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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: dollargeneral.com under News & Events.\nSuch as statements about our strategy, plans, including but not limited to our 2021 real estate outlook, our initiatives, goals, priorities, opportunities, investment, guidance, expectations or beliefs about future matters, including but not limited to, beliefs about COVID-19's future impact on the economy, our business and our customer and other statements that are not limited to historical fact.\nWe also may reference certain financial measures that have not been derived in accordance with GAAP.\ndollargeneral.com under News & Events.\nDespite continued significant uncertainty in the operating environment, our team members have been unwavering in their commitment to fulfilling our mission of serving others, by providing affordable, convenient and close to home access to everyday essentials, at a time when our customers need them most.\nI could not be more proud of their efforts.\nAs always, the health and safety of our employees and customer continues to be our top priority.\nWe continue to closely monitor CDC and other governmental guidelines regarding COVID-19 and are evaluating and adapting our safety protocols as that guidance evolves.\nAs one of America's essential retailers, we remain committed to being part of the solution during these difficult times.\nAnd we believe we are well positioned to continue supporting our customers through our unique combination of value and convenience, including our expansive network of more than 17,000 stores located within 5 miles of approximately 75% of the US population.\nAt the same time, we remain focused on advancing our operating priorities and strategic initiatives, as we continue to meet the evolving needs of our customers and further position Dollar General for a long-term sustainable growth.\nTo that end, and from a position of strength, I'm excited to share an update on some of our more recent plans.\nFirst, as you saw in our release, we plan to further accelerate our pace of new store openings and remodels in 2021.\nIn total, we expect to execute 2,900 real estate projects next year, as we continue to lay and strengthen the foundation for future growth.\nAs previously announced, we recently introduced our newest store concept pOpshelf, further building on our proven track record of store format innovation.\nWe opened our first two locations during the quarter and while still early, we are encouraged by their initial results.\nFinally, one of our core values is representing and respecting the dignity and differences of others.\nBuilding on this core value, along with our commitment to diversity and inclusion, we recently updated our fourth operating priority to better capture and express our intent.\nWe will discuss each of these updates in more detail later in the call.\nBut first, let's recap some of the results for the third quarter.\nThe quarter was once again highlighted by exceptional growth on both the top and bottom lines.\nWe're particularly pleased that for the quarter, our three non-consumable categories once again delivered a combined sales increase, well in excess of our consumable business.\nOf note, this represents our 10th consecutive quarter of year-over-year comp sales growth in our non-consumable business, which speaks to the strong and sustained momentum in these product categories.\nFrom a monthly cadence perspective, comp sales for Q3 periods range from the low double digits to mid-teens with the best performance in August followed by modest moderation as we move through the quarter.\nOverall, third quarter net sales increased 17.3% to $8.2 billion, driven by comp sales growth of 12.2%.\nThese results include significant growth in average basket size, partially offset by a decline in customer traffic, as we believe customers continue to consolidate shopping trips in an effort to limit social contact.\nOnce again this quarter, we increased our market share in highly consumable product sales, as measured by syndicated data, driven by double-digit increases in both units and dollars.\nImportantly, our data suggests an increase in new customers this quarter, as compared to Q3 of 2019.\nThese new customers skew younger, higher income and more ethnically diverse, further underscoring the broadening appeal of our value and convenience proposition.\nWe are also encouraged by the repurchase rates of new customers and are working hard to retain them, with more targeted marketing and continued execution of our key initiatives.\nWe're particularly pleased with the -- and how we delivered significant operating margin expansion, which contributed to third quarter diluted earnings per share of $2.31, an increase of 63% over the prior year.\nCollectively, our Q3 results reflect strong and disciplined execution across many fronts and further validate our belief that we are pursuing the right strategies to create meaningful long-term shareholder value.\nWe operate in one of the most attractive sectors in retail and with our unique combination of value and convenience, further enhanced through our initiatives, we believe we are well positioned to successfully navigate the current environment and emerge even stronger than before.\nNow that Todd has taken you through a few highlights of the quarter, let me take you through some of its important financial details.\nUnless I specifically note otherwise, all comparisons are year-over-year and all references to earnings per share refer to diluted earnings per share.\nAs Todd already discussed sales, I will start with gross profit, which was positively impacted in the quarter by meaningful increase in sales including the impact of COVID-19.\nGross profit as a percentage of sales was 31.3% in the third quarter, an increase of 178 basis points and represents our sixth consecutive quarter of year-over-year gross margin rate expansion.\nThis increase was primarily attributable to a reduction markdowns as a percentage of sales, higher initial markups on inventory purchases, a greater proportion of sales coming from non-consumables categories and a reduction in shrink as a percentage of sales.\nThese factors were partially offset by increased distribution and transportation costs, which were driven by increased volume and our decision to incur employee appreciation bonus expense.\nSG&A as a percentage of sales was 21.9%, a decrease of 62 basis points.\nAlthough we incurred incremental costs related to COVID-19, these costs were more than offset by the significant increase in sales.\nExpenses that were lower as a percentage of sales this quarter include, occupancy costs, utilities, retail labor, depreciation and amortization, repairs and maintenance and employee benefits.\nThese items were partially offset by increases in incentive compensation expense and hurricane-related expenses.\nMoving down the income statement, operating profit for the third quarter increased 57.3% to $773 million, compared to $491 million in the third quarter of 2019.\nAs a percentage of sales, operating profit was 9.4%, an increase of 240 basis points.\nOperating profit in the third quarter was positively impacted by COVID-19, primarily through higher sales.\nThe benefit from higher sales was partially offset by approximately $38 million of incremental investments that we made in response to the pandemic, including additional measures taken to further protect our employees and customers, and approximately $25 million in appreciation bonuses for eligible frontline employees.\nYear-to-date to the third quarter, we have invested approximately $153 million in COVID-19 related expenses including about $99 million in appreciation bonuses for our frontline employees.\nOur effective tax rate for the quarter was 21.6% and compares to 21.7% in the third quarter last year.\nFinally, as Todd noted earlier, earnings per share for the third quarter increased 62.7% to $2.31.\nTurning now to our balance sheet and cash flow, which remained strong and provide us the financial flexibility to further support our customers and employees during these unprecedented times, while continuing to invest for the long term.\nWe finished the quarter with $2.2 billion of cash and cash equivalents, a decrease of $760 million compared to Q2 and an increase of $1.9 billion over the prior year.\nMerchandise inventories were $5 billion at the end of the third quarter, an increase of 11.8% overall and 5.9% on a per store basis.\nWhile out of stocks remain higher than normal for certain high demand products, we continue to make good progress with improving our in-stock position and are pleased with our overall inventory levels.\nYear-to-date to Q3, we generated significant cash flow from operations totaling $3.4 billion, an increase of 103.7%.\nTotal capital expenditures through the first three quarters were $698 million and included our planned investments in remodels and relocations, new stores and spending related to our strategic initiatives.\nDuring the quarter, we repurchased 4.4 million shares of our common stock for $902 million and paid a quarterly dividend of $0.36 per common share outstanding at a total cost of $88 million.\nAt the end of Q3, the remaining share repurchase authorization was $1.6 billion.\nOur capital allocation priorities continue to serve us well and remain unchanged.\nOur first priority is investing in high return growth opportunities, including new store expansion and our strategic initiatives.\nWe also remain committed to returning significant cash to shareholders through anticipated share repurchases and quarterly dividend payments, all while maintaining our current investment grade credit rating and managing to a leverage ratio of approximately 3 times adjusted debt-to-EBITDAR.\nMoving to an update on our financial outlook for fiscal 2020.\nWe continue to operate in a time of significant uncertainty regarding the severity and duration of the COVID-19 pandemic, including its impact on the economy, consumer behavior and our business.\nAs a result, we are not providing guidance for fiscal 2020 sales or earnings per share at this time and are unlikely to resume issuing guidance to the extent such uncertainties persist.\nLet me now provide some context as to what we expect in the fourth quarter.\nGiven the unusual situation, I will elaborate on our comp sales trends thus far in Q4.\nFrom the end of Q3 through December 1, comp sales accelerated increasing approximately 14% during this timeframe, reflecting increased demand in our consumables business.\nAnd while we remain cautious in our sales outlook, we are encouraged with our sales trends, particularly as we move further past government stimulus payments and the expiration of enhanced unemployment benefits under the CARES Act.\nThat said, significant uncertainty still exists concerning the duration of the positive sales environment, including external factors related to the ongoing health crisis and their potential impact on our business.\nBeyond these macro factors, there are number of more specific considerations as it relates to the fourth quarter.\nFirst, we anticipate higher transportation and distribution costs in Q4.\nLike other retailers, our business is seeing the effect of higher transportation costs due to a tight carrier market, as a result of driver shortages and a greater demand for services at third-party carriers.\nIn addition, we are in the process of building, expanding or opening a number of distribution centers across our dry and DG Fresh networks.\nAnd while we expect, these investments will enable us to drive even greater efficiencies going forward and further support future growth, these investments will pressure gross margin rates in Q4.\nAlso please keep in mind that the fourth quarter represents our most challenging lap of the year from a gross margin perspective filing 60 basis points of rate improvement in Q4 2019.\nWith regards to our strategic initiatives, we continue to anticipate they will positively contribute to operating margin over time as the benefit to gross margin continues to scale and outpace the associated expense with both NCI and DG Fresh on pace to be accretive to operating margin in 2020.\nHowever, our investment in these initiatives will pressure SG&A rates in the fourth quarter, as we further accelerate their rollouts.\nFinally, we expect to make additional investments in the fourth quarter as a result of COVID-19, including up to $75 million in employee appreciation bonuses, which includes our recent announcement to award approximately $50 million in additional bonuses, bringing our full year investment in appreciation bonuses to approximately $173 million, as well as continued investments in health and safety measures.\nIn closing, we are very proud of the team's execution and service resulting in another quarter of exceptional results.\nAs always, we continue to be disciplined in how we manage expenses and capital with the goal of delivering consistent, strong financial performance, while strategically investing for the long term.\nWe remain confident in our business model and our ongoing financial priorities to drive profitable same-store sales growth, healthy new store returns, strong free cash flow and long-term shareholder value.\nLet me take the next few minutes to update you on our four operating priorities.\nOur first operating priority is driving profitable sales growth.\nThe team once again did a fantastic job in Q3, executing against a portfolio of growth initiatives.\nLet me highlight some of our recent efforts.\nStarting with our cooler door expansion program which continues to be our most impactful merchandising initiative.\nDuring the first three quarters, we added approximately 49,000 cooler doors across our store base.\nIn total, we expect to install more than 60,000 cooler doors this year.\nThe majority of which will be in our higher capacity coolers, creating additional opportunities to drive higher on-shelf availability and deliver an even wider product selection.\nTurning now to private brands, which remain a priority, as we look to drive overall category awareness and even greater customer adoption through rebranding, repositioning and expansion of select brands as well as the introduction of new product lines.\nWe're very pleased with the continued progress across these fronts, including the successful rebranding of six product lines and the introduction of two new brands so far this year.\nAnd we're excited about the continued momentum we're seeing across the portfolio.\nFinally, a quick update on our FedEx relationship.\nDuring the quarter, we completed our initial rollout of this convenient customer package pick-up and drop-off service, which is now available in more than 8,500 stores.\nWe're very pleased with the reception this offering is receiving from our customers and we continue to explore innovative opportunities to further leverage our unique real estate footprint to provide even more solutions for our customers in convenient and nearby locations.\nBeyond these sales driving initiatives, enhancing gross margin remains a key area of focus for us.\nIn addition to the gross margin benefits associated with our NCI, DG Fresh and private brand efforts, foreign sourcing remains an important gross margin opportunity for us.\nThe team once again did a great job during the quarter, working with our supply partners to ensure product availability.\nLooking ahead, we continue to pursue opportunities to increase our foreign sourcing penetration, while further diversifying our countries of origin.\nWe also continue to pursue supply chain efficiencies including the continued expansion of our private fleet, the opening of additional DG Fresh facilities and the recent purchase of our future Walton, Kentucky dry distribution center, which should contribute to a further reduction in stem miles beginning early next year.\nIn addition, we recently began construction on our first ever ground up combination DG Fresh and dry distribution center in Blair, Nebraska.\nWe anticipate this facility will be completed in early 2022, enabling us to drive even greater efficiencies as we move ahead.\nThe team is also executing against additional opportunities to enhance gross margin, including further improvements in shrink, as we continue to build on our success with electronic article surveillance.\nOur second priority is capturing growth opportunities.\nOur proven high-return low-risk real estate model continues to be a core strength of our business.\nAs previously announced, we recently celebrated a significant milestone with the opening of our 17,000th store.\nThis is a testament to the fantastic work of our best-in-class real estate team as we continue to expand our footprint and enhance our ability to serve even more customers.\nAs a reminder, our real estate model continues to focus on five metrics that have served us well for many years in evaluating new real estate opportunities.\nThese metrics include, new store productivity, actual sales performance, average returns, cannibalization and the payback period.\nOf note, we continue to see strong performance across these metrics.\nFor 2020, we remain on track to open 1,000 new stores, remodel 1,670 stores and relocate 110 stores.\nThrough the first three quarters, we opened 780 new stores, remodeled 1,425 stores, including more than 1,000 in the higher cooler count, DGTP or DGP formats, and we relocated 76 stores.\nWe also added produce in more than 140 stores, bringing the total number of stores which carry produce to more than 1,000.\nAs Todd noted for fiscal 2021, we plan to execute 2,900 real estate projects in total including 1,050 new stores, 1,750 remodels and 100 store relocations.\nAdditionally, we plan to add produce in approximately 600 stores.\nNotably, we expect approximately 50% of our new unit openings and about 75% of our remodels to be in the DGTP or DGP formats.\nThe remainder of our new store openings and remodels will primarily be in the traditional format with higher capacity coolers.\nOur plans also include having approximately 30 stores in our new pOpshelf concept, which Todd will discuss in more detail by the end of fiscal 2021 up from two locations today.\nOverall, our real estate pipeline remains extremely robust and we are excited about the significant growth opportunities ahead.\nOur third operating priority is to leverage and reinforce our position as a low-cost operator.\nOver the years, we've established a clear and defined process to control spending, which governs our disciplined approach to spending decisions.\nThis zero based budgeting approach, internally branded as Save to Serve keeps the customer at the center of all we do, while reinforcing our cost control mindset.\nWe continue to build on our success with Fast Track, which Todd will discuss in more detail later.\nAs a result of our efforts to-date, our store associates are able to better serve our customers during this period of heightened demand, as evidenced by our recent customer survey results where we continue to see overall satisfaction scores at all time highs.\nOur underlying principles are to keep the business simple, but move quickly to capture growth opportunities, while controlling expenses and always seeking to be a low-cost operator.\nWe have three business operating priorities.\nBut at the heart of them is our foundational fourth operating priority.\nThis priority is anchored in our people and it's truly foundational to everything we do at Dollar General.\nOur fourth operating priority is investing in our diverse teams through development, empowerment and inclusion.\nAs Todd noted, this updated language more fully expresses our values and core beliefs and more closely aligns with the investments we continue to make in the development of our people.\nImportantly, we believe these investments continue to yield positive results across our store base, as evidenced by continued, record low store manager turnover, record staffing levels, healthy applicant flows and a robust internal promotion pipeline.\nAs a growing retailer, we also continue to create new jobs and opportunities for career advancement.\nIn fact, more than 12,000 of our current store managers are internal promotes and we continue to innovate on the development opportunities we can offer our teams.\nWe believe, the opportunity to start and develop a career with a growing and purpose-driven Company is a unique competitive advantage and remains our greatest currency in attracting and retaining talent.\nWe also recently completed our annual community giving campaign, where employees across the organization come together to raise funds for a variety of important causes.\nI was once again humbled by the generosity and compassion of our people.\nThis event truly embodies the Serving Others culture that is so deeply embedded at Dollar General.\nIn summary, we are executing well from a position of strength and our operating priorities continue to provide a strong foundation from which we can drive continued growth in the years ahead.\nI'm proud of the great progress the team has made in advancing our strategic initiatives.\nLet me take you through some of the most recent highlights.\nStarting with our non-consumable initiative or NCI.\nAs a reminder, NCI consist of a new and expanded product offering in key non-consumable categories.\nThe NCI offering was available in 5,200 stores at the end of Q3, and given our strong execution to date, we now expect to expand the offering to more than 5,600 stores by the end of 2020.\nIncluding approximately 400 stores in our NCI lite [Phonetic] version.\nThis compares to our prior expectation of more than 5,400 stores at year end.\nWe're especially pleased with the strong sales and margin performance our NCI stores once again delivered in the quarter.\nWe also continue to benefit from incorporating select NCI products and planograms throughout the broader store base.\nAnd we are pleased with the performance of our lite stores which incorporates a vast majority of the NCI assortment, but through a more streamlined approach.\nAs noted earlier, we are also excited about the recent introduction of pOpshelf and the opening of our first two locations, which further builds on our success and learnings with NCI.\npOpshelf aims to engage customers by offering a fun, affordable and differentiated treasure hunt experience, delivered through, first, continually refresh merchandise, primarily in targeted non-consumable product categories.\nSecond, a differentiated in-store experience, including impactful displays of our offering designed to create a highly visual, fun and easy shopping experience.\nAnd third, exceptional value with approximately 95% of our items priced at $5 or less.\nImportantly, while pOpshelf delivers many of Dollar General's core strengths, including customer insights, merchandise innovation, operational excellence, digital capabilities and real estate expertise, it is specifically tailored to a different shop indication.\nWe'll primarily be located in suburban communities and initially targets a higher income customer, potentially unlocking additional and incremental growth opportunities going forward.\nWe're proud of all of the incredible work the team has done in standing up this concept and with the initial work now behind us, we look forward to welcoming additional customers to pOpshelf, as we move forward, our goal of approximately 30 stores by the end of 2021.\nTurning now to DG Fresh, which is a strategic multi-phase shift to self-distribution of frozen and refrigerated goods.\nAs a reminder, the primary objective of DG Fresh is to reduce product cost on our frozen and refrigerated items, by removing the markup paid to third-party distributors, thereby enhancing gross margin.\nAnd we continue to be very pleased with the product cost savings we are seeing.\nIn fact, DG Fresh continues to be the largest contributor to gross margin benefit we are realizing from higher initial mark-ups on inventory purchases.\nImportantly, we expect this benefit to grow as we continue to scale this transformational initiative.\nAnother important goal of DG Fresh is to increase sales in these categories.\nWe're pleased with the success we are already seeing on this front, driven by higher overall in-stock levels and the introduction of more than 55 additional items, including both national and private brands in select stores being serviced by DG Fresh.\nAnd while produce is not included in our initial rollout plans, we plan -- we plan and continue to believe DG Fresh could provide a potential path forward to expanding our produce offering to even more stores in the future.\nIn total, we were self-distributing to more than 13,000 stores from eight DG Fresh facilities at the end of Q3.\nWe expect to capture benefits from this initiative in more than 14,000 stores from 10 facilities by the end of this year and are well on track to complete our initial rollout across the chain in 2021.\nNext, our digital initiative, where our strategy consist of building a digital ecosystem specifically tailored to provide our customers with an even more convenient, frictionless and personalized shopping experience.\nIn an environment where customers continue to seek safe, familiar and convenient experiences, we believe our unique footprint combined with our digital assets, provides a distinct competitive advantage.\nMore specifically, I'm pleased to note that during the quarter, we expanded DG Pickup, our buy online, pickup in the store offering to nearly 17,000 stores compared to more than 2,500 stores at the end of Q2, providing another convenient access point for those seeking a more contactless customer experience.\nIn addition to DG Pickup, our plans include further expansion of DG GO checkout, as we look to make this feature available in select stores that includes self checkout further enhancing our convenience proposition.\nBy leading our channel in digital tools and experiences, we believe we are well positioned to drive more in-store traffic, grow basket size and offer even greater convenience to new and existing customers.\nMoving now to Fast Track, where our goals, including increasing labor productivity in our stores, enhancing customer convenience and further improving on-shelf availability.\nWe continue to be pleased with the labor productivity improvements we are seeing as a result of our efforts around rolltainer optimization and even more shelf-ready packaging.\nThe second component of Fast Track is self checkout, which provides customers with another flexible and convenient checkout solution, while also driving greater efficiencies for our store associates.\nDuring the quarter, we accelerated the rollout of self checkout to more than 900 stores, compared to approximately 400 stores at the end of Q2, with plans for further expansion as we move forward.\nAnd while still early, we are pleased with the initial results, including our customer adoption rates as well as positive feedback from both customers and employees.\nOverall, we remain focused on controlling what we can control, while taking actions, including the continued execution of our key initiatives to further differentiate and distance Dollar General from the rest of the discount retail landscape.\nAs a mature retailer in growth mode, we are also laying the groundwork for future initiatives and continue to believe we are pursuing the right strategies to capture additional growth opportunities in a rapidly changing retail landscape.\nIn closing, we are very proud of the team's performance and our results through the first three quarters of 2020, which further demonstrate that our unique combination of value and convenience continues to resonate with our customers and positions us well going forward.\n", "role": "user" }, { "content": "compname posts q3 earnings per share $2.31.\nq3 earnings per share $2.31.\nq3 same store sales rose 12.2 percent.\nq3 sales $8.2 billion versus refinitiv ibes estimate of $8.15 billion.\ndeclares q4 2020 cash dividend of $0.36 per share.\nplan to award a total of up to $75 million in appreciation bonuses to eligible frontline employees in q4.\nfor fy 2021, co plans to execute 2,900 real estate projects.\nsince the end of the third quarter, the company has continued to experience elevated demand in its stores.\nsame-store sales increased about 14% as compared to comparable timeframe in 2019 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: dollargeneral.com under News & Events.\nSuch as statements about our financial guidance, strategy, initiatives, plans, goals, priorities, opportunities, investments, expectations or beliefs about future matters and other statements that are not limited to historical fact.\nWe will also reference certain non-GAAP financial measures.\ndollargeneral.com under News & Events.\nDespite, what continues to be a challenging operating environment, including elevated cost pressures and broad-based supply chain disruptions, our teams remain focused on controlling what we can control, and they are delivering for our customers.\nWe are grateful for their efforts.\nLooking ahead, we believe we are well positioned to navigate the current environment.\nAnd although we've experienced higher-than-expected costs, both from a product and supply chain perspective we're very confident in our price position.\nAs our price indexes relative to our competitors and other classes of trade remain in line with our targeted and historical ranges.\nAnd because so many families depend on us for everyday essentials at the right price, we believe products at the $1 price point are important for our customers and they will continue to have a significant presence in our assortment.\nIn fact, approximately 20% of our overall assortment remains at $1 or less.\nAnd moving forward we will continue to foster and grow this program where appropriate.\nAs the largest retailer in the US by store count, with over 18,000 stores located within five miles of about 75% of the US population, we believe our presence in local communities across the country provides another distinct advantage and positions us well for continued success.\nOverall, we remain focused on advancing our operating priorities and strategic initiatives.\nAs we continue to strengthen our competitive position, while further differentiating and distancing Dollar General from the rest of the discount retail landscape.\nTo that end, I'm excited to share an update on some of our more recent plans.\nFirst, as you saw in our release, we expect to execute a total of nearly 3,000 real estate projects in 2022, including 1,100 new store openings as we continue to lay and strengthen the foundation for future growth.\nOf note, these plans include the acceleration of our pOpshelf concept, as we expect to nearly triple our store count next year, as compared to our fiscal '21 year-end target of up to 50 locations.\nIn addition, given the sustained performance of our pOpshelf concept, which continues to exceed our expectations, we plan to further accelerate the pace of new store openings as we move ahead.\nTargeting a total of about 1,000 pOpshelf locations by fiscal year-end 2025.\nImportantly, we anticipate these new pOpshelf locations will be incremental to our annual Dollar General store opening plans, as we look to further capitalize on the significant growth opportunities we see for both brands.\nWe are also now at the early stages of plans to extend our footprint into Mexico, which will represent our first store locations outside the Continental United States.\nWe believe Mexico represents a compelling expansion opportunity for Dollar General given this demographics and proximity to the US, and we are confident that our unique value and convenience proposition will resonate with the Mexican consumer.\nWhile our initial entry in the Mexico is focused on piloting a small number of stores in 2022.\nWe expect to seize -- we plan today will ultimately turn into additional growth opportunities in the future.\nFinally, as previously announced, we recently introduced our digital services by partnering with DoorDash to provide delivery in under an hour, in over 10,000 locations.\nFurther enhancing our convenience proposition, while broadening our reach with new customers.\nJeff will discuss these updates in more detail later in the call.\nBut first let's recap some of the top line results for the third quarter.\nNet sales increased 3.9% to $8.5 billion following a 17.3% increase in Q3 of 2020.\nComp sales declined 0.6% to the prior year quarter, which translates to a robust 11.6% increase on a two-year stack basis.\nFrom a monthly cadence perspective, comp sales were lowest in September, with October being our strongest month of performance.\nAnd I'm pleased to report that Q4 sales to-date are trending in line with our expectations.\nOur third quarter sales results include a year-over-year decline in customer traffic, which was largely offset by growth in average basket size, even as we lap significant growth in average basket size last year.\nIn addition, during the quarter, we saw an improvement in customer traffic, as compared to Q2 of 2021.\nAnd we continue to be pleased with the retention of the new customers acquired in 2020.\nWe're also pleased with the market share gains as measured by syndicated data in our frozen and refrigerated product categories.\nAnd even as our market share in total highly consumable product sales decreased slightly in Q3, we feel good about our overall share gains on a two-year stack basis.\nCollectively, our third quarter results reflect strong execution across many fronts.\nAnd further validates our belief that we are pursuing the right strategies to enable sustainable growth, while supporting long-term shareholder value creation.\nWe operate in one of the most attractive sectors in retail.\nAnd as a mature retailer in growth mode, we continue to lay the groundwork for our future initiatives, which we believe will unlock additional growth opportunities as we move forward.\nOverall, I've never felt better about the underlying business model and we are excited about the significant growth opportunities we see ahead.\nNow that Todd has take you through a few highlights of the quarter, let me take you through some of its important financial details.\nUnless we specifically note otherwise all comparisons are year-over-year, all references to earnings per share refer to diluted earnings per share and all years noted refer to the corresponding fiscal year.\nAs Todd already discussed sales, I will start with gross profit.\nAs a reminder gross profit in Q3 2020 was positively impacted by a significant increase in sales, including net sales growth of 24% in our combined non-consumable categories.\nFor Q3 2021, gross profit as a percentage of sales was 30.8%, a decrease of 57 basis points, but an increase of 121 basis points, compared to Q3 2019.\nThe decrease compared to Q3 2020 was primarily attributable to a higher LIFO provision, increased transportation costs, a greater proportion of sales coming from our consumables category and an increase in inventory damages.\nThese factors were partially offset by higher inventory markups and a reduction in shrink as a percentage of sales.\nSG&A as a percentage of sales was 22.9%, an increase of 105 basis points.\nThis increase was driven by expenses that were greater as a percentage of sales in the current year period, the most significant of which were retail, labor and store occupancy costs.\nThe quarter also included $16 million of disaster-related expenses attributable to Hurricane Ida.\nMoving down to income statement.\nOperating profit for the third quarter decreased 13.9% to $665.6 million.\nAs a percentage of sales, operating profit was 7.8%, a decrease of 162 basis points.\nAnd while the unusual and difficult prior year comparison create pressure on our operating margin rate, we're very pleased with the improvement of 78 basis points, compared to Q3 2019.\nOur effective tax rate for the quarter was 22.2% and compares to 21.6% in the third quarter last year.\nFinally, earnings per share for Q3 decreased 10% to $2.08, which reflects a compound annual growth rate of 21% over a two-year period.\nTurning now to our balance sheet and cash flow which remain strong and provide us the financial flexibility to continue investing for the long-term, while delivering significant returns to shareholders.\nMerchandise inventories were $5.3 billion at the end of the third quarter, an increase of 5.4% overall and a decrease of 0.1% on a per store basis.\nAnd while we're not satisfied with our overall in-stock levels, we continue to make good progress and are focused on improving our in-stock position particularly in our consumables business.\nLooking ahead, we are pleased with our inventory position for the holiday shopping season and our teams continue to work closely with suppliers to ensure delivery of goods for the remainder of the year.\nYear-to-date through [Phonetic] the third quarter, we generated significant cash flow from operations totaling $2.2 billion.\nCapital expenditures to the first three quarters were $779 million and included our planned investments in new stores, remodels and relocations, distribution and transportation projects and spending related to our strategic initiatives.\nDuring the quarter, we repurchased 1.6 million shares of our common stock for $360 million and paid a quarterly dividend of $0.42 per common share outstanding at a total cost of $97 million.\nAt the end of Q3, the total remaining authorization for future repurchases was $619 million.\nWe announced today that our Board has increased this authorization by $2 billion.\nOur capital allocation priorities continue to serve us well and remain unchanged.\nOur first priority is investing in high return growth opportunities, including new store expansion and our strategic initiatives.\nWe also remain committed to returning significant cash to shareholders through anticipated share repurchases and quarterly dividend payments, all while maintaining our current investment grade credit rating and managing to a leverage ratio of approximately 3 times adjusted debt-to-EBITDA.\nMoving to an update on our financial outlook for fiscal 2021.\nWe continue to operate in a time of uncertainty regarding the economic recovery from the COVID-19 pandemic, including any changes in consumer behavior and the corresponding impacts on our business.\nDespite continued uncertainty, including cost inflation ongoing pressure throughout the supply chain, we are updating our sales and earnings per share guidance, which reflects our strong performance through the first three quarters, as well as our expectations for Q4.\nFor 2021, we now expect the following: Net sales growth of approximately 1% to 1.5%; a same-store sales decline of approximately 3% to 2.5%, but which reflects growth of approximately 13% to 14% on a two-year stack basis; and earnings per share in the range of $9.90 to $10.20, which reflects a compound annual growth rate in the range of 22% to 24% or approximately 21% to 23%, compared to 2019 adjusted earnings per share over a two-year period.\nOur earnings per share guidance now assumes an effective tax rate of approximately 22%.\nLet me now provide some additional context as it relates to our outlook.\nIn terms of sales, we remain cautious in our outlook over the next couple of months, given the continued uncertainties arising from the COVID-19 pandemic, including additional supply chain disruptions and the impact of the end of certain federal aid such as additional unemployment benefits and stimulus payments.\nTurning to gross margin.\nPlease keep in mind, we will continue to cycle strong gross margin performance from the prior year where we benefited from a favorable sales mix and a reduction in markdowns, including the benefit of higher sell-through rate.\nConsistent with Q2 and Q3, we expect continued pressure on our gross margin rate in the fourth quarter, due to a higher LIFO provision, as a result of cost of goods increases, a less favorable sales mix, compared to the prior year quarter, and an increase in markdown rates as we continue to cycle the abnormally low levels in 2020.\nWe also anticipate higher supply chain costs in Q4 compared to the 2020 period.\nLike other retailers our business continues to be impacted by higher costs due to transit and port delays, as well as elevated demand for services at third-party carriers.\nHowever, despite these challenges we are confident in our ability to continue navigating these transitory pressures.\nWith regards to SG&A, we continue to expect about $70 million to $80 million, an incremental year-over-year investments in our strategic initiatives.\nThis amount includes $56 million in incremental investments made during the first three quarters of 2021.\nHowever, in aggregate, we continue to expect our strategic initiatives will positively contribute to operating profit and margin in 2021, driven by NCI and DG Fresh, as we expect the benefits to gross margin from our initiatives will more than offset the associated SG&A expense.\nFinally, our updated guidance does not include any impact from the proposed federal vaccine and testing mandate, including potential disruptions to the business or labor market or any incremental expense.\nIn closing, we are pleased with our third quarter results, which are with testament to the strong performance and execution by the team.\nAs always we continue to be disciplined and how we manage expenses in capital with the goal of delivering consistent strong financial performance, while strategically investing for the long-term.\nWe remain confident in our business model and our ongoing financial priorities to drive profitable same-store sales growth, healthy new store returns, strong free cash flow and long-term shareholder value.\nLet me take the next few minutes to update you on our operating priorities and strategic initiatives.\nOur first operating priority is driving profitable sales growth.\nThe team did a great job this quarter, executing against a robust portfolio of growth initiatives.\nLet me highlight some of our more recent efforts.\nStarting with our non-consumables initiative or NCI.\nThe NCI offering was available in nearly 11,000 stores at the end of Q3, and we continue to be very pleased with the strong performance we are seeing across our NCI store base.\nNotably, this performance is contributing an incremental 2.5% total comp sales increase on average in NCI stores along with a meaningful improvement in gross margin rate, as compared to stores without the NCI offering.\nOverall, we now plan to expand this offering to a total of more than 11,500 stores by year-end, including over 2,000 stores in our light version.\nAnd we expect to complete the rollout of NCI across nearly the entire chain by year-end 2022.\nMoving to our pOpshelf concept, which further builds on our success and learnings with NCI.\npOpshelf aims to engage customers by offering a fun, affordable and differentiated treasure hunt experience, delivered through continually refreshed merchandise, a unique in-store experience and exceptional value with the vast majority of our items priced at $5 or less.\nDuring the quarter we added 14 new pOpshelf locations, bringing the total number of stores to 30.\nOpened our first 14 store within a store concepts and celebrated the one-year anniversary of our first pOpshelf store opening.\nFor 2021, we remain on track to have a total of up to 50 pOpshelf locations by year-end, as well as up to an additional 25 store with an in-store concepts, which incorporate a smaller footprint pOpshelf shop into one of our larger format Dollar General market stores.\nImportantly, as Todd noted earlier, we continue to be very pleased with the performance of our pOpshelf stores, which have far exceeded our expectations for both sales and gross margin.\nIn fact, we anticipate year one annualized sales volumes for our current locations to be between $1.7 million and $2 million per store and expect the initial average gross margin rate for these stores to exceed 40%.\nWe believe this bodes well for the future as we move toward our goal of about 1,000 pOpshelf locations by year-end 2025.\nTurning now to DG Fresh, which is a strategic multiphase shift to self-distribution of frozen and refrigerated goods.\nAs a reminder, we completed the initial rollout of DG Fresh across the entire chain in Q2, and are now delivering to more than 18,000 stores from 12 facilities.\nThe primary objective of DG Fresh is to reduce product costs on our frozen and refrigerated items.\nAnd we continue to be very pleased with the savings we are seeing as DG Fresh remains a meaningful contributor to our gross margin rate.\nAnother goal of DG Fresh is to increase sales in these categories.\nAnd we are very happy with the performance on this front, as overall comp sales of our frozen and refrigerated goods outperformed all other product categories in Q3, even against a difficult prior year sales comparison.\nGoing forward, we expect to realize additional benefits from DG Fresh, as we continue to optimize our network, further leverage our scale, deliver an even wider product selection and build on our multi-year track record of growth in cooler doors and associated sales.\nWith regards to our cooler expansion program, during the first three quarters we added more than 52,000 cooler doors across our store base.\nIn total, we expect to install approximately 65,000 additional cooler doors in 2021.\nThe majority of which will be in high capacity coolers.\nTurning now to an update on our expanded health offering, which consist of about 30% more feet of selling space and nearly 400 additional items, as compared to our standard offering.\nThis offering was available in nearly 800 stores at the end of Q3, with plans to expand to approximately 1,000 stores by year-end.\nLooking ahead, our plans include further expansion of our health offering, with the goal of increasing access to basic healthcare products and ultimately services overtime, particularly in rural America.\nIn addition to the gross margin benefits associated with the initiatives I just discussed, we continue to pursue other opportunities to enhance gross margin, including improvements in private brand sales, global sourcing, supply chain efficiencies and shrink.\nOur second priority is capturing growth opportunities.\nWe recently celebrated a significant milestone with the opening of our 18,000 stores, which reflects the fantastic work of our best-in-class real estate team, as we continue to expand our footprint and further enhance our ability to serve additional customers.\nThrough the first three quarters, we completed a total of 2,386 real estate projects, including 798 new stores, 1,506 remodels and 82 relocations.\nFor 2021, we remain on track to open 1,050 new stores, remodel 1,750 stores and relocate 100 stores, representing 2,900 real estate projects in total.\nIn addition, we now have produce in approximately 1,900 stores with plans to expand this offering to a total of over 2,000 stores by year-end.\nFor 2022 we plan to execute 2,980 real estate projects in total, including 1,110 new stores, 1,750 remodels and 120 store relocations.\nWe also plan to add produce and approximately 1,000 additional stores next year with the goal of ultimately expanding this offering to a total of up to 10,000 stores over time.\nOf note, we expect approximately 800 of our new stores in 2022 to be in our larger 8,500 square foot new store prototype, allowing for a more optimal assortment and room to accommodate future growth.\nImportantly, we continue to be very pleased with the sales productivity of this larger format, as average sales per square foot continue to trend about 15% above an average traditional store.\nOur 2022, real estate plans also include opening approximately 100 additional pOpshelf locations, bringing the total number of pOpshelf stores to about 150 by year-end, as well as, up to an additional 25 store with in-store concept.\nAs Todd noted, we are also very excited about our plans to expand our footprint internationally for the first time, with plans to open up to 10 stores in Mexico by year-end 2022.\nAs we look to extend our value and convenience offering to even more communities, while continuing to lay the foundation for future growth.\nOverall, our proven high-return, low-risk real estate model continues to be a core strength of our business.\nAnd the good news is, we believe we still have a long runway for new unit growth ahead of us.\nIn fact, across our Dollar General, pOpshelf and DGX format types, we estimate there are approximately 17,000 new store opportunities potentially available in the Continental United States alone.\nAlthough, these opportunities available to all small box retailers, we expect to continue capturing a disproportionate share as we move forward.\nAnd while still early, we expect our entry into Mexico will ultimately unlock a significant number of additional new unit opportunities in the years to come.\nWhen taken together, our real estate pipeline remains robust and we are excited about the significant new store opportunities ahead.\nNext, our digital initiative, which is an important complement to our physical store footprint, as we continue to deploy and leverage technology to further enhance convenience and access for our customers.\nOur efforts remain centered around building engagement across our digital properties, including our mobile app.\nOf note, we ended Q3 with over 4.4 million monthly active users on the app, and expect this number to grow as we look to further enhance our digital offerings.\nAs Todd noted, our partnership with DoorDash is another example of meeting the evolving needs of our customers, by providing the savings offered by Dollar General, combined with the convenience of same-day delivery in an hour or less.\nAnd while still early, we are pleased with the initial results, including better-than-expected customer trial, strong repurchase rates, high levels of sales incrementality and a broadening of our customer base.\nOur DG Media Network, which we launched in 2018 is also seeing strong results, including significant growth in the number of campaigns on our platform.\nOverall, we remain very excited about the long-term growth potential of this business.\nAnd we look to better connect our brand partners with our customers in a way that is accretive to the customer experience.\nGoing forward, our plans include providing more relevant, meaningful and personalized offerings, with the goal of driving even higher levels of customer engagement across our digital ecosystem.\nOur third operating priority is to leverage and reinforce our position as a low-cost operator.\nWe have a clear and defined process to control spending, which continues to govern our disciplined approach to spending decisions.\nThis zero based budgeting approach internally branded as safe to serve, keeps the customer at the center of all we do, while reinforcing our cost control mindset.\nOur Fast Track initiative is a great example of this approach, where our goals include, increasing labor productivity in our stores, enhancing customer convenience and further improving on-shelf availability.\nThe first phase of Fast Track consisted of both rolltainer and case pack optimization, which has led to the more efficient stocking of our stores.\nThe second component of Fast Track is self-checkout, which provides customers with another flexible and convenient checkout solution, while also driving greater efficiencies for our store associates.\nLooking ahead, our plans now include expanding this offering to over 6,000 stores by year-end 2021, and to the majority of our store base by the end of 2022, as we look to further extend our position as an innovative leader in small box discount retail.\nOur underlying principles are to keep the business simple, but move quickly to capture growth opportunities, while controlling expenses and always seeking to be a low-cost operator.\nOur fourth operating priority is investing in our diverse teams through development, empowerment and inclusion.\nAs a growing retailer, we continue to create new jobs in the communities we serve.\nAs evidenced in 2022, we plan to create more than 8,000 net new jobs.\nIn addition, our growth also fosters an environment where employees have opportunities to advance to roles with increasing levels of responsibility and meaningful wage growth in a relatively short timeframe.\nIn fact, over 75% of our store associates at/or above the lead sales associate position were internally placed.\nAnd we continue to innovate on the development opportunities we offer our teams.\nImportantly, we believe these efforts continue to yield positive results across our store base, as evidenced by our robust promotion pipeline, healthy applicant flows and staffing above traditional levels.\nWe believe the opportunity to start and develop a career with a growing and purpose-driven company is a unique competitive advantage and remains our greatest currency in attracting and retaining talent.\nWe also recently completed our annual community giving campaign, where our employees came together to raise funds for a variety of important causes.\nAnd I was once again inspired by the generosity and compassion of our people.\nOur mission of serving others is deeply embedded in the daily culture of Dollar General.\nAnd I'm so proud to be a part of such an incredible team.\nIn closing, we are making great progress against our operating priorities and strategic initiatives.\nAnd with the actions and multi-year initiatives we have in place, we are confident in our plans to drive long-term sustainable growth and shareholder value creation.\n", "role": "user" }, { "content": "compname reports q3 earnings per share of $2.08.\nq3 earnings per share $2.08.\nsees fy sales up about 1 to 1.5 percent.\nq3 sales rose 3.9 percent to $8.5 billion.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: dollargeneral.com under news and events.\nWe also will reference certain non-GAAP financial measures.\ndollargeneral.com under news and events.\nOur fourth quarter performance was impacted by sustained and rising inflation, ongoing global supply chain pressure and a surge in Omicron cases, which impacted staffing levels at our distribution centers, contributing to elevated out-of-stocks.\nDespite these challenging conditions, our teams continued to focus on controlling what we can control and being there for our customers.\nBecause of their efforts and great execution over the past two years, we believe our underlying business is even stronger than before the pandemic, which positions us well to deliver solid sales and profit growth in 2022 and beyond.\nAnd while we expect this challenging environment to persist over the near term, which is reflected in our Q1 and fiscal 2022 outlook, we're confident we are taking the appropriate actions to manage through this period and deliver on our full year plan.\nIn fact, I'm pleased to report our staffing levels are back to 2019 pre-COVID levels in both our stores and distribution centers, and we are seeing a meaningful improvement in our in-stock positions.\nAdditionally, although we experienced higher-than-expected product and supply chain cost in Q4, we are very confident in our price position as our price indexes, relative to competitors and other classes of trade, remain in line with our targeted and historical ranges.\nAnd because so many families depend on us for everyday essentials at the right price, we believe products at the $1 price point are important to our customers, and they will continue to have a significant presence in our assortment.\nIn fact, approximately 20% of our overall assortment is $1 or less.\nAnd moving forward, we expect to continue to foster and grow this program where appropriate.\npopulation, we believe we are well positioned to continue supporting our customers through our unique combination of value and convenience, even in a challenging economic environment.\nLooking ahead, we remain focused on advancing our operating priorities and strategic initiatives as we continue to strengthen our competitive position while further differentiating Dollar General from the rest of the retail landscape.\nTurning now to our fourth quarter performance.\nNet sales increased 2.8% to $8.7 billion, following a 17.6% increase in Q4 of 2020.\nComp sales declined 1.4% compared to the prior year period, which translates into a robust 11.3% increase on a two-year stack basis.\nFrom a monthly cadence perspective, Comp sales were lowest in January, with December being our strongest month of performance.\nOur fourth quarter sales results include a decline in customer traffic, which was largely offset by growth in average basket size.\nNotably, our average basket size at year-end was approximately $16 and consisted of nearly six items.\nThis compares to an average basket size of about $13 and five items at the end of 2019, which we believe reflects the growing impact of our strategic initiatives and a degree of inflation.\nIn addition, we are pleased with the market share gains as measured by syndicated data in our frozen and refrigerated product categories, where we have placed a good deal of emphasis over the past years in an effort to provide customers with an even wider variety of options.\nAnd even as our market share in highly consumable product sales decreased slightly in Q4, we feel good about our share gains on a two-year basis.\nWe are also pleased with the retention rates of new customers acquired in 2020, which continues to exceed our initial expectations.\nFor the full year, net sales increased 1.4% to $34.2 billion, which was on the high end of our full year guidance and on top of a robust 21.6% increase in fiscal 2020.\nComp sales for the year decreased 2.8%, which translates into a very healthy 13.5% increase on a two-year stack basis.\nIn total, we completed more than 2,900 real estate projects during the year, including the opening of our 18,000th Dollar General store and 50 stand-alone pOpshelf locations as we continue to build and strengthen the foundation for future growth.\nFrom a position of strength, we also made targeted investments in key areas, including the acceleration of our pOpshelf concept, as well as our most recent initiatives focused on health and international expansion as we continue to meet the evolving needs of our customers and further position Dollar General for long-term sustainable growth.\nOverall, we are proud of our fourth quarter and full year results, which further validate our belief that our strategic actions and targeted investments positions us well for continued success while supporting long-term shareholder value creation.\nWe operate in one of the most attractive sectors in retail.\nAnd while our mission and culture remain unchanged as the foundation for our success, with our robust portfolio of short and long-term initiatives, I believe Dollar General is a much different company and is in a much stronger competitive position than it was just a few short years ago.\nAs a result, I've never felt better about the underlying business model, and we are excited about the enormous growth opportunities we see ahead.\nNow, that Todd has taken you through a few highlights of the quarter and the full year, let me take you through some of its important financial details.\nUnless we specifically note otherwise, all comparisons are year over year, all references to earnings per share refer to diluted earnings per share and all years noted refer to the corresponding fiscal year.\nAs Todd already discussed sales, I will start with gross profit.\nAs a reminder, gross profit in Q4 2020 and fiscal year 2020 were both positively impacted by a significant increase in sales, including net sales growth of 24% and 28%, respectively, in our combined non-consumables categories.\nFor Q4 2021, gross profit as a percentage of sales was 31.2%, a decrease of 131 basis points.\nThe decrease compared to Q4 2020 was primarily attributable to a higher LIFO provision, increased transportation and distribution costs and a greater proportion of sales coming from our consumables category.\nOf note, while we expect some relief as we move through 2022, our Q4 supply chain expenses were significantly higher compared to Q4 2020, resulting in a headwind to gross margin of approximately $100 million.\nThese factors were partially offset by a reduction in markdowns as a percentage of sales in higher inventory markups.\nSG&A as a percentage of sales was 22% in the quarter, a decrease of 16 basis points.\nThis decrease was primarily driven by lower incremental costs related to COVID-19, lower hurricane-related expenses and a reduction in incentive compensation.\nThese items were partially offset by certain expenses that were higher as a percentage of sales, including retail labor, occupancy costs, and depreciation and amortization.\nMoving down the income statement.\nOperating profit for the fourth quarter decreased 8.7% to $797 million.\nAs a percentage of sales, operating profit was 9.2%, a decrease of 116 basis points.\nOur effective tax rate for the quarter was 21.2% and compares to 22.7% in the fourth quarter last year.\nFinally, earnings per share for the fourth quarter decreased 1.9% to $2.57, which reflects a compound annual growth rate of 10.6% over a two-year period.\nTurning now to our balance sheet and cash flow, which remained strong and provided us the financial flexibility to continue investing for the long term while delivering significant returns to shareholders.\nMerchandise inventories were $5.6 billion at the end of the year, an increase of 7% overall and 1.4% on a per store basis.\nImportantly, as Todd noted, we have begun to see a meaningful improvement in our in-stock levels since the end of the year and expect continued improvement as we move through 2022, underscoring our optimism that we are well positioned to serve our customers with the products they want and need.\nIn 2021, we generated significant cash flow from operations totaling $2.9 billion.\nTotal capital expenditures for the year were $1.1 billion and included our planned investments in new stores, remodels and relocations, distribution and transportation projects and spending related to our strategic initiatives.\nDuring the quarter, we repurchased 2.2 million shares of our common stock for $490 million and paid a quarterly dividend of $0.42 per common share outstanding at a total cost of $97 million.\nAt the end of the year, the remaining share repurchase authorization was $2.1 billion.\nOur capital allocation priorities continue to serve us well and remain unchanged.\nOur first priority is investing in high-return growth opportunities, including new store expansion and our strategic initiatives.\nWe also remain committed to returning significant cash to shareholders through anticipated share repurchases and quarterly dividend payments, all while maintaining our current investment-grade credit rating and managing to a leverage ratio of approximately three times adjusted debt to EBITDAR.\nMoving to our financial outlook for fiscal 2022.\nFirst, I want to remind everyone that our fiscal year 2022 includes a 53rd week which will occur during the last period of the fourth quarter.\nWe also continue to operate in a time of uncertainty regarding, among other things, the impacts on the business arising from the current geopolitical conflict and the recovery from the global COVID pandemic, including recovery of the U.S. economy, changes in consumer behavior, labor markets and government stimulus and assistance programs.\nDespite these uncertainties, including cost inflation, ongoing pressure in the supply chain and rising fuel costs, we are pleased to provide annual guidance that reflects our confidence in the business.\nWith that in mind, we expect the following for 2022.\nNet sales growth of approximately 10%, including an estimated benefit of approximately two percentage points from the 53rd week, same-store sales growth of approximately 2.5%, and earnings per share growth of approximately 12% to 14%, including an estimated benefit of approximately four percentage points from the 53rd week.\nOur earnings per share guidance assumes an effective tax rate range of 22.5% to 23%.\nWe also expect capital spending to be in the range of $1.4 billion to $1.5 billion, which includes the impact of increases in the cost of certain building materials, as well as continued investment in our strategic initiatives and core business to support and drive future growth.\nWith regards to shareholder returns, our board of directors recently approved a quarterly dividend payment of $0.55 per share, which represents an increase of 31%.\nWe also plan to repurchase a total of approximately $2.75 billion of our common stock this year, reflecting our continued strong liquidity position, the benefit from the 53rd week and our confidence in the long-term growth opportunity for our business.\nLet me now provide some additional context as it relates to our outlook.\nIn terms of quarterly cadence, we anticipate both comp sales and earnings per share growth to be much stronger in the second half of the year than the first half.\nAs a reminder, we are lapping a significant stimulus benefit from Q1 2021, including gross margin expansion of 208 basis points.\nWe also anticipate ongoing cost inflation, including elevated supply chain and fuel costs.\nWhile we do not typically provide quarterly guidance, given the unusual lap in the significant inflationary environment in Q1, we are providing more specific detail on our expectations for the first quarter.\nTo that end, we expect a comp sales decline of 1% to 2% in Q1 with an earnings per share in the range of approximately $2.25 to $2.35.\nTurning now to gross margin for 2022.\nWe expect to continue realizing benefits from our initiatives, including DG Fresh and NCI.\nIn addition, we are optimistic that distribution and transportation efficiencies, including significant expansion of our private fleet, could drive additional benefits over the year despite continued cost pressures in the near term.\nPartially offsetting some of these benefits are rising fuel costs, as well as an expected return to recent historical rates of markdowns and shrink, all of which are expected to be headwinds in 2022.\nWith regards to SG&A, we expect continued investments in our strategic initiatives as we further their rollouts.\nHowever, in aggregate, we continue to expect they will positively contribute to operating profit and margin in 2022 as we expect the benefits to gross margin from our initiatives will more than offset the associated SG&A expense.\nWe also continue to pursue efficiencies and savings through our Save to Serve program, including Fast Track.\nAnd we believe these savings in 2022 will offset a portion of an expected increase in wage inflation.\nIn summary, we are proud of our fourth quarter and full year results in 2021, which are a testament to the perseverance and execution by the team.\nLooking ahead, we are excited about our plans for 2022, including our outlook for sales and earnings per share growth, as well as our planned significant returns to shareholders via an increased dividend payout and increased share repurchases.\nAs always, we continue to be disciplined in how we manage expenses and capital with the goal of delivering consistent, strong financial performance while strategically investing in our business and employees for the long term.\nWe remain confident in our business model and our ongoing financial priorities to drive profitable same-store sales growth, healthy new store returns, strong free cash flow and long-term shareholder value.\nLet me take the next few minutes to update you on our operating priorities and strategic initiatives, including our plans for 2022.\nOur first operating priority is driving profitable sales growth.\nWe have a growing portfolio of initiatives which are contributing to our strong results, as well as strengthening the foundation for future growth.\nLet me take you through some of the recent highlights, as well as some of our next steps.\nStarting with our non-consumables initiative, or NCI, which was available in more than 11,700 stores at the end of 2021.\nWe continued to be very pleased with the strong sales and margin performance we are seeing across the NCI store base.\nNotably, NCI stores outperformed non-NCI stores in both average ticket and customer traffic, driving an incremental 2.5% total comp sales increase on average in NCI stores, along with a meaningful improvement in gross margin rate.\nWe expect to realize ongoing sales and margin benefits from NCI in 2022, and we are on track to complete the rollout across nearly the entire chain by the end of the year.\nMoving to our newest store concept, pOpshelf, which further builds on our success and learnings with NCI.\nAs a reminder, pOpshelf aims to engage customers by offering a fun, affordable and differentiated treasure hunt experience delivered through continually refreshed merchandise, a differentiated in-store experience and exceptional value, with the vast majority of our items priced at $5 or less.\nDuring the quarter, we opened 25 new pOpshelf locations, bringing the total number of stores to 55 and exceeding our initial goal of 50 stores.\nAdditionally, we opened 11 new store within a store concepts during Q4, bringing the total number of Dollar General Market stores with a smaller-footprint pOpshelf store included to a total of 25 at the end of the year.\nAnd we continue to be pleased with the results.\nIn 2022, we plan to nearly triple the pOpshelf store count and open up to an additional 25 store-within-a-store concepts, which would bring us to a total of more than 150 stand-alone pOpshelf locations and a total of approximately 50 store-within-a-store concepts.\nWe continue to anticipate year one annualized sales volumes for our current locations to be between $1.7 million and $2 million per store and expect the average gross margin rate for these stores to exceed 40%.\nIn addition to the early success of pOpshelf, we have been able to take some of our learnings and apply them in our Dollar General store base, particularly in further enhancing our nonconsumables offering.\nOverall, we are very pleased with the results from this unique and differentiated concept, and we are excited about our goal of approximately 1,000 pOpshelf locations by year-end 2025.\nTurning now to DG Fresh, which is a strategic, multi-phased shift to self-distribution of frozen and refrigerated goods, along with a focus on driving continued sales growth in these areas.\nAs a reminder, we completed the initial rollout of DG Fresh across the entire chain in 2021 and are now delivering to more than 18,000 stores from 12 facilities.\nThe primary objective of DG Fresh is to reduce product cost on our frozen and refrigerated items, and we continue to be very pleased with the savings we are seeing.\nNotably, DG Fresh was a meaningful positive contributor to our gross margin rate in 2021, and we expect to see continued benefits in 2022.\nAnother important goal of DG Fresh is to increase sales in our frozen and refrigerated categories.\nWe are pleased with the performance on this front, including enhanced product offerings in stores and strong performance from our perishables department.\nIn fact, our perishables department had a high single-digit comp increase in Q4 and contributed more comp sales dollars than any other department for both Q4 and the full year.\nImportantly, the sales penetration of these categories has increased to approximately 9% as compared to approximately 8% prior to the rollout of DG Fresh.\nIn 2022, we expect to realize additional benefits from DG Fresh as we continue to optimize our network, further leverage our scale and deliver an even wider product selection.\nAnd while produce is not included in our initial rollout, we continue to believe that DG Fresh provides a potential path forward to expanding our produce offering to more than 10,000 stores over time.\nTo that end, at the end of Q4, we offered produce in more than 2,100 stores, with plans to expand this offering to a total of more than 3,000 stores by the end of 2022.\nFinally, DG Fresh has also extended the reach of our cooler expansion program.\nDuring 2021, we added more than 65,000 cooler doors across our store base.\nIn 2022, we again expect to install more than 65,000 additional doors as we continue to build on our multiyear track record of growth in cooler doors and associated sales.\nTurning now to an update on our expanded health offering, which consists of up to 30% more feet of selling space and up to 400 additional items as compared to our standard offering.\nThis offering was available in nearly 1,200 stores at the end of 2021, with plans to expand to a total of more than 4,000 stores by the end of 2022.\nAs we move toward becoming more of a health destination, particularly in rural America, our plans include further expansion of our health offering, with the goal of increasing access to basic healthcare products and ultimately services over time.\nIn addition to the gross margin benefits associated with the initiatives I just discussed, we continue to pursue other opportunities to enhance gross margin, including improvements in private brand sales, global sourcing, supply chain efficiencies and shrink reduction.\nOur second priority is capturing growth opportunities.\nOur proven high-return, low-risk real estate model has served us well for many years and continues to be a core strength of our business.\nIn 2021, we completed a total of 2,902 real estate projects, including 1,050 new stores, 1,752 remodels and 100 relocations.\nFor 2022, we remain on track to execute nearly 3,000 real estate projects in total, including 1,110 new stores, 1,750 remodels and 120 store relocations.\nAs a reminder, we expect approximately 800 of our new stores in 2022 to be in our larger, 8,500 square foot store format, allowing for an expanded assortment and room to accommodate future growth as we respond to our customers' desire for an even wider product selection.\nImportantly, we continue to be very pleased with the sales productivity of all of our larger-format stores as average sales per square foot are about 15% above an average traditional store.\nIn addition to our planned Dollar General and pOpshelf growth in 2022, and included in our expected new store total, we are very excited about our plans to expand internationally with the goal of opening up to 10 stores in Mexico by the end of 2022.\nOverall, our real estate pipeline remains robust with more brick-and-mortar stores than any retailer in the country.\nAnd we are excited about our ability to capture significant growth opportunities in the years ahead.\nNext, our digital initiative, which is an important complement to our physical footprint as we continue to deploy and leverage technology to further enhance convenience and access for our customers.\nOur efforts remain centered around building engagement across our digital properties, including our mobile app.\nWe ended 2021 with over million monthly active users on the app and expect this number to grow as we look to further enhance our digital offerings.\nAs with everything we do, the customer is at the center of our digital initiative.\nOur partnership with DoorDash is the latest example of these efforts as we look to extend the value offering of Dollar General, combined with the convenience of same-day delivery in an hour or less.\nThis offering was available in more than 10,700 stores at the end of Q4, and we are very pleased with the early results, including our ability to generate profitable transactions, as well as better-than-expected customer trial, strong repurchase rates, high levels of sales incrementality and a broadening of our customer base.\nIn addition, our DG Media Network is becoming increasingly more relevant in connecting our brand partners with our customers.\nTo that end, we significantly grew the reach of this network in 2021, increasing from 6 million unique active profiles to more than 75 million, enabling our vendors to now reach over 90% of our DG customers through the DG Media Network.\nAfter establishing the foundation over the last few years, we are poised to meaningfully grow this business in 2022 and beyond as we expand the program and enhance the value proposition for both our customers and brand partners while increasing the overall net financial benefit for the business.\nOverall, our strategy consists of building a digital ecosystem specifically tailored to provide our customers with an even more convenient, frictionless and personalized shopping experience.\nAnd we are pleased with the growing engagement we are seeing across our digital properties.\nOur third operating priority is to leverage and reinforce our position as a low-cost operator.\nWe have a clear and defined process to control spending which continues to govern our disciplined approach to spending decisions.\nThis zero-based budgeting approach, internally branded as Save to Serve, keeps the customer at the center of all we do while reinforcing our cost control mindset.\nNotably, the Save to Serve program contributed more than $800 million in cumulative cost savings from its inception in 2015 through the end of 2021.\nOur Fast Track initiative is a great example of this approach, where our goals include increasing labor productivity in our stores, enhancing customer convenience and further improving on-shelf availability.\nThe first phase of Fast Track consisted of both rolltainer and case pack optimization, which has led to the more efficient stocking of our stores.\nThe second component of Fast Track is self-checkout, which provides customers with another flexible and convenient checkout solution while also driving greater efficiencies for our store associates.\nSelf-checkout was available in more than 6,100 stores at the end of 2021.\nWe continue to be pleased with our results, including strong and growing customer adoption rates and high scores on speed and ease of checkout.\nIn 2022, we plan to expand this offering to a total of up to 11,000 stores by the end of the year as we look to further extend our position as an innovative leader in small box discount retail.\nLooking ahead, the next phase of Fast Track consists of increasing our utilization of emerging technology and data strategies, which includes putting new digital tools in the hands of our field leaders in 2022.\nWhen combined with our data-driven inventory management, we believe these efforts will reduce store workload and drive greater efficiencies for our retail associates and leaders.\nI also want to highlight our growing private fleet, which consisted of more than 700 tractors and accounted for approximately 20% of our outbound transportation fleet at the end of 2021.\nWe are focused on significantly expanding our private fleet in 2022, as we plan to more than double the number of tractors, we expect will account for approximately 40% of our outbound transportation fleet by the end of the year.\nImportantly, we save an average of 20% of associated costs every time we replace a third-party tractor with one from our private fleet.\nMoving forward, we believe our private fleet will become an increasingly significant competitive advantage as it gives us greater operational control in our supply chain while further optimizing our cost structure.\nOur underlying principles are to keep the business simple, but move quickly to capture growth opportunities while controlling expenses and always seeking to be a low-cost operator.\nOur fourth operating priority is investing in our diverse teams through development, empowerment and inclusion.\nAs a growing retailer, we created thousands of new jobs in 2021, providing career growth opportunities for existing associates and the start of a career for many others.\nIn 2022, we now expect to create more than 10,000 net new jobs as a result of our continued growth.\nOur internal promotion pipeline remains robust, as evidenced by our internal placement of more than 75% of our store associates at or above the lead sales associate position.\nWe also continue to innovate on development for our teams to provide ongoing opportunities for career advancement, and in turn, meaningful wage growth.\nThese investments include offering an enhanced college tuition benefit for our associates and their families, as well as continuing to facilitate driver training programs for associates who would like to become drivers in our private fleet.\nIn addition to our focus on development, we continue to focus on further enhancing the associate experience and our strong workplace culture.\nCollectively, these investments continue to yield positive results across our organization, including healthy applicant flow and strong critical staffing levels.\nWe believe the opportunity to start and develop a career with a growing and purpose-driven company is a unique competitive advantage and remains our greatest currency in attracting and retaining talent.\nOverall, we made significant progress against our operating priorities and strategic initiatives in 2021.\nThese efforts have further strengthened our foundation and position heading into 2022 as we continue to drive long-term sustainable growth.\nIn closing, I'm proud of the team's strong and resilient performance in 2021.\nAs we enter 2022, we are laser-focused on executing and delivering our robust plans, which we believe will further enhance our unique combination of value and convenience for our customers while delivering strong returns for our shareholders.\n", "role": "user" }, { "content": "q4 same store sales fell 1.4 percent.\nsees q1 earnings per share $2.25 to $2.35.\nq4 earnings per share $2.57.\nq4 sales rose 2.8 percent to $8.7 billion.\nq4 same-store sales decreased 1.4%; increased 11.3% on a two-year stack 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: Horton believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different.\nAdditional information about factors that could lead to material changes in performance is contained in D.R. Horton's annual report on Form 10-K, which is filed with the Securities and Exchange Commission.\ndrhorton.com and we plan to file our 10-Q later today or tomorrow.\nThe D.R. Horton team delivered an outstanding first quarter, highlighted by a 48% increase in earnings to $3.17 per diluted share.\nOur consolidated pre-tax income increased 45% to $1.5 billion on a 19% increase in revenues and our consolidated pre-tax profit margin improved 380 basis points to 21.2%.\nOur homebuilding return on inventory for the trailing 12 months ended December 31 was 38.5% and our consolidated return on equity for the same period was 32.4%.\nThese results reflect our experienced teams, their production capabilities and our ability to leverage D.R. Horton's scale across our broad geographic footprint.\nEven with the recent rise in mortgage rates, housing market conditions remain very robust and we are focused on maximizing returns while continuing to increase our market share.\nThere are still significant challenges in the supply chain, including shortages in certain building materials and a very tight labor market.\nWe are focused on building the infrastructure and processes to support a higher level of home starts while working to stabilize and then reduce construction cycle times to our historical norms.\nAfter starting construction on 25,500 homes this quarter, our homes and inventory increased 30% from a year ago to 54,800 homes with only 1,000 unsold completed homes across the nation.\nOur January home starts and net sales holders were in line with our targets and we are well positioned to achieve double-digit volume growth in 2022.\nWe believe our strong balance sheet, liquidity and low leverage position us very well to operate effectively through changing economic conditions.\nWe plan to maintain our flexible operational and financial position by generating strong cash flows from our homebuilding operations while managing our product offerings, incentives, home pricing, sales base and inventory levels to optimize returns.\nEarnings for the first quarter of fiscal 2022 increased 48% to $3.17 per diluted share compared to $2.14 per share in the prior-year quarter.\nNet income for the quarter increased 44% to $1.1 billion compared to $792 million.\nOur first quarter home sales revenues increased 17% to $6.7 billion on 18,396 homes closed, up from $5.7 billion on 18,739 homes closed in the prior year.\nOur average closing price for the quarter was $361,800, up 19% from the prior-year quarter, while the average size of our homes closed was down 1%.\nOur net sales orders in the first quarter increased 5% to 21,522 homes, while the value increased 29% from the prior year to $8.3 billion.\nA year ago, our first quarter net sales orders were up 56% due to the surge in housing demand during the first year of the pandemic when we had significantly more completed homes available to sale and prior to the significant supply chain challenges we've experienced since.\nOur average number of active selling communities decreased 3% from the prior-year quarter and was up 3% sequentially.\nOur average sales price on net sales orders in the first quarter was $383,600, up 22% from the prior-year quarter.\nThe cancellation rate for the first quarter was 15%, down from 18% in the prior-year quarter.\nNew home demand remains very strong despite the recent rise in mortgage rates.\nOur local teams are continuing to sell homes later in the construction cycle so we can better ensure the certainty of the home close date for our homebuyers with virtually no sales occurring prior to start of home construction.\nWe plan to continue managing our sales pace in the same manner during the spring and we expect our number of net sales orders in our second quarter to be equal to the same quarter in the prior year were up by no more than a low single-digit percentage.\nOur January home sales and net sales order volume were in line with our plans and we are well positioned to deliver double-digit volume growth in fiscal 2022 with 29,300 homes in backlog, 54,800 homes in inventory, a robust lot supply and strong trade and supplier relationships.\nOur gross profit margin on home sales revenues in the first quarter was 27.4%, up 50 basis points sequentially from the September quarter.\nThe increase in our gross margin from September to December reflects the broad strength of the housing market.\nThe strong demand for homes combined with a limited supply has allowed us to continue to raise prices and maintain a very low level of sales incentives in most of our communities.\nOn a per square foot basis, our home sales revenues were up 3.4% sequentially while our cost of sales per square foot increased 2.9%.\nWe expect our construction and lot costs will continue to increase.\nHowever, with the strength of today's market conditions, we expect to offset most cost pressures with price increases in the near term.\nWe currently expect our home sales gross margin in the second quarter to be similar to or slightly better than the first quarter.\nIn the first quarter, homebuilding SG&A expense as a percentage of revenues was 7.5%, down 40 basis points from 7.9% in the prior-year quarter.\nOur homebuilding SG&A expense as a percentage of revenues was lower than any first quarter in our history and we remain focused on controlling our SG&A while ensuring our infrastructure adequately supports our business.\nWe have increased our housing inventory in response to the strength of demand and are focused on expanding our production capabilities further.\nWe started 25,500 homes during the quarter, up 12% from the first quarter last year, bringing our trailing 12-month starts to 94,200 homes.\nWe ended the quarter with 54,800 homes in inventory, up 30% from a year ago.\n25,600 of our total homes at December 31 were unsold, of which only 1,000 were completed.\nOur average cycle or average construction cycle time for homes closed in the first quarter has increased by almost two weeks since our fourth quarter and two months from a year ago.\nAlthough we have not seen much improvement in the supply chain yet, we are focused on working to stabilize and then reduce our construction cycle times to historical norms.\nAt December 31, our homebuilding lot position consisted of approximately 550,000 lots, of which 24% were owned and 76% were controlled through purchase contracts.\n23% of our total owned lots are finished and at least 47% of our controlled lots are or will be finished when we purchase them.\nOur growing and capital-efficient lot portfolio is a key to our strong competitive position and is supporting our efforts to increase our production volume to meet demand.\nOur first quarter homebuilding investments in lots, land and development totaled $2.2 billion, of which $1.2 billion was for finished lots, $570 million was for land development and $390 million was to acquire land.\nForestar, our majority-owned residential lot manufacturer, operates in 55 markets across 23 states.\nForestar continues to execute extremely well and now expects to grow its lot deliveries this year to a range of 19,500 to 20,000 lots with a pre-tax profit margin of 13 and a half to 14%.\nAt December 31, Forestar's owned and controlled lot position increased 33% from a year ago to 103,300 lots.\nHorton or subject to a right of first offer based on executed purchase and sale agreements.\n$330,000 million of our finished lots purchased in the first quarter were from Forestar.\nForestar is separately capitalized from D.R. Horton and had approximately $500 million of liquidity at quarter end with a net debt to capital ratio of 33.9%.\nWith its current capitalization, strong lot supply and relationship with D.R. Horton, Forestar plans to continue profitably growing their business.\nFinancial services pre-tax income in the first quarter was $67.1 million with a pre-tax profit margin of 36.4% compared to $84.1 million and 44.9% in the prior-year quarter.\nFor the quarter, 98% of our mortgage company's loan originations related to homes closed by our homebuilding operations and our mortgage company handled the financing for 66% of our home buyers.\nFHA and VA loans accounted for 44% of the mortgage company's volume.\nBorrowers originating loans with DHI Mortgage this quarter had an average FICO score of 721 and an average loan-to-value ratio of 88%.\nFirst-time homebuyers represented 55% of the closings handled by the mortgage company this quarter.\nOur rental operations generated pre-tax income of $70.1 million on revenues of $156.5 million in the first quarter compared to $8.6 million of pre-tax income on revenues of $31.8 million in the same quarter of fiscal 2021.\nOur rental property inventory at December 31 was $1.2 billion compared to $386 million a year ago.\nWe sold one multifamily rental property of 350 units for $76.2 million during the quarter.\nThere were no sales of multifamily rental properties during the prior-year quarter.\nWe sold two single-family rental properties totaling 225 homes during the quarter for $80.3 million compared to one property sold in the prior-year quarter for $31.8 million.\nAt December 31, our rental property inventory included $519 million of multifamily rental properties and $642 million of single-family rental properties.\nAs a reminder, our multifamily and single-family rental sales and inventories are reported in our rental segment and are not included in our homebuilding segments, homes closed, revenues or inventories.\nIn fiscal 2022, we continue to expect our rental operations to generate more than $700 million in revenues.\nWe also expect to grow the inventory investment in our rental platform by more than $1 billion this year based on our current projects in development and our significant pipeline of future projects.\nWe are positioning our rental operations to be a significant contributor to our revenues, profits and returns in future years.\nOur balanced capital approach focuses on being disciplined, flexible and opportunistic.\nDuring the three months ended December, our cash used in homebuilding operations was $115 million as we invested significant operating capital to increase our homes and inventory to meet the current strong demand.\nAt December 31, we had $4.1 billion of homebuilding liquidity consisting of $2.1 billion of unrestricted homebuilding cash and $2 billion of available capacity on our homebuilding revolving credit facility.\nWe believe this level of homebuilding cash and liquidity is appropriate to support the scale and activity of our business and to provide flexibility to adjust to changing market conditions.\nOur homebuilding leverage was 17.3% at the end of December and homebuilding leverage net of cash was 6.9%.\nOur consolidated leverage at December 31 was 25.1% and consolidated leverage net of cash was 15.2%.\nAt December 31, our stockholders' equity was $15.7 billion and book value per share was $44.25, up 29% from a year ago.\nFor the trailing 12 months ended December, our return on equity was 32.4% compared to 24.4% a year ago.\nDuring the quarter, we paid cash dividends of $80.1 million and our board has declared a quarterly dividend at the same level as last quarter to be paid in February.\nWe repurchased 2.7 million shares of common stock for $278.2 million during the quarter.\nOur remaining share repurchase authorization at December 31 was $268 million.\nWe remain committed to returning capital to our shareholders through both dividends and share repurchases on a consistent basis and to reducing our outstanding share count each fiscal year.\nAs we look forward to the second quarter of fiscal 2022, we are expecting market conditions to remain similar with strong demand from homebuyers, but continuing supply chain challenges.\nWe expect to generate consolidated revenues in our March quarter of $7.3 billion to $7.7 billion and homes closed by our homebuilding operations to be in a range between 19,000 and 20,000 homes.\nWe expect our home sales gross margin in the second quarter to be approximately 27.5% and homebuilding SG&A as a percentage of revenues in the second quarter to be approximately 7.5%.\nWe anticipate the financial services pre-tax profit margin in the range of 30% to 35% and we expect our income tax rate to be approximately 24% in the second quarter.\nFor the full fiscal year, we continue to expect to close between 90,000 and 92,000 homes, while we now expect to generate consolidated revenues of $34.5 billion to $35.5 billion.\nWe forecast an income tax rate for fiscal 2022 of approximately 24% and we also continue to expect that our share repurchases will reduce our outstanding share count by approximately 2% at the end of fiscal 2022 compared to the end of fiscal 2021.\nWe still expect to generate positive cash flow from our homebuilding operations this year after our investments in home building inventories to support double-digit growth.\nWe will then continue to balance our cash flow utilization priorities among increasing the investment in our rental operations, maintaining conservative homebuilding leverage and strong liquidity, paying an increased dividend and consistently repurchasing shares.\nIn closing, our results reflect our experienced teams and production capabilities, industry-leading market share, broad geographic footprint and diverse product offerings across multiple brands.\nOur strong balance sheet, liquidity and low leverage provide us with significant financial flexibility to capitalize on today's robust market and to effectively operate in changing economic conditions.\nWe plan to maintain our disciplined approach to investing capital to enhance the long-term value of the company, which includes returning capital to our shareholders through both dividend and share repurchases on a consistent basis.\nHorton team for your focus and hard work.\nWe are incredibly well positioned to continue growing and improving our operations in 2022.\nWe will now host questions.\n", "role": "user" }, { "content": "q1 earnings per share $3.17.\nqtrly consolidated revenues increased 19% to $7.1 billion.\nhomes closed in quarter decreased 2% to 18,396 homes compared to 18,739 homes closed in same quarter of fiscal 2021.\nqtrly net sales orders increased 29% in value to $8.3 billion on 21,522 homes sold.\nreaffirms its previously issued fiscal 2022 guidance.\nhomebuilding revenue for q1 of fiscal 2022 increased 17% to $6.7 billion from $5.7 billion in same quarter of fiscal 2021.\nupdating its fiscal 2022 guidance for consolidated revenues to range of $34.5 billion to $35.5 billion.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Although D.R. Horton believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different.\nAdditional information about factors that could lead to material changes in performance is contained in D.R. Horton's Annual Report on Form 10-K and its most recent Quarterly Report on Form 10-Q, both of which are filed with the Securities and Exchange Commission.\ndrhorton.com and we plan to file our 10-Q early next week.\nThe D.R. Horton team delivered an outstanding third quarter, highlighted by a 78% increase in earnings to $3.06 per diluted share.\nOur consolidated pre-tax income increased 81% on a 35% increase in revenues to $7.3 billion and our pre-tax profit margin improved 490 basis points to 19.4%.\nOur homebuilding return on inventory for the trailing 12-months ended June 30 was 34.9% and our consolidated return on equity for the same period was 29.5%.\nThese results reflect our experienced teams and their production capabilities, our ability to leverage D.R. Horton scale across our broad geographic footprint and our product positioning to offer homes at affordable price points across multiple brands.\nHousing market conditions remained very robust, and we are focused on maximizing returns and increasing our market share further.\nHowever, multiple disruptions in the supply chain, combined with the improvement in economic conditions and strong demand for new homes have resulted in shortages in certain building materials and tightness in the labor market, which has caused our construction time to become less predictable.\nAs our top priority is to consistently fulfill our commitments to our homebuyers, we have slowed our home sales pace to more closely align to our current production levels and are selling homes later in the construction cycle, when we can better ensure the certainty of home close date for our homebuyers.\nWe expect to work through these issues and increasing our production capacity.\nWe started construction on 22,600 homes this quarter and our homes in inventory increased 44% from a year ago to 47,300 homes at June 30, 2021, positioning us to finish 2021 strong and to achieve double-digit growth again in 2022.\nWe believe our strong balance sheet, liquidity and low leverage positioned us very well to operate effectively through changing economic conditions.\nWe plan to maintain our flexible operational and financial position by generating strong cash flows from our homebuilding operations and managing our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments.\nEarnings for the third quarter of fiscal 2021 increased 78% to $3.06 per diluted share compared to $1.72 per share in the prior year quarter.\nNet income for the quarter increased 77% to $1.1 billion compared to $630.7 million.\nOur third quarter home sales revenues increased 35% to $7 billion on 21,588 homes closed, up from $5.2 billion on 17,642 homes closed in the prior year.\nOur average closing price for the quarter was $326,100 and the average size of our homes closed was down 2%.\nThe value of our net sales orders in the third quarter increased 2% from the prior year to $6.4 billion, while our net sales orders for the quarter decreased 17% to 17,952 homes.\nOur average number of active selling communities increased 1% from the prior year quarter and was down 3% sequentially.\nOur average sales price on net sales orders in the third quarter was $359,200.\nThe cancellation rate for the third quarter was 17%, down from 22% in the prior year quarter.\nAs David described, in this very strong demand environment, our local teams are restricting the sales order pace in each of their communities based on the number of homes in inventory, construction time and lot position.\nThey continue to adjust sales prices to market on a community-by-community basis, while staying focused on providing value to our buyers.\nBased on the stage of completion of our current homes in inventory, production schedules, and capacity, we expect to continue restricting the pace of our sales orders during our fourth fiscal quarter.\nAs a result, we expect our fourth quarter net sales orders to be lower than the third quarter.\nHowever, we are confident that we will be well-positioned to deliver double-digit volume growth in fiscal 2022 with 32,200 homes in backlog, 47,300 homes in inventory, a robust lot supply and strong trade and supplier relationships.\nOur gross profit margin on home sales revenue in the third quarter was 25.9%, up 130 basis points sequentially from the March quarter.\nThe increase in our gross margin from March to June exceeded our expectations and reflects the broad strength of the housing market.\nThe strong demand for a limited supply of homes has allowed us to continue to raise prices or lower the level of sales incentives in most of our communities.\nOn a per square foot basis, our revenues were up 4.7% sequentially, while our stick and brick cost per square foot increased 3.5% and our lot cost increased 1.7%.\nWe expect both our construction and lot costs will continue to increase on a per square foot basis.\nHowever, with the strength in today's market conditions, we expect to offset any cost pressures with price increases.\nWe currently expect our home sales gross margin in the fourth quarter to be similar to or slightly better than the third quarter.\nWe remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the return on our inventory investments and adjust to local market conditions and new home demand.\nIn the third quarter, homebuilding SG&A expense as a percentage of revenues was 7.1%, down 80 basis points from 7.9% in the prior year quarter.\nOur homebuilding SG&A expense, as a percentage of revenues, is lower than any quarter in our history and we remain focused on controlling our SG&A, while ensuring that our infrastructure adequately supports our business.\nWe have increased our housing inventory in response to the strength of demand and we expect the current constraints on our supply chain to ultimately subside.\nThis quarter, we started 22,600 homes, up 33% from the third quarter last year, bringing our trailing 12-month starts to 94,500 homes.\nWe ended this quarter with 47,300 homes in inventory, up 44% from a year ago.\n15,400 of our total homes at June 30 were unsold, of which 500 were complete.\nAt June 30, our homebuilding lot position consisted of approximately 517,000 lots, of which 24% were owned and 76% were controlled through purchase contracts.\n25% of our total owned lots are finished and at least 44% of our controlled lots are or will be finished when we purchase them.\nOur growing and capital efficient lot portfolio is a key to our strong competitive position and it'll support our efforts to increase our production volume to meet homebuyer demand.\nOur third quarter homebuilding investments in lots, land and development totaled $1.8 billion, of which $910 million was for finished lots, $540 million was for land development and $350 million was to acquire land.\n$300 million of our total lot purchases in the third quarter were from Forestar.\nForestar, our majority owned subsidiary, is a publicly traded well-capitalized residential lot manufacturer operating in 55 markets across 22 states.\nForestar is delivering on its high-growth expectations and now expects to grow its fiscal 2021 lot deliveries by approximately 50% year-over-year to a range of 15,500 to 16,000 lots with a pre-tax profit margin of 11.5% to 12%, excluding their $18.1 million loss on extinguishment of debt recognized during the quarter.\nAt June 30, Forestar's owned and controlled lot position increased 91% from a year ago to 96,600 lots.\n61% of Forestar's owned lots are under contract with D.R. Horton or subject to a Right of First offer under our master supply agreement.\nForestar is separately capitalized from D.R. Horton and had approximately $470 million of liquidity at quarter end with a net debt-to-capital ratio of 37.8%.\nWith a strong lot supply, capitalization and relationship with D.R. Horton, Forestar plans to continue profitably growing their business.\nFinancial Services pre-tax income in the third quarter was $70.3 million with a pre-tax profit margin of 37.3% compared to $68.8 million and 43.9% in the prior year quarter.\nThe year-over-year decline in our Financial Services pre-tax profit margin was primarily due to lower net gains on loans originated this quarter caused by market fluctuations and increased competitive pricing pressure in the market.\nFor the quarter, 98% of our mortgage company's loan originations related to homes closed by our homebuilding operations and our mortgage company handled the financing for 66% of our homebuyers.\nFHA and VA loans accounted for 45% of the mortgage company's volume.\nBorrowers originating loans with DHI Mortgage this quarter had an average FICO score of 721 and an average loan-to-value ratio of 89%.\nFirst-time homebuyers represented 58% of the closings handled by the mortgage company this quarter.\nAt June 30, our multi-family rental operations had 11 projects under active construction and an additional four projects that are completed and in the lease-up phase.\nBased on leased occupancy in our marketing process, we expect to sell two or three of these projects during the fourth quarter of fiscal 2021.\nOur multi-family rental assets sold $458.3 million at June 30.\nLast year, we began constructing and leasing homes as income-producing single-family rental communities.\nAfter these rental communities are constructed and achieve a stabilized level of leased occupancy, each community is marketed for sale.\nDuring the third quarter, we sold our second single-family rental community for $23.1 million in revenue and $11.4 million of gross profit.\nAt June 30, our homebuilding inventory included $303.1 million of assets related to 44 single-family rental communities, compared to $87.2 million of assets related to 10 communities at the beginning of the fiscal year.\nWe are pleased with the performance of our single and multi-family rental teams and we look forward to their growing contributions for our future profits and returns.\nOur balanced capital approach focuses on being disciplined, flexible and opportunistic.\nDuring the nine months ended June, our cash provided by homebuilding operations was $276 million even while we have reinvested significant operating capital to expand our homebuilding inventories in response to strong demand.\nAt June 30, we had $3.7 billion of homebuilding liquidity, consisting of $1.7 billion of unrestricted homebuilding cash and $2 billion of available capacity on our homebuilding revolving credit facility.\nWe believe this level of homebuilding cash and liquidity is appropriate to support the increased scale and activity in our business and to provide flexibility to adjust to changing market conditions.\nOur homebuilding leverage was 16% at the end of June with $2.5 billion of homebuilding public notes outstanding and no senior note maturities in the next 12 months.\nAt June 30, our stockholders' equity was $13.8 billion and book value per share was $38.54, up 27% from a year ago.\nFor the trailing 12-months ended June, our return on equity was 29.5% compared to 19.9% a year ago.\nDuring the quarter, we paid cash dividends of $72.1 million and our Board has declared a quarterly dividend at the same level as last quarter to be paid in August.\nWe repurchased 2.6 million shares of common stock for $241.2 million during the quarter for a total of 8.1 million shares repurchased fiscal year-to-date for $661.4 million.\nOur remaining share repurchase authorization at June 30 was $758.8 million.\nWe remain committed to returning capital to our shareholders through both dividends and share repurchases on a consistent basis and to reducing our outstanding share count each fiscal year.\nIn the fourth quarter of fiscal 2021, based on today's market conditions, we expect to generate consolidated revenues of $7.9 billion to $8.4 billion and our homes closed to be in a range between 23,000 and 24,500 homes.\nWe expect our home sales gross margin in the fourth quarter to be in the range of 26% to 26.3% and homebuilding SG&A, as a percentage of revenues, in the fourth quarter to be approximately 7%.\nWe anticipate our Financial Services pre-tax profit margin in the range of 40% to 45% and we expect our income tax rate to be approximately 23.5%.\nFor the full fiscal year of 2021, we now expect consolidated revenues of $27.6 billion to $28.1 billion and to close between 83,000 and 84,500 homes.\nThis year, we have prioritized reinvestment of our operating capital to increase our housing and land and lot inventories to support higher demand.\nOur other cash flow priorities remain balanced among increasing our investment in our multi and single-family rental platforms, maintaining conservative homebuilding leverage and strong liquidity, paying a dividend and repurchasing shares to reduce our outstanding share count by approximately 2% from the beginning of fiscal 2021.\nIn closing, our results reflect our experienced teams and production capabilities, industry-leading market share, broad geographic footprint and diverse product offerings across multiple brands.\nOur results also illustrate the growth opportunity in front of us as we increase production capacity in response to homebuyer demand.\nOur strong balance sheet, liquidity and low leverage provide us with a significant financial flexibility to capitalize on today's robust market and to effectively operate in changing economic conditions.\nWe plan to maintain our disciplined approach to investing capital to enhance the long-term value of the company, which includes returning capital to our shareholders through both dividends and share repurchases on a consistent basis.\nAs a result of these efforts, we are incredibly well-positioned to continue growing and improving our operations.\nWe will now host questions.\n", "role": "user" }, { "content": "d r horton q3 earnings per share $3.06.\nq3 earnings per share $3.06.\nqtrly homes closed increased 35% in value to $7.0 billion on 21,588 homes closed.\nqtrly consolidated revenues increased 35% to $7.3 billion.\nqtrly net sales orders increased 2% in value to $6.4 billion on 17,952 homes sold.\nhomebuilding revenue for q3 of fiscal 2021 increased 35% to $7.1 billion from $5.2 billion in same quarter of fiscal 2020.\nat june 30, 2021, company had 47,300 homes in inventory.\nhousing market conditions remain very robust.\nhave slowed our home sales pace to more closely align to our current production levels.\nhomebuyer demand exceeding our current capacity to deliver homes across all of our markets.\nare also selling homes later in construction cycle when we can better ensure certainty of home close date for our homebuyers.\nsees 2021 consolidated revenues of $27.6 billion to $28.1 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: Although D.R. Horton believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different.\nAdditional information about factors that could lead to material changes in performance is contained in D.R Horton's annual report on Form 10-K and subsequent reports on Form 10-Q, all of which are or will be filed with the Securities and Exchange Commission.\ndrhorton.com and we plan to file our 10-K toward the end of next week.\nAll of this can be found at investors.\nToday, we also have Paul Romanowski with us.\nHe was recently promoted to Executive Vice President and Co-Chief Operating Officer.\nPaul has been with D.R Horton since 1999, serving as our regional Florida as our Florida South Division President for 15 years and most recently as our Florida region President for seven years.\nI'd like to take a brief moment to have Paul introduce himself before we get started.\nI'm excited for the opportunity to serve into my new role on the D.R Horton management team and I look forward to getting know our investors and analysts in the coming year.\nGiven that Paul is new to his role, he will not be an active participant today, but we are glad to have him with us and believe his extensive homebuilding experience will strengthen our executive team.\nThe D.R Horton team finished the year with a strong fourth quarter, which included a 63% increase in consolidated pre-tax income to $1.7 billion and a 27% increase in revenue to $8.1 billion.\nOur pre-tax profit margin for the quarter improved 480 basis points to 21.3% and our earnings per diluted share increased 65% to $3.70.\nFor the year, consolidated pre-tax income increased 80% to $5.4 billion on a $27.8 billion of revenue.\nOur pre-tax profit margin for the year improved 460 basis points to 19.3% and our earnings per diluted share increased 78% to $11.41.\nWe closed a record 81,965 homes this year, an increase of over 16,500 homes or 25% from last year.\nWhile also achieving a historical low homebuilding SG&A percentage of 7.3%, our homebuilding return on inventory was 37.9% and our return on equity was 31.6%.\nThese results reflect our experienced teams in their production capabilities, our ability to leverage D.R Horton scale across our broad geographic footprint and our product positioning to offer homes at affordable price points across multiple brands.\nOur homebuilding cash flow from operations for 2021 was $1.2 billion.\nOver the past five years, we have generated $5.9 billion of cash flow from homebuilding operations, while growing our consolidated revenues by 128% and our earnings per share by 383%.\nDuring this time, we also more than doubled our book value per share, reduced our homebuilding leverage 220% and increased our homebuilding liquidity by $2.8 billion, all while significantly increasing our returns on inventory and equity.\nHousing market conditions remain very robust and we are focused on maximizing returns and increasing our market share further.\nHowever, there are still significant challenges in the supply chain, including shortages in certain building materials and tightness in the labor market.\nAs a result, we continued restricting our home sales pace during the fourth quarter by selling homes later in the construction cycle to align with our production levels and better ensure certainty of home closing date for our homebuyers.\nWe expect to work through the supply chain challenges and ultimately increase our production capacity.\nAfter starting construction on 22,400 homes, our homes and inventory increased 26% from a year ago to 47,800 homes at September 30, 2021.\nIn October, we started more than 8,000 homes, further positioning us to achieve double-digit growth and again in 2022.\nWe believe our strong balance sheet, liquidity and a low leverage position us very well to operate effectively through changing economic conditions.\nWe plan to maintain our flexible operational and financial position by generating strong cash flows from our homebuilding operations and managing our product offerings, incentives, home pricing sales pace and inventory levels to optimize our returns.\nDiluted earnings per share for the fourth quarter of fiscal 2021 increased 65% to $3.70 per share, and for the year diluted earnings per share increased 78% to $11.41.\nNet income for the quarter increased 62% to $1.3 billion and for the year, net income increased 76% to $4.2 billion.\nOur fourth quarter home sales revenues increased 24% to $7.6 billion on 21,937 homes closed, up from $6.1 billion on 20,248 homes closed in the prior year.\nOur average closing price for the quarter was $346,100, up 14% from last year and the average size of our homes closed was down 1%.\nNet sales orders in the fourth quarter decreased 33% to 15,949 homes and the value of those orders was $6 billion, down 17% from $7.3 billion in the prior year.\nA year ago, our fourth quarter net sales orders were up 81% due to the surge in housing demand during the first year of the pandemic when we had significantly more completed homes available to sell and prior to the supply chain challenges that arose in 2021.\nOur average number of active selling communities decreased 5% from the prior year and was down 3% sequentially.\nOur average sales price on net sales orders in the fourth quarter was $378,300, up 23% from the prior year.\nThe cancellation rate for the fourth quarter was 19% flat with the prior year quarter.\nAs David described, new home demand remains very strong and our local teams are continuing to restrict our sales order pace where necessary on a community-by-community basis based on the number of homes and inventory, construction times, production capacity and lot position.\nThey also continue to adjust sales prices to market, while staying focused on providing value to our buyers.\nWe are still restricting the pace of our sales orders during our first fiscal quarter, but to a lesser extent than during our fourth quarter.\nAs a result, we expect our first quarter net sales orders to be approximately equal to or slightly higher than our 20,418 sales orders in the first quarter last year.\nOur October net sales order volume was in line with our plans and we remain confident that we are well positioned to deliver double-digit volume growth in fiscal 2022 with 26,200 homes in backlog, 47,000 homes in inventory, a robust lot supply and strong trade and supplier relationships.\nOur gross profit margin on home sales revenue in the fourth quarter was 26.9%, up 100 basis points sequentially from the June quarter.\nThe increase in our gross margin from June to September reflects the broad strength of the housing market and benefited from the better alignment of our sales order pace to our construction schedules.\nThe strong demand for a limited supply of homes has allowed us to continue to raise prices or lower the level of sales incentives in most of our communities.\nOn a per square foot basis, our revenues were up 7% sequentially, while our stick and brick cost per square foot increased 7.5% and our lot cost increased 2%.\nWe expect both our construction and lot costs will continue to increase.\nHowever, with the strength in today's market conditions, we expect to offset any cost pressures with price increases.\nWe currently expect our home sales gross margin in the first quarter to be similar to the fourth quarter.\nWe remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the return on our inventory investments and adjust to local market conditions and new home demand.\nIn the fourth quarter, homebuilding SG&A expense as a percentage of revenues was 6.9%, down 70 basis points from 7.6% in the prior year quarter.\nFor the year, homebuilding SG&A expense was 7.3%, down 80 basis points from 8.1% in 2020.\nOur homebuilding SG&A expense as a percentage of revenues is at its lowest point for a quarter and for a year in our history and we are focused on continuing to control our SG&A, while ensuring that our infrastructure adequately supports our business.\nWe have increased our housing inventory in response to the strength of demand and are focused on expanding our production capabilities further.\nWe started 22, 400, hundred homes during the fourth quarter and 91,500 homes during fiscal 2021, which is an increase of 21% compared to fiscal 2020.\nWe ended the year with 47,800 homes in inventory, up 26% from a year ago.\n21,700, hundred of our total homes et September 30th were unsold, of which 900 were completed.\nAlthough we have not seen significant improvement in the supply chain yet, we expect the current constraints to ultimately moderate at some point in 2022.\nAt September 30th, our homebuilding lot position consisted of approximately 530,000 lots, of which 24% were owned and 76% were controlled through purchase contracts.\n24% of our total owned lots are finished and at least 47% of our controlled lots are or will be finished when we purchase them.\nOur growing and capital efficient lot portfolio is key to our strong competitive position and will support our efforts to increase our production volume to meet homebuyer demand.\nOur fourth quarter homebuilding investments in lots, land and development totaled $1.8 billion, of which $1 billion was for finished lots, $330 million was for land, and $440 million was for land development.\nForestar, our majority owned subsidiary is a publicly traded, well capitalized residential lot manufacturer operating in 56 markets across 23 states.\nForestar continues to execute extremely well on its high growth plan as they increase their lot sold by 53% to 15,915 lakhs during fiscal 2021 compared to the prior year.\nForestar's pre-tax profit margin for the year improved 400 basis points to 12.4%, excluding an $18.1 million loss on extinguishment of debt.\nAt September 30th, Forestar's owned and controlled lot position increased 60% from a year ago to 97,000 lots.\n61% of Forestar's owned lots are under contract with D.R Horton or subject to a right of first offer under our master supply agreement.\n$370 million of D.R Horton's land and lot purchases in the fourth quarter were from Forestar.\nForestar is separately capitalized from D.R Horton and had approximately $500 million of liquidity at year-end with a net debt to capital ratio of 35.2%.\nWith its current capitalization, strong lot supply and relationship with D.R Horton, Forestar plans to continue profitably growing their business.\nFinancial services pre-tax income in the fourth quarter was $103 million on $223 million of revenue with a pre-tax profit margin of 46.1%.\nFor the year, financial services pre-tax income was $365 million on $824 million of revenue, representing a 44.3% pre-tax profit margin.\nFor the quarter, 98% of our mortgage company's loan originations related to homes closed by our homebuilding operations and our mortgage company handled the financing for 66% of our homebuyers.\nFHA and VA loans accounted for 45% of the mortgage company's volume.\nMortgage this quarter had an average FICO score of 722 and an average loan to value ratio of 89%.\nFirst-time homebuyers represented 59% of the closings handled by our mortgage company this quarter.\nOur multifamily and single-family rental operations generated combined pre-tax income of $742 -- $74.3 [Phonetic] million in the fourth quarter and $86.5 million in fiscal 2021.\nour total rental property inventory at September 30th was $841 million compared to $316 million a year ago.\nWe sold three multifamily properties totaling 960 units during fiscal 2021 for $191.9 million, all of which were sold in the fourth quarter compared to two properties totaling 540 units sold in fiscal 2020.\nWe sold three single family rental communities totaling 260 homes during fiscal 2021 for $75.9 million, including one sale of 64 homes during the fourth quarter for $21 million in revenue.\nIn fiscal 2022, we expect our rental operations to generate more than $700 million in revenues from rental property sales.\nWe also expect to grow the total inventory investment in our rental platforms by more than $1 billion in fiscal 2022 based on our current rental projects in development and our significant pipeline of future single and multifamily rental projects.\nWe are positioning our rental operations to be a significant contributor to our revenues, profits and returns in future years.\nOur balanced capital approach focuses on being disciplined, flexible and opportunistic.\nDuring fiscal 2021, our cash provided by homebuilding operations was $1.2 billion and our cumulative cash generated from homebuilding operations for the past five years was $5.9 billion.\nAt September 30th, we had $5 billion of homebuilding liquidity consisting of $3 billion of unrestricted homebuilding cash and $2 billion of available capacity on our homebuilding revolving credit facility.\nThis level of liquidity provides significant flexibility to adjust to changing market conditions.\nOur homebuilding leverage was 17.8% at fiscal year-end with $3.1 billion of homebuilding public notes outstanding, of which $350 million matures in the next 12 months.\nAt September 30th, our stockholders' equity was $14.9 billion and book value per share was $41.81, up 29% from a year ago.\nFor the year, our return on equity was 31.6%, an improvement of 950 basis points from 22.1% a year ago.\nDuring the quarter, we paid cash dividends of $71.6 million for a total of $289.3 million of dividends paid during the year.\nDuring the quarter, we repurchased 2.3 million shares of common stock for $212.6 million dollars and our stock repurchases during fiscal year 2021 totaled 10.4 million shares for $874 million.\nOur outstanding share count is down 2% from a year ago and our remaining share repurchase authorization at September 30th was $546.2 million.\nWe remain committed to returning capital to our shareholders through both dividends and share repurchases on a consistent basis and to reducing our outstanding share count each fiscal year.\nBased on our financial position and outlook for fiscal 2022, our Board of Directors increased our quarterly cash dividend by 13% to $22.5 per share.\nAs we look forward to the first quarter of fiscal 2022, we are expecting market conditions to remain similar with strong demand from homebuyers, but continuing supply chain challenges that will delay home construction, completion and closing.\nWe expect to generate consolidated revenues in our December quarter of $6.5 billion to $6.8 billion and our homes closed by our homebuilding operations to be in a range between 17,500 homes and 18,500 homes.\nWe expect our home sales gross margin in the first quarter to be 26.8% to 27% and homebuilding SG&A as a percentage of revenues in the first quarter to be approximately 8%.\nWe anticipate our financial services pre-tax profit margin in the range of 30% to 35% and we expect our income tax rate to be approximately 24% in the first quarter.\nLooking further out, we currently expect to generate consolidated revenues for the full fiscal year of 2022 of $32.5 billion to $33.5 billion and to close between 90,000 homes and 92,000 homes.\nWe forecast an income tax rate for fiscal 2022 of approximately 24%, subject to changes and potential future legislation that could increase the federal corporate tax rate.\nWe also expect that our share repurchases will reduce our outstanding share count by approximately 2% at the end of fiscal 2022 compared to the end of fiscal 2021.\nWe expect to generate positive cash flow from our homebuilding operations in fiscal 2022 after our investments in homebuilding inventory to support double-digit growth.\nWe will then balance our cash flow utilization priorities among increasing the investment in our rental operations, maintaining conservative homebuilding leverage and strong liquidity, paying an increased dividend and consistently repurchasing shares.\nIn closing, our results reflect our experienced teams and production capabilities, industry leading market share, broad geographic footprint and diverse product offerings across multiple brands.\nOur strong balance sheet, liquidity and low leverage provide us with significant financial flexibility to capitalize on today's robust market and to effectively operate in changing economic conditions.\nWe plan to maintain our disciplined approach to investing capital to enhance the long-term value of the company, which includes returning capital to our shareholders through both dividends and share repurchases on a consistent basis.\nYour efforts during 2021 were remarkable.\nWe closed the most homes in a year in our company's history, achieving 10% market share with record profits and returns and we are incredibly well positioned to continue growing and improving our operations in 2022.\nWe will now host questions.\n", "role": "user" }, { "content": "q4 earnings per share $3.70.\nqtrly consolidated revenues increased 27% to $8.1 billion.\nhomebuilding revenue for q4 of fiscal 2021 increased 24% to $7.6 billion from $6.2 billion in same quarter of fiscal 2020.\nhomes closed in quarter increased 8% to 21,937 homes compared to 20,248 homes closed in same quarter of fiscal 2020.\nnet sales orders for q4 ended september 30, 2021 decreased 33% to 15,949 homes.\nsees 2022 consolidated revenues of $32.5 billion to $33.5 billion.\nsees 2022 homes closed between 90,000 homes and 92,000 homes.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: danaher.com, under the heading Quarterly Earnings.\nThe supplemental materials describe additional factors that impacted year-over-year performance.\nWe may also describe certain products and devices, which have applications submitted and pending for certain regulatory approvals or are available only in certain markets.\nAs a result of the size of the Cytiva acquisition and its impact on Danaher's overall core revenue growth profile, we're presenting core revenue on a basis that includes Cytiva sales.\nReferences to core revenue growth includes Cytiva sales and the calculation of period-to-period sales growth comparing the current period Cytiva sales to the historical period Cytiva sales prior to acquisition.\nIn the first quarter of 2021, we got off to a very strong start, delivering better-than-expected core revenue growth across our portfolio.\nOur broad-based performance was driven by double-digit core revenue growth in our base business, our ongoing contributions to the development and production of COVID-19 vaccines and therapeutics and strong demand for Cepheid's point-of-care molecular diagnostic tests.\nOur record top line performance also contributed to outstanding earnings-per-share growth and free cash flow generation.\nOur well-rounded first quarter results are a testament to the unique positioning of our portfolio and our commitment to continuous improvement.\nWe have an exceptional collection of market-leading franchises and technologies all powered by the Danaher Business System, that serve attractive end markets with durable secular growth drivers.\nWe believe that this powerful combination differentiates Danaher and reinforces our sustainable, long-term competitive advantage.\nSo with that, let's turn to our first quarter results.\nWe generated $6.9 billion of sales in the first quarter with 30% core revenue growth.\nAll three of our reporting segments delivered better-than-expected growth, led by Life Sciences and Diagnostics.\nWe believe we continue to capture market share, particularly at some of our larger businesses, including Cytiva, Pall, Radiometer, Leica Biosystems, Hach and Videojet.\nOver the last several years, we've prioritized high-impact growth investments in innovation, sales and marketing, to ensure that we're well positioned both near and long term.\nThrough new product introductions and the impact of our Danaher Business System growth tools, we've enhanced our competitive advantage and believe we've achieved notable market share gain.\nGeographically, revenue growth was broad-based across both developed and high-growth markets.\nWe saw over 20% growth in the developed market, led by North America and Western Europe.\nHigh-growth markets were up more than 45%, largely driven by the recovery in China.\nOur gross profit margin increased 580 basis points year-over-year to 62% in the first quarter, largely due to higher sales volumes and the positive impact of higher-margin product mix.\nOur operating profit margin of 29.1% was up 1,300 basis points year-over-year, including more than 900 basis points of core margin expansion as a result of higher gross margins and lower operating expenses as we continue to see limited travel and other related costs.\nAdjusted diluted net earnings per common share of $2.52 were up 140% versus last year.\nWe generated $1.6 billion of free cash flow in the quarter, an increase of 135% year-over-year.\nNow in the first quarter, we deployed more than $400 million of capital toward mergers and acquisitions across all three segments.\nMost notably, IDT and Cytiva completed their first bolt-on acquisition with IDT adding Swift Biosciences, which brings complementary capabilities and a broad portfolio of next-gen sequencing library preparation and enrichment solutions for DNA, RNA and methylated DNA samples.\nAnd Cytiva acquired Vanrx Pharmasystems, which provides innovative, automated aseptic tolling technologies used to fill vials, syringes and cartridges, a critical final step to complete the bioprocessing workflow.\nWe also continued to make significant organic investments and high-impact growth initiatives across all of Danaher.\nOver the past six months, we've invested in a meaningful expansion of production capacity at Cepheid, Cytiva, Pall Biotech and Beckman Life Sciences.\nNear term, these investments will support COVID-related demand, but they're equally important to support the long-term growth of these businesses, where we see tremendous runway ahead given the underlying growth drivers and the durability of the markets they serve.\nBetween these four businesses, we're investing more than $1 billion in 2021 to continue to meet our customers' needs today and well into the future.\nSo now let's take a look -- a more detailed look at our results across the portfolio.\nLife Sciences reported revenue increased 115% as a result of the Cytiva acquisition, and core revenue was up 41.5%.\nWe saw strong double-digit core revenue growth across all of our largest operating companies in the platform, led by Cytiva, Pall Life Sciences, Beckman Life Sciences and IDT.\nIn our bioprocessing businesses, accelerating demand for COVID-related vaccines and therapeutic development and production drove a combined core revenue growth rate of more than 60% at Cytiva and Pall Biotech.\nExcluding the impact of COVID-related activity, our underlying biopharma business grew in the low 20s range.\nWe believe that our ability to continue meeting customers' needs across their bioprocessing workflows enabled us to gain market share in the quarter, particularly within our cell culture media and single-use product line.\nReported revenue was up 34%, and core revenue grew 31%.\nEach of our largest operating companies in the platform achieved high single digit or better core revenue growth, led by Cepheid, which achieved more than 90% core revenue growth.\nIn response to the unprecedented demand for Cepheid's rapid point-of-care molecular test, the team again increased production capacity and shipped over 10 million respiratory test cartridges in the first quarter.\nRoughly half of the tests shipped were COVID-only tests, and the other half were 4-in-1 combination test for COVID-19 Flu A, Flu B and RSV.\nWe also saw increasing demand for nonrespiratory tests across Cepheid's market-leading test menu, including sexual health, hospital-acquired infections and urology, demonstrating the broad applicability of Cepheid's molecular diagnostic offering.\nMoving to our Environmental & Applied Solutions segment.\nReported revenue grew 6.5% and core revenue was up 3.5%.\nOur Water Quality platform was up slightly and product identification was up high single digits.\nOur Water Quality businesses support customers' day-to-day mission-critical water operations, providing water testing, treatment and analysis across a variety of applications around the world.\nWe saw good underlying demand for our analytical chemistries and consumables during the quarter, and we're encouraged by the improvement in equipment sales, which returned to growth as customers got back up and running at more normalized levels.\nIn Product Identification, we saw mid single-digit core revenue growth in our marking and coding businesses and double-digit growth in packaging and color management.\nEsko and X-Rite benefited from the underlying market recovery and saw good momentum from customers initiating new projects and investments in the first quarter.\nSo with that context from what we saw by segment during the quarter, let's take a look -- walk through some of the trends we're seeing across our end markets and geographies.\nCustomer activity around the world is approaching pre-pandemic levels as we all collectively adapt to working in this new environment.\nWe're seeing this in the form of strong sales funnels and order book growth.\nService levels at or near pre-pandemic levels and an uptick in equipment revenues.\nWhile some of this dynamic is a result of pent-up demand in the wake of widespread lockdowns, we're starting to see underlying recovery across most of our end markets that were impacted.\nNow if we take a closer look at these dynamics by geography, China appears to be the furthest along in terms of reopening, with activity levels largely back to normal.\nThe U.S. is not all the way back just yet, but is moving in the right direction.\nAnd an increase in vaccination rates across the country appear to be driving some of this progress.\nEurope is improving broadly.\nAnd while certain areas have recently experienced setbacks in the process of reopening, we've not seen any material impact.\nIn Life Sciences, activity in the broader biopharma market remains robust.\nThere has not been any slowdown in the double-digit growth trend we've seen over the last several quarters across non-COVID-related biopharma activity.\nWithin COVID-related biopharma activity, the significant ramp-up of vaccines and therapeutics is driving record bioprocessing demand.\nWe're involved in the majority of COVID-19 vaccine and therapeutic projects under way around the world today, including all of those in the U.S. that are currently on the market or in later-stage clinical trials.\nOur operating companies are playing a significant role in the development and production of new therapies and vaccines across the biopharma pipeline.\nAnd given the breadth of our offering and the production capacity we're adding in 2021, we're uniquely positioned to support our customers in their mission today and well into the future, which is to make more life-saving treatment available to more patients faster.\nIn clinical diagnostics, we continue to see heightened demand for rapid point-of-care molecular testing.\nAs we look across the COVID-19 testing landscape and consider the durability of the demand that we're seeing, we believe that Cepheid's positioning is the strongest among the various testing modalities and settings.\nCepheid's leading presence at the point of care, combined with the speed, accuracy and workflow advantages of their molecular offering, uniquely positions the business to support customers' testing needs, not only for COVID-19, but beyond the pandemic as well.\nAcross hospital and reference labs, patient volumes are at or near pre-pandemic levels in most major geographies as elective procedures and hospital visits have rebounded from last year.\nConsumables growth is accelerating as a result, and we're encouraged by the momentum of instrument placement.\nFinally, in the applied market, consumables remain solid across essential business operations like testing and treating water and safely packaging food and medicine.\nAnd growth is picking up on the equipment side as customers get back to more normal operations and initiate capital investments.\nNow let's briefly look ahead to our expectations for the second quarter and the full year.\nWe expect to deliver second quarter core revenue growth in the mid-20s range.\nWe anticipate low double-digit core revenue growth in our base business and a low double-digit core growth contribution from COVID-related revenue tailwind.\nAdditionally, we expect to have operating profit fall-through of approximately 40% in the second quarter and for the remainder of 2021.\nFor the full year 2021, we now expect to deliver high teens core revenue growth.\nWe anticipate that COVID-related revenue tailwinds will be a high single-digit to low double-digit contribution to the core revenue growth rate.\nThis would include an estimated $2 billion of 2021 revenue at Cytiva and Pall Biotech associated with vaccines and therapeutics, which is higher than our previous expectation of $1.3 billion.\nAnd at Cepheid, we'll continue ramping capacity through the year and now expect to ship approximately 45 million tests in 2021 compared to our prior estimate of 36 million tests.\nAnd in our base business, we now expect that core revenue will be up high single digits for the full year.\nSo to wrap up, we had a very strong start to the year and feel good about the momentum we're seeing across all of Danaher.\nOur first quarter results are a testament to the commitment and capability of our team and a durable, balanced positioning of our portfolio.\nWe believe this combination differentiates Danaher and sets us up well to outperform in 2021 and beyond.\nIn our pursuit of continuous improvement, we'll strive to keep building an even better, stronger company and to positively impact the world around us in meaningful ways for all of our stakeholders.\nWe see tremendous opportunities ahead to do just that.\nThat concludes our formal comments.\n", "role": "user" }, { "content": "q1 adjusted non-gaap earnings per share $2.52.\nq1 revenue rose 58 percent to $6.9 billion.\nfor q2 2021, company anticipates that non-gaap core revenue growth will be in mid-20 percent range.\nfor full year 2021, company now anticipates that non-gaap core revenue growth rate including cytiva will be in high-teens percent 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: danaher.com under the heading Quarterly Earnings.\nThe supplemental materials describe additional factors that impacted year-over-year performance.\nWe may also describe certain products and devices which have applications submitted and pending for regulatory -- certain regulatory approvals or are only available in certain markets.\nAs a result of the size of the Cytiva acquisition and its impact on Danaher's overall core revenue growth profile, we are presenting core revenue on a basis that includes Cytiva sales.\nReferences to core revenue growth exclude Cytiva sale in the calculation of period to period sales growth.\nWe appreciate you joining us on the call today.\nWe're very pleased with our strong start to the year with another terrific results in the second quarter.\nWe saw broad-based strength across the portfolio, which helped us deliver over 30% core revenue growth, more than 70% adjusted earnings-per-share growth and outstanding free cash flow generation.\nThis well-rounded performance is a testament to the positioning of our portfolio and our exceptional team who are committed to leading and executing with the Danaher Business System every day.\nDuring the second quarter, we continued to strengthen our competitive advantage through significant high impact organic growth investments and enhanced our portfolio with strategic growth accelerating acquisition.\nWe prioritize innovation across Danaher and increased our production capabilities, all of which we believe contributed to the market share gains in several of our businesses.\nWe also announced our pending acquisition of Aldevron which will expand our presence into the fast-growing and important frontier of genomic medicine.\nPutting it all together, we believe the combination of our leading portfolio and DBS driven execution differentiates Danaher today and provides a strong foundation for sustainable long-term outperformance.\nSo with that, let's turn to our second quarter results.\nOur sales were $7.2 billion and we delivered core revenue growth of 31.5% with strong contributions from all three of our reporting segment.\nGeographically, high growth markets grew nearly 35% and developed markets were up more than 25%.\nRevenue in each of our three largest markets, North America, Western Europe and China was up 30% or more in the quarter.\nOur gross profit margin increased by 710 basis points to 60.9% primarily due to higher sales volumes, the favorable impact of higher margin product mix and the impact of prior year purchase accounting adjustments related to the Cytiva acquisition that did not repeat in 2021.\nOur operating profit margin increased to 27.8% including 775 basis points of core operating margin expansion, primarily as a result of higher gross margin and continued lower operating expense as travel and other related costs remains below pre-pandemic levels.\nAdjusted diluted net earnings per common share of $2.46 were up 71% compared to 2020.\nWe generated $1.8 billion of free cash flow in the quarter, up over 40% year-over-year.\nIn June, we announced our intention to acquire Aldevron a producer of high quality plasmid DNA, mRNA and protein serving academic, biotechnology and pharmaceutical customers.\nThe addition of Aldevron will expand our capabilities into the important field of genomic medicine where we're seeing the accelerated adoption of gene and cell therapies, DNA and RNA vaccines and gene editing technology.\nWe anticipate Aldevron will be accretive to Danaher on multiple levels as we expect the business to generate $500 million of revenue in 2022, with more than 20% annual revenue growth and a strong margin profile.\nWe look forward to welcoming this incredibly talented and innovative team to Danaher once the transaction closes.\nIn addition to announcing the Aldevron acquisition we also accelerated several organic growth investments across the portfolio.\nOne of our core values at Danaher is innovation defines our future and we have made a significant commitment toward our research and development effort increasing our research and development spend by more than 30% year-over-year to bring more impactful solutions to our customers.\nAt SCIEX we launched ZenoTOF 7600, a high resolution accurate mass spectrometry system that enables scientists to identify, characterize and quantify molecules at previously undetectable level, helping to advance the development of new biotherapeutics and precision diagnostics.\nAt Beckman Coulter Diagnostics, we recently introduced the DxA 5000 Fit a compact automation solution designed for small and mid-sized laboratories that reduces up to 80% of the manual steps typically required for sample preparation.\nThese are just a few great examples of how we're continuing to invest for growth across Danaher to support our customers and enhancing our competitive advantage through innovation.\nAdditionally, we're making substantial investments to expand capacity across our bio processing businesses and Cepheid.\nNear term, these investments are supporting existing customer demand driven by both the market and meaningful share gain, but they are equally important to support the long-term growth of these businesses where we see tremendous runway ahead, given the underlying structural growth drivers in the markets they serve.\nWe expect our total capital expenditures across Danaher to be approximately $1.5 billion in 2021 as we continue to invest in supportive of our customers' needs today and well into the future.\nWe believe the strategic combination of these organic and inorganic investments across our portfolio will reinforce our competitive advantage and accelerate our growth trajectory going forward.\nNow, let's go into more detail on our quarterly results across the segment.\nLife Science's reported revenue increased 41.5% with core revenue up 35%.\nThis growth was broad based with most of our major businesses in the platform, delivering 30% or better core growth.\nWe continue to see strong demand for our bioprocessing solutions with combined core revenue growth of more than 40% at Cytiva and Pall Biotech.\nOur non-COVID related bioprocessing business was up low double-digits where we saw robust customer activity and order rates.\nCOVID related vaccine and therapeutic revenues were consistent with the first quarter and exceeded $1 billion over the first 6 months of the year.\nSo I'd be remiss if I didn't take a moment to reflect on Cytiva's fantastic first year as part of Danaher.\nWe've established a new company with a new brand name added more than 1500 associates and made substantial progress in the transition to Danaher, all while maintaining world-class support of our customers, significantly ramping production capacity and growing revenues by more than 50%.\nI think it's fair to say, they've exceeded our expectations in every way and that's really a testament to the Cytiva team who've embraced Danaher and the Danaher business system and continued to execute exceptionally in support of our customers.\nMoving to Diagnostics, reported revenue was up 40.5% and core revenue grew 37% led by more than 50% core growth at Cepheid.\nBeckman Diagnostics and Leica Biosystems each grew more than 30% as patient volumes and clinical diagnostic activity approached pre-pandemic levels around the world.\nAt Cepheid, growth outside of respiratory testing was led by our sexual health and hospital-acquired infection assays, particularly among newly acquired Cepheid customers.\nIn respiratory testing, we believe we continued to gain market share as expanded manufacturing capacity enabled the team to produce and ship approximately 14 million cartridges in the quarter.\nAs expected COVID-only test accounted for approximately 80% of these shipments while our 4 in 1 combination test for COVID-19 Flu-A, Flu-B and RSV represented approximately 20%.\nThis broad-based performance across Cepheid was driven by the team's thoughtful installed base expansion over the last 15 months and as evidence of the significant value, Cepheid provides to clinician with the unique combination of fast, accurate lab-quality results and the best-in-class, easy to use workflow at the point of care.\nMoving to our Environmental and Applied Solutions segment, reported revenue grew 15.5% and core revenue was up 13%.\nRevenue growth accelerated across both platforms with water quality up high single-digits and product identification up approximately 20% in the quarter.\nIn our water quality businesses, demand for our analytical chemistries and consumables was driven by improving activity across municipal, chemical, food and beverage end market.\nEquipment order rates accelerated as customers got back up and running and began to invest in larger projects.\nIn product identification Videojet was up mid-teen and our packaging and color management businesses were up more than 25% in the quarter.\nThis acceleration reflected a broad-based recovery with growth across most major geographies and end market.\nSo, with that as a backdrop to what we saw this quarter let's spend some time going through trends geographically and across our end market.\nLooking at conditions around the world most major regions and countries have broadly returned to or are approaching normal operations.\nThis is reflected in the strong results we've seen across the US, Europe and China.\nThat said, we're mindful of the emerging COVID-19 variants driving further outbreaks and have taken action to help minimize the potential impact on our respective businesses.\nAnd at this point, we've seen no material impact from recent variant or selective lockdown.\nWe saw positive momentum across our businesses with order growth trending above revenue growth.\nMost of our end markets have largely recovered with growth rate at or above pre-pandemic level as customers have adopted to the new environment.\nIn-person commercial activity continues to rebound and we're seeing our teams spend more time on site with their customers, a trend we expect to continue as we move through the year.\nAcross Life Sciences, we're seeing healthy demand in most of our end market led by Biopharma where the pace of customer activity remains elevated.\nBiotech funding levels are robust and the number of lifesaving biologic and genomic-based therapies in development and production continues to rise and it's further augmented by the work around COVID-19 vaccines and therapeutics.\nToday, there are over 1,500 monoclonal antibody-based therapies in development globally, which is more than 50% increase from just 5 years ago.\nWe also see over 1,000 gene therapy candidates in development today, a 10-fold increase over the last several years as these technologies mature and therapies gain regulatory approval.\nGiven that many of these candidates are still in early stage research we expect the growth rate of this market to remain strong for many years to come.\nIn addition to the growth in biologics and genomic based medicines, there is significant demand related to COVID-19 vaccines and therapeutics, both on the market and in development today.\nGiven the interest we're seeing from customers looking to address emerging variants and increased global supply, as well as evolving vaccination guidelines globally we expect to see durable growth in the segment of the Biopharma market for the foreseeable future.\nAt the current pace of vaccination it's clear that vaccine demand will continue well into next year.\nWe expect to recognize $2 billion in COVID related vaccine and therapeutic revenue in 2021 and anticipate entering 2022 with approximately $1.5 billion in COVID-related backlog.\nThese assumptions do not include the potential contribution from booster shot or an expansion of availability to populations under 12-year-old due to the level of uncertainty around each of these scenarios.\nGiven the growing numbers of drug being developed and the increasing scientific sophistication required to discover and manufacture these complex therapies, customers are looking to partner with vendors who can reliably supply them solutions for their most challenging problems as they move from the lab to production scale.\nOur comprehensive bio-processing portfolio and scientific expertise positions us well to do just that and we're confident, our proactive investments in innovation and capacity will help us meet this growing customer demand now and far into the future.\nIn the clinical diagnostics market, patient volumes are at or near pre-pandemic levels in most major regions as patients are returning for wellness checks, routine screenings and other elective procedures.\nIn molecular diagnostics, while PCR, respiratory testing volumes in the US have declined we're seeing persistent demand for Cepheid testing at the point of care.\nOutside of the US, which makes up approximately half of Cepheid's revenue, we continue to see strong demand for our testing as vaccination rates lag and emerging variants drive outbreak.\nNow, as I mentioned earlier we shipped approximately 14 million respiratory tests during the second quarter, up from 10 million shipped in the first quarter and we now expect to ship approximately 50 million tests in 2021.\nLooking ahead with the assumption that COVID-19 will be an endemic disease, we believe that the point of care molecular respiratory testing market will expand significantly from where it was prior to the pandemic and given Cepheid's leading positioning around speed, accuracy and the ease of use workflow advantages we believe will continue to gain market share.\nThe combination of these market share gains, the expansion of Cepheid's leading global installed base and the broadest molecular diagnostic test menu on the market, create significant opportunities ahead for broader utilization and demand for Cepheid's point of care molecular testing solutions.\nMoving to the applied markets, we're seeing a continuation of the steady improvement over the first half of the year.\nCustomer activity is accelerating in line with broader economic activity, which we see in healthy order rates for consumables and increasing investments equipment.\nAcross municipal markets globally consumables demand remains solid as customers continue to test and treat water and instrument-oriented project activity is accelerating with the improving funding environment.\nNow, let's look ahead to our expectations for the third quarter and the full year.\nWe expect to deliver third quarter core revenue growth in the mid to high teens range.\nWe anticipate high single-digit core revenue growth in our base business and a high single-digit core growth contribution from COVID related revenue tailwind.\nAdditionally, we expect to generate operating profit fall through of approximately 40% in the third quarter and for the remainder of 2021.\nFor the full year 2021, we now expect to deliver approximately 20% core revenue growth.\nWe anticipate that COVID related revenue tailwinds will be an approximately 10% contribution to the core revenue growth rate and in our base business we now expect that core revenue will be up 10% for the full year, an increase from our prior expectation of high single-digit.\nSo, to wrap up we've had a great start to the year and we see meaningful opportunities across Danaher to build upon this outstanding performance.\nOur second quarter results reiterate the power of our portfolio and our exceptional team, a unique combination that differentiates Danaher today and provides a strong foundation for sustainable, long-term outperformance.\nAnd with that, back to you, Matt.\nThat concludes our formal comments.\n", "role": "user" }, { "content": "q2 adjusted non-gaap earnings per share $2.46.\nq2 revenue $7.2 billion versus refinitiv ibes estimate of $6.72 billion.\nfor q3 2021, anticipates that non-gaap core revenue growth will be in mid- to high-teens percent range.\nfor full year 2021, now anticipates that non-gaap core revenue growth rate including cytiva will be about 20%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: danaher.com under the heading Quarterly Earnings.\nThe supplemental materials describe additional factors that impacted year-over-year performance.\nWe may also describe certain products and devices which, have applications submitted and pending for certain regulatory approvals or are available only in certain markets.\nAs a result of the size of the Cytiva acquisition and its impact on Danaher's overall core revenue growth profile, we're presenting core revenue on a basis that includes Cytiva sales.\nReferences to core revenue growth, including Cytiva sales, and the calculation of period to period sales growth.\nAnd we really appreciate you joining us on the call today.\nOur team delivered another outstanding results in our third quarter with over 20% core revenue growth, nearly 40% adjusted earnings-per-share growth and strong free cash flow generation.\nThis well-rounded performance is a testament to the unique positioning of our portfolio and our exceptional team, who are committed to leading and executing with the Danaher Business System every day.\nWe highlighted our fantastic portfolio of market-leading franchises in highly attractive end markets, the exceptional team we have out on the field every day and how we differentiate with the Danaher Business System.\nAnd we certainly saw this powerful combination in action during the third quarter as our results attest.\nNow we also talked about our sustainability efforts, and just last week, we published our 2021 Sustainability Report.\nThis year's report reflect the measurable progress we've made across the three pillars of our sustainability program, which are innovation, people, and the environment, and how we use the Danaher Business System to execute on this increasingly important strategic priority.\nNow I hope you all get a chance to read through the report and learn more about the important work that we're doing across Danaher to positively impact the world around us for generations to come.\nSo, with that, let's turn to our third quarter results.\nOur sales were $7.2 billion and we delivered 20.5% core revenue growth with portfoliowide strength led by Diagnostics and Life Sciences.\nGeographically, high growth markets grew approximately 25% and developed markets were up nearly 20%.\nIn fact, revenue in each of our three largest markets, North America, Western Europe and China was up approximately 20% or more in the quarter.\nOur gross profit margin increased by 550 basis points to 60.3% primarily due to higher sales volume, the favorable impact of higher margin product mix, and the impact of prior-year purchase accounting adjustments related to the Cytiva acquisition that did not repeat in 2021.\nNow, adjusted diluted net earnings per common share were $2.39 and were up 39% compared to 2020 and we generated $1.7 billion of free cash flow in the quarter, bringing our year-to-date total to $5.2 billion, which is up 46.5% year-over-year.\nWe continue to accelerate organic growth investments across the entire portfolio and increased our research and development spend by approximately 30% year-over-year.\nAt our Investor Day recently, we highlighted how we use DBS growth tools and processes to accelerate innovation and bring more impactful solutions to our customers faster.\nIn fact, recently launched products like the SCIEX Zeno 7600 and the Triple Quad 7500 and Beckman Life Sciences' CytoFLEX SRT benchtop cell sorter are just a few great examples of how we're driving market share gains through proprietary innovation and enhancing our growth trajectory going forward.\nWe're also making substantial investments to expand production capacity across our bioprocessing businesses and at Cepheid.\nNear term, these investments are supporting existing customer demand and driving meaningful share gains.\nBut they're equally important to support the long-term growth of these businesses where we see significant runway ahead, given the underlying structural growth drivers in the sectors they serve.\nAnd we expect our total capital expenditures across Danaher to be approximately $1.5 billion in 2021 as we continue to invest in support of our customers' needs today and well into the future.\nSo now let's go into more detail on our quarterly results across the segments.\nLife Sciences reported revenue increased 24.5% with core revenue up 20%.\nThis growth was broad-based across the segment with most major operating companies achieving high teens or better core growth.\nNow these strong results were led by continued demand for our bioprocessing solutions as in Cytiva bioprocessing and Pall Biotech, both grew more than 30% in the quarter, including low double-digits non-COVID related core growth.\nCOVID-related vaccine and therapeutic revenue contributed -- continued to be strong and now exceeds $1.5 billion year-to-date.\nAt Cytiva, we passed an important milestone last month when we exited the last of our transition services agreement with GE.\nWe successfully completed this process ahead of schedule, which is a testament to the entire Cytiva and integration team and their collective commitment to the Danaher Business System.\nCytiva also added more than 1,500 new associates to the global team since joining Danaher to help ensure that we're supporting our customers today and continue meeting their needs well into the future.\nAldevron is a leading producer of high quality plasmid DNA, mRNA and proteins, and provides a fantastic beachhead for us in our genomic medicine enterprise.\nWe're seeing the rapid development of gene and cell therapies, DNA and RNA vaccines, and gene editing technologies.\nAnd Aldevron expands our capabilities in these areas to ultimately help our customers bring more life-saving therapies and vaccines to market faster.\nSo we're really excited about the quality, the scale, the turnaround time and the reputation that Aldevron brings to the Danaher portfolio.\nIn Diagnostics, reported revenue was up 29.5% and core revenue grew 28.5% led by more than 60% growth at Cepheid.\nEach of our other major diagnostic businesses, Beckman Coulter, Radiometer, and Leica Biosystems, grew low to mid-teens in the quarter as clinical diagnostic activity and patient volumes around the world largely returned to pre-pandemic levels.\nIn respiratory testing at Cepheid, we further expanded manufacturing capacity, which enabled the team to produce and ship approximately 16 million cartridges during the quarter.\nCOVID-only tests accounted for approximately 80% of those shipments and our 4-in-1 combination tests for COVID-19 Flu-A and B and RSV represented approximately 20%.\nAnd non-respiratory core growth at Cepheid was up double-digits as well, led by demand for hospital-acquired infections, sexual health and virology testing.\nWe also saw strong growth in our installed base as system placements continue to exceed pre-pandemic rates.\nAnd we believe the team's thoughtful placement of the GeneXpert and Infinity Systems over the last 18 months is setting up Cepheid very well for future growth opportunities.\nSo, let's move to our Environmental & Applied Solutions segment.\nReported revenue was up 7% with core revenue up 7.5%.\nWater Quality grew mid-single digits and our product identification platform was up low double-digit.\nAcross our Water Quality businesses, we saw good underlying market strength, particularly in food and beverage and various industrial applications, as activity returned to more normal levels.\nMunicipal projects picked up, given the improving funding environment and as more customers return to in-person work.\nOn product identification, both Videojet and our packaging and color management businesses were up low-double digits in the quarter.\nComparable strength across consumables, service and installed base growth was driven by more normalized levels of customer activity and investment.\nWe believe that our ability to meet our customers' needs, particularly on the equipment side of Videojet enabled us to gain market share and expand on the industry-leading installed base of printers.\nSo with that as the backdrop for what we saw this quarter, let's spend some time going through regional and end-market trends.\nMost major regions and countries around the world are largely back to pre-pandemic activity levels.\nCustomers have adapted to the current operating environment and protocols and broadly resumed in-person commercial activities and site access.\nThis is reflected in the strong results we've seen across the U.S., Europe and China.\nAnd this momentum is also reflected in our strong order book growth, which is trending above revenue growth.\nNow we're mindful of potential COVID-19 variants or outbreaks and selective lockdowns, but we're not currently see any material negative impact from these scenarios.\nAnd while we are seeing some global supply chain constraints, we're leveraging the Danaher Business System tools like Daily Management and actively working with our customers and suppliers to help mitigate any impact.\nAcross Life Sciences, we're seeing robust customer activity and demand across all major end-markets.\nLab and other site access is largely back to pre-COVID levels and we're seeing this through more normalized productivity levels, installations and project initiations, driven by a strong funding environment.\nNow biopharma continues to lead the way as the number of life-saving biologic and genomic-based therapies in development and production continues to rise and is augmented by the ongoing work around COVID-19 vaccines and therapeutics.\nAnd at our recent Investor Day, we spent time covering how well positioned we are to support this complex life-changing work that our customers are pursuing.\nOur combined bioprocessing portfolio across Cytiva and Pall Biotech is the broadest offering in the industry with leading position in upstream and downstream applications.\nAnd we further support our customers with best-in-class scientific services partnering to solve their most challenging problems as they move from the lab to production scale.\nAnd our global reach enabled us to reliably and consistently meet our customers' needs.\nNow in addition to the industrywide opportunities in biologics and genomic-based medicines, we continue to see significant demand related to the development and production of COVID-19 vaccine and therapeutics.\nOur customers are working to address emerging variants and increased global supply, and given that only about a third of the global population has been vaccinated, we believe we'll see durable growth in this biopharma segment for the foreseeable future.\nWe continue to expect about $2 billion of COVID-related vaccine and therapeutic revenue in 2021.\nAnd since we spoke at our Investor Day, we now expect to enter 2022 with approximately $2 billion in COVID-related backlog versus our previous expectation of $1.5 billion of backlog.\nAnd moving to the clinical diagnostic market, non-COVID testing volumes are essentially back to pre-pandemic levels in most major regions as patients are returning for wellness checks, routine screening, and other elective procedures.\nIn molecular diagnostics, strong global demand persists for Cepheid point-of-care PCR respiratory testing as a result of the Delta variant and outbreaks, along with lower vaccine vaccination rates in many regions.\nAs I mentioned earlier, we shipped approximately 16 million respiratory tests during the third quarter and we now expect to ship approximately 55 million tests in 2021 versus our prior expectation of 50 million.\nNow as we head into the traditional respiratory virus season, we're hearing from customers that they expect this to be a much more active season than last year's.\nIn preparation, their preference is for our 4-in-1 combination test, so we're seeing an uptick in demand for those cartridges, particularly given the recent outbreaks of RSV across the U.S. Cepheid's 4-in-1 test was also recently approved with a third gene target for SARS-CoV-2 detection, ensuring it can continue to accurately detect future COVID-19 viral mutations and reinforcing Cepheid's competitive advantage in the respiratory testing market.\nNow moving to the applied market.\nCustomer activity has largely rebounded to pre-pandemic levels, which we see in robust order rates across both consumables and equipment.\nIn the global municipal market, consumables demand remains solid and the pace of instrument oriented project activity continues to pick up with the improving funding environment and broad return to work.\nSo now let's look ahead to our expectations for the fourth quarter and the full year.\nWe expect to deliver fourth quarter core revenue growth in the low to mid teens range, with high single-digit core revenue growth in our base business and a mid to high single-digit core growth contribution from COVID-related revenue tailwind.\nAdditionally, we expect to generate operating profit fall through of approximately 40% in the fourth quarter, a similar level to what we achieved in the third quarter.\nNow for the full year 2021, we now expect to deliver more than 20% core tailwind and our base business will each contribute more than 10% to our 2021 core revenue growth rate.\nSo to wrap up, we're proud to deliver another terrific result here in the third quarter.\nOur performance is a testament to the power of our unique portfolio, the strength of our end markets and our team's commitment to leading and executing with the Danaher Business System.\nAnd this unique combination differentiates Danaher today and it reinforces our opportunities ahead for sustainable long-term outperformance.\nSo with that, back over to you, Matt.\nThat concludes our formal comments.\nEmma, we're now ready to take questions.\n", "role": "user" }, { "content": "q3 adjusted non-gaap earnings per share $2.39.\nq3 revenue $7.2 billion versus refinitiv ibes estimate of $7 billion.\nfor q4 2021, company anticipates that non-gaap core revenue growth will be in low-to-mid teens percent range.\nfor full year 2021, company now anticipates that non-gaap core revenue growth rate including cytiva will be more than 20%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm joined by John Peyton, CEO; Allison Hall, Interim CFO and Controller; Jay Johns, President of IHOP; and John Cywinski, President of Applebee's.\nWhen we spoke last quarter, I shared my belief that the industry and our brands, in particular, were on the cusp of a restaurant renaissance.\nAnd our headline today is that the renaissance is here.\nI love this notion of renaissance because it's all about resurgence and creativity and pushing beyond established boundaries, and that's exactly what we're doing at Dine Brands.\nWe're changing the way people think and we are turbocharging creativity and experimentation.\nA willingness to learn and adapt is flourishing throughout our organization.\nI see it every day from our franchisees, to our company staff, to the restaurant teams, our general managers and our servers.\nAnd that's why I'm so proud of our company and our franchisees.\nI'm proud of our management team, and I'm especially proud of the thousands of hard-working restaurant team members around the world.\nNow as I look back on the first quarter, it's remarkable how we continue to persevere and grow.\nOur brands posted meaningful improvements during the first quarter.\nSo let me share those results through the lens of store sales, total revenue and cash generation because, obviously, each one leads to the next.\nAverage weekly sales at both IHOP and Applebee's exceeded pre-pandemic levels several different times during the first quarter.\nAccording to Black Box, and this is impressive, Applebee's increase in same-store sales for Q1 outperformed the casual dining segment.\nOff-premise, in March, both IHOP and Applebee's off-premise sales reached absolute dollar levels, higher than when the restaurants were 100% off-premise in 2020, indicating the staying power of this largely incremental business.\nWe achieved revenue of $204.2 million and EBITDA of $58.1 million, reflecting strong underlying performance across our business.\nCash, we generated free cash flow of $30.7 million which, in part, enabled us to repay our $220 million revolver in early March.\nAnd also importantly, our franchisees opened 10 new restaurants during the quarter, indicating that they're beginning to pivot toward growth.\nWe're very encouraged by our Q1 performance, and we're certainly optimistic that economic tailwinds will sustain us throughout 2021.\nContributing to that view is historically high consumer savings, the Federal spending that we've been enjoying as well as a new potential infrastructure bill.\nThe unemployment rate is the lowest since the pandemic began.\nAnd with vaccinations rising, the economic growth outlook firming and the strength and resilience of our brands, I'm confident that we'll build on the strong Q1 performance to drive market share gains and deliver profitable growth throughout the year.\nNow our fundamental strengths are something many CEOs would love to have.\nNumber one, we are an asset-light 98% franchise model that is a significant generator of cash.\nSecond, we've got two iconic world-class brands that are number one in both the casual and family dining categories.\nAnd third, we've got the most talented, most resilient team members in the industry today, along with the next generation of workers still to be hired.\nAnd as tough as the past year has been, the pandemic actually gave us new competitive competencies.\nHere's what we have today that no one could have even imagined pre COVID.\nWe've got significant incremental off-premise business in both brands.\nOur teams moved quickly and aggressively to add the tech and operations capability needed to nurture and sustain this new business.\nSecond, we leaned heavily into ghost kitchens and virtual brands like Cosmic Wings and others on the horizon that offer new sources of revenue per dine in our franchisees, all of that due to the creativity and talent of our people.\nAnd we advanced our digital platform and loyalty programs that will increase our share of wallet.\nSo with COVID-19 vaccine appointments now more widely available and capacity restrictions being eased across the country, we are seeing increased traffic in our restaurants.\nA couple of questions that might be on your mind.\nFirst is about hiring, and that is certainly a challenge in the industry today and all around the country.\nSo I want you to know that we are aggressively working to help our franchisees recruit adequate staffing to accommodate the increase in demand.\nAnd this is a great example of where dine scale makes a big difference.\nWe're launching national campaigns for two recruiting days next week.\nApplebee's and IHOP are collaborating with their franchisees on the 17th and 19th with the goal of hiring more than 20,000 new team members, and we're making it easy to apply via text, email and in-person, and both brands are leveraging very creative social campaigns to generate interest.\nYour second question today might be around procurement, and I want you to know that we're working to secure the continuity of our supply chain.\nDuring the past few months, the surge in guests going out to eat created demand that has outpaced supply.\nThis is actually not a terrible problem to have, as we see it as just a moment in time.\nNonetheless, our purchasing co-op remains heavily engaged with both brands, and we've adjusted our full year food forecast slightly upward due to generally higher commodity and input costs.\nHowever, we expect prices to fall back to equilibrium as our suppliers adjust to the new demand forecasts over the remainder of the year.\nWe want the world to know right now that Applebee's and IHOP are open for business.\nSo our marketing plans encompass national TV, digital media, social media platforms and one-to-one marketing.\nBoth IHOP and Applebee's have standard operating procedures in place, and our employees have done a terrific job of adhering to best practices like QR code menus upon request, tables that aren't set until the guest is seated, the proper use of masks and enhanced cleaning protocols.\nAnd so with safety in place, we're doubling down on innovation to fuel the renaissance.\nAnd specifically, we've got five growth platforms that build on Dine's competitive advantage.\nNumber one, we're developing and investing in new smaller restaurant prototypes for both brands.\nFlip'd is a good example of our new thinking; number two is off-premise enhancing technology like FlyBuy; number three, virtual brands, think Cosmic Wings; number four is ghost kitchens.\nFor IHOP, they're up and running in Dubai, Kuwait and Saudi Arabia.\nAnd for Applebee's and Cosmic Wings, we're up and running in L.A., Philadelphia and coming soon in Miami.\nAnd as always, we're focused on new culinary creations like IHOP's Burritos & Bowls.\nSo I know that you're waiting for our comprehensive long-term growth plan.\nAnd I can tell you that we're currently conducting a top to bottom strategic review of the business.\nAnd as part of that process, we're embracing a bigger and more holistic vision for our future.\nBut in the near term, I can tell you that we've already decided to lean into three incremental investments that I know will make a difference, and since we spoke last quarter.\nFirst is technology that enhances the guest experience.\nWe -- we're accelerating the redesign of ihop.com and the IHOP app.\nWe're accelerating the Flip'd website and its app as well as the platform needed to support our loyalty programs for IHOP and Applebee's.\nSecond, we're leaning into Flip'd by IHOP.\nWe'll increase investment to accelerate the launch of this IHOP sister brand.\nAnd on that topic, I can just say, stay tuned for some news coming soon.\nAnd third, we're making investments to improve the guest experience in our portfolio of 69 company-owned Applebee's restaurants in the Carolinas, which by the way, consistently ranked among the top performers in the domestic Applebee's system based on sales.\nSo these three investments that I just mentioned are largely an investment in capex, and they represent an additional $5 million in capex since we last spoke.\nWe don't expect them to alter our previously issued G&A guidance.\nSo I'm confident in our plans and very confident in our management team.\nWe've identified the building blocks for the restaurant renaissance, and we'll use those as a way for all of you to continue to follow the progress of our story.\nAn important part of our story is a strong balance sheet because it enables us to create that future, and Allison will now give you an update on that as well as on our financial results.\nI'll begin with an update on the business.\nOur performance in the first quarter reflects pent-up consumer demand for our brands.\nVaccine is being administered across the country, the distribution of government stimulus checks and the gradual easing of dining room restrictions.\nAt the end of the first quarter, 99% of our domestic restaurants were open for dining operations, with restrictions in some states.\nI'm pleased to reiterate that we repaid the $220 million drawdown from our revolving credit facility in early March 2021 as planned.\nWe now expect to achieve an annual interest savings of approximately $5 million.\nOur cash position remained strong.\nWe ended the first quarter with total unrestricted cash of $179.6 million.\nThis compares to unrestricted cash of $163.4 million for the fourth quarter of last year, excluding the $220 million that was drawn against our revolving credit facility, a 10% increase.\nSwitching gears to our operating results.\nI'll start with the income statement.\nFor the first quarter, adjusted earnings per share was $1.75 compared to $1.45 for the same quarter of 2020.\nThe year-over-year improvement was primarily due to lower tax expense as well as a higher gross profit, driven by an increase in revenue from Applebee's company-operated restaurants, due to a higher average check and increased traffic.\nWe believe the distribution of the latest round of government stimulus checks in March favorably impacted both traffic and average checks.\nThe increase in average check was also partially attributable to favorable product mix and daypart ships.\nGross profit for our Applebee's company-owned restaurants increased 5.9 percentage points to 9% for the first quarter compared to the same quarter in 2020.\nRental segment revenue for the first quarter of 2021 was $26.1 million compared to $29 million for the same period last year.\nThe variance was primarily due to the decrease in base rent, resulting from restaurant closures and lease buyouts, and a decline in percentage of rental income based on franchisees' retail sales.\nRental segment gross profit was 19.8% for the first quarter of 2021.\nThis represents sequential improvement of 12 percentage points compared to the fourth quarter of 2020, which was more heavily impacted by charges related to the planned closures of underperforming IHOP restaurants.\nTurning to our GAAP effective tax rate for the first quarter.\nOur effective tax rate for the first quarter of 2021 was negative 6.6% compared to 23.2% for the same quarter of 2020.\nThe change in effective tax rate was primarily due to onetime recognition of excess tax benefits on stock-based compensation related to the departure of our previous CEO.\nSwitching gears to G&A.\nG&A for the first quarter of 2021 was $39.9 million compared to $37.6 million for the same quarter of last year.\nThe increase was primarily due to higher personnel costs associated with equity-based and other incentive compensation, partially offset by lower travel costs.\nWe continue to view G&A as a significant lever for the organization.\nTurning to the cash flow statement.\nCash from operations for the first quarter of 2021 was $30.6 million compared to $29.6 million for the same quarter last year.\nThe increase was primarily due to the recognition of excess tax benefits on stock-based compensation.\nOur highly franchised model continues to generate strong adjusted free cash flow of $30.7 million for the first quarter of 2021 compared to $27.5 million for the same quarter in the prior year.\nThe variance was primarily due to the increase in cash from operations just discussed and lower capex compared to the first quarter of 2020.\nWe believe that our strong cash position, cash from operations, disciplined G&A management, and the ongoing improvement in our business will allow us to invest and grow as the recovery from the pandemic continues.\nRegarding capital allocation and financial flexibility, our business decisions are driven by the improvements in our restaurant operations and industry conditions.\nAs a result of our progressive recovery, we chose to repay the $220 million drawn against the revolver in early March.\nWe'll continue to evaluate our business performance, which will influence our decisions on capital allocation.\nTurning to our franchisees assistance programs.\nAs of March 31, 78% of the $61.9 million in royalty, advertising fees and rent payment deferrals that Dine Brands provided to 223 franchisees across both brands has been repaid.\nDine Brands started the year strong, both Applebee's and IHOP posted meaningful sequential improvement in comp sales.\nAverage weekly sales in dollars for both brands increased to pre-pandemic levels in certain weeks during the first quarter.\nWe ended the first quarter with a strong cash position, allowing us to make additional investments in our business.\nWe're very pleased with our start to 2021, and we remain optimistic about the second half of the year.\nNow you will hear more from brand President, John Cywinski, who will tell you about the significant progress we're making at Applebee's, John?\nAfter a year of navigating the pandemic, March and April represented an extraordinarily positive inflection point for the Applebee's brand.\nIn fact, in more than four years as President of Applebee's, I honestly can't recall the brand being better positioned than it is at this very moment.\nWe just delivered the two highest monthly sales volumes Applebee's has achieved since the inception of Dine in 2008.\nIn fact, it's quite likely March and April represent two of our all-time highest volume months in the 40-year history of the brand, but I really can't confirm this as our database only goes back 13 years.\nWhat I can confirm is that March comp sales were positive 6.1% versus 2019, reflecting the confluence of consumer stimulus, compelling marketing and most importantly, operational excellence.\nMomentum continued to accelerate in April as Applebee's delivered a plus 11.4% comp sales result versus that same 2019 baseline.\nWhile it's impossible to determine how much of this momentum can be attributed to government stimulus versus organic demand, it's very clear to me that America is dining out again in full force.\nSo here's the real story.\nAccording to Black Box, 2021 comp sales versus 2019, as John referenced, Applebee's has now significantly outperformed the casual dining category for 12 consecutive weeks.\nAnd get this, an average of 560 basis points.\nIn many respects, this is reminiscent of Q1 of last year when we posted 10 consecutive weeks of positive comps before the emergence of COVID.\nClearly, Applebee's momentum has returned, and it's returned in a very powerful way.\nIt's important to remember that this momentum started to emerge in the last week of February, well before stimulus checks, when we introduced our successful Burgers and Wings event.\nThis message really resonated with Applebee's guests behind the enormously popular Chicken Fried lyrics from our friends at the Zac Brown band.\nIn the April return of our signature Irresist-A-Bowls currently on air, is the latest example of Applebee's providing big flavor and abundant value.\nThis advertising was choreographed to the classic AC/DC Rock Anthem Back in Black and it delivered breakthrough results.\nThis is just more evidence of Applebee's talented marketing team continuing to innovate around what I firmly believe to be the most enduring, memorable and likable ad campaign in the entire industry, and frankly, outside of the industry.\nOf course, I'm talking about eating good in the neighborhood, something that's a real point of pride for our franchise partners, the restaurant teams and our entire organization.\nWe hear about our advertising all the time from our guests, and it always brings a smile to my face.\nEqually important to our guests is the innovation our team continues to deliver behind Applebee's $5 Mucho Cocktails, as we begin to see the alcohol business steadily return to pre-COVID normalcy.\nThe easing of capacity constraints, the opening of bar seating and the reemergence of our late night daypart represent clear incremental growth opportunities as we progress through the year.\nAnd after scaling back media spending in January and February, our national media plan is now substantial, and equally balanced throughout the remainder of the year with favorable Q2, Q3 and Q4 comparisons with each of the same quarters in 2019, which bodes very well for the brand.\nAdditionally, there are other indicators that our performance isn't short-term in nature.\nApplebee's unaided brand awareness and advertising awareness continue to significantly outpace all casual dining competitors.\nIn key metrics such as affordability, menu variety, guest satisfaction, brand affinity and likelihood to visit consistently outperform the category average.\nNow, I'd like to share a few insights regarding our on-premise and off-premise business.\nFor both March and April, Applebee's restaurant sales averaged an impressive $54,000 per week.\nAs anticipated, our on-premise business has steadily increased as dining restrictions have eased.\nIt's worth noting here that our off-premise volume has held steady between $17,000 and $18,000 per week per restaurant reflecting the staying power of this off-premise business.\nWithout question, Applebee's has significantly broadened its reach and relevance within this important convenience driven segment.\nFor the month of April, Applebee's sales mix consisted of a 67% dine in, 20% Carside To-Go and 13% delivery.\nIncluded in this delivery segment is our new virtual brand, Cosmic Wings, and after about 10 weeks in market, Cosmic Wings sales have averaged about $330 per restaurant per week with significant geographic variability, reflecting Uber Eats coverage.\nFor context, individual restaurants range from a low of $100 per week to a high of $2,000 per week.\nNow importantly, we add Postmates delivery this week and then expand to include DoorDash later this month, which will significantly enhance Cosmic Wings distribution, visibility and trial.\nAfter this expansion, I should be able to quantify the size of the Cosmic Wings opportunity.\nIn the meantime, you can use your imagination as to what the addition of DoorDash may mean for the business.\nNow, with respect to restaurant operations.\nI'm very encouraged with the integration of handheld tablets in about 500 Applebee's restaurants.\nWith staffing challenges across the country, these tablets provide a meaningful hedge against labor inflation, while enabling our service to be far more efficient in taking care of the guests.\nBottom line of servers love these tablets because it makes their job easier and allows them to make more money.\nAdditionally, one of the positive outcomes of this past year was the approximate 33% reduction in our core menu and the simplification of our operation.\nThe resulting food and labor benefits have had a favorable impact on restaurant margins as well as restaurant execution.\nI should also reinforce that over the past year, our teams have been quietly focused on building an awesome innovation pipeline of culinary, beverage, marketing and technology initiatives for future deployment.\nSo in wrapping up, it's quite evident to me that America trusts Applebee's, as we're beginning to see the benefits of the goodwill that our franchise partners worked so hard to create over this past year.\nVirtually all of our restaurants are now open, royalty collections remain rock solid.\nOur advertising fund is now comparable to what it was in 2019, and it's a big lever for us moving forward.\nWe have an exceptionally talented team who have been eagerly awaiting this day and franchisees are aligned behind our business plan and confident in our ability to not only perform but to thrive in this environment.\nFor the first time in a long time, I now believe we control our own destiny, and we're poised to unlock the full potential of this great brand.\nWhile I'm sure there'll be other challenges along the way, there always are, Applebee's has genuine momentum right now, and I couldn't be more optimistic about our future than I am right now.\nAnd with that, I'm going to turn it to my partner, Jay.\nJohn, you must be really proud of those results and what your team and franchisees are accomplishing right now.\nI know I'm very proud of it.\nSo a nice job.\nLike Applebee's, we've made great progress this quarter compared to where we were during the pandemic as well.\nOur first quarter comp sales improved sequentially by 8.9 percentage points compared to the fourth quarter.\nAs our business improved, our average weekly sales in dollars has grown significantly and surpassed pre-pandemic levels at times during the quarter as stimulus checks provided our guests with additional buying power.\nAverage weekly sales were approximately $26,000 for January and sequentially increased to just under $36,000 from March, reaching a high for the quarter of approximately $40,000.\nRegarding our domestic restaurants opened for business, 97% of restaurants were opened for dine-in service with restrictions in most states as of March 31.\nThat compares to only 70% with dine in as of December 31.\nWith guests eager to return to in restaurant dining, we're pleased that California recently increased indoor restaurant capacity to 50%.\nIHOP's presence in California makes up approximately 13% of our domestic business.\nSo we're optimistic about the potential lift overall there.\nTo drive sustainable growth, we're continuing to execute against four strategies.\nAs I discussed with you last quarter, these are focusing on our p.m. dayparts, providing compelling value, maintaining our gains in off-premise sales, and lastly, our development growth.\nOur plans have yielded tangible results.\nTo provide some color on our first two strategies, focusing on that p.m. daypart in value.\nWe launched IHOPPY Hour in September of last year to offer our guests a broad selection of value options during those nonpeak daypart hours, mainly two to 10 p.m. IHOPPY Hour continues to drive incremental sales even as business improves across all of our dayparts.\nAdditionally, IHOPPY Hour traffic is two to three times higher than the rest of the day compared to September 2020 when we launched it.\nThis actually equates to a low to mid-single-digit lift in sales for the entire day.\nTo further increase the appeal of our IHOPPY Hour's menu, which has been very well received by our guests, we plan to update the menu items over time.\nWe're continually innovating to maintain IHOP's category-leading position in family dining.\nOur latest innovation is IHOP's new steakhouse premium bacon, which is available on our new bacon obsession menu.\nThis makes IHOP the first national family dining restaurant chain to offer this type of thick cut premium bacon.\nThe bacon obsession menu continues to solidify our position as the leader in breakfast and highlights our commitment to both innovation and value across all of our dayparts.\nDuring 2020, we played both defense and offense to remain resilient during and also prepare to thrive after the pandemic.\nWe played defense by making operational changes and moving heavily or completely at times into alternative occasions.\nBut we also invested heavily in our menu and preparation for the recovery.\nWe wanted to be ready with a fresh and appealing menu for guests to enjoy when they return to our restaurants, but also accommodate guests, who choose to dine on-premise.\nThis culminated in the launches of IHOPPY Hour and our signature Burritos & Bowls.\nBoth have been very well received by our guests.\nBurritos & Bowls perfectly filled the gap we had in our menu and continues to capture 8% to 10% of total ticket order incidents since we launched it with really minimal promotion.\nOur overarching menu strategy underscores innovation and supports both breakfast and non-breakfast occasions while also being portable for guests on the go.\nNow let's switch gears to our third strategy of maintaining our gains in on-premise sales.\nDespite capacity restrictions generally being eased across the country in the first quarter, our off-premise sales held steady at 33.3% of total sales.\nThat's flat compared to the fourth quarter.\nHowever, we've seen a steady increase in net off-premise sales in dollars.\nFor the first quarter, our sales mix consisted of 66.7% dine-in, 16.8% to go and 16.4% delivery.\nWe continue to believe that sustaining off-premise sales mix at a much higher rate is feasible in a post pandemic environment, and will strongly complement the anticipated return of our dine-in business.\nIn fact, our weekly off-premise sales in March reached dollar levels higher than we were 100% off-premise last year, even at the higher than shutdowns.\nIn the first quarter, as the overall business increased, so has the to-go business.\nThe pandemic has certainly influenced consumer behavior and change how guests use IHOP.\nWe adapted to the changes in this behavior through innovation and developing highly affordable items such as Burritos & Bowls.\nWe believe the convenience of takeout delivery will remain appealing to our guests.\nTurning to our forward strategy development.\nWe have the benefit of being able to now provide our franchisees with four different development platforms.\nThese includes -- include our traditional formats, nontraditional, our first Flip'd by IHOP locations, which we plan to open in 2021 and a new small prototype that we intend to test this year.\nIn the first quarter, our franchisees opened eight new restaurants globally, and for the remainder of the year, we expect to resume development that was paused due to the pandemic.\nLooking ahead, we have a plan in place for more robust development starting in 2022.\nWe believe the brand can potentially exceed its historical annual average of approximately 60 new restaurants opened over the last decade.\nAs we begin to plan our growth for the next three years, we intend to have a blended mix between these four types of development vehicles.\nWe made great progress over the last 12 months.\nWe're successfully executing against our four strategies and are seeing tangible results.\nIHOP remains in a position of strength and is poised for long-term growth.\nLook, I can't say it enough to all of you on the call, but the restaurant renaissance is here, and our Q1 performance is certainly evidence of that.\nI've got so much confidence in our future because I really believe that restaurants are an essential part of society and people want a place to gather and celebrate.\nAnd after 13 months of being locked in our houses, we, Americans, are ready to do that.\nOur people, our teams, our franchisees and the thousands of restaurant team members across the country are amazingly resilient.\nI mentioned last time that I worked in my parents restaurant when I was in high school.\nAnd that's why I think the favorite part of my job is when I get to visit team members in the field.\nI've finally gotten to do that in the last couple of weeks, and it's truly energizing and invigorating and what impressed me the most on my recent visits to our restaurants is that even after 13 months of extreme challenge, I was greeted with unbelievable enthusiasm and optimism about the future.\nSo as we transition to a post pandemic environment, Dine will continue to invest in innovation and the strategic platforms that we know will drive long-term sustainable growth.\n", "role": "user" }, { "content": "q1 adjusted earnings per share $1.75.\nq1 gaap earnings per share $1.51.99% of domestic restaurants open.\ncurrently cannot provide a complete business outlook for fiscal 2021.\nqtrly total revenue $204.2 million versus $206.9 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm joined by John Peyton, CEO; Vance Chang, CFO; Jay Johns, President of IHOP; and John Cywinski, President of Applebee's.\nWe're pleased with our strong Q2 results, and I'm excited to hear from Vance Chang, our talented new CFO.\nI'll start by defining this moment in time.\nThe restaurant renaissance is clearly driving our rebound at Dine Brands and Americans are returning to indoor dining.\nAnd now that Americans are back, we're pivoting from triage to acceleration.\nAnd what I mean by that is we're accelerating the innovation and the reinvention of the guest experience.\nToday, I'm thrilled to report that our investments in innovation and the resiliency of our franchisees and team members is clearly paying off.\nDuring Q2, both Applebee's and IHOP posted significant improvements in comp sales.\nAnd this is important, both brands are fundamentally improved businesses due to off-premise sales.\nAnd I'm seeing that for myself.\nI've been on the road.\nI've now met with 61 franchisees and toured our restaurants in Ohio, New York City, Connecticut, New Jersey, Vegas and Atlanta.\nAnd each conversation with a franchisee or a team member or a restaurant manager reinforces for me our unique advantages that ensure our business is built to win.\nFirst, we've got two iconic brands that thrive based on guest connection.\nCollectively, Applebee's and IHOP has been serving communities for more than 100 years.\nBoth brands are beating their comp set because our guests have long-lasting emotional connections that endure even during these tough times.\nSecond, our guest satisfaction is strong, and that's impressive because many of our restaurants are operating with less labor than they're used to.\nAnd finally, we work side-by-side with experienced, talented franchisees who are doing extraordinary things and as a result, are emerging from the pandemic with stable financial fundamentals.\nSo here we go.\nI'll recap second quarter highlights, including comp sales, EBITDA, free cash flow, off-premise growth and development.\nSo first, according to Black Box, and this is terrific, Applebee's and IHOP, each outperformed their segments in Q2, and both brands' second quarter comp sales improved compared to the first quarter.\nSpecifically, Applebee's second quarter comps increased by 10.5%, and IHOP's comps declined by 3.4%, which reflects an improvement of 17.8 percentage points compared to the first quarter.\nWe achieved revenue of $233.6 million and EBITDA of $71.7 million, which reflects the continued strength of our franchise model and a gradual return to steady state.\nWe generated free cash flow of $107.3 million during the first six months of the year, which is consistent with Dine's track record of generating strong and stable adjusted free cash flow.\nAnd finally, in Q2, we opened 10 new restaurants signaling the growing confidence our franchisees have in our brands and in putting their capital back to work.\nNow despite what is still a fluid and unpredictable environment due to the delta variant and COVID-19, we remain cautiously optimistic, and there are two main reasons why.\nFirst, improving consumer confidence is approaching pre-pandemic levels.\nIt looks like federal spending will continue this time via the Infrastructure Bill and low unemployment are all meaningful tailwinds.\nNow that said, our optimism is somewhat tempered by continued volatility.\nFor example, the labor shortage is affecting wages, hours of operation and the availability of certain SKUs in our supply chain.\nInflation is also in concern for our guests as well as for our network.\nWe're seeing its effect on the cost of paper and packaging, oils, poultry, pork products and eggs.\nAnd based upon current conditions, we now expect commodity inflation in the range of approximately four percent to five percent for the full year.\nAnd the final unknown, of course, is the delta variant, which is largely regional at this time.\nOur outlook would certainly be impacted if large areas of the country return to lockdowns or restaurant guests become uncomfortable dining out.\nAnd now that I've covered our performance, I want to give you a more complete picture of how we're accelerating innovation through digital technology.\nAt Dine, we're leaning into our scale.\nOur strategy is to build one common digital architecture for both Applebee's and IHOP that enables us to do more for both brands than either brand could invest on its own.\nSo far, just in 2021, we've implemented a new CRM and digital platform that enables sophisticated offer management, strengthens our digital marketing and marketing analytics and improves our management of customer data while also serving as the backbone for our loyalty programs.\nWe've also rolled out upgrades to our apps and our websites.\nNow we provide a more seamless food order experience.\nFor example, guests now have more ability to customize their orders, and it takes fewer clicks to navigate the menu.\nAnd these new apps and websites provide us a more comprehensive understanding of our guest purchasing preferences and online behavior.\nWe've also added cool functionality like geo sensing to track guest arrival in advance of car side or in-restaurant pickup and delivery.\nAnd in our call center, approximately 150 Applebee's are on our new AI and fully automated voice ordering platform.\nIn 2021, we've also introduced tech to improve the on-premise dining experience.\nThat includes handheld devices for servers that are now in 500 Applebee's restaurants.\nThose handhelds drive faster table turns, additional drink orders and most importantly, one of our servers in Atlanta told me that she's earning more money because she's turning her tables faster.\nWe also introduced pay-and-go that enables guests to pay at the table using their own device, and the digital wallet that allows guests to redeem offers and coupons from their phone.\nAnd finally, later this year, IHOP will begin to roll out new point-of-sale and kitchen display technology.\nWe expect the new POS and KDS systems to reduce the cost of labor, ensure food is served hot and with improvements in order accuracy.\nAnd importantly, the new POS and KDS will integrate order flow between digital and on-premise to seamlessly support car side and to-go orders.\nAll of these digital set capabilities are new in 2021.\nAnd by end of the year, approximately 75% of our digital technology tools will be modernized or new.\nAnd this is the most robust delivery of digital tech in Dine's history.\nOur franchisees will be adopting the on-premise technology in the restaurants throughout 2021 and 2022.\nI'll wrap up by emphasizing that our performance, our brands and our finances are strong.\nWe understand that today's environment remains fluid, and we're drawing on our deep experience and guest insights to continue to share -- to continue to grow share today and in the future.\nOur new CFO, Vance Chang, is going to share more information about our financial results in just a moment.\nBut first, let me proudly introduce the newest member of our leadership team.\nVance spent the past 20 years in both banking and building high-growth consumer and healthcare companies.\nVance is here because he's an operations-oriented CFO.\nHe'll lean into our domestic and international businesses and work with those teams to fuel growth and improve profitability for Dine and for our franchisees.\nVance is a high-impact executive who's got a track record of driving innovation and delivering on execution.\nAnd that's exactly the profile we need as we pivot from the crisis to innovation that accelerates our growth.\nI'm excited to be here today, and we look forward to working with all of you in the months and years ahead.\nIt's great to be with everyone on my first earnings call as CFO of Dine.\nDuring my first month at the company, I've been meeting with team members and franchisees in reviewing plans.\nThe onboarding process was instrumental and reinforced my confidence in the business and our direction.\nI spent the past 20 years in my career in advising, investing and building high-growth consumer healthcare companies providing strategic leadership during times of meaningful change.\nWhile we all continue to emerge from the pandemic, we know there are very real challenges still ahead of us, and I recognize the obligation we have as leaders within our industry.\nFor me, it's a humbling responsibility as we work together to maximize the full potential of the enterprise and to deliver profitable growth for all of our stakeholders, including our shareholders, franchisees and team members.\nJohn just highlighted some of our baseline results, but let me spend now a few minutes talking about the financials.\nI'll begin my remarks with a review of our cash position.\nThe continued improvement in our business has helped us maintain our strong cash position.\nWe finished the second quarter with a total unrestricted cash of $259.5 million.\nThis is a 44% increase over the first quarter's unrestricted cash balance of $179.6 million.\nTurning to our operating results.\nFranchise revenues for the second quarter were $167 million compared to $67.9 million for the same quarter of 2020.\nTurning to the company restaurant segment.\nSales for the second quarter were $38.2 million compared to $16.8 million for the second quarter of 2020.\nRental segment revenue for the second quarter of 2021 were $27.4 million compared to $23.7 million for the same quarter of 2020.\nThe improvement was due to an increase in percentage rental income based on franchisees' retail sales.\nAdjusted earnings per share for the second quarter of 2021 was $1.94 compared to an adjusted net loss per diluted share of $0.87 for the same quarter of 2020.\nThe improvement was due to an increase in gross profit as our business continued to recover from the effects of the pandemic.\nRegarding our GAAP effective tax rate.\nOur effective tax rate for the second quarter of 2020 was 24% expense compared to an 8.2% benefit for the same quarter of last year.\nThe main reason for the variance was due to the nondeductible impairment of goodwill in the second quarter of 2020.\nG&A for the second quarter of 2021 was $39.3 million compared to $30.9 million for the same quarter of 2020.\nThe increase was primarily due to higher personnel costs associated with our incentive compensation accrual based on company performance.\nTurning to the cash flow statement.\nCash from operations for the first six months of 2021 was $106 million compared to cash used in operating activities for the first six months of 2020 of $10.5 million.\nThe improvement was primarily due to the recovery of our business, as discussed earlier.\nWe believe the positive trend in our liquidity and comp sales will allow us to strategically invest for growth and innovation.\nNow I would like to share some thoughts about the back half of the year.\nWe expect G&A to be higher in Q3 and Q4 relative to the first half of the year.\nAs a reminder, our G&A does include noncash expenses such as depreciation and stock-based comp that we normally add back as EBITDA, but expected increase in G&A is primarily driven by two factors: first, we pushed professional services and travel expenses to the second half of the year given the uncertainties that we faced during the first half of the year.\nSecond, higher incentive compensation is expected in the second half which is a variable component of G&A that will fluctuate based on our business performance.\nAdditionally, I would point out that our Q2 financial performance reflects strong pent-up demand that we may not experience at the same level in Q3 and Q4 in addition to the normal trends that we typically experience in the second half of the year.\nWe also have more restaurants in the first half than we will have in Q3 and Q4 due to recent closures.\nTurning to our 2021 financial performance guidance.\nI would like to highlight a revision to our G&A guidance primarily due to the factors discussed earlier.\nWe now expect G&A to range between $168 million and $178 million.\nThis compares to our previous expectation for G&A to range between $160 million and $170 million.\nOur guidance for capex of approximately $90 million for 2021 remains unchanged.\nMoving on to capital allocation.\nWe took proactive measures to reinforce our financial flexibility in early 2020, which included the temporary suspension of our quarterly cash dividend and share repurchase program.\nOn past calls, when asked about our plan to return cash to shareholders we have indicated that we wanted to see several quarters of improving performance before reinstating a dividend or buyback program.\nSince the start of the year, our fundamentals have continued to improve contributing to our strong adjusted free cash flow position as referenced earlier.\nAs we enter the back half of the year, we will have a shareholder return strategy to share with you and are considering all options to maximize shareholder return and deliver sustained long-term profitable growth for the system.\nWe will have more details on our third quarter call.\nAnd a few points on our capital structure.\nIn early 2020, Dine took pre-emptive steps to mitigate the effects of the pandemic on its operations and its franchisees including voluntarily increasing the interest reserve for our securitized debt from the required $16.4 million to $32.8 million.\nI would like to highlight that due to the improved -- strong improvement in our business over the last 12 months, we have decided to reduce the interest reserve back to $16.4 million.\nOur leverage ratio as of June 30 was 4.9 times compared to four times as of March 31.\nWith our leverage ratio back below 5.25 times, we will no longer be required to make principal payments on our 2019 Class A-2 notes after September.\nI would also like to highlight that we continue to have significant cushion in our debt service coverage ratio, or DSCR, at 4.6 times as of June 30.\nThis is an improvement from the DSCR of 3.45 times as of March 31.\nAs a reminder, the first key DSCR measurement is not tripped until the ratio falls below 1.75 times.\nMaintaining our financial flexibility to meet our debt service obligations is one of our highest priorities.\nWe'll continue our disciplined approach to monitoring liquidity, especially during these times of uncertainty due to the pandemic.\nWe're very pleased with our achievements and remain cautiously optimistic about our recovery.\nWe've done a lot of the heavy lifting to build a solid foundation for long-term growth.\nYour timing is good.\nI'm very pleased to report that Q2 was an exceptional quarter for the Applebee's brand.\nWhen compared with our 2019 baseline, April, May and June comp sales were positive 11.7%, positive 8.1% and positive 11.4%, respectively.\nThis combined plus 10.5% result marks the best quarterly sales performance throughout the 14-year history of Dine Brands.\nOf course, that excludes the anomaly of the 2021 versus 2020 pandemic year.\nRestaurant sales delivered approximately $53,000 per week throughout the quarter.\nTo put this in proper perspective, the months of March, April, May and June in sequence ranked as Applebee's four highest weekly sales months under Dine's ownership.\nI'm particularly proud of our franchisee partners and the entire Applebee's team as they continue to showcase their restaurant-level excellence within an obviously challenging environment.\nAccording to Black Box Intelligence, Applebee's has now outperformed the casual dining category on comp sales for 25 consecutive weeks by an average of 596 basis points.\nAs expected, with guests returning to our dining rooms, we experienced a natural shift from off-premise sales to dine-in sales in Q2.\nTo better understand this trajectory, dine-in mix moved from 67% in April to 72% in June, with 16% Carside To-Go and 12% delivery in June, reflecting this gradual migration to a normalized post-pandemic mix.\nApplebee's off-premise weekly sales in June was $14,700 per restaurant.\nAnd as a percentage of total sales, it's reasonable to assume our off-premise mix may ultimately settle in the low to mid-20% range.\nI should note, this represents about double our pre-pandemic off-premise mix of 12%, illustrating Applebee's enhanced relevance within this convenience-driven occasion.\nGiven the importance of this business, we are expanding our initial drive-through test to include an additional six units in Q4 for a total of seven dedicated Applebee's pickup windows.\nNow this off-premise mix includes our Cosmic Wings virtual brand, which we were planning to expand to DoorDash, as you recall, in early May.\nHowever, due to significant chicken wing supply challenges across America, we postponed our DoorDash expansion to a date to be determined contingent upon supply availability.\nWe anticipate meaningful incremental demand with this expansion, and we want to ensure supply -- sufficient supply to properly satisfy this demand.\nIn the meantime, I'll hold off commenting further on Cosmic Wings results until we pull this lever with DoorDash hopefully at the end of Q4.\nTurning to restaurant execution.\nApplebee's continues to resonate with our guests on key operational metrics such as guest satisfaction, brand affinity and visit intent.\nThis is noteworthy given persistent labor challenges throughout the industry.\nTo address this challenge, we executed our first National Hiring Day back on May 17.\nLeveraging our extensive digital assets, we offered a free appetizer in return for an application and an interview, something we playfully branded, Applebee's app for an app.\nHoping to generate 10,000 applications, our franchise partners ended up securing more than 40,000 applications with a single day event, ultimately hiring about 5,000 new team members that week, a terrific result.\nAnd our success here once again illustrates the benefits of scale and brand reputation in navigating this tough labor environment.\nApplebee's continues to lead the casual dining category on affordability, menu variety, to-go awareness, brand awareness and advertising awareness, which remain important attributes for us in this competitive landscape.\nWith smart and strategic media allocation, our teams introduced a balance of new salads, bowls and beverage innovation throughout Q2 with our newest menu hitting restaurants in two weeks.\nWe also shifted our brand messaging to focus on the genuine emotional connection Applebee's has with its guests, a connection we believe is more important and relevant than ever given all this country has endured over the past 16 or 17 months.\nI'm proud of the authenticity and resonance this work delivered in Q2.\nAnd since music is so much a part of our brand DNA, I also wanted to highlight that the current number one song in iTunes in Billboard's top country music is titled Fancy Like from artist Walker Hayes.\nAnd this is important because this song lyrically is all about date night at Applebee's, and it's gone viral in a big way on social media, TikTok, Instagram and YouTube, providing great buzz for the Applebee's brand.\nAdditionally, we entered into a very exciting relationship with The Walt Disney Company in support of their current number one film Jungle Cruise as a way to celebrate and encourage the return to dinner and a movie this summer, a wonderfully familiar part of Americana that we all weren't really able to enjoy for a very long time.\nHopefully, you've had a chance to see our advertising featuring Dwayne, The Rock Johnson and Emily Blunt, set to the classic tunes Rock the Boat and Born to be Wild.\nBoth of those debuted in the NBA championship game on July 20.\nAnd to capitalize on the synergy, we've also developed a business partnership with Dwayne Johnson, the entrepreneur to introduce his new and fastest-growing premium tequila brand, Teremana into all Applebee's restaurants in July.\nDwayne has proven to be a tremendous partner as these signature $7 Mana Margaritas are now available everywhere and proving to be extremely popular with our guests.\nAs we look forward, you can expect our Q3 and Q4 media spending to remain substantial and favorable when compared with the same quarters in 2019.\nTo wrap up, while Applebee's momentum remains strong, it would be unrealistic to expect these unprecedented double-digit sales to sustain in the back half of this year.\nWith that said, Eatin' Good in the Neighborhood has never been more relevant than it is today, and I'm confident in Applebee's ability to continue to thrive in this environment.\nI'll now turn it to Jay Johns for an overview of the IHOP business.\nCongratulations on another great quarter.\nI'm pleased to report that IHOP's solid trajectory continued this quarter.\nOur second quarter comp sales improved sequentially by 17.8 percentage points compared to the first quarter and outperformed the family dining category as well by 150 basis points according to Black Box.\nAnother indication of the health and stand of our business is the growth in domestic average weekly sales every month in the first half of the year.\nFor the second quarter, average weekly sales were 28% higher than Q1.\nAverage weekly sales per week were approximately $38,000 in April and increased to just over $39,000 by June, reaching a high for the quarter of approximately $40,000.\nAs dining room capacity restrictions were eased and consumers satisfied the longing for a sit-down meal to favorite IHOP, our off-premise sales mix moderated as anticipated.\nOff-premise sales accounted for 26.1% of sales mix for the second quarter compared to 33.3% for the first quarter.\nHowever, we continue to believe that we'll retain the majority of the off-premise sales growth attained over the last 15 months, partly due to changes in consumer behavior.\nAccording to a May 2021 survey by McKinsey & Company, consumers intend to continue with many digital behaviors even after COVID-19 subsides, including restaurant curbside pickup.\nIn fact, our net off-premise sales in dollars improved each month in the second quarter.\nAdditionally, off-premise comp sales increased 169% in the second quarter of 2021 compared to the same period of 2019.\nFor the second quarter, our sales mix consists of 73.9% dine-in, 13.9% delivery and 12.2% To-Go.\nApproximately 85% of our domestic restaurants are open for standard operating hours or greater and approximately 27% are operating 24/7.\nWe believe that having more restaurants operating on standard hours or longer, reduced capacity restrictions and higher vaccination rates could be a potential tailwind in the second half of the year.\nTo drive traffic and sustainable long-term growth, we're executing a multi-pronged strategy.\nThis includes our new approach to marketing, launching a loyalty program, developments and virtual brands.\nI'll provide some color on each of these.\nWe're adopting a new marketing tone aimed at leveraging the emotional connection of our guests that they have for IHOP.\nOur new creative is designed to remind consumers why they love the brand.\nWe're taking a multichannel approach to better utilize our resources such as increasing our digital exposure.\nWe believe doing so will allow for more effective one-to-one marketing and better targeted messaging to different audiences.\nI'm pleased to say the marketing transformation is already underway.\nRegarding our loyalty program.\nWe plan to launch a loyalty program in the fourth quarter to increase guest engagement.\nOur goal is to drive trial and importantly, incremental visits from existing IHOP guests.\nAt IHOP, the pandemic forced us to reflect and refocus on our relationships with our guests within a transforming restaurant industry.\nAt the same time, we actually grew our investments in CRM and customer-facing technologies, delving down our commitment to modernize our guest relationships.\nOver the past 12 months, we've invested in CRM, loyalty and digital experiences.\nWhile much of this work has been foundational, we expect to see some of these elements coming to life later this year.\nWe're focused on returning to strong unit growth.\nI highlighted last quarter, we have the advantage of being able to provide our franchisees with four platforms to accommodate their development needs.\nThese include our traditional platforms, nontraditional, a new small prototype is scheduled to test this year and our first Flip'd by IHOP locations, which we plan to open in the next few months.\nRegarding Flip'd, we now plan to open our first location in Lawrence, Kansas in the third quarter.\nThis location will be approximately 3,500 square feet and is a freestanding structure with 55 seats.\nOur second Flip'd location is now scheduled to open late in the third quarter in New York City.\nThis location is a conversion space that will be approximately 1,800 square feet with only 25 seats.\nBoth locations will have the same menu that will address all three dayparts while leveraging the equity of IHOP that guests love.\nImportantly, IHOP provides franchisees with conversion opportunities across all of these platforms, which can be very cost effective.\nAt the sites we've approved for the future this year, approximately 42% are conversions.\nFor 2021, we believe the brand can develop 40 to 50 new restaurants.\nLooking ahead in the next three years, our development strategy includes a blend of our four development platforms.\nAnd with the addition of Flip'd and the introduction of small prototype, we believe the brand can significantly exceed its historical annual run rate over the last decade.\nTurning to virtual brands.\nWhile our focus so far this year has been on restarting and have strong development, we believe the time is appropriate to start evaluating third parties with several brands to partner with.\nGiven that approximately 70% of our domestic restaurants have two full kitchens, we have capacity that can accommodate multiple virtual brands.\nWe're currently reviewing our daypart strategy and assessing how to best utilize our existing capacity.\nDue to the fact we're in the preliminary stage of this, it's too early to discuss who we may work with as a virtual brand partner.\nWe've made good progress over the last year.\nOur business has improved significantly, off-premise sales remained strong even as dining room capacity restrictions were generally eased.\nThe majority of our domestic restaurants are operating on standard hours or longer, and we believe there's additional upside as well as restaurants resume standard operating hours later than the year.\nWe have a multipronged plan in place for long-term growth.\nThe road ahead for IHOP looks bright, and I'm very pleased with our position.\n", "role": "user" }, { "content": "q2 adjusted earnings per share $1.94.\nbelieves that its consolidated financial results for 2021 could continue to be materially impacted by covid-19.\nrevises expectations for general and administrative expenses for 2021 to range between about $168 million and $178 million.\nqtrly total revenues $233.6 million versus $109.7 million.\ndine brands global - looking ahead, optimism is somewhat tempered by continued volatility, which include labor shortages and variants of covid-19.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm joined by John Peyton, CEO; Allison Hall, Interim CFO and Controller; Jay Johns, President of IHOP; and John Cywinski, President of Applebee's.\nI'll start by saying it's an honor for me to join Dine Brands.\nI believe in Dine Brands because I believe in restaurants.\nRestaurants are essential to strong communities and human connection and people appreciate that now more than ever before.\nI believe we're on the cusp of the restaurant renaissance.\nAnd as we enter what we expect to be the beginning of the end of the pandemic, all restaurants face the common challenge and that's the eating out in America has changed.\nThose will win in the new era of restaurants are those who remained resilient and those who invested in new menu and service innovations and new technology during 2020.\nAnd that's the story of Dine Brands.\nWe have solid fundamentals, two category-leading iconic brands and certainly the most talented team members and franchisees in the industry.\nLet me pause and tell you a bit about my story.\nAs a teen, I worked in my parent's restaurant.\nIt was called the [Indecipherable] Philadelphia and I was certainly humbled and stunned by the almost 24/7 demands required at my parents'.\nAfter college, I went on to work as a consultant for PwC, I then was at Starwood Hotels and most recently at Realogy.\nI joined Dine because I believe in the power and lure of strong brands.\n20 years ago, a mentor of mine who was a marketing wizard, taught me that brands win when they're different, better and special.\nAnd our brands are truly different, better and special.\nIHOP, for example, is a pancake obsessed breakfast innovator that makes the most important meal of the day, also the most fun.\nAnd Applebee's embodies what it means to be all American and locally relevant.\nWe call that Eatin' Good in the Neighborhood.\nIn other words, Applebee's and IHOP are iconic brands that connect in an emotional way with our guests.\nAnd that's important because we know restaurants are essential to the fabric of community and human connections.\nI also like our business model.\nWe're 98% franchise and asset light.\nWe are a significant generator of cash.\nOur franchise model helps buffer us from fluctuations in the market and our model generally requires less significant investments of capital and it allows those who are best operating restaurants or franchisee owners to do so with our support.\nMy 20-plus years at Starwood and Realogy taught me that successful franchising requires true partnership and that we work hard every day to ensure that our independent franchisees build valuable businesses that create generational wealth.\nSo over the last two months, I've been on the move.\nI've conducted a deep dive across the Company, learning more and more about our brands and Dine's dynamic corporate culture.\nSo far, I've spoken with 40 franchisees in the U.S. and around the world and they represent 50% of the Applebee's system and more than a third of our IHOP restaurants.\nI've also connected with our suppliers and our vendors and our team members.\nI visited our restaurants, and our test kitchens.\nAnd I can report that our network is aligned and is desired to grow and to invest and to win.\nNow, despite the impact of the pandemic, Dine's fundamentals remain solid.\nYou may recall that in March of 2020, S&P placed the Company's whole business securitization notes on credit watch-negative as it did with two other whole business securitizations in our industry at that time.\nSix months later, S&P removed our notes in credit watch and reaffirmed our BBB rating.\nDine was the only issuer of the series and not have its notes downgraded or remain on credit watch due to the pandemic.\nS&P's decision last fall was a greatest achievement for Dine and illustrates that our fundamentals remain strong.\nAnd because we emerged in 2020 on sound financial footing, we plan to repay in full the $220 million drawn from our revolver last March.\nWe expect to complete the repayment this month, resulting in interest expense savings of approximately $5 million.\nIn addition to strong fundamentals, we have passionate franchisees who remain in very good standing.\nOur collection rate for royalty and marketing fees stands at approximately 99% and the fees we deferred during Q2 of last year are being paid back according to schedule.\nAnd in addition to our fabulous franchisees, importantly, both brands are led by veteran executive team with exceptional experience and industry knowledge.\nYou'll hear from Jay and John shortly and it's their expertise and collective wisdom that truly paid off via their extraordinary stewardship of the brands in our franchisees throughout the challenge of 2020.\nSo looking ahead, we're anticipating rebound in the second half of the year, driven primarily by increases in vaccination rates.\nOverall weekly sales trends for both brands have also improved since the week ending January 3 of 2021, Applebee's improving by approximately 8 percentage points and IHOP posted gains of about 6 points.\nWe're also encouraged by our off-premise business.\nBoth brands maintained off-premise sales of approximately one-third of total sales during the fourth quarter and we view off-premise dining as a new consumer behavior that will live beyond the pandemic.\nWe're continuing to invest in technology to support our growing off-premise business and we're certainly optimistic about the outlook for Applebee's and IHOP because during times of crisis, guests just like me, and just like you look to brands we trust and if restaurant guests return to indoor dining, guests will trust that our franchisees and restaurant team and IHOP and Applebee's are committed to their health and safety.\nSo taken collectively, these fundamentals uniquely position Dine Brands to endure the challenges brought on by the pandemic and position us for long-term sustainable growth.\nOur team is focused on three objectives over the next 12 months to 24 months.\nThe first is to navigate what we believe is the beginning of the end of the crisis.\nThe second is to win the recovery and win the new normal that follows.\nAnd the third is to evaluate long-term growth vehicles.\nSo allow me to share a bit of my thinking about each of those.\nFirst is to navigate the beginning of the end of the crisis.\nOf course, we'll continue to monitor and protect cash and we will also focus on continuous improvement in operational health and safety standards in our restaurants.\nWe're preparing compelling marketing campaigns and new products to drive the recovery growth and we are working intensely to ensure the financial health of our franchisees.\nSecond, we'll win the recovery and win the new normal by leveraging our recent investments in business and consumer insights, CRM and digital to reactivate our guests via one-to-one and highly targeted marketing and we'll realign our menu to reflect learnings in the past 12 months and we'll reset the channel mix to reflect those earnings as well.\nAnd third, we'll continue to evaluate long-term growth vehicles both traditional and non-traditional development, which includes everything from new prototypes for both brands, virtual brands and ghost kitchens, both of which we have the efforts under way and we'll take a look at international expansion opportunities in key markets and possibly explore incorporating a third brand at the right time.\nSo as I wrap up, I want to emphasize the Dine views the crisis as both a threat and an opportunity.\nAnd while we knew it was important to play defense to protect our liquidity and our flexibility, we also played offense so that we would emerge from the crisis in a position to serve more guests both inside and outside of our restaurants.\nBecause we played offence in 2020, we continue to invest in new digital and CRM products that are coming online early this summer as well as innovative menu items like IHOPPY Hour and Burritos & Bowls at IHOP and Applebee's new virtual brand, Cosmic Wings.\nAnd while we were investing in new technology and menu offerings, our franchisees invested in supporting the local communities by feeding and sheltering frontline workers and those in need.\nAnd so if all of these investments combine, that will pay off as our guests return to indoor dining.\nI'll begin with a business update, then review our results for the fourth quarter and the full year.\nLastly, I'll discuss our financial performance guidance for 2021.\nDuring a very challenging year, we took steps to maintain our financial flexibility, including drawing down $220 million in March 2020 from our revolving credit facility, all of which remain outstanding as of December 31.\nAs John just mentioned, we plan to repay the $220 million during the month of March.\nDue to this proactive measure, we continue to have very strong liquidity.\nWe ended 2020 with total cash and cash equivalents of $456 million, which includes restricted cash of $72.7 million.\nExcluding the $220 million drawn from our revolver, cash on the balance sheet was $64 million higher at the end of 2020 compared to year-end 2019.\nThe increase was primarily due to the temporary suspension of both our quarterly cash dividends and our share repurchase program.\nThese steps were taken in response to COVID-19 pandemic and the need to maintain financial flexibility.\nAdditionally, we maintain tight G&A management during the year of austerity and we're able to lower compensation costs following the difficult decision to furlough approximately one-third of our corporate staff for several months during 2020.\nTurning to our financial results, I'll begin with the notable changes on our income statement.\nFor the fourth quarter, adjusted earnings per share of $0.39 compared to $1.78 for the same quarter of 2019.\nFor 2020, adjusted earnings per share was $1.79 compared to $6.95 in 2019.\nThe year-over-year decrease was due to a significant decline in customer traffic resulting from governmental capacity restrictions on dining room operations.\nThis led to declines in domestic comp sales at both brands and a decrease in the number of Applebee's and IHOP effective restaurants and lower gross profit.\nThe impact of the pandemic on franchise operations resulted in an increase in bad debt.\nFor 2020, our bad debt was approximately $12.8 million as compared to virtually no bad debt for 2019.\nSwitching gears to G&A.\nGiven our asset-light business model, G&A remains an important lever for us.\nIn 2020, it constituted 30% of our total revenues excluding advertising revenues.\nG&A for the fourth quarter of 2020 improved to $39.4 million from $41.7 million for the same quarter last year.\nThe decline was primarily due to lower travel and compensation costs.\nG&A for the fourth quarter was lower than our guidance of approximately $45 million, primarily due to our ability to tighten G&A controls in response to the resurgence of coronavirus cases.\nG&A for 2020 was $144.8 million, including $4.3 million related to the company restaurants segment.\nThis compares to $162.8 million in 2019.\nThe decline was primarily due to G&A tighter management around that, which included a decrease in compensation and travel-related costs.\nNow turning to the cash flow statement.\nCash from operations for 2020 was $96.5 million compared to $155.2 million in 2019.\nThe change was primarily due to a decrease in total revenue, resulting from the decline in guest traffic at our restaurants as previously discussed.\nOur highly franchised model continued to generate strong adjusted free cash flow of $106.6 million in 2020 compared to $148.8 million in the prior year.\nThe decline was primarily due to the decrease in cash from operations just discuss, primarily offset by lower capex compared to 2019.\nWe believe that our cash on hand, cash from operations and the steps we've taken to mitigate the effects of the pandemic will allow us to continue to remain with strong liquidity throughout the year as our business continues to improve.\nNow regarding capital allocation, we continue to reevaluate our capital allocation strategy as industry conditions continue to improve and normal restaurant operations resume.\nAs previously discussed, we plan to repay the $220 million drawn last March.\nAdditionally, we will review reinstating our quarterly cash dividends and resumption of our share repurchase program.\nWe will also reevaluate investments in our existing brands to enable both -- platforms for both organic and non-organic growth.\nNow for an update on our franchisee assistance program.\nDine Brands provide approximately $55.7 million in royalty, advertising fees and rent payment deferrals to our franchisees and continue to provide assistance on a case-by-case basis.\nIn total, we provided approximately $61 million deferrals to 223 franchisees across both brands, of which 61 have repaid their deferred balances in full.\nOverall, a total of approximately $32 million of the original subsequent deferrals have been repaid and repayments are on track.\nRegarding adjusted EBITDA, our consolidated adjusted EBITDA for 2020 was $158.7 million compared to $273.5 million for 2019.\nThe decrease was primarily due to a significant decline in customer traffic resulting from a governmental mandated dine-in capacity restrictions discussed earlier.\nThis led to decreases in both revenues and gross profit in 2020 compared to 2019.\nBecause of our asset-light model and low capex requirements, we continue to have very high quality adjusted EBITDA as capex represented only 7% of 2020 adjusted EBITDA.\nLastly, I will review our financial performance guidance for fiscal 2021, which reflects the projected impact over the pandemic on our guidance as of today.\nDue to ongoing uncertainty created by COVID-19, we clearly cannot provide a complete business outlook for the year.\nAs our business conditions continue to improve and dining capacity restrictions are lowered, we will evaluate providing additional performance guidance as necessary.\nWe're not offering guidance around development comp sales because of the uncertainty of the recovery this year.\nHowever, I can tell you, G&A is expected to range between approximately $160 million and $170 million including non-cash stock-based compensation expense and depreciation of approximately $45 million.\nPlease note that this range includes approximately $5 million of G&A related to the company restaurants segment and capital expenditures are expected to be approximately $14 million inclusive of approximately $5 million related to the company restaurants segment.\nTo wrap up, Dine Brands has significant cash on the balance sheet and has maintained strong financial flexibility despite the adverse conditions in 2020.\nComp sales of both brands have improved significantly since the onset of the pandemic.\nAlthough there is a lot of work that's still ahead of us, we believe accomplishments this year have laid a solid foundation for growth.\nI'm very proud of what this Applebee's team accomplished in 2020 and remain extremely optimistic about our business prospects here in '21.\nIn partnership with our franchisees, we fundamentally altered our business model to adapt to this new environment.\nApplebee's comp sales progressed from minus 49.4% in Q2 to minus 13.3% in Q3 to minus 1.9% in the month of October when we last spoke.\nAlmost immediately thereafter, the country experienced a rather abrupt resurgence of COVID directly impacting our Q4 trajectory.\nAs a result, November comp sales were minus 15% while December came in at minus 30.1%.\nNow the good news is that business is now improving as comp sales for January and the first three weeks of February combined were minus 18.1%, rolling over a very strong 3.3% increase from the same timeframe last year.\nAdditionally, given COVID-related restrictions, we scaled back our media spending in December, January and February.\nIt's also important to note that not all casual dining brands are impacted equally by these restrictions given each brand's geographic distribution.\nApplebee's has a disproportionately heavy penetration of its restaurants in the Northeast and Midwest, two geographies, obviously hardest hit by dining restrictions.\nWhile reflected in these recent results, this will ultimately and disproportionately benefit us as restrictions are eased over the coming months.\nFor context, at the end of December, 412 of our dining rooms were closed due to government imposed mandates.\nIn many respects, our current operating environment feels very similar to late summer of last year if you recall when we saw Applebee's sales momentum accelerate as restrictions were eased, including our first positive sales week at the end of September.\nAnd barring unforeseen circumstances, I anticipate a similar dynamic to unfold very soon here in '21.\nNow for the month of February, Applebee's sales mix consisted of 63% dine-in, 22% Carside To Go, and 15% delivery.\nOn the off-premise front, we continue to enhance Carside To Go with the upcoming introduction of a third-party app called FlyBuy that notifies restaurant teams through geofencing the moment our guest arrives on the lot.\nAlso, our franchise partner in Arkansas recently opened Applebee's first drive- thru window.\nIn addition to being very well received by team members and guests, this dedicated drive-thru lane eliminates weather challenges, improves throughput and importantly extends our late night to-go operating hours.\nFrom a delivery perspective, our tamper-evident packaging is now fully deployed throughout the brand as another visible point of guest reassurance.\nWithout question, our off-premise investments over the past year have broadened Applebee's reach and relevance across this important convenience-driven occasion.\nNow with respect to Applebee's on-premise business.\nI anticipate our 63% sales mix to naturally elevate this year, as indoor dining gradually returns.\nAnd I firmly believe dining room service will be an unmistakable core strength for Applebee's, as guests look for that long overdue escape from home, where they can once again connect with one another over a good meal and perhaps a drink.\nMost importantly, these guests will naturally gravitate to brands that have earned their trust and loyalty throughout the pandemic.\nOn this front, we're confident Applebee's is exceptionally well positioned.\nThis optimism is supported by our very strong brand affinity and visit intent metrics, which have proven to be reliable leading indicators of brand performance.\nAnd as the year progresses, we'll continue to deploy guest-facing digital technology such as our pay-and-go initiative designed to provide easy mobile payment options without the need for a server.\nNow, I'd like to take a moment to discuss our virtual brand evolution.\nAs you may know, we just launched Cosmic Wings nationally on February 17, introducing a fully differentiated virtual brand, targeting a younger audience around the wings meal occasion.\nAt the moment, Cosmic Wings remains an online delivery-only concept available via Uber Eats and fulfilled through approximately 1,250 Applebee's kitchens.\nIn addition to craveable wings, tenders, waffle fries and onion rings, the team has developed a proprietary menu of Cheetos original wings, Cheetos Flamin' Hot wings as well as Cheetos cheese bites.\nThis innovation work is exclusive to Applebee's and the culmination of our ongoing partnership between our culinary and marketing teams, franchisees, PepsiCo and Frito-Lay.\nWhile it's far too early to draw any conclusions, Cosmic Wings averaged $510 of incremental sales per restaurant last week in its first full week of operation, showing a steady build from day to day.\nWe're very pleased with these initial results, and we'll certainly be in a better position to quantify the ultimate financial impact of Cosmic Wings on our next call.\nWe've also been active in piloting our first ghost kitchens in partnership with our franchisees, with two in Philadelphia, one in Los Angeles and another soon to open in Miami.\nTo clarify, these are low capital investment, small footprint kitchens without a street front presence designed to satisfy online delivery demand for Applebee's, where we currently don't have restaurant penetration.\nThe business model here appears attractive in the right geographies, where a brick-and-mortar presence may not be feasible.\nNow, as I reflect upon this past year, I know our guests genuinely trust Applebee's perhaps now more than ever.\nWhether it's in their family rooms or in our dining rooms, there is no more relevant brand positioning for this environment than Eatin' Good in the Neighborhood as John referenced.\nTo this point, last week, we launched our latest national event, 5 Boneless Wings for $1 with the purchase of any burger, which is resonating extraordinarily well.\nIn fact, last week, Applebee's achieved our single highest sales volume week since the pandemic outbreak in mid-March of last year, that's 50 weeks ago.\nIt's also worth noting that we are strategically and tactically aligned with our franchisees around our full-year marketing and innovation plan along with contingencies, given the obvious need for agility in this environment.\nIn closing, I believe Applebee's is near an inflection point, and that America's pent-up demand for dining out is indeed very real.\nWe saw this trajectory last year up until the resurgence of the virus, and I'm confident we'll see it again this year very soon.\nAnd when this does occur, our franchise partners are very well positioned to not only return to sustained growth, but to thrive in a post-pandemic environment as they unlock the full potential of the Applebee's brand.\nWith that, I'll turn it to Jay.\nWe are very optimistic about the road ahead for IHOP for several reasons.\nFirst, our quarterly comp sales improved meaningfully from a decline of 59.1% for the second quarter to a decline of 30.1% for the fourth quarter, reflecting a net increase of 29 percentage points since the pandemic began.\nSecond, the brand is well positioned to benefit from pent-up demand when restrictions on the dining room capacity are eased and we have a strategy in place to capture it.\nLastly, our development pipeline remains strong and new opportunities are being pursued.\nAs we closed out the fourth quarter, IHOP's comp sales declined 30.1%, which is on par with the family dining category.\nOur performance, especially the final six weeks, was adversely impacted by the resurgence in coronavirus cases.\nWe were particularly impacted in California and Texas, which collectively comprised approximately 25% of our domestic restaurants.\nOur results for January 2021 improved to minus 26.8%, representing a gain of 10 percentage points from December.\nFebruary comp sales through week ending February 21 were down 27.6%.\nFor the same period, our sales mix consisted of 66% dine-in, 16.9% to-go and 17.1% delivery.\nAs we continue to navigate the ever-changing environment, we have four strategies to help the brand drive growth.\nNumber 1, focusing on our PM daypart; Number 2, value; Number 3, maintaining our gains in off-premise sales; and Number 4, development growth.\nWe believe this new value platform will not only play an important part of the strengthening and expanding our PM business, but also drive off-premise sales in locations where it's available.\nIHOPPY Hour is driving incremental sales in the mid to high teens and approximately 20% incremental traffic compared to the rest of the day.\nThis equates to a low- to mid-single-digit lift in both sales and traffic for the whole week.\nIHOPPY Hour is consistently four times more effective at driving traffic than any window we've had during that time.\nOur third strategy is growing our strong off-premise business.\nAs consumer sentiment is shifting and off-premise is becoming more accepted around the country, our mix has remained strong.\nFor the fourth quarter, off-premise was 33.3% of total sales, compared to 32.4% for the third quarter.\nTo provide more color, to-go accounted for approximately 17% of sales mix and delivery accounted for approximately 16%.\nOff-premise comp sales for the fourth quarter grew by 130%, driven primarily by traffic.\nWe believe that we can retain a significant amount of this growth even as dining room capacity restrictions are eased over time.\nConducive to this is our -- is the high portability of IHOP's menu and our proprietary off-premise packaging, which keeps our food warm approximately 40 minutes after leaving the restaurant.\nAdditionally, we implemented curbside to-go quickly at the onset of the pandemic and continue investments in our IHOP and Go platform.\nIHOP's latest menu innovation is our all-new signature, Burritos & Bowls, which is introduced this past January.\nThe six new Burritos & Bowls were designed with creative flavor combinations and easy portability in mind for guests to enjoy wherever they please and appeal to guests across all dayparts.\nThe results since the launch are very encouraging, with Burritos & Bowls capturing approximately 8% of check at order incidents based on our soft launch without a full media and marketing campaign.\nSwitching gears to our fourth strategy, development.\nAs we look at growth heading into 2021 and beyond, we will grow our IHOP brand with four different platforms.\nFirst, traditional development, of which we have a stable pipeline as a result of franchisee obligations that were deferred as part of our assistance during the pandemic.\nSecond, non-traditional development, which is led by our largest agreement in our 62-year history, with TravelCenters of America for 94 restaurants over five years.\nThird, the resumption of work on our Flipped by IHOP concept, which we expect to open our first location this year.\nAnd fourth and finally, we've developed a new small prototype that we intend to test this year.\nWe expect it to provide new opportunities for franchisee growth with a higher return on investment, allowing us to go into areas we might not have been able to penetrate previously.\nFor 2021, we expect to continue to reinvigorate our growth that was hindered by the pandemic.\nNow, for an update on our domestic restaurants open for business.\nAs of December 31, 1,174 restaurants or 70% of our domestic system was open for in-restaurant dining with restrictions.\nThis compares to 1,425 restaurants or 85% as of September 30.\nThe decline in locations open for in-restaurant service was primarily due to the spike in coronavirus cases discussed earlier.\nTurning to the unit guidance for restaurant closures we provided in October.\nAs a reminder, given the impact of the pandemic on individual restaurant level economics, we evaluated only greatly underperforming restaurants that we determine had a greater chance of not being viable coming out of the pandemic.\nThese restaurants were generally some of the lowest performing units in the system, based on sales and franchisee profitability.\nThis program concluded with 41 closures over the last six months, which is well below our initial projection of up to 100 restaurants.\nWe remain confident that we'll eventually replace these severely underperforming locations and grow our footprint with better performing restaurants that had volumes closer to our pre-COVID AUV of approximately $1.9 million.\nTo close, we're executing against our four strategies to drive our growth which includes PM daypart expansion, value, maintaining our gains and off-premise sales and development growth.\nWe've done the heavy lifting to position the brand for long-term success and build an insurmountable lead in family dining.\nI'm pleased with what our franchisees and team members have accomplished during a very challenging year and I'm very optimistic about the road ahead.\nIt's truly because of their leadership, particularly during the pandemic, that Dine and its brands are poised to enjoy significant upside potential in 2021 and beyond.\nUnderstandingly through meaningful change in performance trajectory will not happen immediately, but I am confident in our ability to restore sustainable same restaurant sales momentum in the second half of 2021 as more people are vaccinated and guests [Indecipherable] dine out return to restaurants.\nI have absolute faith in our franchisees and our talented team members will lead us into a new restaurant renaissance.\nOur strong fundamentals remain intact.\nWe're positioning Dine for long-term growth and continuing to evolve as a guest-centric data-driven organization.\n", "role": "user" }, { "content": "compname reports q4 adjusted earnings per share $0.39.\nq4 adjusted earnings per share $0.39.\nihop's comparable same-restaurant sales decreased 30.1% for q4 of 2020.\nconsolidated financial results for 2021 could continue to be materially impacted by global impact from covid-19.\ncompany currently cannot provide a complete business outlook for fiscal 2021.\ndine brands - capital expenditures expected to be about $14 million, inclusive of approximately $5 million related to company restaurants segment for fy 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: As we begin the final year of The Walt Disney Company's first century, I am pleased to share our results for the first quarter of fiscal 2022, starting with the highlights.\nOur adjusted earnings per share of $1.06 is up from $0.32 a year ago.\nOur domestic parks and resorts achieved all-time revenue and operating income records despite the Omicron surge.\nAnd our streaming services ended Q1 with 196.4 million total subscriptions after adding 17.4 million in the quarter, including 11.8 million Disney+ subscribers.\nI'll share more about those items shortly.\nBut first, I want to talk about this unique moment in the history of The Walt Disney Company.\nIt is perhaps fitting that our 100th anniversary comes at a time of significant change for us and our industry.\nIn the midst of a global pandemic, fast-changing consumer expectations and a leadership transition, we reimagined our parks business, substantially increased our investment in content creation and executed a reorganization that will facilitate our ongoing transformation.\nEach of those actions has helped set the stage for our second century.\nAnd as we approach that remarkable milestone, I am filled with optimism.\nWe have the world's most creative storytelling engine, an unmatched collection of brands and franchises and an ability to tell stories that form deep emotional connections with audiences.\nWe have a portfolio of distribution platforms, including powerful and growing streaming services.\nWe have diverse revenue streams that span business models and industries, but which all are interconnected to create entertainment's most powerful synergy machine.\nWe have the country's top news organization and the most trusted brand for following sports and our theme parks continue to be the most magical places on Earth.\nIn short, our collection of assets and platforms, creative capabilities, and unique place in the cultural zeitgeist give me great confidence that we will continue to define entertainment for the next 100 years.\nTo carry through on that promise, we will be guided by three strategic pillars: storytelling excellence, innovation, and audience focus.\nStorytelling excellence is, of course, dependent on having excellent storytellers.\nI am thrilled to share that our legacy of being home to the most accomplished leaders in the industry will continue, as nearly all of our top creative executives have recently renewed, extended, or signed new contracts.\nI could not be more excited to continue working with these creative powerhouses.\nThe quality content from our teams was recognized just yesterday with a fantastic 23 Oscar nominations, including three of the five best animated feature films: Pixar's Luca; Walt Disney Animation's Raya and the Last Dragon; and our newest franchise, Walt Disney Animation's Encanto, which received three nominations.\nSummer of Soul was recognized in the best documentary category, and Nightmare Alley and West Side Story both received best picture nominations.\nAs you may have seen earlier today, we announced West Side Story will debut in most Disney+ markets on March 2, and we can't wait for our subscribers to see this incredible film.\nIn Q1, our studios took us deeper into the Marvel Cinematic Universe with Eternals and the Disney+ original series, Hawkeye, and returned us to that galaxy far, far away with another Disney+ original series, The Book of Boba Fett.\nOur general entertainment teams also continued to produce programming of the highest quality.\nIn fact, last year, our general entertainment team produced nearly a quarter of the industry's best-reviewed shows.\nAnd Q1 saw 10 of their shows achieve a 100% critic score on Rotten Tomatoes.\nThat includes Abbott Elementary, the first freshman broadcast comedy to earn the 100% Certified Fresh score since ABC's own Modern Family in 2009.\nOur success in branded storytelling is, of course, no secret.\nHowever, it's often lost that the depth, breadth, and quality of our general entertainment content is also a driving force behind the success of our streaming services.\nIn fact, six of the 10 most-watched programs across our services are general entertainment titles produced by our own team.\nAnd general entertainment is an increasingly powerful driver of engagement in most of our international markets where such content is already included in our service under the Star brand.\nGoing forward, integrating more owned general entertainment into our services, especially Disney+, will be a priority.\nIn fact, just today, we added episodes of Grown-ish, Black-ish, and The Wonder Years to our domestic Disney+ service.\nRounding out our content focus is, of course, sports.\nSporting events continue to be the most powerful draw in television, accounting for 95 of the 100 most-watched live broadcast in 2021.\nAnd ESPN once again set the bar this quarter with live games across each of our four major U.S. sports, including the revolutionary Monday Night with Peyton and Eli.\nAnd I am pleased to announce that we have expanded our agreement with Peyton Manning and his Omaha Productions company to extend our relationship through the 2024 NFL season.\nWhile multiplatform television and streaming will continue to be the foundation of sports coverage for the immediate future, we believe the opportunity for The Walt Disney Company goes well beyond these channels.\nIt extends to sports betting, gaming, and the metaverse.\nIn fact, that's what excites us, the opportunity to build a sports machine akin to our franchise flywheel that enables audiences to experience, connect with and become actively engaged with their favorite sporting events, stories, teams, and players.\nTurning to distribution results.\nThe continued growth of our streaming services was certainly a standout.\nOur success at Disney+ this quarter was not the result of any one item, but instead a combination of organic growth and powerful new content, our strategic decision to include the Disney bundle with all Hulu Live subscriptions, and new market launches.\nThe remainder of this fiscal year will feature compelling Disney+ originals from across our brands and franchises, beginning with Pixar's Turning Red and Marvel Studios' Moon Knight in March.\nAnd the back half of FY '22 will feature a truly stunning array of content, including two Star Wars series: Andor and the highly anticipated Obi-Wan Kenobi, which I am excited to announce will premiere on May 25.\nWe'll debut two Marvel series, Ms. Marvel and She-Hulk; fresh new shorts from Disney Animation and Pixar featuring the worlds of Big Hero 6 and Cars; a live-action reimagining of the Disney classic Pinocchio, starring Tom Hanks as Geppetto; and one of the most anticipated sequels in some time, especially in the Chapek household, Hocus Pocus 2.\nAs I've said before, we continue to manage our services for the long term and maintain confidence in our guidance of 230 million to 260 million total paid Disney+ subscribers globally by the end of fiscal 2024.\nChristine will provide more detail into our theatrical results.\nHowever, I want to reiterate that we continue to see value in the moviegoing experience, especially for big franchise blockbusters.\nAnd given the performance of titles like Spider-Man: No Way Home, we are looking forward to kicking off our summer slate with another Marvel franchise film, Doctor Strange in the Multiverse of Madness.\nThat said, audiences will be our North Star as we determine how our content is distributed.\nAnd we do not subscribe to the belief that theatrical distribution is the only way to build a Disney franchise.\nThis quarter, audiences proved us right as Encanto became a phenomenon within days of its arrival on Disney+ after families' continued reluctance to return to theaters resulted in a muted theatrical performance.\nWith outstanding music from Lin-Manuel Miranda, it became the fastest title to cross 200 million hours viewed on Disney+ and took social media by storm.\nPeople around the world expressed their fandom through their own content and conversation, and the Encanto hashtag has been viewed more than 11 billion times.\nThe soundtrack, which debuted at No.\n197 on the Billboard 200 chart, reached No.\n1 shortly after debuting on Disney+.\nAnd eight of the film's songs hit the Hot 100 chart, including We Don't Talk About Bruno, which became the first Disney song to reach No.\n1 since Aladdin's A Whole New World in 1993.\nAt the same time, sales of Encanto merchandise defied traditional post-holiday declines and actually increased following the film's release on Disney+ on Christmas Eve and guests at Disney California Adventure have loved seeing Mirabel in real life.\nThese results are exactly what you would expect from the launch of a new Disney franchise, and we are thrilled that Disney+ was the catalyst.\nWe are more confident than ever in this platform as a content service, a franchise engine, and as a venue for the next generation of Disney storytelling.\nFinally, I could not be more pleased with the performance of our Parks, Experiences and Products segment, which posted its second best quarter of all time.\nOver the last several years, we've transformed the guest experience by investing in new storytelling and groundbreaking technology, and the records at our domestic parks are the direct result of this investment.\nFrom new franchise-based lands and attractions, to craveable food and beverage offerings, to must-have character merchandise, there is more great Disney storytelling infused into every aspect of a visit to our parks than ever before.\nAt the same time, we're giving guests new tools to personalize their visits and spend less time in line and more time having fun.\nWhile we anticipated these products would be popular, we have been blown away by the reception.\nIn the quarter, more than a third of domestic park guests purchased either Genie+, Lightning Lane, or both.\nThat number rose to more than 50% during the holiday period.\nWhile demand was strong throughout the quarter at both domestic sites, our reservation system enabled us to strategically manage attendance.\nIn fact, their stellar performance was achieved at lower attendance levels than 2019.\nAs we return to a more normalized environment, we look forward to more fully capitalizing on the extraordinary demand for our parks, along with the already realized yield benefits that took shape this quarter.\nAnd we, of course, will continue to invest in the guest experience.\nI am personally looking forward to Star Wars: Galactic Starcruiser at Walt Disney World, a two-night adventure into the most immersive Star Wars story ever created.\nLater this summer, we will debut an innovative new roller coaster at Epcot, Guardians of the Galaxy: Cosmic Rewind, and open Avengers Campus at Disneyland Paris, where the iconic Quinjet landed a few weeks ago ahead of the resort's 30th-anniversary celebrations.\nOur company is truly extraordinary, and I am honored to work with the most talented team in the industry to create the next generation of Disney stories and experiences through our focus on storytelling excellence, innovation, and our audience.\nWith that, I'll hand it over to Christine.\nExcluding certain items, diluted earnings per share for the quarter were $1.06, an increase of $0.74 from the prior-year quarter.\nFiscal 2022 is off to a good start as evidenced by our first-quarter results and our continued progress toward more normalized operations across our businesses.\nAt parks, experiences, and products, operating income was up $2.6 billion year over year as all of our parks and resorts around the world were open for the entirety of the fiscal first quarter.\nIn the prior-year quarter, Walt Disney World Resort and Shanghai Disney Resort were open for the entire quarter, while Hong Kong Disneyland Resort and Disneyland Paris were each open for a limited number of weeks and Disneyland Resort was closed for the entire quarter.\nAt our domestic parks, we were very pleased with the strong levels of demand we saw from both Walt Disney World and Disneyland.\nAnd as Bob mentioned, our reservation system has allowed us to strategically manage attendance.\nOverall, attendance trends at our domestic parks continued to strengthen in the quarter with Walt Disney World and Disneyland Q1 attendance up double digits versus Q4, in part reflecting holiday seasonality.\nPer capita spending at our domestic parks was up more than 40% versus fiscal first quarter 2019 driven by a more favorable guest and ticket mix, higher food, beverage and merchandise spending and contributions from Genie+ and Lightning Lane.\nPutting these factors together, our domestic parks and resorts delivered Q1 revenue and operating income exceeding pre-pandemic levels even as we continued managing attendance to responsibly address ongoing COVID considerations.\nLooking ahead to Q2, our demand pipeline for domestic guests at Walt Disney World and Disneyland remain strong, benefiting from our 50th-anniversary celebration at Walt Disney World and new attractions and experiences at both parks.\nAt international parks, a profitable first quarter reflected improving trends at Disneyland Paris.\nWe also saw improved results at Hong Kong Disneyland, although the resort is now temporarily closed in response to a resurgence in COVID cases in the region.\nWe expect international parks will continue to be impacted by COVID-related volatility for the remainder of Q2.\nMoving on to our media and entertainment distribution segment.\nFirst-quarter operating income decreased by more than $600 million versus the prior year as revenue growth across our lines of business was more than offset by higher programming and production costs.\nRevenue growth in the quarter was primarily driven by increased subscription fees from our direct-to-consumer services.\nWe also delivered record advertising revenues for the segment as we continue to see strong advertiser demand for our live sports and streaming and digital businesses.\nTurning to our results by line of business.\nAt linear networks, you may recall that we guided to a decrease in operating income of nearly $500 million for Q1 versus the prior year.\nOperating income of $1.5 billion came in better than expected, primarily driven by our international channels, which I'll discuss in a minute.\nAt our domestic channels, both broadcasting and cable operating income decreased in the first quarter versus the prior year.\nLower results at broadcasting were impacted by an adverse comparison to prior year political advertising revenue at our owned television stations, as we noted in the guidance we gave last quarter.\nAt cable, the year-over-year decrease in operating income reflected higher programming and production costs and increased marketing spend, partially offset by increases in advertising and affiliate revenue.\nGrowth in advertising revenue was driven by ESPN as we benefited from the start of a normalized NBA calendar and increased viewership for football.\nESPN advertising revenue in the first quarter was up 14% versus the prior year and second quarter-to-date domestic cash advertising sales at ESPN are currently pacing up.\nTotal domestic affiliate revenue increased by 2% in the quarter.\nThis was primarily driven by six points of growth from higher rates, offset by a four-point decline due to a decrease in subscribers.\nOperating income at our international channels decreased slightly versus the prior year.\nThese results came in more than $200 million better than our prior guidance primarily due to lower programming and production costs as well as better-than-expected advertising and affiliate revenues.\nAt direct-to-consumer, first-quarter operating results decreased by $127 million year over year, driven by higher losses at Disney+ and ESPN+, partially offset by improved results at Hulu.\nI'll note that beginning this quarter, we are providing disclosure on our programming and production expenses by service as well as additional detail for Disney+ in our 10-Q.\nOperating losses at Disney+ increased versus the prior year as growth in subscription revenue was more than offset by higher programming, technology, and marketing costs.\nWe ended the quarter with nearly 130 million global paid Disney+ subscribers, reflecting over 11 million net additions from Q4.\nTaking a look at subscriber growth by region.\nWe added 4.1 million paid domestic Disney+ subscribers, including a benefit of approximately 2 million incremental subscribers from our strategic decision to include Disney+ and ESPN+ as part of a Hulu Live subscription.\nIn international markets, excluding Disney+ Hotstar, we added 5.1 million paid subscribers, primarily driven by growth in Asia Pacific and European markets.\nI'll note that growth in Asia included the benefit of new market launches in South Korea, Taiwan, and Hong Kong in the quarter.\nFinally, we were able to resume growth in Disney+ Hotstar markets with 2.6 million paid subscriber additions in the quarter.\nOverall, we are pleased with Disney+ subscriber growth in the quarter and are looking forward to new market launches and a strong content slate later this year.\nAs I've previously shared, we don't anticipate that subscriber growth will necessarily be linear from quarter to quarter, and we continue to expect growth in the back half of the fiscal year to exceed growth in the first half.\nAt ESPN+, we ended the first quarter with over 21 million paid subscribers versus 17 million in Q4.\nResults decreased compared to the prior year as growth in subscription revenue was more than offset by higher sports programming costs driven by the NHL and LaLiga.\nAnd at Hulu, higher subscription revenues versus the prior year were partially offset by higher programming and production costs driven by increased affiliate fees for live TV.\nHulu ended the first quarter with 45.3 million paid subscribers, inclusive of 4.3 million subscribers to our Hulu Live digital MVPD service.\nMoving on to content sales/licensing and other.\nResults decreased in the first quarter versus the prior year to an operating loss of $98 million, driven by lower theatrical results and higher film impairments, partially offset by improved TV SVOD results.\nAs I noted last quarter, while theaters have generally reopened, we are still experiencing a prolonged recovery to theatrical exhibition, particularly for certain genres of films, including non-branded general entertainment and family focused animation.\nThis dynamic contributed to increased losses in the quarter as we released more titles in Q1 this year versus the prior year, resulting in lower theatrical results.\nThis was partially offset by income from our co-production of Spider-Man: No Way Home.\nAs we look ahead, we would like to give you some context around two items that may impact our second-quarter results.\nFirst, as we continue to increase our investment in content, we expect programming and production costs at DMED to increase versus the prior year, primarily driven by direct-to-consumer and linear networks.\nAt direct-to-consumer, we expect programming and production expenses to increase by approximately $800 million to $1 billion, including programming fees for Hulu Live.\nAt linear networks, we expect programming and production expenses to increase by approximately $500 million, reflecting factors including COVID-related timing shifts.\nWe aired four additional NFL games at the start of the current quarter.\nAnd as a reminder, the Academy Awards will be held in Q2 of this year, while it fell into Q3 of the prior year.\nSecond, at content sales/licensing and other, a difficult Q2 comparison to prior year TV and SVOD program sales is due in part to our strategic decision to hold more of our owned and produced content for our direct-to-consumer services.\nAs a result, we expect operating income to be adversely impacted by more than $200 million versus the prior-year quarter.\n[Operator instructions] And with that, operator, we're ready for the first question.\n", "role": "user" }, { "content": "q1 earnings per share $1.06 excluding items.\n11.8 million disney+ subscribers added in q1.\nsaw significant increase in total subscriptions across our streaming portfolio to 196.4 million.\nas of quarter-end total hulu paid subscribers were 45.3 million.\nat disney media and entertainment segment, our film and television productions have generally resumed.\nwe have seen disruptions of production activities depending on local circumstances.\nin fiscal 2022, domestic parks and experiences are generally operating without significant mandatory covid-19-related restrictions.\nqtrly lower results at disney+ reflected higher programming and production, marketing and technology costs.\nhave incurred, and will continue to incur, costs to address government regulations and safety of employees, guests and talent.\nqtrly higher subscription revenue at disney+ was due to subscriber growth and increases in retail pricing.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 playback of today's call will be archived in our Investor Relations website located at investors.\ndicks.com for approximately 12 months.\nAnd finally, a few admin items.\nFirst, a note on our same-store sales reporting practices.\nOur consolidated same-store sales calculation includes stores that we chose to temporarily close last year as a result of COVID-19.\nThe method of calculating comp sales varies across the retail industry, including the treatment of temporary store closures as a result of COVID-19.\nAccordingly, our method of calculation may not be the same as other retailers.\nNext, as a reminder, due to uneven nature of 2020, we plan 2021 off of 2019 baseline.\nAccordingly, we will compare 2021 sales and earnings results against both 2019 and 2020.\nWe are extremely pleased to announce yet another quarter of record results as we continued to execute at a very high level and capitalize on incredibly strong consumer demand.\nWe're in a great lane right now, and 2021 will be our boldest and most transformational year in the company's history.\nWe believe the future of retail is experiential, powered by technology and a world-class omnichannel operating model.\nImportantly, we are reimagining the athlete experience, both across our core business and through new concepts that we have been working on for the past several years, which will collectively propel our growth in the future.\nWe've recently debuted DICK's House of Sport in Rochester, New York.\nIt's off to a great start and is on track to become among our highest volume stores in the chain.\nWe've reimagined virtually everything in the store and believe it sets the standard for sport retailing and athlete engagement.\nOur partners who have visited the store all agree there is nothing like it, and we hope everyone has the opportunity to see it in person.\nNext we are completely reengineering our Golf Galaxy business.\nThe game of golf is in great shape.\nOur golf business has been tremendous.\nWith Golf Galaxy comps significantly outperforming the company average in recent quarters, we're leaning into this straight by investing in our Golf Galaxy business and adding TrackMan technology to enhance the fitting and lesson experience.\nWe are also investing in talent to elevate the in-store service model and are remodeling 18 stores this year.\nThe new stores we've remodeled are showing promising results.\nLooking ahead, we expect golf to have a long runway, and we are committed to leveraging this momentum for future growth within our business.\nWe've been working on Public Lands for several years and look forward to opening our first two stores later this year.\nBased on our research, we think there is an opportunity in the marketplace and believe this new concept will be a great growth vehicle for us.\nImportantly, conservation will play a prominent role in our new Public Lands concept.\nAnd we will champion environmental issues as we speak up to protect the planet and our Public Lands.\nAs a member of the outdoor industry, we have also joined forces with other retailers to advocate for conserving 30% of the U.S. lands and waters by 2030.\nWe expect to have the same voice and as much impact on these issues as we've had inside the DICK's business, highlighting the youth sports crisis and sensible gun legislation.\nWe'll be sharing more details about our plans for Public Lands in the weeks and months ahead.\nIn closing, you can see DICK's is a growth company, and we will continue to invest in our business to grow our lead as the nation's largest sport retailer.\nWe see significant growth opportunities within DICK's and Golf Galaxy as well as with House of Sport and Public Lands.\nWe will continue to invest in our vertical brands.\nAnd with our key partners, including Nike, North Face, Callaway, TaylorMade and others, to elevate the athlete experience across the stores and online.\nOur Q1 consolidated same-store sales increased 115% as we anniversaried the majority of our temporary store closures from last year.\nThe strength of our diverse category portfolio, supply chain, technology capabilities and omnichannel execution helped us continue to capitalize on strong consumer demand across golf, outdoor activities, home fitness and active lifestyle.\nWe also saw a resurgence in our team sports business as kids began to get back out on the field after a year in which many youth sports activities were delayed or canceled.\nOur strong comps were supported by sales growth of over 100% within each of our three primary categories; the hardlines, apparel and footwear as well as increases in both average ticket and transactions.\nLike others, we also benefited from the recent stimulus checks.\nThese results combined translate to a 52% sales increase when combined -- sorry, when compared to the first quarter of 2019.\nFrom a channel standpoint, our brick and mortar stores generated significant triple-digit comps, and importantly, delivered an approximate 40% sales increase when compared to 2019 with roughly the same square footage.\nOur eCommerce sales increased 14%, which was on top of our 110% online sales increase in the same period last year when the vast majority of our stores were closed for over six weeks.\nThis represented nearly a 140% increase when compared to 2019.\nWithin eCommerce, in-store pickup and curbside continued to be a meaningful piece of our omnichannel offering, increasing approximately 500% when compared to BOPIS sales during the first quarter of 2019.\nAnd as a percent of online sales, we saw sequential growth compared to the second half of last year.\nThese same-day services along with ship from store are fully enabled by our stores which are the hub of our industry-leading omnichannel experience, both serving our in-store athletes and providing over 800 forward points of distribution for digital fulfillment.\nDuring Q1, our stores enabled approximately 90% of our total sales and fulfilled approximately 70% of our online sales through either ship from store, in-store pickup or curbside.\nThroughout the quarter, we remained disciplined in our promotional strategy and cadence, and certain categories in the marketplace continue to be supply constrained.\nAs a result, we expanded our merchandise margin rate by 787 basis points versus 2020 and 312 basis points versus 2019.\nThis merchandise margin expansion, along with substantial leverage on fixed costs, drove a significant improvement in gross margin.\nIn total, our first quarter non-GAAP earnings per diluted share of $3.79 not only represented a 511% increase over Q1 2019, but eclipse our full year 2019 non-GAAP earnings per diluted share of $3.59.\nDuring the first quarter last year, we recorded a net loss per share of $1.71 as we temporarily closed our stores to promote the safety of our teammates, athletes and communities.\nLooking ahead, we remain very enthusiastic about our business and we're raising our full year sales and earnings guidance.\nOur financial outlook balances this enthusiasm with the uncertainties that still exist, particularly as it relates to the second half of the year.\nLee will address our outlook in greater detail within his remarks.\nNow let me provide a few updates on our strategic growth drivers.\nFirst, within merchandising, our well defined brand strategy drive differentiation and exclusivity within our assortments as we leverage both our key national brand partnerships and our highly profitable and growing vertical brand portfolio.\nDuring the quarter, our vertical brands continue to be a significant source of strength, posting triple-digit comps with merchandise margin rate expansion that outperformed the company average.\nWe saw sustained success in DSG, our largest vertical brand as well as in CALIA, our second largest women's athletic apparel brand.\nThis year we are investing to make our vertical brands even stronger through improved space in-store and increased marketing.\nIn March, we augmented our men's athletic apparel collection by launching VRST, our new premium apparel brand that serves the modern athletic male.\nThe team has done a great job with VRST, and it's off to a really strong start.\nNext, to increase engagement with our athletes, we're taking steps to dial-up service in our stores and to make our stores more experiential.\nAs Ed mentioned, we've been very pleased with the early results from our first DICK's House of Sport and are excited for the grand opening of our second location in Knoxville next week.\nVirtually everything in House of Sport is new; from our engagement and service models to our merchandising standards, brands and concept shops as well as an adjacent outdoor field to host sports events and promote product trial.\nThese highly experiential stores are exploring the future of retail and they provide us a great opportunity to test and learn.\nWe'll continue to refine and grow the House of Sport concept while also rolling the most successful elements into our core DICK's stores.\nBeyond House of Sport, we continue to evolve the DICK's athlete experience.\nDuring the quarter, we added more than 30 soccer shops that provide a high level of service from in-store soccer experts who are especially trained to help athletes find the equipment and cleats they need to excel at the game.\nThe soccer shops also feature a variety of updated in-store elements, including an elevated cleat shop, an expanded selection of licensed jerseys and soccer trial cages in select locations.\nWe've been pleased with the initial results and plan to add additional shops throughout the year.\nAs discussed on prior calls, footwear is a key pillar of our merchandising strategy.\nAnd during the quarter, we converted more than 40 additional stores to premium full service footwear.\nOver 50 more stores will be converted by the end of the year, taking this experience to approximately 60% of the DICK's chain.\nLastly, as the number one premium golf retailer in the world, we are benefiting from renewed interest in the game.\nParticipation rates are healthy and energy for the game of golf continues to increase with women, juniors and young adults contributing to the game's growth.\nAs a result of this robust demand, our golf business has been great at both DICK's and Golf Galaxy with Golf Galaxy comps significantly outperforming the company average in recent quarters.\nIn 2021, we're investing over $20 million to transform our Golf Galaxy stores via combination of elevated experience, industry-leading technology and unmatched expertise through our certified PGA and LPGA professionals.\nAs part of this, we've rolled out TrackMan technology to over 80% of the chain to enhance the fitting and lesson experience.\nWe've also completely redesigned nearly 20 stores.\nIn addition, we enabled online booking of lessons and club fittings and invested in talent and training to elevate our in-store service model.\nWe supported these efforts through our first Golf Galaxy specific brand campaign, Better Your Best, across TV, social and in-store.\nNow moving to our omnichannel capabilities.\nWe continue to drive significant improvement in the profitability of our eCommerce channel through fewer promotions, leverage of fixed costs and strong athlete adoption of in-store pickup and curbside.\nWe're continuing to enhance the curbside experience with new features like proxy pickup as well as through improved inventory availability and reduced pickup wait time for athletes.\nDuring Q1, over 90% of curbside orders were ready within 15 minutes.\nAnd upon checking at the store, 50% were delivered to the athlete's car in under 2.5 minutes.\nLooking ahead, we continue to expect curbside pickup will remain a meaningful piece of our omnichannel offering as our athletes turned to this service for speed and convenience.\nAlong with curbside, our ScoreCard program continues to be a key to our omnichannel offering with more than 20 million active members who drive over 70% of our sales.\nWe're using data science to drive more personalized marketing and engagement with our athletes, which is resulting in strong retention of the 8.5 million new athletes we acquired last year.\nSpeaking of new athletes, we acquired nearly 2 million new athletes this past quarter.\nAnd relative to our existing athletes, they continue to skew younger and more female, representing a great opportunity for future growth.\nIn closing, we are a growth company, steeped in technology and omnichannel experience with a bold path forward.\nAs we continue to execute against our strategic priorities, we are enthusiastic about our business and confident that our investments will strengthen our leadership position within the marketplace.\nI had the pleasure of visiting many of our stores during this first quarter.\nLet's begin with a brief review of our first quarter results.\nConsolidated sales increased 119% to approximately $2.92 billion.\nIncluding the impact of last year's temporary store closures, consolidated same-store sales increased 115%.\nThis increase was broad-based with each of our three primary categories of hardlines, apparel and footwear comping up over 100%.\nTransactions increased 90%, and average ticket increased 25%.\nCompared to 2019, consolidated sales increased 52%.\nOur brick and mortar stores comped up nearly 190% as we anniversaried last year's temporary store closures.\nAnd compared to 2019, increased approximately 40% with roughly the same square footage.\nOur eCommerce sales increased 14% over last year and increased 139% versus 2019.\nAs a percent of total net sales, our online business was 20%.\nAs expected, this decrease from the 39% of net sales in 2020 given last year's temporary store closures, but increased compared to the 13% we had in 2019.\nLastly, in terms of stimulus.\nWhile this can be difficult to quantify, we recognize that our athletes had more cash spend during the quarter and believe we benefited from this during the first quarter.\nGross profit in the first quarter was $1.09 billion or 37.3% of net sales and improved approximately 2,100 basis points compared to last year.\nThis improvement was driven by leverage on fixed occupancy cost of approximately 1,000 basis points from the significant sales increase and merchandise margin rate expansion of 787 basis points, primarily driven by fewer promotions and a favorable sales mix.\nAdditionally, last year included $28 million of inventory writedowns, resulting from our temporary store closures, which were subsequently recovered in the second quarter of 2020 due to better than anticipated sales and margin on merchandise nearing the end-of-life upon the reopening of our stores.\nThe balance of the improvement was driven by lower shipping expense as a percent of net sales due to higher brick and mortar store sales penetration following last year's temporary store closures.\nCompared to 2019, gross profit as a percent of sales improved by 795 basis points, driven by leverage on fixed occupancy costs of 475 basis points due to the significant sales increase and merchandise margin rate expansion of 312 basis points, primarily driven by fewer promotions.\nSG&A expenses were $608.3 million or 20.84% of net sales and leveraged 940 basis points compared to last year due to the significant sales increase.\nSG&A dollars increased $205.1 million, of which $21 million is attributable to the expense recognition associated with changes in our deferred compensation plan investment values.\nThis expense is fully offset in other income and has no impact on net earnings.\nThe remaining $183 million is primarily due to normalization of expenses following our temporary store closures last year to support the increase in sales as well as higher incentive compensation expenses due to our strong first quarter results.\nSG&A expenses include $13 million of COVID-related safety costs, which in light of the latest CDC guidance, we expect these costs to decline significantly beginning in the second quarter.\nCompared to 2019's non-GAAP results, SG&A expenses as a percent of net sales, leveraged 446 basis points from the -- due to the significant sales increase.\nSG&A dollars increased $122.3 million due to increases in store payroll and operating expenses to support the increase in sales and hourly wage rate investments and COVID-related safety costs as well as higher incentive compensation expenses.\nDriven by our strong sales and gross margin rate expansion, we delivered record quarterly non-GAAP EBT and EBT margin results.\nNon-GAAP EBT was $477.1 million or 16.35% of net sales, and it increased $684.8 million or approximately 3,200 basis points from the same period last year.\nMore relevantly, compared to 2019, non-GAAP EBT increased $396 million or approximately 1,200 basis points as a percent of net sales.\nIn total, we delivered non-GAAP earnings per diluted share of $3.79.\nThis is compared to a net loss per share of $1.71 last year and non-GAAP earnings per diluted share of $0.62 in 2019, a 511% increase.\nOn a GAAP basis, our earnings per diluted share were $3.41.\nThis includes $7.3 million in non-cash interest expense as well as 9.2 million additional shares that will be offset by our bond hedge at settlement, but are required in the GAAP diluted share calculation.\nBoth are related to the convertible notes we issued in the first quarter of 2020.\nNow looking to our balance sheet, we are in a strong financial position, ending Q1 with approximately $1.86 billion of cash and cash equivalents and no borrowings on our $1.85 billion revolving credit facility.\nWhile our quarter end inventory levels decreased 4% compared to the same period last year, our strong flow of products supported Q1 sales growth in excess of our expectations.\nLooking ahead, our inventory is very clean and we continue to expect a robust product flow.\nIn terms of supply chain expense, we are seeing elevated costs, which we expect to continue, but thus far have mitigated this pressure through higher ticket as a result of being less promotional and increasing prices in select categories.\nTurning to our first quarter capital allocation.\nNet capital expenditures were $57.2 million and we paid $33 million in quarterly dividends.\nDuring the quarter, we also repurchased just over 1 million shares of our stock for $76.8 million at an average price of $74.59 and we have approximately $954 million remaining under our share repurchase program, and our plan for 2021 continues to include a minimum of $200 million of share repurchases.\nNow let me move on to our fiscal 2021 outlook for sales and earnings.\nAs a result of our significant Q1 results, we are raising our consolidated same-store sales guidance and now expect full year comp sales to increase by 8% to 11% compared to our prior expectation of down 2% to up 2%.\nAt the midpoint, our updated comp sales guidance represents a 22% sales increase versus 2019 compared to our prior expectation of up 11%.\nWhile we have been very pleased with the start of our second quarter and are highly encouraged about the rest of the year, beginning in June, we will start to anniversary significant comp sales gains from last year.\nThere is also continued uncertainty around when consumer behavior will normalize and what the new normal will be.\nAnd we are limited in our ability to forecast demand, particularly as it relates to the second half.\nGiven this, within our updated outlook, we have maintained our Q3 and Q4 performance expectations in line with our original guidance, which assumes comps will decline in the range of high-single to low-double-digits.\nNon-GAAP EBT is now expected to be in the range of $1 billion to $1.1 billion compared to our prior outlook of $550 million to $650 million, which at the midpoint and on a non-GAAP basis, is up 142% versus 2019 and up 45% versus 2020.\nAt the midpoint, non-GAAP EBT margin is expected to be approximately 10%.\nWithin this, gross margin is expected to increase versus 2019, driven by leverage on fixed expenses and higher merchandise margins.\nWhen compared to 2020, gross margin is also expected to increase driven by leverage on fixed expenses, while merchandise margins are expected to be approximately flat.\nThis assumes a gradual normalization promotions beginning in the second quarter and modest deleverage on fixed expenses in the second half.\nSG&A expense is expected to leverage versus both 2019 and 2020 due to the significant projected increase in full year sales.\nAs a reminder, at the beginning of 2021, we transitioned last year's premium pay program to a more lasting compensation program, including increasing and accelerating annual merit increases and higher wage minimums.\nThe impact of these programs has been included within our guidance.\nIn total, we are raising our full year non-GAAP earnings per diluted share outlook to a range of $8 to $8.70 compared to our prior outlook of $4.40 to $5.20.\nAt the midpoint and on a non-GAAP basis, our updated earnings per share guidance is up 126% versus 2019 and up 36% versus 2020.\nIn closing, we are extremely pleased with our Q1 results and remain very enthusiastic about the future of DICK's Sporting Goods.\nThis concludes our prepared comments.\n", "role": "user" }, { "content": "compname reports record quarterly earnings in first quarter 2021; delivers 115% increase in same store sales compared to the first quarter of 2020 and raises full year guidance.\nsees fy non-gaap earnings per share $8.00 to $8.70.\nq1 sales rose 119 percent to $2.92 billion.\n115% increase in consolidated same store sales in q1.\nqtrly consolidated net income $3.41 per share.\nqtrly non-gaap net income $3.79 per share.\nplans to repurchase a minimum of $200 million of its common shares in 2021.\nfor 2021, incurred about $13 million of covid-related safety costs in q1.\nexpects to relocate 11 dick's sporting goods stores 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: In particular, the extent of the continued impact of COVID-19 on our business remains uncertain at this time.\nDuring today's call, we will discuss GAAP and non-GAAP financial measures.\nAfter the content of today's call, Lewis will begin with a recap of Dolby's financial results and provide our second quarter 2021 outlook, and Kevin will finish with the discussion of the business.\nI think I'll jump right into the numbers.\nFirst quarter revenue was $390 million, which was above the guidance range of $330 million to $360 million and was also above the $271 million we saw in Q4 and the $292 million in Q1 of last year.\nRevenues were better than what we guided as we had a true-up in the quarter of about $20 million that relates to Q4 shipments, and we also had some recoveries in Q1 that came in sooner in the year than we thought.\nSo that's more of a shift in timing within the fiscal year.\nQ1 also benefited from higher estimated market TAMs. In terms of the sequential growth from Q4, Q1 benefited from timing of revenue under contracts and higher recoveries, along with higher adoption, and this was consistent with what I highlighted at the beginning of the quarter.\nAnd in addition, sequential growth was helped by holiday seasonality, which is sort of a typical factor.\nIn the year-over-year comparison, all of our cinema-related revenue streams were down significantly from last year's Q1, and that's because of COVID.\nBut then more than offsetting that were higher revenues from timing under contracts, higher recoveries and greater adoption of Dolby.\nSo the Q1 revenue of $390 million was composed of $373 million in licensing and $17 million in products and services.\nSo let me discuss the trends in-licensing revenue by end market starting with Broadcast.\nBroadcast represented about 37% of total licensing in the first quarter.\nBroadcast revenues increased by about 36% year-over-year, and that was driven by higher recoveries; higher adoption of Dolby, including our patent programs; and a higher true-up, which relates to the Q4 shipments.\nAnd this was offset partially by lower market volume in set-top boxes.\nOn a sequential basis, Broadcast was up by about 16%, driven by holiday seasonality for TVs, higher recoveries and higher adoption, offset partially by the lower set-top box activity.\nMobile represented approximately 28% of total licensing in Q1.\nMobile increased by a little over 200% from last year and about 170% from last quarter due primarily to timing of revenue under customer contracts and also helped by higher customer adoption.\nConsumer Electronics represented about 14% of total licensing in the first quarter.\nOn a year-over-year basis, CE licensing was up by about 6%, mainly due to higher adoption of Dolby, including our patent programs.\nOn a sequential basis, CE increased by about 52%, driven by higher seasonality, higher adoption in our patent programs and timing of revenue under contracts.\nPC represented about 9% of total licensing in Q1.\nPC was higher than last year by about 3% due to increased adoption of Dolby's premium technologies like Dolby Atmos and Dolby Vision.\nAnd this was offset partially by declining ASPs that comes from mix of disc versus non-disc units.\nSequentially, PC was up by about 5%, driven by higher adoption of those premium Dolby technology.\nOther Markets represented about 12% in total licensing in the first quarter.\nThey were up by about 8% year-over-year, driven by higher gaming from new console releases and also from higher Via admin fees and via the patent pool program that we administer.\nAnd that was offset partially by significantly lower Dolby Cinema box office share because of COVID.\nOn a sequential basis, Other Markets was up by about 33%, driven by higher revenue from gaming and from the Via admin fees.\nBeyond licensing, our products and services revenue was $16.9 million in Q1 compared to $14.3 million in Q4 and $34.2 million in last year's Q1.\nWe had anticipated the large year-over-year decrease in our guidance because most of this revenue comes from equipment that's sold to cinema exhibitors, and these customers continue to be negatively impacted by the pandemic.\nThe Q1 total was slightly above guidance, and that was mostly attributable to exhibitors in China.\nNow I'd like to discuss Q1 margins and operating expenses.\nTotal gross margin in the first quarter was 90.9% on a GAAP basis and 91.5% on a non-GAAP basis.\nProducts and services gross margin on a GAAP basis was minus $5.5 million in Q1 compared to minus $15.5 million in the fourth quarter, and the fourth quarter included large excess of obsolete inventory charges because of our decision to exit the conferencing hardware arena.\nWe are taking steps to reduce the cost structure in manufacturing, and we should start to see some impact of this by the end of this quarter.\nThis quarter, meaning Q2.\nProducts and services gross margin on a non-GAAP basis was minus $3.9 million in Q1 compared to minus $14.1 million in the fourth quarter.\nAnd I would apply the same comments here as I did in the GAAP section.\nOperating expenses in the first quarter on a GAAP basis were $189.8 million compared to $198.7 million in Q4.\nThe Q1 total includes $13.9 million of gain from sale of assets as we completed the disposition of our former Brisbane manufacturing site during the quarter.\nBut it also includes $10 million of restructuring expense, primarily for severances and the related benefits, consistent with the comments that I made at the beginning of the quarter when I provided guidance.\nOperating expenses in the first quarter on a non-GAAP basis were $167.1 million compared to $176.5 million in the fourth quarter.\nNon-GAAP operating expenses were below what we've guided primarily due to various marketing programs that shifted out in timing as well as lower bad debt expenses than we had projected.\nOperating income in the first quarter was $164.7 million on a GAAP basis or 42.3% of revenue compared to $48.6 million or 16.6% of revenue in Q1 of last year.\nOperating income in the first quarter on a non-GAAP basis was $189.7 million or 48.7% of revenue compared to $74.1 million or 25.4% of revenue in Q1 of last year.\nIncome tax in Q1 was 14.5% on a GAAP basis and 19.9% on a non-GAAP basis.\nNet income on a GAAP basis in the first quarter was $135.2 million or $1.30 per diluted share compared to $48.8 million or $0.47 per diluted share in last year's Q1.\nNet income on a non-GAAP basis in the first quarter was $153.3 million or $1.48 per diluted share compared to $65.5 million or $0.64 per diluted share in Q1 of last year.\nFor both GAAP and non-GAAP, net income in the first quarter was above guidance due to revenue higher than what we projected, combined with operating expenses lower than what we had estimated.\nDuring the first quarter, we generated about $82 million in cash from operations, which compares to about $31 million generated from operations in last year's first quarter.\nAnd we ended the first quarter this year with about $1.2 billion in cash and investments.\nDuring the first quarter, we bought back about 500,000 shares of our common stock and ended the quarter with about $147 million of stock repurchase authorization still available to us.\nWe also announced today a cash dividend of $0.22 per share.\nThe dividend will be payable on February 19, 2021, to shareholders of record on February 9, 2021.\nNow let's discuss the forward outlook.\nAs a reminder, the approach we took at the beginning of the fiscal year was to give specific guidance for Q1, like normal, and then give a scenario of a revenue range for Q2 and then give some qualitative comments on the second half of the year.\nWe took that approach because of the uncertainties from COVID, which was causing very limited forward visibility.\nNow nearly three months later, it's fair to say that visibility remains very limited.\nNot surprising, given the ongoing disruption we're seeing around the world from pandemic.\nSo today, we'll take a similar approach to what we did before.\nI will discuss full P&L guidance for Q2 and then provide some color on the second half of the year, but not detailed guidance.\nLet me start by reminding you of a couple of comments I made last quarter that remained true today.\nAt that time, I said that for the first half of FY '21, we were anticipating year-over-year growth in licensing revenue from higher adoption of Dolby technologies, but we are also expecting year-over-year decline in products and services revenue because of the COVID impact on the cinema industry.\nLet's talk more specifically now then about the Q2 revenue outlook.\nLast quarter, I provided a Q2 revenue scenario of $270 million to $300 million for the quarter.\nToday, our scenario is that Q2 revenue could range from $280 million to $310 million.\nThe TAM data for Q2 has risen modestly compared to what we were seeing a few months ago, and we have factored that into this latest scenario.\nAnd to reinforce something I said last quarter, the transition from Q1 to Q2 this year reflects higher revenue in Q1 from timing under customer contracts and also recoveries.\nLast year, in FY '20, that order was reversed in the sense that Q2 was the quarter that benefited more from the timing and recoveries.\nSo if I combine the Q2 actual that we just reported with the Q2 outlook I mentioned a second ago, that would put our first half revenue outlook range at $670 million to $700 million compared to our previous outlook range of $600 million to $660 million.\nSo that's the first half.\nNow let's talk about revenue in the second half of FY '21.\nThere's four main factors that I'd like to highlight: TAMs, the pace of recovery in cinema space, timing of revenue and higher adoption of Dolby.\nLet me explain a bit more.\nFirst of all, the industry TAM data that we're currently seeing from analysts continues to indicate that TAMs are projected to be lower in our second half on a year-over-year basis, mainly because of an uptick in shipment volume of certain devices like TVs and PCs that happened in the second half of FY '20 but is not projected to repeat in the same time frame of FY '21.\nSecond, in the cinema space, the recovery that people might have been expecting seems to be pushing out in time, and that's judging by trends in content by big titles and screen openings or closings.\nThird, as I alluded to earlier, some of the upside in our Q1 revenue, the quarter we just reported, came from deals closing sooner than we thought, in other words, moving from second half into the first half.\nAnd fourth, we would anticipate that a higher adoption of Dolby technologies would drive year-over-year growth.\nAnd then from a sequential perspective, i.e., transitioning from first half '21 to second half '21, we had said before and we continue to say that we anticipate second half revenue would be below first half because of a combination of lower seasonality in consumer device shipments and lower revenue from timing under contracts and from recoveries.\nSo considering these various factors, we could see a scenario for second half revenue in the mid- to high 500s.\nBut as I said earlier, we'll stop short of providing detailed guidance because of the limited visibility right now.\nAnd of course, we plan to provide you all with an update in three months when we publish our Q2 actual results.\nSo let me quickly finish up by providing an outlook on the rest of the P&L for Q2.\nI already highlighted the revenue range of $280 million to $310 million in total, of which licensing would comprise $270 million to $295 million, while products and services would comprise $10 million to $15 million.\nQ2 gross margin on a GAAP basis is estimated to range from 88% to 89%, and the non-GAAP gross margin is estimated to range from 89% to 90%.\nWithin that, products and services gross margin is estimated to range from minus $3 million to minus $4 million on a GAAP basis and from minus $2 million to minus $3 million on a non-GAAP basis.\nOperating expenses in Q2 on a GAAP basis are estimated to range from $200 million to $210 million.\nIn Q2, our annual salary increases for all the employees go into effect, and we also anticipate more activity in marketing programs as well as R&D projects.\nOperating expenses in Q2 on a non-GAAP basis are estimated to range from $175 million to $185 million, and the projected increase from Q1 is driven by the same comments I made about the GAAP operating expenses.\nOther income is projected to range from $1 million to $2 million for the quarter, and our effective tax rate for Q2 is projected to range from 20% to 21% on both a GAAP and non-GAAP basis.\nSo based on the combination of the factors I just covered, we estimate that Q2 diluted earnings per share could range from $0.36 to $0.51 on a GAAP basis, and from $0.57 to $0.72 on a non-GAAP basis.\nThat's all I have.\nOver to you, Kevin.\nOur fiscal year is off to a great start, and we continue to enable Dolby experiences to more people around the world.\nDolby Vision and Dolby Atmos are increasingly available across a broad range of new devices and services, and we are enabling more Dolby experiences in music and gaming, which is adding to our value proposition for broader adoption in areas such as Mobile and PC.\nOn top of that, we are excited about bringing Dolby to address everyday virtual experiences and interactions through Dolby.io.\nAll of this adds to our confidence in the significant growth opportunities that we see ahead of us.\nAs consumers spend an increased amount of time enjoying content within their homes, it is clear that the quality of these experiences matter.\nAnd Dolby Vision and Dolby Atmos are consistently highlighted among the devices and services that enable the best way for people to enjoy their content.\nThe combined Dolby experience was highlighted at CES throughout the latest TV lineups from our partners, including LG, Sony and Panasonic.\nTCL and Skyworth also announced they are adding support for Dolby Vision IQ, which optimizes the picture on your TV to the surrounding light and the content being viewed.\nEarlier this quarter, OPPO launched their first TVs, which includes support for the combined Dolby Vision and Dolby Atmos experience.\nAnd Dolby Atmos continues to be highlighted among the top sound bars in the market, including the latest products announced at CES from LG, JBL and TCL.\nAs we move beyond the living room, our partners are increasing the ways in which consumers can enjoy Dolby experience, including new adoption and headphones.\nApple is supporting Dolby Atmos in AirPods Max, adding to the ways the consumer can enjoy the Dolby experience across Apple's devices and services.\nSamsung recently announced that their Galaxy Buds Pro supports Dolby Atmos and includes Dolby head tracking technology, which enables consumers to have a realistic and immersive sound experience as they physically move in relation to where their content is being played.\nWithin PC, we continue to see growing momentum for broader adoption of Dolby technologies.\nLenovo announced that they will be bringing the first PCs with Dolby Voice to market.\nDolby Voice for PCs will optimize the communications experience to create clearer and more natural meeting experiences.\nThis is another example of how we are bringing new value to our partners by addressing a primary use case for how consumers interact with their PCs on an everyday basis.\nLenovo also continues to support Dolby Vision and Dolby Atmos across their latest PC lineups.\nAdditionally, Dell continues to release new PCs that support Dolby Vision.\nAnd in India, we saw new Nokia PCs from Flipkart come to market with the combined experience.\nWith a broad range of OEM partners and devices that support Dolby Vision and Dolby Atmos, it is becoming easier for consumers to discover content available in Dolby.\nHBO Max became the latest major streaming service to support the combined Dolby Vision and Dolby Atmos experience, starting with the release of Wonder Woman 1984.\nThey joined top streaming services around the world like Netflix, Disney+, Apple TV+, Tencent, Rakuten and more that are enabling content and the combined experience.\nIn addition, Amazon Prime video began to stream live English Premier League matches in Dolby Atmos, and Canal Plus is now supporting Dolby Atmos within their on-demand services in Poland.\nAnd while we're on the topic of movie and TV content, let me spend a moment on Dolby Cinema.\nAs Lewis said, the environment remains challenging across the industry.\nAt the same time, in certain regions where consumers have been able to return to the cinema and there is strong local content, we have seen that consumers will seek out a premium experience.\nAs the industry continues to evolve, we are confident that Dolby Cinema enables the best way to enjoy a movie and our partners remain deeply engaged.\n12 new Dolby Cinema locations around the world were opened this quarter, including our first site in Taiwan.\nSo as we continue building on our strong presence within movie and TV content, we see significant opportunities to enable more Dolby experiences in areas like music and gaming.\nThe music and Dolby experience continues to expand globally across artists, services and devices.\nSeveral new artists around the world released music in Dolby Atmos for the first time this quarter.\nAnghami, one of the largest music streaming services in the Middle East, announced that they will be enabling support for Dolby Atmos music within their Anghami Plus service.\nTIDAL continues to expand the number of devices within the home that enable the Dolby Atmos music experience with their TIDAL Connect feature.\nThe music and Dolby experience adds to our value proposition for deeper adoption within mobile, and creates new opportunities in new device categories like automotive, where we see strong initial engagement from potential partners.\nMoving on to gaming.\nThe Xbox Series X and Series S will be the first consoles to support the combined Dolby Vision and Dolby Atmos experience for gaming content with updates scheduled for later this year.\nNew gaming titles like Call of Duty: Cold War and Immortals Fenyx Rising were released this quarter with support for Dolby Atmos.\nAs we grow the amount of gaming content in Dolby, we increase the reasons for broader adoption in mobile and PC devices.\nLenovo and ASUS recently announced new gaming PCs that will support Dolby experiences.\nAnd this quarter, QQ Speed Mobile by Tencent became the first mobile game with Dolby Atmos.\nTencent games and Anghami Plus are examples of the growing momentum we have in enabling more Dolby experiences in gaming and music that address more of the content that consumers are most engaged with on their mobile devices.\nWith the release of iPhone 12 at the beginning of the quarter, consumers can now record, share and enjoy their videos in Dolby Vision.\nBT is now streaming live sports in Dolby Atmos to mobile devices via their BT Sports app.\nAnd Bilibili, one of the largest video sharing sites in China, began supporting content in Dolby Atmos.\nAs we continue to increase the amount of relevant content, we are adding to our value proposition for deeper and broader adoption of Dolby within mobile devices.\nWe also continue to deepen our engagement within the developer community with Dolby.io.\nHaving been in market now for about eight months, let me highlight a couple of opportunities that we are focused on.\nFirst, there is an increasing demand for high-quality real time interactions across a broad range of apps and services, including social media, live performance and online education.\nThis is the use case for our interactivity APIs with Dolby Voice.\nFor example, Kiddom, a digital platform for online education, is expanding their usage to include our full suite of interactivity APIs, including Dolby Voice, to improve the quality of the communications experience between teachers and students.\nSecond, we see an opportunity to bring higher quality to recorded media content, starting with audio.\nVideo platforms are embedding our media APIs to enable higher quality audio experiences ranging from social media and podcasts, to product videos and even footage used for news broadcasts.\nWhile we are still in the early days, we are learning from our engagement with developers to continue to involve our offer -- evolve our offering, increase usage and broaden the number of use cases that we can address.\nSo to wrap up, the combined Dolby Vision and Dolby Atmos experience is consistently highlighted among the best ways to enjoy movie and TV content.\nWe are seeing the Dolby experience expand across new forms of content, for music and gaming to user-generated content, all of which build upon our value proposition for broader adoption across devices and services.\nThe engagement with our developer platform continues to grow, bringing Dolby to a broader world of content experiences and interactions.\nAll of this gives us confidence in our ability to drive revenue and earnings growth into the future.\n", "role": "user" }, { "content": "dolby laboratories q1 non-gaap earnings per share $1.48.\nq1 non-gaap earnings per share $1.48.\nq1 gaap earnings per share $1.30.\nexpect continued uncertainty in global financial markets.\ndolby laboratories- anticipate that cinema sites and production of content could continue to be negatively affected through fiscal 2021 or longer.\ntotal revenue is estimated to range from $280 million to $310 million in q2 fiscal 2021.\ndiluted earnings per share is anticipated to range from $0.36 to $0.51 on a gaap basis in q2 fiscal 2021.\ndiluted earnings per share is anticipated to range from $0.57 to $0.72 on a non-gaap basis in q2 fiscal 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: In particular, the extent of the continued impact of COVID-19 on our business remains uncertain at this time.\nDuring today's call, we will discuss GAAP and non-GAAP financial measures.\nAs for the content of today's call, Kevin will start with a discussion of the business.\nAnd Lewis will follow with a recap of Dolby's financial results and provide our fourth quarter, second half and fiscal 2021 outlook.\nQ3 was another strong quarter for Dolby.\nOur revenue and earnings for the quarter were solid, and we are on track to deliver annual revenue growth of over 10% and year-over-year earnings growth at an even higher rate.\nAt the same time, Dolby experiences are accessible to a growing number of people around the world, highlighted by the launch of Dolby Atmos on Apple Music and the Tokyo Olympics broadcasted in Dolby Vision and Dolby Atmos.\nBefore Lewis takes you through the numbers, I wanted to highlight the recent progress we have made in enabling Dolby experiences across a much broader range of content, which creates opportunities for continued revenue and earnings growth.\nThe inclusion of Dolby Atmos on Apple Music marks a significant step forward in bringing Dolby Atmos Music to a much larger audience and establishing it as the best way to create and listen to music.\nThe Dolby Atmos music experience has been prominently featured by Apple and has been met with positive and enthusiastic reactions from artists, industry partners and consumers.\nApple Music subscribers around the world can easily access albums and playlists of Dolby Atmos songs and can enjoy their music across Apple's wide range of products that support the combined Dolby experience.\nAnd recently, Dolby Atmos-enabled Android devices can also enjoy Dolby Atmos on Apple Music.\nBeyond Apple Music, Naver Vibe, a music streaming service in South Korea, launched support for Dolby Atmos this quarter.\nAnd additionally, our partners like TIDAL, Amazon Music, Hungama and Anghami continue to grow the number of songs available in Dolby Atmos on their streaming services.\nAs the ways in which consumers can enjoy Dolby Atmos music expands, we are also focused on growing the library of music through our engagement with artists and music distributors.\nDistroKid, a leading distributor of independent music, announced that they will be delivering songs in Dolby Atmos on both Apple Music and TIDAL.\nWe see enthusiastic engagement from popular artists, including Ariana Grande, BTS, Billie Eilish and Glass Animals, who are among the many artists highlighting the availability of their music in Dolby.\nAs we expand the availability of Dolby Atmos music to consumers, we add to the reasons to adopt Dolby Atmos in mobile, PC and automotive.\nWe also had some exciting wins in live broadcast this quarter.\nComcast is currently delivering NBC's Live Tokyo Olympics coverage in both Dolby Vision and Dolby Atmos to their X1 customers.\nThis marks the first time that the Olympics can now be enjoyed in the combined experience.\nAlso this quarter, Euro 2020 broadcasted in Dolby Atmos across multiple broadcasters in Poland, Malaysia, across the Middle East and North Africa.\nAnd the Eurovision Song Contest was broadcast in Dolby Atmos live to viewers in the Netherlands.\nBy enabling a growing number of live broadcast events, we build upon our strong presence in movie and TV content and add to the value proposition for deeper adoption of Dolby in TVs, set-top boxes, DMAs and mobile applications.\nThe momentum of Dolby Vision and Dolby Atmos content across streaming services continues to be strong as our partners bring new titles in Dolby Vision and Dolby Atmos.\nParamount+ added support for Dolby Atmos when they recently released A Quiet Place II in the combined Dolby experience.\nWe have also seen our partners expand the amount of original local content that is enabled in Dolby.\niQIYI recently announced they will be making Dolby Vision and Dolby Atmos content available on their international app that is available in over 190 countries and will be enabling Dolby experiences in new original local content on their platform.\nApple TV+ is enabling new local episodic content in Dolby Vision and Dolby Atmos in Korea.\nNetflix released their first original film for Thailand in Dolby Vision this quarter, and Disney+ Hotstar is enabling new local content for India in Dolby.\nStan, a leading OTT service in Australia, now supports the combined Dolby experience on their platform.\nEnabling relevant local content in Dolby is another important factor in driving more adoption across the global markets that our OEM partners serve.\nThis quarter, Xiaomi and Skyworth released new TV models highlighting both Dolby Vision and Dolby Atmos.\nIn Japan, Regza launched their first TV with Dolby Vision IQ, adding to a growing list of partners that includes LG, Panasonic, TCL, Xiaomi and Hisense.\nSagemcom recently launched their all-in-one video soundbox, which combines set-top box and sound bar functionality with support for Dolby Atmos.\nAnd LG announced the rollout of updates coming to their OLED TVs that optimize for the best gaming experience in Dolby Vision.\nGaming is another area we are focused on growing the number of experiences in Dolby, and we have begun to see momentum with mobile games becoming available in Dolby Atmos.\nWith gaming and music, we are enabling more of the relevant content for mobile phones and PCs to now be Dolby experiences, adding to the reasons for adoption on these devices.\nThis quarter, we saw Dolby Atmos highlighted across several mobile phone launches in India, including Oppo and their Realme branded phones and Xiaomi's Redmi gaming smartphone.\nWithin PC, Samsung recently launched a new Galaxy book lineup featuring Dolby Atmos.\nWe continue to build our momentum of Dolby Vision and Dolby Atmos across content, services and devices.\nAnd at the same time, we still see significant opportunity to increase adoption as we grow the amount of content experiences available in Dolby.\nLet me shift to Cinema.\nWe now have about 95% of our Dolby Cinemas open globally, and our partners remain deeply engaged.\nIn recent months, more content has returned to the big screen, and we have seen positive signs in box office performance.\nThis was highlighted in the U.S. with strong opening weekends from titles like Black Widow and F9: The Fast Saga that were both available in Dolby Cinema.\nWe continue to see moviegoers seeking to enjoy these movies in the best way possible with box office skewing more towards Dolby Cinema and premium experiences compared to pre-pandemic levels.\nAnd we are now bringing Dolby expertise and innovations that create the best way to enjoy content to a much broader range of experiences and real-time interactions through Dolby.io.\nMarie brings strong leadership experience and a track record of leading engagement with developer communities, including most recently at DocuSign, where she established the company's first-class developer experience.\nDuring our first year with Dolby.io in market, our focus has been on building our engagement with the developer community, learning from these interactions and continually evolving our offerings to best meet the needs of developers.\nSince launch, we have seen strong demand for higher-quality, real-time experiences.\nWe have now begun to roll out a significant update that will enable larger scale interactions with more participants.\nWe have positive feedback from current customers who are now live with this release, and we are actively engaging a significant pipeline of potential customers that these increased capabilities can directly address.\nWe see engagement across a variety of use cases, including podcasting, remote collaboration tools, virtual meetings and online education.\nWe are excited by the many ways developers are engaging with our APIs, and we are just at the beginning of what Dolby.io can enable in creating higher-quality, everyday audiovisual experiences.\nSo to wrap up, Dolby is available to a much larger audience across a wider range of content today than ever before.\nAs we build upon our presence in movie and TV content with more Dolby experiences in music, gaming and live events, we increase the reasons for deeper adoption of Dolby across devices.\nAnd with Dolby.io, we are building the momentum to bring the Dolby magic to a wide range of use cases and experiences.\nAll of this gives us confidence in our ability to drive revenue and earnings growth into the future.\nAnd with that, I'd like to hand it over to Lewis to take us through the financials.\nAnd as Kevin said in his opening comments, we did have another solid quarter.\nSo let me go through the Q3 numbers, and then I'll walk you through the outlook for Q4.\nSo starting off with revenue.\nRevenue in the third quarter was $287 million, which was at the higher end of our guidance range and included a true-up of about $14 million for Q2 shipments reported that were above the original estimates, and that item is not uncommon.\nOn a year-over-year basis, third quarter revenue was about $40 million above last year's Q3 as we benefited from higher market TAMs, along with greater adoption of our Dolby technologies.\nAnd then on a sequential basis, revenue was down from Q2, mainly due to timing of revenues from contracts and from patent licensing programs, and both of these topics were anticipated when we gave guidance.\nSo Q3 revenue was comprised of $272 million in licensing and $15 million in products and services.\nSo let's discuss the trends in licensing revenue by end market, starting with broadcast.\nBroadcast represented about 46% of total licensing in the third quarter.\nBroadcast revenues increased by about 40% year-over-year, and that was driven by higher market volume, higher recoveries and higher adoption of our Dolby technologies.\nAnd then on a sequential basis, broadcast increased by about 18%, and that was due mostly to higher recoveries.\nIn the mobile space, mobile represented about 18% of total licensing in Q3.\nMobile declined by about 36% year-over-year, mainly due to lower recoveries, and that was offset partially by higher market volume.\nAnd then on a sequential basis, mobile was down by about 24%, due mostly to timing of revenue under contracts, and we did anticipate that.\nConsumer electronics represented about 14% of total licensing in Q3.\nAnd on a year-over-year basis, CE licensing increased by about 86%, driven by higher market volume, higher adoption of Dolby and higher recoveries.\nOn a sequential basis, CE went down by about 22%, and that was due mainly to timing of revenue under contracts.\nPC represented about 9% of total licensing in the third quarter.\nPC was higher than last year by about 6%, due to higher market volume, along with increased adoption of Dolby Vision and Dolby Atmos, offset partially by lower recoveries.\nAnd sequentially, PC was down by about 51%, due mostly to timing of revenue, and that lines up with some of the comments I made last quarter about its increase that quarter because of timing.\nOther markets represented about 13% of total licensing in the third quarter.\nThey were up about 42% year-over-year, and that was driven by higher revenue from Dolby Cinema, via admin fees and gaming.\nAnd on a sequential basis, other markets increased by about 4% due mostly to Dolby Cinema and to gaming.\nSo if I go beyond licensing, our products and services revenue was about $15.2 million in Q3 compared to $16 million in Q2 and $11.8 million in last year of Q3.\nThe year-over-year increase reflects just modestly higher demand in the cinema industry.\nSo now I'd like to discuss Q3 margins and our operating expenses.\nTotal gross margin in the third quarter was 89% on a GAAP basis and 89.7% on a non-GAAP basis.\nProducts and services gross margin on a GAAP basis was minus $3.9 million in Q3 compared to minus $345,000 in the second quarter, and products and services gross margin on a non-GAAP basis was minus $2.6 million in Q3 compared to a positive $1.1 million in the second quarter.\nBoth GAAP and non-GAAP product gross margins were lower than what I had guided, and that was due to write-downs we took during the third quarter for conferencing hardware.\nOperating expenses in the third quarter on a GAAP basis were $199.1 million compared to $204 million in Q2, and our operating expenses in the third quarter on a non-GAAP basis were $173.6 million compared to $178.4 million in the second quarter.\nNow operating expenses were below guidance in Q3, and that was mainly due to some of our marketing programs that shifted in timing from Q3 into Q4.\nAnd you will see that sort of mirrored back and reflected in our Q4 expense guidance, where the delta from Q3 to Q4 will be driven mostly by our marketing programs.\nAnd then our operating income in the third quarter was $56.1 million on a GAAP basis or 19.6% of revenue compared to $34.1 million or 13.8% of revenue in Q3 of last year.\nOperating income in the third quarter on a non-GAAP basis was $83.6 million or 29.1% of revenue compared to $60.5 million or 24.5% of revenue in Q3 of last year.\nIncome tax in Q3 was 7.7% on a GAAP basis and 13.7% on a non-GAAP basis.\nNet income on a GAAP basis in the third quarter was $54.6 million or $0.52 per diluted share compared to $67.3 million or $0.66 per diluted share in last year's Q3.\nNow I'd like to point out as a reminder, last year's Q3 net income, and that's both GAAP and non-GAAP, included $36 million of discrete tax benefits, which does affect the year-over-year comparisons.\nSo our net income on a non-GAAP basis in the third quarter was $74.8 million or $0.71 per diluted share compared to $87.5 million or $0.86 per diluted share in Q3 of last year.\nAnd again, that benefits -- the last year number benefits from that onetime tax credit.\nFor both GAAP and non-GAAP, net income in the third quarter was above guidance due to revenue landing at the higher end of our range and expenses coming in below the range.\nDuring the third quarter, we generated $172 million in cash from operations compared to $134 million generated in last year's third quarter.\nWe ended the third quarter with about $1.3 billion in cash and investments.\nDuring the third quarter, we bought back about 400,000 shares of our common stock and ended the quarter with about $37 million of stock repurchase authorization available.\nToday, we announced that the Board of Directors has approved an additional $350 million of stock repurchase authorization.\nSo if I combine that new approval with the remaining balance that was at the end of June, means that as of today, we have $387 million of stock repurchase authorization available going forward.\nWe also announced today a cash dividend of $0.22 per share.\nThe dividend will be payable on August 19, 2021, to shareholders of record on August 11, 2021.\nSo now let's discuss the forward outlook.\nLast quarter, when I discussed guidance for Q3, I laid out a scenario that said our second half revenue could range from $560 million to $600 million.\nNow with Q3 under our belt and having landed in the range, we are updating the second half revenue range to $570 million to $600 million, in other words, bumping up the lower end by $10 million, which means we are anticipating Q4 revenue to range from $280 million to $310 million.\nWithin that, licensing could range from $265 million to $290 million, while products and services could range from $15 million to $20 million.\nWith respect to market conditions and industry analyst reports that look out over the horizon, there's still a fair amount of uncertainty out there, and so we are maintaining similar assumptions as what we talked about last quarter, namely that PC TAMs in the second half could be higher on a year-over-year basis, while TAMs for TVs and other consumer devices could be down in the second half.\nWe also continue to anticipate that we'll see organic growth on a year-over-year basis from broader adoption of Dolby technologies across various markets.\nAnd we also anticipate some higher revenue from Dolby Cinema as that industry looks to improve, which we have seen some signs of in recent times, and Kevin made a couple of comments about that with some of the titles that came out.\nSo let me move on to the rest of the P&L outlook for Q4.\nQ4 gross margin on a GAAP basis is estimated to range from 88% to 89%, and the non-GAAP gross margin is estimated to range from 89% to 90%.\nWithin that, products and services gross margin is estimated to range from about breakeven to $1 million on a GAAP basis and from about $1 million to $2 million on a non-GAAP basis.\nOperating expenses in Q4 on a GAAP basis are estimated to range from $216 million to $226 million, and operating expenses in Q4 on a non-GAAP basis are estimated to range from $190 million to $200 million.\nAs I mentioned earlier, the increase from Q3 to Q4 would be driven primarily by specific marketing programs, some of which shifted in timing from Q3 into Q4.\nBut in total, Q3 plus Q4 marketing is expected to land at a similar amount as we were thinking last quarter.\nAnd to repeat a comment I made last quarter, marketing expenses for the full year FY '21 would be similar to what they were last year or maybe a bit lower depending on how Q4 turns out.\nSo let's finish up the Q4 guidance.\nOther income is projected to range from $1 million to $2 million for the fourth quarter, and our effective tax rate for Q4 is projected to range from 19% to 20% on both a GAAP and non-GAAP basis.\nBased on a combination of the factors I just covered, we estimate that Q4 diluted earnings per share could range from $0.25 to $0.40 on a GAAP basis and from $0.47 to $0.62 on a non-GAAP basis.\nAnd now that we've provided guidance for Q4, here's a full year outlook that would correspond to that.\nFY '21 revenue is anticipated to range from $1.28 billion to $1.31 billion, with gross margin ranging from 89% to 90% on a GAAP basis and 90% to 91% on a non-GAAP basis.\nTotal operating expenses for the year are estimated to range from $810 million to $820 million on a GAAP basis and from $710 million to $720 million on a non-GAAP basis.\nAnd full year diluted earnings per share are estimated to range from $2.79 to $2.94 on a GAAP basis and from $3.57 to $3.72 on a non-GAAP basis.\nSo operator, hopefully, my phone is working okay now.\nCan you queue up the first question?\nYes, Mr. Chew, your line is open.\nLet's move on to the rest of the P&L outlook for Q4.\nI wasn't quite sure where I dropped off.\nQ4 gross margin on a GAAP basis is estimated to range from 88% to 89%, and the non-GAAP gross margin is estimated to range from 89% to 90%.\nWithin that, products and services gross margin is estimated to range from about breakeven to $1 million on a GAAP basis and from about $1 million to $2 million on a non-GAAP basis.\nOperating expenses in Q4 on a GAAP basis are estimated to range from $216 million to $226 million, and operating expenses in Q4 on a non-GAAP basis are estimated to range from $190 million to $200 million.\nAs I mentioned earlier, the increase from Q3 to Q4 would be driven primarily by specific marketing programs, some of which shifted in timing from Q3 into Q4.\nBut in total, Q3 plus Q4 marketing is expected to land at a similar amount as we were thinking last quarter.\nAnd to repeat a comment I made last quarter, marketing expenses for the full year FY '21 would be similar to what they were last year or maybe a bit lower depending on how Q4 turns out.\nSo let's finish up the Q4 guidance.\nOther income is projected to range from $1 million to $2 million for the fourth quarter, and our effective tax rate for Q4 is projected to range from 19% to 20% on both a GAAP and non-GAAP basis.\nBased on a combination of the factors I just covered, we estimate that Q4 diluted earnings per share could range from $0.25 to $0.40 on a GAAP basis and from $0.47 to $0.62 on a non-GAAP basis.\nAnd now that we've provided guidance for Q4, here's a full year outlook that would correspond to that.\nFY '21 revenue is anticipated to range from $1.28 billion to $1.31 billion, with gross margin ranging from 89% to 90% on a GAAP basis and 90% to 91% on a non-GAAP basis.\nTotal operating expenses for the year are estimated to range from $810 million to $820 million on a GAAP basis and from $710 million to $720 million on a non-GAAP basis.\nAnd full year diluted earnings per share are estimated to range from $2.79 to $2.94 on a GAAP basis and from $3.57 to $3.72 on a non-GAAP basis.\nSo operator, hopefully, my phone is working okay now.\nCan you queue up the first question?\n", "role": "user" }, { "content": "compname reports q3 non-gaap earnings per share of $0.71.\nsees fy revenue $1.28 billion to $1.31 billion .\nq3 non-gaap earnings per share $0.71.\nq3 gaap earnings per share $0.52.\nboard of directors has approved increasing size of its stock repurchase program by $350 million.\nh2 total revenue is estimated to range from $570 million to $600 million.\nfy diluted earnings per share is anticipated to range from $2.79 to $2.94 on a gaap basis and from $3.57 to $3.72 on a non-gaap 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: In particular, we expect that the continued impact of COVID-19 on our business remains uncertain at this time.\nDuring today's call, we will discuss GAAP and non-GAAP financial measures.\nAs for the content of today's call, Lewis will begin with a recap of Dolby's financial results and provide our first and second quarter 2021 outlook, and Kevin will finish with a discussion of the business.\nI hope everyone is doing well.\nOur Q4 revenue was above our guidance, but we are still down on a year-over-year basis and that reflects the ongoing impact of the pandemic.\nSo let's go through the numbers.\nFourth quarter revenue was $271 million, compared to $247 million in Q3 and $299 million in Q4 of last year.\nOur revenue guidance coming into the fourth quarter was a range of $225 million to $255 million.\nSo compared to guidance, revenues were better than what we projected as we had a true-up of about $25 million in the quarter related to Q3 shipments, which was about $15 million higher than the true-up that we had last quarter, and with most of that improvement coming from TVs and set-top boxes, and PCs.\nTotal company revenue in Q4 increased sequentially by $24 million compared to Q3, as we benefited from higher unit volumes in TVs, set-top boxes, DMAs and PCs, along with the higher true-up that I just discussed.\nAnd all of this was partially offset by lower revenue from mobile due to timing under contracts, and I will discuss that in a second.\nNow looking at Q4 on a year-over-year basis, total company revenue is down by $28 million from last year's Q4 and we can attribute that mainly to COVID-19, especially in products and services, which were down by about $20 million or nearly 60% below last year.\nThe composition of Q4 revenue was $257 million in licensing and $14 million in products and services.\nSo let's break down licensing revenue by end market, starting with broadcast.\nBroadcast represented about 47% of total licensing in the fourth quarter.\nBroadcast revenues increased by about 2% year-over-year, helped by the higher true-up related to the Q3 shipments and also driven by higher adoption in TVs and set-top boxes.\nAnd then this was then offset partially by lower recoveries in the quarter.\nOn a sequential basis, broadcast was up by about 35% due to higher volume in TVs and set-top boxes along with higher recoveries and the higher true-up.\nMobile represented approximately 15% of total licensing in Q4.\nMobile was down by about 13% over last year due to lower recoveries, but partially offset by higher adoption of Dolby Technologies.\nFor the sequential comparison, I should point out that last quarter Q3, Mobile was about 33% licensing, which was higher than normal, and that was due to timing of revenue under customer contracts, so we came into Q4 expecting Mobile revenue to decline this quarter and return to a more normalized percentage of revenue, which is what it did.\nSo accordingly Mobile revenue was down sequentially by about 50%, and that was primarily due to timing of revenue under customer contracts.\nConsumer electronics represented about 13% of total licensing in the fourth quarter.\nOn a year-over-year basis, CE licensing was down by about 8%, mainly due to lower recoveries.\nOn a sequential basis, CE was about 68% higher than Q3.\nAnd as a reminder, Q3 was lower than usual and only 9% of licensing because of timing under contract.\nAnd so, the sequential increase from Q3 to Q4 was mostly a return to a more normal level.\nPC represented about 12% of total licensing in Q4.\nPC was higher than last year by about 26%, helped by the higher true-up and also because of the increased adoption of Dolby Technologies.\nAnd sequentially, PC was up by about 32% that's for similar reasons.\nOther markets represented about 13% of total licensing in the fourth quarter and they were down by about 19% year-over-year due to significantly lower Dolby Cinema box office share and that's because of the COVID restrictions and lack of big titles, and also because of lower revenues from gaming due to console life cycles and/or recoveries in automotive.\nOn a sequential basis, other markets was up by about 32%, driven by higher revenue from gaming and from via admin fees and that's the patent pool that we administered.\nBeyond licensing, our products and services revenue was $14.3 million in Q4, compared to $11.8 million in Q3 and $34 million in last year's Q4.\nOur guidance had anticipated the large year-over-year decrease because most of this revenue comes from equipment that we sell to cinema exhibitors and these customers continue to be negatively affected by the pandemic.\nAnd speaking of products and services revenue, going forward into Q1, we're winding down and exiting conferencing hardware sales, as we will now be fully focused on expanding the availability of the Dolby Voice experience through software solutions, such as interactivity APIs on our developer platform.\nSo later on, when I cover the outlook for FY '21, my comments on products and services revenue and gross margin will reflect the fact that we are exiting the conferencing hardware arena.\nNow I'd like to discuss Q4 margins and operating expenses.\nTotal gross margin in the fourth quarter was 84.3% on a GAAP basis and 85.1% on a non-GAAP basis.\nProducts and services gross margin on a GAAP basis was minus $15.5 million in the fourth quarter and a large portion of that consisted of charges for excess and obsolete inventory associated with conferencing hardware and that relates back to what I just said a minute ago, about our plans in that space.\nGoing forward into Q1, we anticipate that products and services margin will still be negative, but more along the lines of around minus $3 million or minus $4 million.\nI'll cover this again in the outlook section in a few minutes.\nProducts and services gross margin on a non-GAAP basis was minus $14.1 million in the fourth quarter, and my comments here are similar to what I just said for GAAP gross margins.\nOperating expenses in the fourth quarter on a GAAP basis were slightly above the high-end of the range that we had guided, coming in at a $198.7 million, compared to $182.9 million in Q3.\nAnd remember that Q3 was particularly low for us, because that was the first full quarter of reacting to COVID-19 and lots of our activities have been temporarily halted or pushed out.\nOperating expenses in the fourth quarter on a non-GAAP basis were $176.5 million, which is within our range and that was compared to $159.2 million in the third quarter, and basically the same comments that I made in GAAP apply here as well.\nOperating income in the fourth quarter was $30.1 million on a GAAP basis or 11.1% of revenue, compared to $51.2 million or 17.1% of revenue in Q4 of last year.\nOperating income in the fourth quarter on a non-GAAP basis was $54.3 million or 20% of revenue, compared to $77.6 million or 26% of revenue in Q4 of last year.\nIncome tax in Q4 was 21.8% on both the GAAP and non-GAAP basis.\nThe effective tax rate was slightly higher than guidance, and that was due mainly to the mix of our income between different tax jurisdictions.\nNet income on a GAAP basis in the fourth quarter was $26.8 million or $0.26 per diluted share, compared to $43.9 million or $0.43 per diluted share in last year's Q4.\nNet income on a non-GAAP basis in the fourth quarter was $45.8 million or $0.45 per diluted share, compared to $67.6 million or $0.66 per diluted share in Q4 of last year.\nFor both GAAP and non-GAAP, net income in Q4 was above the guidance that we gave at the beginning of the quarter, and that was primarily due to revenue being above the high-end of our range, offset partially by the lower product and services gross margin that I mentioned a minute ago.\nDuring the fourth quarter, we generated about $113 million in cash from operations, which compares to about $130 million generated in last year's fourth quarter.\nWe ended the fourth quarter with nearly $1.2 billion in cash and investments.\nDuring Q4, we bought back about 640,000 shares of our common stock and ended the quarter with about $187 million of stock repurchase authorization still available to us.\nWe also announced today a cash dividend of $0.22 per share.\nThe dividend will be payable on December 4, 2020 to shareholders of record on November 24, 2020.\nBefore I go into the outlook for FY '21, let's summarize the results for the full-year FY '20.\nTotal revenue in FY '20 was $1,162 million that compares to $1,241 million in the prior year with a year-over-year decline due to the impact from COVID-19.\nWithin total revenue, licensing was $1,079 million, which was down about $28 million from last year due to lower consumer activity because of the pandemic, while products and services revenue was $83 million for the year, down about $51 million from last year due mainly to lower demand from the cinema industry because of restrictions brought on also by the pandemic.\nOperating income for the full-year FY '20 was $219 million on a GAAP basis or about 19% of revenue and operating income on a non-GAAP basis was $318 million or about 27% of revenue.\nNet income on a GAAP basis was $231 million or $2.25 per diluted share and net income on a non-GAAP basis was $305 million or $2.97 per diluted share.\nAnd cash flow from operations for the full-year was $344 million and that's slightly up from the previous year, where cash flow from operations was $328 million.\nSo now let's discuss the full-year outlook.\nFirst, let me say that we'll be facing some interesting dynamics in FY '21 with our year-over-year comparisons.\nBecause we have a September year-end, the first two quarters of FY '20 were mostly unaffected by COVID-19, while the last two quarters of FY '20 were fully affected by COVID.\nAnd as we head into FY '21, COVID continues to persist and visibility is very limited, even more so the further out you tried to look.\nSo today, I'm going to provide an outlook scenario for the first half of the year, including our perspective on what Q1 and Q2 revenue could be and for the second half of the year because visibility is limited, we are not providing guidance at this time, but I will provide some color on some of the factors that could affect the second half.\nSo let's discuss the first half.\nIn the first half of FY '21, we currently anticipate year-over-year growth in licensing revenue, and that could be offset by year-over-year decline in products and services revenue.\nThe anticipated growth that we could get in licensing would come mainly from higher adoption of our technologies as industry analysts currently are projecting market TAM to be flat to slightly down in the first half.\nAnd also, we anticipate Dolby Cinema licensing revenue to be significantly down year-over-year in our first half because of that COVID versus pre-COVID factor of comparison in the cinema industry.\nAnd then for that same reason, we are anticipating cinema product sales to be down year-over-year.\nNow within the first half of the year, based on what we currently see, here is the scenario we are assuming for Q1 and then Q2.\nIn the first quarter of FY '21, we anticipate that total revenue could range from $330 million to $360 million.\nWithin that, we estimate that licensing could range from $320 million to $345 million, while products and services is projected to range from $10 million to $15 million.\nAt the midpoint of the range, we anticipate growth in lights seem to be driven by a higher adoption of our technologies across a range of devices.\nIn addition, the Q1 licensing outlook is benefiting from timing of revenue under customer contracts, as well as potentially higher recoveries.\nNow we are not anticipating as much revenue from these items, namely the timing of the recoveries in our second quarter.\nAnd by the way, last year, it was Q2 not Q1 that benefited more from timing of recoveries.\nSo with that in mind, and based on what we currently see and having just gone over the Q1 revenue outlook, we currently see our Q2 revenue scenario looking like a range of about $270 million to $300 million.\nAnd doing the math for you on the first half of FY '21 by combining the Q1 and Q2 figures that I just went over, our current outlook scenario assumes a first half FY '21 revenue range of $600 million to $660 million.\nWe will plan to update you on how this picture has evolved after Q1 is completed.\nAs for the second half, like I said, we are not giving guidance for the second half, but here are some points to consider.\nOn a sequential basis in our licensing revenue, we typically see second half revenue is lower than the first half because of lower seasonality in consumer device shipments and also because of the timing of revenue on the customer contract.\nOn a year-over-year basis, while we do expect to see continuing benefit from increased adoption of Dolby Technologies, it's worth noting that with respect to market TAM, current industry analysts reports are projecting markets like PC and TV TAM to be down on a year-over-year basis in the second half.\nAnd that's because of an uptick in unit shipments that happened in the latter part of FY '20 that might not repeat in that same timeframe next year.\nSo, of course, it's much too early to know if that will be true, but that's what the current reports currently suggest.\nAnd as for Dolby Cinema and cinema products, the year-over-year comparison should be favorable in the second half, but we don't know to what extent or at what pace.\nSo those are a few things to think about for the second half and we thought it was worth providing you that color.\nSo let me now finish up by providing the outlook on the rest of the P&L for Q1, already highlighted the revenue range scenario of $330 million to $360 million.\nSo Q1 gross margin on a GAAP basis is estimated to range from 90% to 91%, and the non-GAAP gross margin is estimated to range from 91% to 92%.\nWithin that, products and services gross margin is estimated to range from minus $3 million to minus $4 million on a GAAP basis, and from minus $2 billion to minus $3 million on a non-GAAP basis.\nAs I mentioned earlier, we are winding down and exiting the conferencing hardware space, and the demand for cinema products continues to be weak because of the industry conditions.\nAnd as a result, we are reducing certain resources in manufacturing, as well as other areas that were connected with conferencing hardware and cinema products.\nWe anticipate that it will take several months to complete, various activities to smoothly transition our conferencing hardware partners and then customers.\nWith respect to the impact on our products and services gross margin, we estimate that we could start to see savings in our cost of goods sold by around the end of fiscal Q2, and that's because of these transitioning activities that we have to undertake.\nOperating expenses in Q1 on a GAAP basis are estimated to range from $207 million to $219 million.\nIncluded in this range is approximately $7 million to $9 million of restructuring charges for severances and related benefits that are being provided to employees that are impacted by the actions that I just mentioned a minute ago.\nOperating expenses in Q1 on a non-GAAP basis are estimated to range from $175 million to $185 million, and this range excludes the estimated restructuring charge.\nOther income is projected to range from $1 million to $2 million for the quarter, and our effective tax rate for Q1 is projected to range from 20% to 21% on both the GAAP and non-GAAP basis.\nSo based on a combination of the factors I just covered, we estimate that Q1 diluted earnings per share could range from $0.70 to $0.85 on a GAAP basis and from $0.97 to $1.12 on a non-GAAP basis.\nSo that's it for me.\nOver to you, Kevin.\nI want to focus my comments on three main areas today.\nI will start by highlighting our continued progress, increasing the number of Dolby Vision and Dolby Atmos experiences around the world.\nI'll then spend a few minutes on the changes we have made in our cinema and conferencing hardware business to adjust to the evolving conditions in certain markets.\nAnd then I will share some thoughts on the exciting opportunity for Dolby to address a new world of content through our developer platform and related initiatives.\nIn a year where we all face challenges and disruptions, we have continued to bring more Dolby experiences to more people around the world, and they are the driving force behind the Dolby magic.\nSo let me start with the Dolby Vision and Dolby Atmos ecosystem that continues to grow.\nWith the launch of the iPhone 12, consumers are now able to see the benefits of Dolby Vision when they record video and share it.\nWe are excited about the opportunity to support this ecosystem so the Dolby Vision content can be enjoyed on social media, video sharing sites and more.\nThis will vastly expand the content that can be enjoyed in Dolby Vision, adding more reasons for devices and services to adopt our technology and creating new opportunities for Dolby.\nDuring 2020, we continued to grow the presence of Dolby Vision and Dolby Atmos across the many ways that people enjoy movie and TV content.\nAt the beginning of the year we saw the launches of Disney+ and Apple TV+ with the combined Dolby experience.\nGoogle Play, Showtime and PBS all began streaming in Dolby Vision this year.\nIn this quarter, Watcher a streaming service in Korea began supporting content in Dolby Vision and Dolby Atmos.\nThe momentum of Dolby Vision and Dolby Atmos within movie and TV content continues to drive an expanding lineup of devices within the home.\nThe adoption of Dolby Vision and Dolby Atmos within 4K TV shipments grew significantly year-over-year.\nOur partners like TCL, Sony, Panasonic and Skyworth added support for the Dolby Vision and Dolby Atmos experience deeper within their TV lineups and have also broadened the global reach of their offerings, including this year into India.\nXiaomi launched their first TV that supports Dolby Vision and Dolby Atmos just this year.\nAnd we continue to bring new innovations to market, like Dolby Vision IQ, which optimizes the picture on your TV by adjusting to the surrounding line and to the type of content being viewed.\nOur continued innovation brings new value to our partners and consumers and adds to the reasons for deeper adoption.\nDolby Vision and Dolby Atmos continue to grow across a broader range of devices.\nApple recently began enabling support for Dolby Atmos to the HomePod.\nEarlier this year, Sonos launched its first Dolby Atmos product with the Sonos Arc and Roku began supporting Dolby Vision and Dolby Atmos with the Roku Ultra.\nWe are also beginning to see increasing adoption of the combined experience within set-top boxes, including the latest offerings from Free in France and Deutsche Telekom in Germany.\nWithin Mobile and PC, Apple highlights the adoption of the Dolby Vision and Dolby Atmos playback with support throughout their iPad, MacBook and iPhone lineups.\nWe also have strong initial adoption of Dolby Atmos within the latest flagship mobile phones from Samsung, OPPO and Sony.\nLenovo launched several new PCs that support the combined experience and Dell began shipping Dolby Vision enabled PCs earlier this year.\nWe see significant growth opportunities within both Mobile and PC as we gain new wins, drive deeper adoption within our partners' device lineups and expand the types of content that can be enjoyed with Dolby Vision and Dolby Atmos.\nIn the same way, the Dolby Vision and Dolby Atmos enabled great movie and TV content, we see a significant opportunity to create immersive experiences within music and gaming.\nThese are important forms of entertainment that expand our current value proposition and grow the number of devices that can benefit from the Dolby experience.\nLet me start with music.\nA year ago, we launched Dolby Atmos for music with Amazon Music HD and the Amazon Echo Studio.\nThe music in Dolby experience has been met with deep and passionate engagement from artists.\nFor example, those that we highlighted in the stories from Lizzo, Post Malone, Coldplay and J Balvin.\nTidal became the second streaming service to support Dolby Atmos Music, enabling millions of Dolby Atmos devices within mobile and in the home.\nOur increasing presence in music will create opportunities to grow adoption in mobile, automotive, smart speakers and headphones.\nIn gaming, Microsoft announced their new Xbox to be the first gaming console to support the combined Dolby Vision and Dolby Atmos experience for gaming.\nWe are also seeing a growing number of gaming PCs adopt the Dolby experience, including new products from Lenovo and ASUS this year.\nAs we grow the presence of Dolby Vision and Dolby Atmos within gaming content, we add to the value proposition for broader adoption within PCs, gaming consoles and mobile phones.\nOur momentum for Dolby Vision and Dolby Atmos across content, services and devices is strong and at the same time, we still see much of the opportunity ahead of us.\nWe continue to grow our presence throughout devices within the home, and we made it even earlier stages of adoption within mobile and PC.\nWe are focused on accelerating that adoption by increasing the amount of content and by broadening our presence in categories like music and gaming.\nLet me shift now to talk about the areas where we have made some changes to adjust to the evolving conditions in certain markets.\nThe cinema environment remains challenging as the time of recovery is uncertain and the landscape is evolving.\nAs Lewis discussed, we have made some adjustments to operations and manufacturing here to reflect a lower outlook for demand.\nAt the same time, we remain confident that studios will continue to create great content that audiences will continue to want to experience these movies in the cinema and that they will take out the best experiences.\nLet me spend a few -- just a few moments on Dolby Voice.\nWe entered the communication space with the goal of enabling higher quality and more natural meeting experiences.\nOur value proposition of enabling higher quality interactions remains as strong and relevant as ever and we see significant opportunities to broaden the reach of our technologies.\nAs we move forward, we are winding down the sales of our conferencing hardware to focus all of our efforts on the larger opportunity to enable the Dolby Voice experience through our enterprise partners and our developer platform.\nAnd that brings me to the opportunity to bring the Dolby experience to the vast and growing amount of content that are a part of our everyday lives, from user-generated content to social media and casual entertainment to everyday virtual interactions.\nToday, developers can access our technology through Dolby.io to improve media and interactivity within their applications.\nWe have seen growing engagement from developers across a variety of industries and use cases from improving audio quality in podcast, media production and online marketplace videos to enabling interactivity in online education, social media, and live streaming applications.\nThis quarter, we began partnering with SoundCloud to enable artists to improve the quality of their tracks using our mastering APIs and have seen nearly 200,000 tracks mastered through our APIs in the few months since launch.\nWe are also working to integrate our media APIs onto the box platform this quarter to enable their customers to enhance content with our media APIs right within the box experience.\nAdditionally, we recently enabled our interactivity APIs to include the benefits of Dolby Voice and we have drawn strong engagement from developers since its release.\nAs we look ahead, we will continue to expand our offerings to address more audio and video features.\nFor example, now that consumers can create Dolby Vision with the iPhone 12.\nWe see opportunities to support content platforms seeking to make the most of this expanding world of Dolby Vision content.\nWhile we are just at the beginning of these new opportunities, we are learning quickly from our early engagement with developers and evolving our offering to bring the Dolby experience to everyday applications and services.\nSo to wrap up, the momentum of Dolby Vision and Dolby Atmos with movies and TV content is strong as our partners continue to bring new devices and services to market.\nOur opportunity remains ahead of us and we are enabling more content experiences in music and gaming that can accelerate the adoption across device categories.\nConsumers can now capture and edit in Dolby Vision for the first time, expanding the Dolby experiences into the growing world of user-generated content.\nAnd we are excited by the opportunity to bring the Dolby experience to new use cases and industries through our developer platform.\nAll of this gives us confidence in our ability to drive revenue and earnings growth into the future.\nI look forward to updating you next quarter.\n", "role": "user" }, { "content": "q4 non-gaap earnings per share $0.45.\nq4 gaap earnings per share $0.26.\nsees q2 revenue $270 million to $300 million.\nsees q1 2021 total revenue to range from $330 million to $360 million.\nsees q1 2021 diluted earnings per share to range from $0.70 to $0.85 on a gaap basis.\ndiluted earnings per share on a non-gaap basis is anticipated to range from $0.97 to $1.12 for q1 2021.\nanticipate that cinema sites could continue to be negatively affected through first half of fiscal 2021 or longer.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 for the content of today's call, Kevin will start with a discussion of the business and Robert will follow with a recap of Dolby's financial results and provide our first quarter and fiscal 2022 outlook.\nOur Q4 earnings per share came in above our midpoint, while revenue came in toward the low end of our guidance range.\nLooking at the full year, we had a strong fiscal 2021 with 10% revenue growth and our highest operating margin since fiscal 2014, and we created considerable momentum across many of our growth initiatives, that will allow more people to be entertained by premium Dolby experiences.\nConsumers can now easily record, edit and share their videos in Dolby Vision with their Apple iPhone.\nMusic in Dolby is being enjoyed by a significantly larger audience, with the launch of Dolby Atmos on to Apple Music, and we have the first partners, who will enable the Dolby Atmos music experience in the car, with Mercedes-Benz and Lucid Motors, and gamers can now play some of their favorite titles in Dolby Vision for the first time, on the latest Xbox.\nDuring FY '21, our revenues benefited from robust increases in consumer device shipments, combined with increased adoption of Dolby Atmos and Dolby Vision, partially offset by a decrease in the cinema related revenues.\nAs we enter FY '22, we are expecting revenue growth in the mid to high single digits, as we anticipate a shift in those factors, with accelerating growth of Dolby Atmos and Dolby Vision and a partial recovery in cinema related revenues, offset by a macro slowdown in consumer device shipments.\nIt has been a dynamic environment.\nBefore Robert takes you through the numbers in more detail, including a discussion on our licensing end markets, I want to walk you through some of the most important factors, as we think about long-term revenue growth.\nOur foundational audio technologies, increased adoption of Dolby Atmos and Dolby Vision and our opportunity to expand our addressable market with initiatives like dolby.io.\nLet's start with our foundational audio technologies, which include Dolby Digital Plus, AC-4 and our audio patent licensing.\nThese foundational technologies made up roughly three quarters of our licensing business in FY '21, and have high attach rates across a diverse set of devices and end markets.\nIn FY '21, our foundational audio technologies grew about 11% year-over-year, due largely to robust global shipments of DCs and higher TV volumes, particularly in North America and Europe.\nWe also benefited from higher than normal true ups coming into the year.\nAs we look ahead to FY '22, industry analysts' reports indicate that we will not see the level of market growth we saw in the previous year, noting uncertainties around global supply constraints and consumer spending.\nOf course, we partner with OEMs across multiple device categories, across all geographies and each of them is impacted differently.\nWhen we take all of this into account, we expect a decrease in the low single digits for our foundational audio revenues.\nOver the long term, we expect our foundational licensing revenue to generally reflect market trends and device shipments, driven by our strong presence across a wide set of consumer devices and markets, with opportunities to increase adoption in certain areas like mobile and automotive.\nThe remainder of our licensing revenue includes Dolby Atmos, Dolby Vision and our Imaging Patent Technologies, where growth is being driven primarily by new adoption and new licensees.\nThis portion of our licensing revenue also includes Dolby Cinema, where we expect strong year-over-year growth, as box office recovers from low attendance throughout FY '21, driven by the pandemic.\nIn total, this portion is approaching one quarter of our licensing revenue and grew nearly 20% in FY '21.\nWe see this growth accelerating to over 35% in FY '22.\nOur continued momentum with Dolby Vision and Dolby Atmos is a key driver here, and I'd like to take a few minutes to highlight our progress in these areas.\nLet me start with Dolby Atmos Music; the response from artists and consumers is clear.\nDolby Atmos creates a whole new way to enjoy music.\nThe engagement continues to build, with some of the world's most popular music artists like Justin Bieber and The Weeknd, describing the Dolby Atmos music experience as “game-changing,” and “an immersive world where you can feel every detail”.\nWe also recently launched a new venue, Dolby Live at Park MGM, where concert attendees will be able to enjoy their favorite artists with the ultimate Dolby Atmos Music experience, and then seek the experience in all the ways they enjoy music.\nAmazon Music recently announced that they are making Dolby Atmos Music experiences more broadly available to their subscribers.\nThe music in Dolby experience significantly increases the value that Dolby brings, across a wide range of devices, including mobile, PC and speaker products.\nOur growing presence in music has created a new value proposition for Dolby in the automotive space.\nMercedes-Benz announced last month, that they are adopting the Dolby Atmos Music experience in two of their top luxury cars, the Mercedes Maybach and the Mercedes-Benz S-Class.\nAnd just yesterday, Chinese electric-car maker NIO, announced they are including Dolby Atmos in their ET7 model.\nWe are excited that these new partnerships add to our early momentum within automotive, that started with Lucid Air earlier this year, which is now on the road in the U.S.\nWe are just at the beginning of the significant opportunity we see ahead in this space.\nThis quarter, the launch of the iPhone 13 lineup again highlighted the capability to enable consumers to record and share their videos in Dolby Vision.\nWith a significant increase to the amount of Dolby Vision content being created through the iPhone, we are seeing a range of content platforms, now enabling support for Dolby Vision for the first time.\nThis quarter, Bilibili, one of China's largest social video sites, began to support the upload and sharing of user generated Dolby Vision content.\nMore recently, Vimeo became the first all-in-one platform to support playback of Dolby Vision content for the Apple ecosystem.\nWith more content platforms supporting Dolby Vision content to broader audiences and used cases, we look to drive increased adoption of Dolby Vision playback and capture across more devices, particularly in mobile and PC.\nWe are also building momentum to enable more live broadcast events in Dolby.\nComcast delivered the 2021 MLB World Series and playoff games in Dolby Vision on Fox Sports.\nThursday night football games will be available in Dolby Vision through Fox, and NBC will be delivering select college football games in Dolby Vision.\nGrowing the number of Dolby content experiences, especially live content with dedicated followings, provides more impetus for greater adoption of Dolby Vision and Dolby Atmos.\nGaming in Dolby Vision is now available on the Xbox series X and S, marking the first time gamers can enjoy playing in the combined Dolby experience.\nMicrosoft also expanded their support of the combined experience, by adding Dolby Vision to their Surface devices.\nIn the living room, we see our partners like Amazon, Xiaomi, TCL and Sky, highlight the combined Dolby Vision and Dolby Atmos experience in their latest TV launches, and we continue to garner support from streaming services with Hulu, adding Dolby Vision this quarter.\nThe newer soundbar products from LG and Sonos showcase support for Dolby Atmos, and in mobile, we saw new Android phones and tablets this quarter from Samsung, Xiaomi and Realme with Dolby technologies.\nWith a solid foundation and increasing adoption of Dolby Atmos and Dolby Vision, we are able to broadly address the world of premium content experiences like movies, TV and music, and are confident in our ability to drive continued growth.\nWith Dolby.io, our developer-first API platform, we see an opportunity to greatly expand our addressable market, by focusing on use cases that benefit from Dolby's unique experience in media and communications.\nWhile our platform has broad applicability across a range of use cases, we are focusing where we think we can offer the most differentiation, virtual live performances, online and hybrid events, social audio, premium education, gaming and content production.\nEach of these verticals represents an opportunity of hundreds of billions of minutes annually.\nAnd collectively, we estimate the addressable market to be about $5 billion and growing.\nWith the breadth and depth of our expertise, we are enabling higher quality capture, processing and playback capabilities compared to what is currently available in the market.\nLast quarter, we released a major platform update, which puts us in a position to address more of our potential customers' needs, by making our APIs more competitive on the number of concurrent users we can support.\nAs we focus on our target use cases and learn from our engagement with developers, we continue to introduce new APIs and features that address the needs of developers and improve the overall developer experience.\nWith these recent improvements, we are beginning to see increased self-service activity.\nAnd with our new leadership in place, we are focused on increasing awareness and building the pipeline.\nThis quarter, we saw a number of new music distribution services, including UnitedMasters, integrating our music mastering API and enabling their users to create high-quality music tracks.\nAlso, Cloudinary recently launched an integration of Dolby.io's audio enhance APIs with their MediaFlows product, allowing their customers to easily improve the audio quality of their videos.\nWhile we are still in the early days of Dolby.io, we are excited about the significant opportunity ahead.\nBefore I wrap up, let me spend a minute on our operating model.\nWe significantly increased operating margins in FY '21, due to a combination of gross margin improvements and reduced spending levels due to COVID.\nWe anticipate a partial return of some of these operating expenses in FY '22, like travel and events, as well as a few specific items like our 53rd week of payroll.\nAt the same time, on the strength of our operating model, including our improved gross margins, we will continue to generate higher operating margins, as compared to our pre-pandemic levels, while investing in our growth areas.\nSo in summary, we have a strong foundation and fiscal 2021 was highlighted by significant wins like Dolby Atmos on Apple Music, the first cars that will support Dolby Atmos and enabling Dolby Vision across a wider range of content, from live events to gaming to the user-generated content.\nWe see much of the opportunity ahead, as we drive broader adoption across more content and more devices, even as we seek to significantly expand our addressable market with Dolby.io.\nAll of this gives us confidence in our ability to drive long-term revenue and earnings growth, as we look to FY '22 and beyond.\nRobert is an experienced leader, with a track record of guiding companies through growth, while delivering operational excellence and accountability.\nRobert has been onboard for about four weeks now.\nWe are excited to have his expertise, as we work toward Dolby's next phase of growth.\nAnd with that, I will hand it over to Robert, to take us through the financials in more detail.\nI am very excited to be here and join the Dolby team.\nI hope that in the near term I get a chance to meet you all, if not in person, at least virtually.\nSo let's go through the numbers for Q4 and full year 2021, and then I will take you through our outlook for fiscal year '22.\nTotal revenue in the fourth quarter was $285 million, which was within the total revenue guidance range we provided, and also included a favorable true-up of about $3 million for Q3 shipments reported, that were above the original estimate.\nRevenue landed toward the low end of our guidance range, due to timing of the deal that pushed out of the quarter, and is now anticipated to result in revenue in fiscal year 2022.\nWith our Q4 results, full year 2021 revenues were $1.28 billion compared to $1.16 billion in fiscal year 2020, generating 10% year-over-year growth.\nWithin that, licensing revenue was $1.21 billion, while products and services revenue was $67 million.\nOn a year-over-year basis, fourth quarter revenue was about $14 million above last year's Q4, as we benefited from greater adoption of Dolby Vision and Dolby Atmos and higher cinema-related revenues, partially offset by lower true-ups.\nQ4 revenue was comprised of $266 million in licensing and $19 million in Products and services.\nLet's discuss the full year and year-over-year quarterly trends in licensing revenue by end market, and I will also highlight the key factors, as we look ahead to fiscal '22.\nBroadcast represented about 39% of the total licensing in fiscal year 2021.\nOur full year revenues grew by $36 million or 8% on a year-over-year basis, driven by higher adoption of Dolby Vision and Dolby Atmos in TVs and set-top boxes.\nWe also saw higher foundational audio revenues due to increased TV shipments in North America and Europe compared to fiscal 2020.\nIn Q4, we saw broadcast revenues decline from prior year's Q4, as we saw lower true-ups for foundational audio revenues on a year-over-year basis, partially offset by higher revenues from Dolby Vision and Dolby Atmos.\nAs we look out to fiscal 2022, we currently anticipate broadcast revenues to grow in the low single digits from fiscal '21, driven by higher adoption of Dolby Vision, Dolby Atmos and growth in our imaging patent programs.\nThese growth factors are projected to be partially offset by lower foundational audio revenues, as we see lower recoveries and lower true-ups on a year-over-year basis, and industry analysts are projecting TV shipments to be flat to down low single digits.\nMobile represented approximately 22% of total licensing in fiscal 2021.\nMobile revenue increased by $34 million or 15% compared to fiscal 2020, as our foundational audio revenues benefited from timing of revenues, and we saw higher Dolby Vision revenues from increased adoption.\nOur Q4 mobile revenues were up about 2% compared to the prior year, due to higher adoption of Dolby Vision and Dolby Atmos.\nIn fiscal year '22, we anticipate that mobile revenues could grow mid to high single digits, driven by increasing adoption of Dolby Vision and Dolby Atmos, as well as growth in our imaging patent programs.\nThese factors will be partially offset by lower foundational audio revenues, due to timing of revenues under contract.\nConsumer electronics represented about 15% of total licensing in fiscal year 2021.\nOn a year-over-year basis, CE licensing increased by $29 million or 19%, driven by higher foundational audio revenues, as a result of increased unit volumes in soundbars and AVRs, as well as higher recoveries.\nWe also saw growth from higher adoption of Dolby Atmos and Dolby Vision across CE devices.\nOur Q4 CE revenues increased 28% compared to prior year, which was in line with full year growth drivers of both higher foundational audio revenues and growing adoption of Dolby Atmos and Dolby Vision.\nAs you look ahead to fiscal year '22, we see CE revenues relatively flat year-over-year.\nWe expect to see higher revenues from Dolby Vision and Dolby Atmos adoption, as well as increasing contributions from our imaging patent programs.\nThese growth drivers will be partially offset by lower foundational audio revenues, as industry analysts are estimating unit volumes in DMAs and soundbars to decrease year-over-year and we anticipate lower CE recoveries.\nPC represented about 12% of total licensing in fiscal year 2021.\nOur fiscal year '21 PC revenues were higher than prior year by about $10 million or 7%, driven by higher foundational audio revenues, as a result of strong PC shipments throughout the year and growing revenues from Dolby Atmos and Dolby Vision.\nThese growth factors were partially offset by lower recoveries compared to fiscal year '20.\nOur Q4 PC revenues were about 7% higher compared to prior year Q4, driven by increased Dolby Vision and Dolby Atmos revenues.\nAs we look ahead to fiscal year '22, we see low to mid single digit growth in our PC revenues, as more PCs continue to adopt Dolby Vision and Dolby Atmos, as well as growth in our imaging patent programs.\nOther markets represent about 12% of total licensing in fiscal year 2021.\nThey were up about $26 million or 21% year-over-year, driven by higher revenues from gaming, due to the console refresh cycle and higher foundational revenues related to patents.\nIn Q4, we saw other markets grow about 26% year-over-year due to increased Dolby Cinema revenues as theaters reopen, and higher revenues from gaming.\nAs we look ahead to fiscal '22, we anticipate that other markets revenues could grow at an even higher rate of over 25%, as we estimate Dolby Cinema revenues to continue momentum from Q4, as more people are able to return to the movies and we also see continued growth in gaming.\nBeyond licensing, our products and services revenue was $67 million in fiscal year '21, compared to $83 million in fiscal year 2020.\nPrior year included about two quarters of pre-pandemic activity related to our cinema products business, and included revenues for our communications hardware business, which we exited in early fiscal year '21.\nProducts and services revenue in Q4 was $19 million compared to $14 million in last year's Q4.\nThe year-over-year increase reflects higher demand in the cinema industry.\nTotal gross margin in the fourth quarter was 89.2% on a GAAP basis and 90% on a non-GAAP basis.\nOperating expenses in the fourth quarter on a GAAP basis were $214 million.\nOperating expenses in the fourth quarter on a non-GAAP basis were $189.9 million, compared to $176.5 million in the prior year.\nOperating expenses were at the low end of our guidance for Q4.\nOperating income in the fourth quarter was $40.4 million on a GAAP basis or 14.2% of revenue, compared to $30.1 million or 11.1% of revenue in Q4 of last year.\nOperating income in the fourth quarter on a non-GAAP basis was $66.6 million or 23.4% of revenue, compared to $54.3 million or 20% of revenue in Q4 of last year.\nOn a full year basis, operating income was $344.4 million on a GAAP basis or about 26.9% of revenue, compared to $218.7 million or 18.8% in fiscal 2020.\nFull year operating income in fiscal '21 on a non-GAAP basis was $450.7 million or about 35.2% of revenue compared to $317.9 million or 27.4% in the prior year.\nIncome tax in Q4 was minus 3% on a GAAP basis and 13% on a non-GAAP basis.\nOur tax rate benefited from a number of discrete items, including return provision true-ups.\nNet income on a GAAP basis in the fourth quarter was $44.2 million or $0.42 per diluted share compared to $26.8 million or $0.26 per diluted share in last year's Q4.\nNet income on a non-GAAP basis in the fourth quarter was $60.4 million or $0.58 per diluted share, compared to $45.8 million or $0.45 per diluted share in Q4 of last year.\nDuring the fourth quarter, we generated $110 million in cash from operations compared to $113 million generated in last year's fourth quarter.\nWe ended the fourth quarter with about $1.3 billion in cash and investments.\nDuring the fourth quarter, we bought back about 1 million shares of our common stock and ended the quarter with about $291 million of stock repurchase authorization available going forward.\nWe also announced today a cash dividend of $0.25 per share, an increase of $0.03 or 14% compared to the prior quarter.\nThe dividend will be payable on December 8, 2021, to shareholders of record on November 30, 2021.\nNow let's turn to guidance for fiscal '22.\nWe currently estimate total fiscal year '22 revenues could range from $1.34 billion to $1.4 billion.\nThis would result in about 5% to 9% of year-over-year growth as compared to the $1.28 billion in fiscal year 2021.\nWithin this, licensing revenue could range from $1.260 billion to $1.315 billion compared to $1.214 billion in fiscal year '21, which would result in a 4% to 8% year-over-year growth.\nAs I referenced earlier, discussing our revenue by end market, we expect strong growth in our other markets for increased Dolby Cinema and gaming revenues, as well as growth in mobile, PC and to a lesser extent, broadcast, due to increasing adoption of Dolby Vision and Dolby Atmos and growth in our imaging patent programs, partially offset by lower foundational audio revenues.\nFor products and services revenues, we anticipate this could range from $75 million to $90 million for fiscal year '22, with improvements in cinema products and growth in Dolby.io.\nGross margin for fiscal year '22 are expected to be relatively consistent with fiscal year '21.\nLet me shift to operating expenses; we have several factors that impact our year-over-year expectations.\nFirst, fiscal 2022 is a 53-week fiscal year for us, and that results in an extra week of payroll in Q1.\nAs Kevin mentioned, we also see a return of some expenses like travel and events that were lower during the pandemic.\nIn addition to normal annual merit increases that will typically go in effect in fiscal Q2.\nLastly, we continue to invest in areas like Dolby Vision, Dolby Atmos and Dolby.io.\nWith these considerations, we are estimating operating expenses for fiscal 2022 could range from $869 million to $889 million on a GAAP basis and between $750 million to $770 million on a non-GAAP basis.\nWith all of this, our business model remains very strong, as we expect to deliver operating margins between 24% to 26% on a GAAP basis, and between 34% and 36% on a non-GAAP basis.\nBased on the factors above, we estimate that full year diluted earnings per share will range from $2.53 to $3.03 on a GAAP basis and $3.52 to $4.02 on a non-GAAP basis.\nLet me shift to how that translates and what we see for fiscal Q1.\nFor Q1, we see total revenues ranging from $345 million to $375 million.\nWithin that, licensing revenues will range from $330 million to $355 million.\nNote that in the prior year Q1, we benefited from a significant favorable true-up of over $21 million for Q4 fiscal '20 shipments, that was larger than normal, given the volatility of conditions during the pandemic.\nLast year's Q1 also benefited from recoveries and timing of revenue under contract.\nThis was partially offset by increasing adoption of Dolby Vision and Dolby Atmos, and growth in our imaging patent programs.\nQ1 products and services revenue could range from $15 million to $20 million.\nLet me move on to the rest of the P&L outlook for Q1.\nQ1 gross margin on a GAAP basis is expected to be 90% to 91%, and the non-GAAP gross margin is estimated to be about 91% to 92%.\nOperating expenses in Q1 on a GAAP basis are estimated to range from $221 million to $231 million.\nOperating expenses in Q1 on a non-GAAP basis are estimated to range from $190 million to $200 million, which contemplates the impact of the 53-week fiscal year.\nOther income is projected to range from $1 million to $2 million for the first quarter.\nAnd our effective tax rate for Q1 is projected to range from 18% to 19% on both a GAAP and non-GAAP basis.\nBased on the combination of the factors I just covered, we estimate that Q1 diluted earnings per share could range from $0.71 to $0.86 on a GAAP basis and from $0.98 to $1.13 on a non-GAAP basis.\nWith that, let's move on to Q&A.\nOperator, can you please queue up the first question.\n", "role": "user" }, { "content": "q4 non-gaap earnings per share $0.58.\nq4 gaap earnings per share $0.42.\nq4 revenue $285 million versus $271.2 million.\nsees fy 2022 total revenue to range from $1.34 billion to $1.40 billion.\nsees q1 2022 total revenue in the range of $345 million to $375 million.\nsees fy 2022 diluted earnings per share to range from $2.53 to $3.03 on a gaap basis.\nsees q1 diluted earnings per share in the range of $0.71 to $0.86.\nsees fy 2022 diluted earnings per share to range from $3.52 to $4.02 on a non-gaap basis.\nsees q1 non-gaap diluted earnings per share $0.98 to $1.13.\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: Chief Investment Officer Greg Wright, Chief Technology Officer Chris Sharp, and Chief Revenue Officer Corey Dyer are also on the call and will be available for Q&A.\nFor a further discussion of risks related to our business, see our 10-K and subsequent filings with the SEC.\nReconciliations to net income are included in the supplemental package furnished to the SEC and available on our website.\nWe continue to enhance our product mix with a record contribution from our sub-1 megawatt plus interconnection category.\nWe extended our sustainability leadership with the publication of our third annual ESG report.\nWe raised revenue and EBITDA guidance for the second quarter in a row, setting the stage for accelerating growth in cash flow.\nLast but not least, we further strengthened the balance sheet with the redemption of high coupon preferred stock and the issuance of low-cost, long-term fixed rate debt.\nOur formula for long-term value creation is a global, connected, sustainable framework.\nWe continue to advance along these lines during the second quarter.\nOur business continues to globalize.\nAnd, once again, we generated solid performance and strong bookings across all regions.\nOur full-spectrum product offering continues to blossom with record sub-1 megawatt bookings in the second quarter and regional highs in both EMEA and APAC.\nTogether, with interconnection, the sub-1 megawatt category comprised nearly half of our total bookings, demonstrating customers' enthusiastic adoption of PlatformDIGITAL to help accomplish their digital transformation initiatives.\nI'll discuss our sustainable growth initiatives on Page 3.\nIn June, we were awarded the Green Lease Leader Gold award from the Institute for Market Transformation and the U.S. Department of Energy for the third year.\nWe remain the only data center provider to receive this award, which recognizes Digital Realty as a leader in the real estate industry that incorporates green leasing provisions to better align our interest with our customers and drive high performance and healthy buildings.\nDuring the second quarter, we published our third annual ESG report, detailing our 2020 sustainability initiatives, including the utilization of renewable energy for 100% of our energy needs across our entire portfolio in Europe as well as our U.S. colocation portfolio and reaching 50% of our global needs.\nWe also reported progress toward our science-based target, ensuring a deep focus on our renewable energy, energy efficiency and supply chain sustainability initiatives.\nOur ESG report highlights many of our ongoing initiatives, including our diversity, equity and inclusion efforts along with our community involvement.\nDigital Realty is committed to being an active member of and giving back to the communities where we operate globally.\nWe encourage and celebrate community involvement and employee engagement activities through our Do Better Together initiative.\nWe also recently underscored our commitment to transparency and accountability on our diversity, equity and inclusion journey with the publication of our EEO-1 report.\nEvents over the past year and a half have demonstrated that now more than ever, ESG belongs at the forefront of our business.\nI'm proud of our leadership in this area as we advance our broader goal of delivering sustainable growth for all of our stakeholders, investors, customers, employees, and the communities we serve around the world.\nLet's turn to our investment activity on Page 4.\nWe are continuing to invest in our global platform with 39 projects underway around the world as of June 30, totaling nearly 300 megawatts of incremental capacity, most of which is scheduled for delivery over the next 12 months.\nWe are investing most heavily in EMEA with 19 projects totaling over 150 megawatts of capacity under construction.\nMost of this capacity is highly connected, including projects in Frankfurt, Marseille, Paris, and Zurich.\nDemand remains strong across these metros, and each continues to attract service providers as well as enterprise customers from around the world, many of which contributed to a truly standout performance by the region during the second quarter in the up-to-1 megawatt category.\nIn North America, over half of our capacity under construction is concentrated in two hot markets, Portland and Toronto, that can sometimes be overlooked in favor of more traditional North American data center metros.\nWe've had tremendous recent success in these two metros.\nWe have 30 megawatts under construction in Portland or, more specifically, Hillsboro, that are now fully pre-leased, while our Toronto connected campus continues to gain momentum as the premier Canadian hub for global cloud service providers and enterprise customers.\nFinally, in Asia Pacific, we are accelerating our organic growth in this underserved region.\nWe opened our third data center in Singapore, a 50-megawatt facility that received permitting prior to the moratorium on new data center construction.\nDemand for this scarce capacity is robust, and we have another 18 megawatts largely presold and scheduled to open this quarter.\nAlso coming soon in this region are a pair of MC Digital Realty data centers in Japan.\nWith the world's eyes currently on Tokyo for the Olympics, we are opening a new Tokyo facility that's poised to win the gold medal.\nWe are also opening another data center in Osaka this quarter, along with our first data center and the first carrier-neutral offering in Seoul, Korea, during the fourth quarter.\nWe are very excited about the opportunity in Seoul.\nFinally, earlier this month, we announced our intention to enter India in partnership with Brookfield Infrastructure.\nGiven the success of our existing partnership on the Ascenty platform in Latin America, the complementary skills and expertise that we both bring to this partnership, and with the significant growth opportunity available in India, we are excited to expand our footprint in this robust and dynamic market.\nLet's turn to the macro environment on Page 5.\nWe are fortunate to be operating in a business levered to secular demand drivers.\nOur leadership position provides us with a unique vantage point to detect secular trends as they emerge globally on PlatformDIGITAL.\nThe first of these trends is the growing importance of data gravity for Global 2000 enterprises.\nLast year, we introduced the Data Gravity Index, our market intelligence tool, which forecasts the growing intensity of enterprise data creation life cycle and its gravitational impact on global IT infrastructure between key global markets.\nEarlier this year, we took the next step and published an industry manifesto, enabling connected data communities to guide cross-industry collaboration, tackle data gravity head-on, and unlock a new era of growth opportunity for all companies.\nEarlier this week, we announced a collaboration with Zayo to further interconnection business through the creation of an open fabric-of-fabrics.\nWith data sets exploding and data gravity challenges expanding, this initiative will enable multinational enterprises to connect these data oceans through fabric and orchestration.\nThird-party research continues to support data gravity's growing importance.\nMarket Intelligence firm, Gartner, recently conducted its 6th annual survey of chief data officers, and less than 35% of these executives reported their business have achieved their data sharing objectives, including data exchange with external data sources that drive revenue-generating business outcomes.\nIssues often arise due to multiple data hosting and processing meeting places together with the need for appropriate security controls and the inability to overcome latency challenges with direct private interconnection between many counterparties.\nPlatformDIGITAL was designed to solve these problems.\nDigital transformation is compounding this enterprise data and connectivity problem.\nRecent research indicates that enterprise workflows utilize an average of 400 unique data sources, while exchanging data with 27 external cloud products.\nDigital Realty's enterprise and service provider customers are turning to PlatformDIGITAL to overcome these issues by deploying their own data hubs and using interconnection to securely exchange data in and across multiple metros.\nOur leadership position is resonating with industry experts and influencers.\nFor the second consecutive year, Digital Realty was named a global leader by IDC MarketScape for data center colocation and interconnection services, further acknowledgment of our consistently improving customer capabilities.\nThis recognition reflects our execution against the PlatformDIGITAL road map, providing unique differentiated value for customers with our fit-for-purpose, full-spectrum global capabilities.\nEarlier this month, Cloudscene again ranked Digital Realty as the strongest provider of data center ecosystems in EMEA for the second consecutive year.\nDigital Realty was ranked second in both North America as well as Latin America and jumped up three spots to No.\nAlso, in July, GigaOm published their analysis of edge infrastructure capabilities.\nDigital Realty ranked as an industry leader on multiple criteria across three broad categories.\nOur capabilities were ranked highest in vendor positioning and evaluation metrics comparison and second among the key criteria comparison.\nGiven the resiliency of the demand drivers underpinning our business, and the relevance of our platform to meeting customers' needs, we believe we are well positioned to continue to deliver sustainable growth for customers, shareholders and employees, whatever the macro environment may hold in store.\nLet's turn to our leasing activity on Page 7.\nWe signed total bookings of $113 million in the second quarter, including a $13 million contribution from interconnection.\nNetwork and enterprise-oriented deals of 1 megawatt or less reached an all-time high of $41 million, demonstrating our consistent momentum and the growing success of PlatformDIGITAL as we continue to capture a greater share of enterprise demand.\nThe weighted average lease term was over eight years.\nWe landed 109 new logos during the second quarter, with a strong showings across all regions, again, demonstrating the power of our global platform.\nThe geographic and product mix of our new activity was quite healthy, with APAC and EMEA, each contributing approximately 20%, the Americas representing nearly 50%, and interconnection responsible for a little over 10%.\nThe megawatt or less plus interconnection category accounted for almost half of our total bookings with particular strength in the cloud, content and financial services verticals.\nIn terms of specific wins during the quarter and around the world, we landed a top five cloud service provider to anchor our new Tokyo campus.\nClose on the heels of this magnetic customer deployment, Japan's most popular social media applications selected PlatformDIGITAL on the same campus.\nNAVER, the leading Korea-based cloud provider serving the greater APAC region, selected our new carrier-neutral facility in Singapore to support data-intensive workloads for their high-performance computing and I -- AI-intensive technology-based platform.\nA European broadcaster is leveraging PlatformDIGITAL in Vienna and Frankfurt to rewire their network in favor of data-intensive interconnection with benefits in performance, scalability, and cost savings.\nA Global 2000 enterprise data platform is adopting PlatformDIGITAL in Amsterdam, Dublin and Frankfurt to orchestrate workloads across hundreds of ecosystem applications, delivering improved performance, security, cost savings, and simplicity.\nIn London, PlatformDIGITAL is supporting a top three global money center banks fortification of their business continuity capabilities without compromising their data-intensive interconnection requirements.\nOn the continent, our connectivity and operational capabilities are helping two independent fintech customers improve performance enhance -- and enhance access to their connected data communities.\nFinally, in North America, a life sciences digital marketing firm chose PlatformDIGITAL to improve their network architecture and enable future growth.\nTurning to our backlog on Page 9.\nThe current backlog of leases signed but not yet commenced ticked down from $307 million to $303 million as commencement slightly eclipsed space and power leases signed during the quarter.\nThe lag between signings and commencements was a bit longer than our long-term historical average at just over seven months.\nMoving on to renewal leasing activity on Page 10.\nWe signed $178 million of renewals during the second quarter in addition to new leases signed.\nThe weighted average lease term on renewals signed during the second quarter was just under three years, again, reflecting a greater mix of enterprise deals smaller than 1 megawatt.\nWe retained 77% of expiring leases, while cash releasing spreads on renewals were slightly positive, also reflective of the greater mix of sub-1 megawatt renewals in the total.\nIn terms of second quarter operating performance, overall portfolio occupancy ticked down by 60 basis points as we brought additional capacity online across six metros during the quarter.\nSame capital cash NOI growth was negative 1.5% in the second quarter, largely driven by the churn in Ashburn at the beginning of the year.\nAs a reminder, the Westin Building in Seattle, the Interxion platform in EMEA, Lamda Helix in Greece and Altus IT in Croatia are not yet included in the same-store pool.\nSo these same capital comparisons are less representative of our underlying business today than usual.\nLet's turn to our economic risk mitigation strategies on Page 11.\nThe U.S. dollar fluctuated during the second quarter but remained below the prior year average, providing a bit of an FX tailwind.\nAs a reminder, we manage currency risk by issuing locally denominated debt to act as a natural hedge so only our net assets within a given region are exposed to currency risk from an economic perspective.\nIn addition to managing credit risk and foreign currency exposure, we also mitigate interest rate risk by proactively terming out short-term variable rate debt with longer-term fixed rate financing.\nGiven our strategy of matching the duration of our long-lived assets with long-term fixed-rate debt, a 100 basis-point move in benchmark rates would have roughly a 75 basis-point impact on full year FFO per share.\nIn terms of earnings growth, second quarter core FFO per share was flat year-over-year but down 8% from last quarter driven by $0.12 noncash deferred tax charge related to the higher corporate tax rate in the U.K., which came into effect during the second quarter.\nExcluding the tax charge, which was not previously contemplated in our guidance, we outperformed our internal forecast due to a beat on the top line with a slight assist from FX tailwinds as well as operating expense savings, partially due to lower property-level spending in the COVID-19 environment.\nFor the second time this year, we are raising our full-year outlook for total revenue and adjusted EBITDA to reflect the underlying momentum in our business.\nThe deferred tax charge does run through core FFO per share.\nSince it is noncash, the deferred tax charge does not hit AFFO.\nMost of the drivers of our guidance table are unchanged.\nBut I would like to point out that we are lowering our expected recurring CapEx spend for the remainder of the year, setting a stage for accelerating growth in cash flow.\nAs you could see from the bridge chart on Page 12, we expect our bottom line results to improve sequentially over the balance of the year as the deferred tax charge comes out of the quarterly run rate and the momentum in our underlying business continues to accelerate.\nWe do still expect to see some normalization in our cost structure with an increase in property-level operating expenses that have been deferred due to COVID, along with an uptick in G&A expense as we return to the office and resume a more normal travel schedule.\nSo your model should reflect these higher costs.\nLast, but certainly not least, let's turn to the balance sheet on Page 13.\nAs you may recall, we closed on the sale of a portfolio of noncore assets in Europe for $680 million late in the first quarter, which impacted second quarter adjusted EBITDA to the tune of approximately $10 million.\nAs a result, net debt to adjusted EBITDA was slightly elevated 6x as of the end of the second quarter but is expected to come back down in line with our long-term range over the course of the year through a combination of proceeds from asset sales and growth in cash flows as signed leases commence.\nFixed charge coverage ticked down slightly, also reflecting the near-term impact from asset sales, but remains well above our target and close to an all-time high at 5.4x, reflecting the results of our proactive liability management.\nWe continue to execute our financial strategy of maximizing the menu of available capital options while minimizing the related costs and extending the duration of our liabilities to match our long-lived assets.\nIn mid-May, we redeemed $200 million of preferred stock at 6.625%, which brought total preferred equity redemptions over the prior 12 months to $700 million at a weighted average coupon of just over 6.25%, effectively lowering leverage by 0.3 turns.\nIn mid-June, we issued 0.5 million shares under our ATM program, raising approximately $77 million.\nIn early July, we raised another $26 million with the sale of the balance of our Megaport stock.\nWe also took our first trip to the Swiss bond market in early July, raising approximately $595 million in a dual tranche offering of Swiss green bonds with a weighted average maturity of a little over six and a half years and a weighted average coupon of approximately 0.37%.\nThis successful execution against our financial strategy reflects the strength of our global platform, which provides access to the full menu of public as well as private capital, sets us apart from our peers, enables us to prudently fund our growth.\nAs you can see from the chart on Page 13, our weighted average debt maturity is nearly six and a half years, and our weighted average coupon is down to 2.2%.\ndollar-denominated, reflecting the growth of our global platform and serving as a natural FX hedge for our investments outside the U.S. 90% of our debt is fixed rate to guard against a rising rate environment, and 98% of our debt is unsecured, providing the greatest flexibility for capital recycling.\nFinally, as you can see from the left side of Page 13, we have a clear runway with nominal near-term debt maturities and no bar too tall in the out years.\nOur balance sheet is poised to weather a storm, but also positioned to fuel growth opportunities for our customers around the globe, consistent with our long-term financing strategy.\nAndrew, would you please begin the Q&A session?\n", "role": "user" }, { "content": "q2 revenue rose 10 percent to $1.1 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: On the call today we will discuss non-GAAP financial measures, including adjusted EBITDA and free cash flow.\nSome of you may know her from her IR role with tech-driven companies like Groupon, and Lawson Software, and from Buffalo Wild Wings.\nKeith, Jane, and I look forward to working with her.\nWe're pleased to have delivered improved third quarter results despite continued pandemic-related economic pressures, including nearly 300 basis point improvement in adjusted EBITDA margin.\nWe continue to make meaningful progress on executing our overall transformation to One Deluxe.\nAs discussed last quarter, we began to see an improvement in the latter part of our second quarter, which continued into the third quarter.\nWe see our sequential improvement in topline revenue, GAAP and adjusted EBITDA margins as clear evidence of our continued momentum.\nBy our estimates, we delivered sales driven growth, excluding COVID-related impacts, for the third consecutive quarter.\nWe continue to win new business at an accelerated rate, and we're successfully cross-selling our products and services.\nWe're pleased to have the financial strength and flexibility to support the long-term growth potential of the business.\nWe've restored some of our investments in the company's overall infrastructure, including technology upgrades, continued real estate consolidations, streamlined organization design, talent enhancements and more, after slowing a bit in Q2.\nImportantly, we remain confident in our financial strength, as demonstrated by declaring our regular quarterly dividend.\nOur net debt is now at its lowest in more than two years.\nI continue to believe this is all compelling evidence our One Deluxe strategy is working.\nHere are some specifics.\nWe delivered 23.3% adjusted EBITDA margins.\nA 290 basis point sequential improvement from last quarter, better improvement than we expected.\nWe reported revenue of $439 million, improving over 600 basis points sequentially over second quarter with revenue down 11% or $54 million versus last year -- also better improvement than we expected.\nOur sales-driven performance continues.\nWe've built cash reserves from operations.\nOur Q3 net debt is now at the lowest level in more than two years.\nWe fully repaid our COVID-related draw on the revolver in October, demonstrating the strength of our business.\nOver the last seven months of the pandemic, we continued to generate cash from operations, naturally improving our liquidity and eliminating the need for any additional cushion.\nOur financial position continues to serve as a competitive advantage, helping us win across all our segments.\nAdjusting for decisions we made to slow progress of the pandemic, we're on path and on budget in our technology infrastructure upgrade and renewal.\nWe closed nearly 50 of more than 80 sites, representing nearly a 60% reduction in the number of our locations over the last 18 months, including seven additional site closures in Q3.\nWe're particularly pleased with the future operating savings and significant capital avoidance we're going to achieve by relocating both our Minneapolis headquarters and Atlanta technology facilities to more efficient spaces.\nNow, on to sales.\nWe continue to make progress in becoming a sales-driven revenue growth company.\nEveryone sells at Deluxe.\nOur One Deluxe approach works, bringing the best of Deluxe to our customers to solve their problems rather than simply pedaling one solution at a time.\nWe continue to outperform our pre-pandemic sales plan, and of course over a thousand deals with multi-year contracts year-to-date, including six of our top-25 targets.\nWe signed significant wins in each of our four businesses during the third quarter.\nIt will take time to onboard these wins and the pandemic environment lengthens implementation timelines as our clients work through sequencing their own priorities.\nHowever, we're very proud to be expanding our pipeline and closing new business at record rates, giving us confidence that we'll exit 2020 with a strong backlog for us to focus our efforts on converting to revenue.\nSome of our key wins for the quarter include securing a contract with M&T Bank for our treasury management services.\nWe expanded our relationship with RE/MAX to provide national marketing, branded print and promotional solutions to their 65,000 agents.\nThis is an excellent example of us growing share and moving from a transactional vendor to a recurring revenue managed services partner.\nAnd our MPX and DPX solutions added Delta Dental and Albertsons as customers too.\nOur telesales centers continued to cross-sell, delivering record average order value.\nCombined with our enterprise efforts, we've signed more than a 175 cross-sell deals totaling $11 million in total contract value.\nThe results are clear even amid the COVID fog.\nWe're winning new business across all our decisions, delivering record cross-sell performance selling our existing solutions to existing customers while adding new customers and distribution partners.\nThis continued success gives us confidence that we'll be able to deliver sales-driven revenue growth in the low- to- mid-single digits with adjusted EBITDA margins of 20% or more over the long-term.\nNow, onto some segment details.\nOur Payments business continues to perform well and delivered 15.6% revenue growth over prior year.\nWe are well positioned in our receivables, payables and SMB cash management businesses, where we're winning new clients and market share and benefiting from positive secular outsourcing trends as firms focus on speed and efficiency in accounts receivables.\nWe continue to see new and long-standing customers shifting volume to the safety of Deluxe due to our strong balance sheet and trusted service levels.\nOur cloud and promotional solutions divisions continued to experience the greatest COVID-related impacts, and accordingly we expect revenue and profit growth to lag the recovery due to reduced discretionary spending.\nIn cloud, this impact is visible in data-driven marketing revenue, where mainly financial institutions have deferred campaign spend.\nWe believe the financial institution spend will return and, in fact, we saw increased demand in Q3 versus last year's quarter.\nWe've also signed new financial institution customers as well.\nWhile our incorporation and website services have experienced weakened demand, we continue to focus on adding new relationships to deliver our incorporation and website services, including The Hartford and NFIB.\nOur Promotional Solutions delivered sequential quarterly improvement in revenue while driving significant benefit to adjusted EBITDA margins.\nWhile we did not repeat the benefit we saw from PPE in Q3, we did experience positive sequential growth in what we call our business essentials product area, forms and more that business use to operate.\nWe also signed several new customers focused on our managed brand services program, giving us more confidence in our future profitable growth.\nAs anticipated, the secular decline in the Checks business sequentially improved during the third quarter, consistent with the pattern of previous economic downturns.\nWe continue to see an increase in new Check customers resulting from new business start-up.\nWe're encouraged to see self-service and digital order volume acceleration in the third quarter, proving our digital strategy works.\nCompetitively, we're winning new Check customers at a rate faster than before and we renewed a top-five Check customer.\nOur financial strength is a key factor here too, just like in Payments.\nThe uncertainty of the pandemic continues.\nAnd as such, we will not provide detailed outlook for the fourth quarter or full-year 2021 today.\nKeith will provide some detail on our future expectations, which reflect today's environment.\nThe macro environment remains challenged as we're in the midst of a second wave of COVID.\nMost importantly, given the work we've accomplished, the results we've delivered despite the ongoing challenges, I feel good about our relative position in the market and we continue to believe total company adjusted EBITDA margins will remain at our long-term target of 20% or better.\nLastly, I want to emphasize our team has delivered better than expected performance again, despite the pandemic.\nDeluxe remains financially sound.\nWe expanded margins almost 300 basis points, paid our dividend, paid our revolver down to the pre-COVID level, have the lowest net debt in more than two years, and our sales engine is working.\nAs Barry noted, our strategy is working, and we are seeing the results.\nWe delivered strong sequential performance in the third quarter despite the continued challenging environment.\nWe've strengthened our financial position, while simultaneously advancing our business transformation.\nQ3 total revenue declined 11% or $54.1 million to $439.5 million as compared to the same period last year.\nThis is a sequential improvement of 600 basis points from the Q2 decline rate.\nWhile we did benefit from sales-driven growth, it wasn't sufficient to overcome the impacts of the pandemic.\nImportantly and similarly to last quarter, we took assertive actions in the quarter to address the loss of revenue and change in mix.\nThese expense actions improved adjusted EBITDA margins by 290 basis points sequentially to 23.3%.\nSome of this improvement will not repeat in Q4, but we do expect margins to remain in our long-term range of greater than 20%.\nThe third quarter revenue decline was partially offset by new and cross-sell wins.\nThe reduction in revenue and the change in mix did affect our results.\nGross profit margin for the quarter improved 160 basis points from the prior year with the loss of lower margin revenue in our promotional and cloud segments.\nSG&A expense declined $14.4 million due primarily to lower commissions, personnel exits, 401(k) match suspensions and restructuring actions.\nInterest expense declined $3.6 million due to lower interest rates on higher borrowing levels compared to last year.\nAll this together, increased operating income to $44.4 million, net income of $29.4 million, increased from a net loss of $318.5 million in Q3 2019.\nLast year's net income included non-cash asset impairment charges for goodwill and certain intangibles totaling $391 million.\nOur adjusted EBITDA for the period was $102.5 million, $16.8 million lower than the same period last year.\nThe adjusted EBITDA margin declined 90 basis points to 23.3% on a year-over-year basis, but sequentially increased by 290 basis points compared to the second quarter.\nNow, on to segment details.\nPayments revenue grew compared to last year by 15.6% to $74.7 million, with Treasury Management revenue leading the growth in the quarter.\nAs expected, we continued to experience softness in our Payroll business because of elevated unemployment levels.\nWe expect Q4 revenue to grow sequentially and be single digit on a year-over-year basis.\nAdjusted EBITDA margin decreased to 22.4%, primarily due to increased costs related to last year's large client win.\nWe anticipate adjusted EBITDA margin pressure to continue into Q4 due to lapping of one-time hardware sales and outsource deals in Q4 2019, as well as expected COVID-related client implementation delays.\nCloud Solutions revenue declined 20.3% to $63.8 million from last year.\nData-driven marketing solutions revenue sequentially improved from last quarter, as financial institutions slowly reactivated their marketing campaign.\nWeb and hosted solutions experienced declines related to the loss of customers discussed last year, expected attrition from our decision to stop investing in certain product lines, plus the economic impact of the macro environment.\nAdjusted EBITDA margin increased to 25.7% as we benefited from mix shift in cost reductions.\nWe expect the loss of revenue associated with Q4 2020 product exits will continue to impact the business into 2021, but we anticipate cloud margins to remain healthy in the low-to-mid 20s range.\nPromotional Solutions revenue declined 20.3% to $124.9 million from last year.\nCompared to prior quarter, revenue grew about 6% and adjusted EBITDA margin expanded 260 basis points, as the mix shifted and costs were removed.\nIn the case of Promotional Solutions, we see the pullback most acutely in marketing and promotional solutions, where revenues are tied to events and branded merchandise.\nWe believe the business will continue to improve, but we are not expecting a rapid recovery until COVID-19 impacts abate.\nCheck revenue declined 8.4% from last year to $176.1 million due to the secular decline, combined with the pandemic.\nAdjusted EBITDA margin decreased to 48.3% as a result of higher commissions on referrals and technology investments in support of our One Deluxe strategy.\nCheck recovery rates in Q3 likely benefited from some delayed Q2 volume and we expect revenue recovery to be slightly lower in Q4 compared to Q3, as general economic activity continues to improve.\nThis performance is consistent with the recovery from previous economic slowdowns.\nYear-to-date, cash from operating activities was $166.8 million and capital expenditures were $42.7 million.\nFree cash flow, defined as cash provided by operating activities, less capital expenditures, was $124.1 million, a decline of $34.2 million.\nThe primary drivers of decline were COVID-related revenue decline, cloud business losses described last year and expected secular Check declines.\nThese were partially offset by lower taxes, integration and legal settlements.\nWe did not repurchase common stock in Q3 and we expect to repurchase less in 2020 than previous years.\nWe ended the quarter with strong liquidity of $413 million and our cash balance was $310.4 million.\nIn October, we paid down another $140 million of the revolving credit facility, repaying 100% of our COVID-related March draw.\nThis repayment is not reflected in our reported credit facility balance of $1.04 billion or cash balance at the quarter-end.\nI think it's important to note that we have consistently built liquidity throughout the year.\nIn addition, net debt has continued to decrease, and in the quarter at $730 million, the lowest level in more than two years for the second consecutive quarter during a pandemic.\nI want to pause here.\nThe pandemic has challenged us.\nBut this new management team is delivering.\nIn Q3, we expanded margins sequentially.\nOur year-to-date adjusted EBITDA margin is at 20.2%, within our long-term target range.\nAs Barry noted, we remain cautious about the pace of the recovery, given the uncertainties ahead and the COVID resurgence.\nWe expect the revenue decline to worsen on a percentage basis in Q4 versus Q3 due to COVID-related customer implementation and program delays, combined with the impacts of product exits in cloud.\nHowever, we do expect to maintain adjusted EBITDA margins within our long-term target of 20% or better.\nOur bold actions and winning strategy maintain the company's financial strength and position us for long-term growth.\nOur team and business model are highly durable, giving us the runway to complete our historic transformation.\nAs further evidence of our strength, our Board approved a regular quarterly dividend of $0.30 per share on all outstanding shares.\nThe dividend will be payable on December 7, 2020 to all shareholders of record on November 23, 2020.\nI am proud of our financial performance in light of the pandemic.\nOur financial position is strong, our strategy is working.\nWe are well positioned to accelerate our transformation and deliver long-term shareholder returns.\nNow, back to Barry.\nI want to build on your comments and reiterate our remarkable Q3 achievements.\nWe increased margin sequentially, almost 300 basis points.\nNet debt declined to the lowest level in more than two years.\nWe expanded liquidity with cash from operations, while fully repaying our COVID-related draw on our revolver.\nWe declared our regular dividend.\nOur Payments business grew 16% and we're confident we'll be a double-digit grower over the long term.\nOur One Deluxe sales strategy is working.\nBy our estimates, we've been a sales-driven growth company for three consecutive quarter.\nThe strength of our balance sheet and fiscal responsibility is helping us win new business and positions us well for the future.\nCOVID may have temporarily slowed our progress, but we still believe Deluxe will be a low- to- mid-single digit revenue growth company with margins in the low- to- mid-20s over the long term.\nWe're proud of our progress to the absolute and especially in light of COVID.\nFinally, I want to recognize the extraordinary contribution of my follow Deluxers.\nThe team has risen to the unprecedented challenges of COVID and continued to deliver for our clients.\nOur team went to work and got the job done.\nWe're a team living our purpose, values and ownership culture, because we are all shareholders too.\nNow, we'll take questions.\n", "role": "user" }, { "content": "deluxe corp qtrly revenue $439.5 million versus $493.6 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On the call today, we will discuss non-GAAP financial measures, including adjusted EBITDA and free cash flow.\nI'm proud of the performance we delivered in 2020, particularly in the light of the unprecedented challenges we face due to COVID-19.\nUnder the leadership of our newly expanded management team, which had been in place just 75 days before the pandemic took hold, we made significant progress on our historic transformation executing on our strategy, and operating in four new segments.\nWe further optimized our portfolio completing targeted divestitures, and exit during the past year.\nWe also ended 2020 with a lowest net debt in 2.5 years and paid our regular quarterly dividend demonstrating our disciplined stewardship and financial strength.\nAlthough I'm proud of how well our team has executed, the impact of COVID-19 on our financial performance was clear.\nWe reported revenue of $1.79 billion for the full year 2020, a decline of 11% compared to 2019.\nYou will note, at our Q1 earnings call we had forecasted 20% adjusted EBITDA margins for the full year 2020; fast-forward nine months later, I'm very pleased to report that we achieved this goal delivering adjusted EBITDA margin of 20.4% for the full year, despite the macroeconomic impact from COVID.\nImportantly, COVID did not change our focus strategy and one thing has become increasingly clear; our company's diverse portfolio and business model are highly durable, we have the right strategy, right segments, and right team to whether any major macroeconomic storm.\nWe're a sales driven company now, we continue to invest the strong cash flows contracts and promotional solutions to grow payments and cloud solutions, each of which is well positioned in secular growth markets.\nNow, I would like to take a moment to review the 4 core pillars of our strategy.\nFirst, sales; continue to unify our go-to-market sales approach in order to drive growth, selling more of what we have to new and existing customers, breaking our previous dependence on acquisition-only growth, that also resulted in escalating debt.\nSecond, payments and clouds; we focus on these secular growth businesses, sell what we have, build new products, and migrate to a recurring revenue model.\nThird, promotional solutions profitability; adjust revenue mix and distribution channels moving to a recurring revenue model.\nFourth, our Checks business; gain market share, capture the share while holding margins flat by making smart investments, giving a strong set cash flow to invest in payments and cloud.\nThe strength of this strategy and our significant progress on our transformation is compelling, and is undeniable despite COVID-19 impacts.\nIn 2019 we promised to become a sales-driven company, and that's exactly what we did.\nWe estimate Deluxe delivered full year sales driven growth in 2020 for the first time in more than a decade, excluding COVID impacts of course.\nWe achieved this result by building an employee ownership and sales culture, fundamentally changing our go-to-market approach.\nInstead of having dozens of separate sales organization, calling on a customer selling one product at a time, we built a unified sales team with a complete review of our customers relationship with us.\nComplementing [Phonetic] these efforts, we have product experts ready to help close the sale.\nThis integrated go-to-market strategy is a key part of our One Deluxe strategy, and this strategy is working.\nIn 2020 we signed more than 3,900 deals.\nWe added many new logos and expanded many of our existing relationships.\nIn fact, since we began One Deluxe, we sold 6 of the Top 10 deals of the last decade, including the largest sale in the company's history.\nHere's just a flavor of our wins in 2020; [indecipherable] they signed a multi-year deal in our Check business, SunTrust had been a longtime customer of Deluxe, so with the merger of SunTrust and BB&T, we're pleased to have been selected as the trusted partner for the new combined entity; this deal is the single largest total contract value in the company's history.\nWe further grew Check market share with additional strategic takeaways winning two national or super-regional banks and more.\nOur Checks retention rate is the highest in five years.\nSynovus expanded it's relationship with us to include our entire receivables as a service platform.\nBeing selected by Synovus treasury management to be their digital transformation partner, it's clear evidence our integrated receivables as a service platform is what the market demands.\nPayments further added or expanded relationships with P&C and Sirius XM Radio.\nWe also expanded our relationship with Alliance Data and Citibank.\nAlliance Data joined our receivables management solutions, and Citibank joined our Deluxe Payment Exchange.\nPromotional solutions also built on a key relationship.\nAs you know for previous calls, we're customer of Salesforce, but importantly, now Salesforce is a customer of the Deluxe.\nSalesforce can now utilize our digital Deluxe brand center platform to manage their digital assets promotional products, marketing collateral, and other essential supplies.\nWith our growing relationship with Salesforce and other opportunities in our pipeline, we're well positioned to expand our sales efforts in the technology industry in 2021 and beyond.\nIn our telesales centers, we delivered record average order value growing 7.5% over last year, and our sales team find more than 200 cross sell deals totaling $35 million in total contract value.\nCross-sell has been an allusive goal for this company for more than a decade, and we delivered in 2020.\nOf course, all of these wins are scheduled to onboard in 2021, timing of which will be dictated by COVID lockdowns and restrictions.\nBut here is the bottom line; our One Deluxe approach is working, enabling us to set new sales records in the middle of a pandemic.\nNow, let's talk division specifics.\nOur top growth segment payments, which did not even exist in it's current form until January 2020, had a successful year.\nIn addition to Synovus, SiriusXM Radio, Alliance Data and all the other newly signed clients and distribution partners; integrated receivables continues to benefit from positive secular outsourcing trends as new and long-standing customers focus on speed and efficiency.\nCOVID has put a spotlight on an additional Deluxe competitive advantage; the strength of our balance sheet and our leadership.\nDuring the pandemic we've benefited as a number of institutions shifted volume away from our competitors to the safety of Deluxe.\nIn cloud solutions, our other target growth area; we made important progress in adding a number of new clients.\nYou can see we did experience significant directly related COVID impact, the financial institutions deferred marketing campaign spend impacting our data driven marketing business.\nAdditionally, our website services also experienced weakened demand during the year.\nWe did see encouraging signs for recovery at our corporation services, as we've previously announced.\nWe're particularly optimistic about data driven marketing as the recovery unfolds.\nWe're already deeply engaged in planning multiple large-scale marketing campaigns for our financial institution customers adding to our confidence for 2021 and beyond.\nNext, we're going to talk about promotional solutions business, and I'm going to talk about two areas.\nFirst is business essentials, where we've delivered custom forms and more that businesses consume in their routine operations.\nSecond is branded merchandise used to promote a business.\nEncouragingly, we saw volume in our business essentials as the year progresses.\nWe expect to see a rebounded branded merchandise as events and physical promotion return as COVID fades.\nFurther, I'm extremely proud of the speed with which the promotional services team adapted to the new reality adjusting our product mix.\nWe saw $31 million of personal protective equipment in 2020, a business we had not been in previously, where we had no source of supply, no way to book an order, and no sales training at the beginning of the pandemic; it's a great example of innovative thinking, and speed this organization can now deliver.\nWe also find many new customers focused on our turnkey-managed brand services program giving us more confidence in our future profitable growth.\nSalesforce is just one of these examples.\nFourth is our Check business.\nConsistent with previous economic slowdown, the secular decline in Checks was higher due to the impacts of COVID.\nWe expect the business to rebound in line with historical secular trends as the economy recovers.\nEncouragingly, we witnessed a sequential increase in new check customers resulting from new business start-ups at 2020 unfolded; this is an important evidence of the ongoing necessity of checks.\nWe were also encouraged to see acceleration of self-service and digital order volume acceleration throughout the year proving our digital strategy works.\nOur multiple check wins at expanding market share bring important new revenue providing a partial offset the secular declines.\nClearly, in 2020, we have made significant and measurable progress in all four pillars of our strategy to become a sales-driven growth, trusted business technology company, which we achieved all of this in the middle of a pandemic with a new team.\nNext, I want to briefly outline our progress in three areas that are helping to accelerate our transformation.\nThese three critical areas are talent, technology infrastructure, and efficient operating footprint.\nIn 2020 we further built on our team expanding products, business development and innovation.\nAn example of how talent is helping us succeed is our development of the Medical Payment Exchanger, MPX.\nMPX is the only healthcare option that digitally attaches a check payment to the explanation of payments, delivery them together electronically; this is important because it doesn't require any workflow changes for anyone.\nTo accelerate our MPX progress, we announced our joint venture with Eco-Health in April of 2020.\nWe also continue to foster a culture of empowerment, inclusion, diversity and equity enabling our employee-owner [Phonetic] spring their full authentic cells to work.\nIn doing so, we're more directly reflected the diverse communities and customers we serve; all of this helped us achieve status as a 2020 Great Place To Work.\nOur company had never before been so recognized.\nWe continue to execute on our previously discussed upgrade advancing optimization and efficiencies.\nThird, is an efficient operating footprint.\nWe took full advantage of the work from home reality to drive efficieny and productivity.\nWe closed an additional 24 sites during the year, reducing our location count by 60% in the last two years.\nWe're particularly encouraged by the future operating savings and significant capital avoidance we will achieve by relocating both, our Minnesota headquarters, and Atlanta Technology facilities to more efficient spaces.\nI do want to discuss M&A for a moment.\nAs you know, since I joined DLX, we have paused on acquisitions to reduce debt, strengthen the balance sheet, optimize the portfolio, get our talent and technology infrastructure in place, and importantly, expand our sales capabilities.\nAs I've outlined today, we've now delivered on all of these fronts and are once again ready to look at opportunistic ways to augment our business through acquisition, particularly in our higher growth engines of payments and cloud solutions.\nIn summary, we are very encouraged by our success on all four of our strategic pillars, and in our transformative talent, technology infrastructure, and operating footprint initiatives.\nOur solid performance in the midst of the pandemic gives us confidence in our future post-pandemic.\nFor 2021, we look forward to closing the year as a sales-driven mid-single-digit-revenue growth company, with margins in the low-to-mid 20s, continuing to drive enhanced value for all shareholders.\nNow, I'll pass it to Keith for more financial details.\nAs Barry mentioned, DLX delivered in 2020; we delivered EBITDA margin in line with our plan and guidance.\nWe took swift action to address covert at the onset, and we sustain this focus through the year.\nThe result, we delivered EBITDA margin in line with our commitments, reduced net debt to it's lowest level in 2.5 years, and we continue to invest for growth.\nBefore I get into the details, I want to express my gratitude to all my fellow employee owners who worked tirelessly and overcame many challenges this year.\nThe foundational work we began in 2019 made 2020 a successful year of transformation and continued innovation that produce measurable progress positioning us to deliver full year sales driven growth.\nThat said, we felt the continuing effects of the COVID-19 in our financial results.\nOur total revenue in the quarter was $454.5 million, a decline of 12.9% as compared to the same period last year; however, an increase of 3% from the third quarter.\nFor the full year, total revenue declined 10.8% to $1.791 billion.\nWe reported GAAP net income of $24.7 million in the quarter, and $8.8 million for the full year.\nA comparison of reported 2019 and 2020 full year results is difficult given each year was impacted by asset impairment charges.\nOur measures of adjusted earnings and adjusted EBITDA excludes these non-cash charges along with restructuring, integration and other costs.\nThese adjustments are detailed in the reconciliations provided in our release.\nOur adjusted EBITDA for the quarter was $94.9 million resulting in $364.5 million for the full year.\nAdjusted EBITDA margins for the quarter was 20.9% bringing full year performance 20.4%.\nAs previously committed, our cost containment initiatives improved our adjusted EBITDA margin performance from the first quarter low by more than 300 basis points, this brought both Q4 and full year adjusted EBITDA margin into the low end of our pre-pandemic long-term adjusted EBITDA margin guidance range.\nA closer discussion of Q4 segment performance helps demonstrate the resiliency of our new portfolio approach.\nAs payments continues to experience year-on-year revenue growth, cloud continue to expand EBITDA margins versus prior year.\nPromotional expanded revenue went to 15%, sequentially versus Q3 and Check maintained a strong EBITDA margin despite significant COVID-related headwinds to the business.\nConsistent with our expectations and as we had shared at the third quarter call, payments grew Q4 revenue 3% to $78 million as compared to prior year, achieving 12% growth for the year and ending at $301.9 million.\nWe did see less one-time hardware revenue in the quarter against a tough Q4 2019 compare.\nTreasury management led the growth with encouraging demand for our integrated receivables.\nAs Barry mentioned, the team expanded the number of FI partners that have moved to our full suite of capabilities.\nWe will continue to work with these partners to onboard these services and work to expand the number of full-service clients in 2021.\nAdjusted EBITDA decreased in the quarter and for the full year by $4.5 million and $6.3 million respectively.\nFor the year, adjusted EBITDA margin was 22.6%, well within the range of our pre-pandemic guide on slightly lower revenue performance.\nWe expect to achieve double-digit revenue growth for the year with Q1 growth in low single-digits as expected while we continue to work on implementing the many new clients we signed in 2020.\nWe continue to invest to drive growth and as such we're assuming adjusted EBITDA margins in the low 20% area through the year.\nCloud solutions revenue declined 27.1% to $59.2 million in the quarter and ended the year at $252.8 million, resulting in a decline of 20.6% compared to 2019.\nQ4 data driven marketing solutions revenue remained flat sequentially versus Q3 but experienced a decline versus prior year consistent with pandemic induced financial industry slowdowns in marketing spend.\nBut you can't see in the revenue performance as a number of new data driven marketing clients that signed during the quarter and will benefit us in future periods.\nWeb and hosted solutions saw declines to loss of customers discussed last year, the economic impact of the macroeconomic environment and expected attrition from our decisions to exit certain non-strategic product lines.\nIn Q4, cloud achieved a 160 basis point improvement in adjusted EBITDA margin versus prior year, and expanded 20 basis points to 24.4% for the full year reflecting solid performance against pre-pandemic guide on significantly less revenue.\nWe expect the loss of revenue associated with Q4 2020 product exits will continue to impact the business into 2021, but we anticipate cloud margins to remain healthy in the low-to-mid 20% range.\nPromotional Solutions fourth quarter 2020 sequential revenue grew by 15.3% from Q3 to $144 million, the year-over-year rate of decline moderated to down 16.6%, reflecting the continued impact of market conditions.\nAdjusted EBITDA margin for the fourth quarter was 14%, down from the prior quarter peak.\nFull year revenue declined 17.4% to $529.6 million with an adjusted EBITDA margin of 12.6%, and was greatly impacted by macroeconomic conditions in 2020.\nIn promotional solutions, we are seeing a modest rebound in business essentials, but continue to feel COVID-related impacts most acutely in marketing promotional products where revenues are tied to events and branded merchandise.\nWe believe the business will continue to improve but we are not expecting a rapid recovery in 2021.\nWe are anticipating improved adjusted EBITDA margins throughout 2021 in the low to mid-teens as a result of cost actions taken in 2020, including changes in key distribution relationships throughout 2020 and continuing in 2021.\nChecks fourth quarter revenue declined 10% from last year to $173.3 million due to the secular trend combined with the impact of the pandemic.\nQ4 adjusted EBITDA margin levels of 48.1% held largely steady versus Q3 declining only 10 basis points sequentially despite lower revenue levels, but remained lower than 2019 levels as a result of increased selling costs, new wins, and technology investments in support of our One Deluxe strategy.\nFull year Check revenue declined 9.4% to $706.5 million as compared to last year, and adjusted EBITDA margin decreased to 48.4%.\nBased on the high renewal rates and new businesses won in 2020, we do anticipate Check recovery rates in 2021 to return to mid-single digit declines, consistent with the recovery from previous economic slowdowns.\nFree cash flow defined as cash provided by operating activities less capital expenditures was $155 million for 2020, a decline of $65.1 million as compared to last year.\nThe decline was primarily the result of lower earnings, partially offset by lower interest, taxes, integration and lower CapEx.\nWe did not repurchase common stock in Q4, and we will continue to evaluate future repurchases in 2021.\nWe ended the quarter with strong liquidity of $425 million, including $123 million in cash.\nDuring the quarter we reduced the amount drawn under the credit facility by $200 million, ending the year with $840 million drawn, a reduction of $44 million in the year resulting net debt continue to decrease through the year ending at $717 million, the lowest level in 2.5 years.\nOur Board approved a regular quarterly dividend of $0.30 per share on all outstanding shares.\nThe dividend will be payable on March 1, 2021 to all shareholders of record on February 16, 2021.\nOur strong execution and solid financial position, give us confidence to established guidance for the full year of 2021, the specific timing for economic recovery remains uncertain.\nOur expectation is though for first quarter of 2021 will feel much like a continuation of the fourth quarter of 2020 as a result of the ongoing pandemic.\nWe are poised for recovery to begin in the second quarter enabling us to exit the year a sales-driven mid-single-digit revenue growth company.\nAll of this means, we expect to achieve full-year 2021 revenue growth of 0% to 2% with full year 2021 adjusted EBITDA margin of 20% to 21%.\nWe expect to invest approximately $90 million in CapEx to continue with important transformation work, innovation investments in building future scale across all our product categories.\nBefore I pass it back to Barry, I want to summarize for you; our very strong financial stewardship combined with our new leadership team, winning sales strategy, and ownership culture allowed us to not only protect but improve the company's financial strength, while simultaneously positioning us well for 2021 and beyond.\nCOVID certainly took it's toll but our strong team delivered in the worst of times, and we proved our cash generating business model is highly durable and our transformation is real; all of this gives us much confidence in our future.\nNow, back to Barry.\nIn early 2020, we could not have anticipated the year that was in front of us.\nBut Deluxe-ers [Phonetic] have always had the grit to succeed.\nOur team just put our heads out and went to work.\nWe're proud of our progress on our strategy and transformation to become a trusted business technology company.\nWe're proud of our strengthened balance sheet and improved portfolio.\nWe're proud to be a sales-driven revenue growth company, our cross-sell results, all-time record sales success.\nBut what's more impressive to me, we did all of this in the middle of a global pandemic.\nI now have great confidence we'll be a sales-driven company growing low-to-mid single digit with margins in the low-to-mid 20s over the long-term, and expect to be that company exiting this year.\nWe've done the work, we've completed the preparations and laid the groundwork, and now our company is well positioned for the future.\nI can't close without recognizing the extraordinary contribution of my follow Deluxe-ers [Phonetic].\nOur team went to work and got the job done.\nWe're team living our purpose of values and ownership culture because we are all shareholders too.\nNow, we'll take questions.\n", "role": "user" }, { "content": "sees fy 2021 revenue up 0 to 2 percent.\nqtrly revenue $454.5 million versus $522.1 million.\npositioned for recovery to begin in the second quarter, enabling us to exit 2021 with revenue growth in mid-single digits.\nexpect q1 financial performance to be a continuation of q4 2020.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On the call today, we have Dun & Bradstreet's CEO, Anthony Jabbour; and CFO, Bryan Hipsher.\nOur actual results may differ materially from our projections due to a number of risks and uncertainties.\nToday's remarks will also include references to non-GAAP financial measures.\nWe are off to a strong start as we continue with our transformation and the execution of our near-term and long-term objectives.\nWe finished the first quarter with solid financial results and made significant progress with the integration of Bisnode.\nOverall, we are pleased with the start of the year as adjusted revenues for the quarter increased 29% and adjusted EBITDA increased 37%.\nOrganic constant-currency revenues increased 1.3% as strength in international was partially offset by the final quarter of COVID-19 headwinds and Data.com in North America.\nTotal company revenue retention was 96.3% and we now have approximately 48% of our business under multiyear contracts.\nThe enhancements we have made to data quality and our underlying technology are resulting in positive feedback and deeper customer relationships, allowing us to have more productive conversations about cross-sell and price opportunities of both existing and new products.\nAs we reach the two-year anniversary of our cost savings program, we finished the quarter with $246 million of annualized run-rate cost savings.\nDespite COVID-19 delaying some of our planned cost savings initiatives, we exceeded our original target by 23%, which ultimately contributed to the expansion of adjusted EBITDA margins by over 800 basis points from when we took the company private.\nWhile this marks the completion of our formal cost savings program, we will continue to drive ongoing improvement in terms of operational efficiency through optimizing our geographic footprint, modernizing back-office technologies, and further integrating our solutions to reduce cost and complexity.\nIt's important to note that the cost savings figure we just discussed is a net number, meaning that while we took a significant amount of cost out of the business, we also continue to invest a significant amount in the business, primarily by enhancing and expanding our data and technology assets.\nWhile much of the heavy lifting was completed in 2019 and 2020, our transformation is ongoing as we look to leverage the foundational enhancements we've made during that time to more rapidly and effectively deploy new and innovative solutions.\nOur key priorities for 2021 are to continue to grow our share of wallet with our strategic customers; approach and monetize the SMB space in new and innovative ways; launch new products domestically; localize new and existing products globally; and lastly, to integrate the Bisnode acquisition.\nWe're pleased with the ongoing success we're having with our strategic clients as they renew near 100%, while continuing to expand their relationships with us.\nIn North America, we signed an expanded multiyear renewal with the largest online retailer to support their third-party risk management strategy.\nAs the client continues to expand and enhance their controls around their global supply chain, we are pleased to continue to support their growing needs.\nWe also signed a multiyear renewal with one of the largest multinational retail corporations, expanding their use of data across their business.\nThe client leverages our third-party risk and compliance solutions to mitigate risk throughout their extremely large and complex supply chain, and we are glad to extend and broaden this relationship with such a key customer.\nWe renewed business with another strategic client, a global property and casualty insurance firm who needed access to timely, high-quality data on their current client base to ensure proper underwriting methodologies, ongoing monitoring, as well as access to data for new customer acquisition.\nThe result was a multiyear deal for both core risk and marketing solutions.\nIn our international business, there's been significant focus on rearchitecting our go-to-market efforts to better capture the large global opportunity.\nIn the first quarter, we rolled out a Global 500 account program simultaneously with the close of Bisnode, prioritizing the most strategic accounts.\nI'm pleased with the early traction we are seeing from these efforts demonstrated by several wins in the first quarter.\nOur U.K. team is working with Generali, a Global 500 global insurance and asset management provider with a leading position in Europe and a growing presence in Asia and Latin America, to help them identify ways to improve consistency of screening across their global, corporate, and commercial businesses, as well as reduce risk.\nThe result is a multiyear deal for the integration of D&B Data by Direct+ and our third-party risk solution into their CRM and underwriting system to provide a flexible end-to-end solution that was fully compliant with the global requirements.\nAnother Global 500 company, Linde Region Europe North, member of Linde PLC, is a leading global industrial gas and engineering company that wanted to improve their credit checks and risk monitoring of B2B customers in a more data-driven way.\nWe are pleased they chose D&B Finance and Risk solutions, bringing us both new business and a multiyear deal.\nWe are pleased with the momentum we have with our growing roster of clients and expanding existing client relationships worldwide, particularly with our strategic clients.\nOne segment that we continue to see immense opportunity in is the small and midsized business market.\nI'm excited to update you on the progress we have been making to enhance our SMB strategy through a mix of digital marketing and delivery efforts, as well as through innovative partnerships.\nAfter a difficult 2020, the SMB market is beginning to reemerge.\nAs existing small businesses begin to recover from the effects of COVID-19, we are also seeing a significant rise in the formation of new businesses, especially gig economy start-ups that would benefit significantly from our self-service finance, risk, and sales and marketing solutions, along with software and services offered from our partners.\nThis was the driving purpose behind the first-quarter launch of our improved digital platform.\nThis includes personalized small business resources and offerings for each dnb.com user, driven by the utilization of our visitor intelligence solution, as well as the D&B marketplace, which makes it easier for small businesses to identify and purchase D&B solutions and those from our partners.\nThe marketplace has two primary sections: a product section called D&B Product Marketplace and a dataset section called the D&B Data Marketplace.\nThe D&B Product Marketplace includes a curated set of our solutions along with those of our partners that creates a combined set that allows a small business to operate in a much more sophisticated manner, much earlier in their stage of maturation.\nBut we will continue to add new D&B solutions and partners in the coming quarters.\nWe are mindful of keeping the number of partners limited as this is not a broad-based marketplace, but one that has preferred solutions that we believe will drive the best outcomes for our SMB customers.\nA few examples of solutions that are available in the marketplace today are funds manager integrated with Plaid, CreditSignal, Credit Monitor, Email IQ, Analytics Studio, Hoovers Essentials, and D&B Connect.\nWe also have partner offerings such as KPMG Spark, SAP Ariba with D&B Direct+ integration, and Amazon business access with special rates.\nWithin the D&B Data Marketplace, users can buy a broad range of data sets from alternative data providers to help them identify opportunities and mitigate risks.\nThese data sets are already curated and matched to a DUNS number to make it easy to append to a client's existing D&B data.\nToday, we have 22 partner datasets, including healthcare reference data from IQVIA and commercial fleet data from IHS Markit, and we're adding more partners monthly.\nUser feedback has been overwhelmingly positive around the power of the DUNS number and how it's the key to unlock the power of the data and it's something that meaningfully differentiates us competitively.\nThe D&B customer portal, also launched in the first quarter, allows existing clients to log in and access their already purchased products through a single sign-on, unified digital experience.\nWhile inside the portal, we offer personalized offerings of our and our partner's solutions, which has already resulted in a 60% increase in cross-sells during the first quarter.\nAnd while we continue to grow our solution set within D&B, we're also expanding our reach outside of our core ecosystem.\nA great example of this is what we're doing with Bank of America.\nBank of America became the first major financial institution to offer millions of small businesses the ability to get ongoing insights into their D&B business credit score directly through their Business Advantage 360 banking platform.\nThis is exciting for D&B because it is driving net new paid subscriptions and increased engagement with our small business digital platform.\nWe also partnered with Plaid to bring their network to our solutions.\nBy integrating Plaid capabilities to our digital platform, small businesses can securely permission access to their bank account information for authentication purposes.\nThis gives them instant access to update their D&B business credit profile.\nIn addition, small businesses can share their bank transaction details, enabling us to explore new ways to establish business credit outside of traditional payment data, which many smaller businesses may lack.\nWe're really excited as this is the first of its kind in the business credit space.\nIn the first quarter, subscriptions to our freemium products were up 43% from the prior year.\nThe investments into our small business and digital go-to-market strategy, products, and groundbreaking partnerships are clear evidence of our determination to make this segment a priority and deliver more innovative solutions to our small business clients.\nThe third critical priority is launching new products and use cases.\nYesterday, we announced D&B Rev.\nUp, a solution that simplifies and automates marketing and sales workflows by providing data, targeting, activation, and measurement in a single platform that easily integrates to a customer's existing martech or sales tech stacks through the use of open architecture integrations.\nClients can purchase the full breadth of D&B Rev.\nUp capabilities or even start with a specific channel and build up from there.\nWe have also collaborated with Bambora and Folloze to further extend the insights and capabilities of the D&B Rev.\nUp offerings by adding best-in-class intent and personalized omnichannel experiences to help increase demand generation.\nIn addition, we've entered into an accelerate partnership with a leading data-driven martech company in support of this platform.\nThis is a game-changer in how we approach account-based marketing through the integration of our solution sets along with complementary partnerships.\nWe look forward to providing more updates on Rev.\nUp as it progresses, and it's just a great example of how we're thinking more holistically about serving clients through an integrated platform.\nThis is the vision behind Rev.\nUp, as well as the late 2020 launches of D&B Finance Analytics, an integrated and powerful credit to cash platform; and D&B Risk Analytics, an integrated third-party risk, and compliance platform, both within our Finance and Risk business unit.\nIn our international segment, we continue to focus on rolling out localized solutions across our growing territories.\nAfter 20 new product launches in 2020, we continued the momentum in the first quarter, introducing the Finance Analytics platform in the U.K., Data Vision in Greater China and India, and data blocks in three additional worldwide network partner markets.\nWe're also launching multiple new products in D&B Europe, which is a newly created region that describes our recently acquired Bisnode markets.\nLeveraging our solutions in these markets is a key pillar of our playbook, which we're starting to execute.\nRegarding the Bisnode transformation, we're leveraging the same playbook that led to the successful transformation of D&B these past two years, and we're off to a great start coming together as one D&B.\nIn Q1, we completed the first phase of synergy actions immediately following close, principally, senior leadership rationalization.\nOverall, we have actioned approximately $12 million of annualized run-rate savings and continue to see significant efficiencies through the combination of our two companies.\nWe also established a new European operating model and expect this to be fully implemented during Q2, delivering a more streamlined and integrated business with corresponding operational synergies consistent with our business model.\nWe developed a robust product plan for D&B Europe to accelerate sales of our modern global product solutions and support the sundown of legacy Bisnode products.\nSeveral product launches are slated for the second half, including Finance Analytics, Risk Analytics, D&B Hoovers, and data blocks, to name a few.\nThe team is also accelerating rollouts of several solutions Bisnode had recently launched prior to the acquisition.\nOverall, we are really excited about the progress we are making and look to capitalize on the strong momentum we have built in our first quarter together.\nOverall, I'm pleased with our start to 2021, and I'm excited about the progress we continue to make in terms of increasing share of wallet with strategic clients, better serving SMBs in innovative ways, developing new products domestically, and localizing them internationally and integrating Bisnode.\nThese, along with many other projects the teams are working on are laying the foundation for accelerated, sustainable growth throughout the remainder of 2021 and into 2022.\nToday, I will discuss our first-quarter 2021 results and our outlook for the remainder of the year.\nTurning to Slide 1.\nOn a GAAP basis, first-quarter revenues were $505 million, an increase of 28% or 27% on a constant-currency basis compared to the prior-year quarter.\nThis includes the net impact of a lower purchase accounting deferred revenue adjustment of $17 million.\nNet loss for the first quarter on a GAAP basis was $25 million or a diluted loss per share of $0.06, compared to a net income of $42 million for the prior-year quarter.\nThis was primarily driven by a change in fair value of the make-whole derivative liability in connection with the Series A preferred stock in the prior-year quarter and a higher tax benefit recognized in the prior-year period due to the Cares Act.\nThis was partially offset by lower interest expense, preferred dividends in the prior-year period, improvement in operating income, largely due to lower net deferred revenue purchase accounting adjustments and the net impact of the Bisnode acquisition, partially offset by higher costs related to ongoing regulatory matters.\nTurning to Slide 2.\nI'll now discuss our adjusted results for the first quarter.\nFirst-quarter adjusted revenues for the total company were $509 million, an increase of 28.6% or 27.7% on a constant-currency basis.\nThis year-over-year increase includes 22 percentage points from the Bisnode acquisition and 4.4 percentage points from the net impact of lower deferred revenue purchase accounting adjustments.\nRevenues on an organic constant-currency basis were up 1.3%, driven by growth in our International segment, partially offset by the final quarter of headwinds in North America from COVID-19 and the Data.com wind down.\nExcluding these headwinds, the underlying business grew approximately 3%.\nFirst-quarter adjusted EBITDA for the total company was $186 million an increase of $50 million or 37%.\nThis increase includes the net impact of lower deferred revenue purchase accounting adjustment, a 15-percentage-point impact on year-over-year growth.\nThe remainder of the improvement is due to the net impact of the Bisnode acquisition, as well as increased revenues in international and lower net personnel expenses overall.\nFirst-quarter adjusted EBITDA margin was 36.5%.\nExcluding the impact of the deferred revenue adjustment and the net impact of Bisnode, EBITDA margin improved 220 basis points.\nFirst-quarter adjusted net income was $98 million or adjusted diluted earnings per share of $0.23, an increase from first quarter's 2020 adjusted net income of $50 million.\nTurning now to Slide 3.\nI'll now discuss the results for our two segments, north America and International.\nIn North America, revenues for the first quarter were $339 million, an approximate 1% decrease from prior year.\nExcluding known headwinds, North America grew approximately 2%.\nIn Finance and Risk, we continue to see strength in our government solutions and risk aversion as both private and public sector enterprises continue to need solutions to deal with a rapidly evolving global supplier landscape.\nThe growth in these solutions was offset by approximately $3 million of lower revenues attributable to COVID-19 and $1 million of revenue elimination from the Bisnode transaction.\nFor sales and marketing, we're excited to see double-digit growth in our digital solutions as customers continue to leverage more and more of our modern intent-enabled solutions.\nAnd while data sales also had another solid quarter, the overall growth in sales and marketing was partially offset by $5 million from the Data.com wind down.\nNorth America first-quarter adjusted EBITDA was $151 million, an increase of $7 million or 5% primarily due to lower operating costs resulting from ongoing cost management efforts.\nAdjusted EBITDA margin for North America was 44.5%, up 220 basis points versus prior year.\nTurning now to Slide 4.\nIn our international segment, first-quarter revenues increased 137% to $179 or 131% on a constant-currency basis, primarily driven by the net impact from the acquisition of Bisnode and strong growth in our sales and marketing solutions.\nExcluding the impact from Bisnode, International revenues increased approximately 9%.\nFinance and Risk revenues were $107 million, an increase of 83% or an increase of 78% on a constant-currency basis primarily due to the Bisnode acquisition.\nExcluding the net impact of Bisnode, revenue grew 7% with growth across all markets, including higher worldwide network cross-border sales and higher revenues in Greater China from our risk and compliance solutions and newly introduced API offerings.\nSales and marketing revenues were $63 million, an increase of 382% or an increase of 359% on a constant-currency basis, primarily attributable to the Bisnode acquisition.\nExcluding the net impact of Bisnode, revenue grew 18% due to new solution sales in our U.K. market and increased revenues from our worldwide network product loyalty.\nFirst-quarter international adjusted EBITDA of $52 million increased $28 million or 114% versus first-quarter 2020 primarily due to the net impact of Bisnode acquisition, as well as revenue growth across our international businesses, partially offset by higher net personnel costs.\nAdjusted EBITDA margin was 30.3% or 37.8%, excluding Bisnode, which is an increase of 430 basis points versus prior year.\nTurning now to Slide 5.\nI'll walk through our capital structure.\nAt the end of March 31, 2021, we had cash and cash equivalents of $173 million, which when combined with full capacity of our $850 million revolving line of credit through 2025, represents total liquidity of approximately $1 billion.\nAs of March 31, 2021, total debt principal was $3,674 million, and our leverage ratio was 4.8% on a gross basis and 4.6% on a net basis.\nThe credit facility senior secured net leverage ratio was 3.6%.\nAnd finally, on March 30, we executed $1 billion floating to fixed swaps at an all-in rate of 46.7 bps.\nThese are three-year slots and bring our fixed floating debt ratio to approximately 50-50.\nTurning now to Slide 6.\nI'll now walk through our outlook for full-year 2021.\nAdjusted revenues are expected to remain in the range of $2,145 million to $2,175 million, an increase of approximately 23.5% to 25% compared to full-year 2020 adjusted revenues of $1,739 million.\nRevenues on an organic constant-currency basis, excluding the net impact of the lower deferred revenues, are expected to increase between 3% to 4.5%.\nAdjusted EBITDA is expected to be in the range of $840 million to $855 million, an increase of 18% to 20%.\nAnd adjusted earnings per share is expected to be in the range of $1.02 to $1.06.\nAdditional modeling details underlying our outlook are as follows: We expect interest expense to be $200 million to $210 million; depreciation and amortization expense of approximately $90 million, excluding incremental depreciation and amortization expense resulting from purchase accounting; an adjusted effective tax rate of approximately 24%; weighted average shares outstanding of approximately $430 million; and finally, capex, we anticipate, of around $160 million, including $7 million due to a small asset acquisition we completed in the first quarter.\nOverall, we continue to see the year shaping up as previously discussed, with revenue growth accelerating throughout the year as we transition from the middle of the range in Q2 to the high end of the range in the fourth quarter.\nAnd finally, as previously discussed, we continue to expect adjusted EBITDA for the second and third quarter to be below the low end of the range due to timing of certain expenses in the fourth quarter to be above the high end of the range of our guide.\nOverall, we are pleased with the start of 2021 and look forward to continuing the strong momentum in our building both North America and international.\nOperator, will you please open up the line for Q&A?\n", "role": "user" }, { "content": "compname reports q1 loss per share $0.06.\nq1 loss per share $0.06.\nreiterating its previously provided full year 2021 outlook.\nq1 adjusted earnings per share $0.23.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: So we're going to have a robust Q&A session.\nSo let's move to page three.\nThe business challenge moving into Q1 was twofold for Dover.\nFirst, we exited 2020 with a healthy backlog of business, which we needed to operationally deliver against.\nSecond, we had to work closely with our distributors and customers to seize opportunities in the marketplace despite a complex set of challenges with raw materials, components, logistics and labor availability.\nWe are pleased with our first quarter performance on both counts, which is reflected in a robust revenue growth and the increase in our order backlog as we move into Q2.\nLet's take a look at the metrics.\nTotal revenue was up 13%, 9% organic to the comparable period.\nClearly, the quarter benefited from a good order backlog position and the willingness of the channels to receive product deliveries as market demand accelerated, resulting in the highest volume quarter since 2014 and the largest first quarter volume since 2012 for the company.\nThis performance clear indication that our product portfolio was attractive and often under-appreciated growth avenues and that the work that we have done on operational excellence is gaining traction.\nOrder rates outpaced revenue in the quarter, posting bookings of $2.3 billion, a 27% comparable organic increase.\nThe growth was broad-based with all five segments contributing to the increase.\nThis resulted in the seasonally high backlog of $2.2 billion, an increase of 39%.\nSince our earnings are issued among the first in the industrial sector, I suppose it is upon it's -- it's on us to explain the drivers of growth and their impact on seasonality and full-year demand.\nI'm going to try to be careful with my choice of terms and comments not to cast unwarranted shade on a clearly positive market demand environment.\nThere are several factors driving healthy customer activity, including pent-up demand from last year as a result of low starting channel inventories in certain sectors.\nImportantly, before we get all wound up trying to quantify the impact of channel inventory stocking in inflationary pre-buy, and how it impacts quarterly demand, let's not lose sight of the fact that total marketplace demand is robust, which is reflected in our backlog and which also leads us to revise our revenue growth guidance upward for the full year to 10% to 12%.\nSo put succinctly, it's not pre-buy if we don't remove it from the full-year revenue estimates.\nStill early in the year and we will continue to produce to meet customer demand and watch our backlog and order patterns carefully [Phonetic].\nWe'll have more color on the drivers of demand and our revenue performance, including contribution of market share gains, as we progress through the year.\nFor now, we are focused on executing operationally in demanding conditions to win in the marketplace.\nBut we clearly believe that favorable demand conditions remain durable through the year.\nLet's move to profitability.\nQ1 was solid with consolidated adjusted segment margin of 19.1%, 320 basis points higher versus the comparable quarter.\nThis was supported by strong volumes, favorable mix of products delivered positive pricing [Phonetic] and continued operational discipline and efficiency initiatives, which more than offset input cost headwinds.\nStrong profitability and continued focus on working capital management resulted in seasonally strong free cash flow, which was up $110 million compared to last year's first quarter or the comparable period.\nWith a solid Q1 under our belt, we look at the remainder of 2020 with constructive optimism.\nStrong order trends and a record backlog portend a robust topline outlook and we have confidence in our team's ability to navigate the supply chain challenges.\nWith that, we are raising our guidance for the year to 10% to 12% all in revenue growth and adjusted earnings per share of $6.75 to $6.85 per share, a substantial step up compared to our prior guidance.\nI will skip slide four, which provides a more detailed overview of our results for the first quarter.\nSo let's move to slide five.\nEngineered Products revenue was up 2% organically as demand conditions improved modestly through a comparable period.\nVehicle services entered the year with a strong order book and faced solid demand across all geographies and product lines.\nIndustrial automation grew on automotive recovery and channel restocking, and aerospace and defense shipments were solid.\nThe business remains booked well into the second half of the year.\nAs expected, waste hauling was down year-over-year given a lower starting backlog entering Q1, which was further impacted by component availability issues that constrained shipments in the quarter.\nWe have forecasted this business to be levered toward H2 and order trends and backlog reflect that.\nSame dynamic for industrial winches with revenue down in the quarter.\nBut recovery in order rates, we expect a continued gradual recovery in this business over the year.\nMargin performance in the quarter was flat year-over-year as volume leverage and pricing offset the negative fixed cost absorption in the capital goods portion of the portfolio.\nAnd Fueling Solutions was up 3% organically in the quarter on the strength of North American retail fueling as well as our software and systems business in Europe.\nActivity in China remains subdued.\nOrder backlogs are up 13%, and we expect our hanging hardware, vehicle wash and compliance driven underground product offerings to contribute positively due to an increase in miles driven and construction seasonality as we make our way through the year.\nThe segment posted another quarter of strong margin performance on higher volumes, productivity actions of mix, which is a continuation of the trajectory that we exited in 2020.\nSales in Imaging & Identification improved 4% organically.\nThe core marking and coding business grew well on strong printer and services demand in North America and Asia, but was partially offset by a decline in consumables against the comparable quarter where customers stocked up on inks at the onset of the pandemic.\nWe also saw a nice pickup in serialization software sales.\nTextile printer sales remained soft as global apparel and retail remains impacted by COVID.\nInk consumable volumes were up as we significantly improved ink attachment rates, and we saw encouraging improvement in the pipeline in new printer sales as the quarter progressed.\nMargins improved slightly in the segment on higher volumes and we were able to offset material cost inflation with strategic pricing during the quarter.\nPumps & Process Solutions posted 18% organic growth in the quarter on improved volumes across all businesses except precision components.\nOrder rates and shipments for biopharma connectors and pumps continued to be strong.\nIndustrial pumps had a solid quarter, driven by improved end market conditions and distributor demand.\nAnd polymer processing shipments grew year-over-year on robust demand in Asia and the U.S. Precision components was down in the quarter though demand conditions stabilized in hydrodynamic bearings and compression parts as well as broadly in China through new OEM builds remains impacted.\nAdjusted operating margin in the quarter expanded by 890 basis points on strong volume, favorable mix and pricing.\nThis team has moved the segment to best-in-class topline and bottom line metrics through a dedication to operational excellence, robust product development and innovation management and proactive and purposeful inorganic actions.\nIt's a world-class collection of assets that we will continue to invest behind.\nRefrigeration & Food Equipment continued its solid momentum from the second half of last year posting 18% organic growth.\nRevenue on new orders in beverage can making more than doubled year-over-year.\nFood retail saw broad-based increases across its product lines as key retailers resumed capital investment in product programs plus we've seen good demand for some of our new product introductions and customer wins.\nOur natural refrigerant systems business in particular experienced robust demand in Europe and in the US as customers are adopting more environmentally friendly solutions.\nThe heat exchanger business grew on robust demand in Asia and Europe across all end markets.\nFoodservice equipment was down in the quarter but saw a stabilization in chain restaurant demand.\nDespite operational challenges in food retail due to availability issues with installation raw materials, adjusted margin performance improved by 450 basis points, supported by stronger volumes, productivity initiatives and cost actions we took in the middle of 2020, partially offset by input cost inflation.\nI'll pass it to Brad from here.\nI'm on slide six.\nOn the top is the revenue bridge.\nOur topline benefited from organic growth across all five segments, with particular strength in Pumps & Process Solutions and Refrigeration & Food Equipment segments.\nFX benefited topline by 3% or $51 million.\nAcquisitions more than offset dispositions in the quarter by $15 million.\nWe expect this number to grow in subsequent quarters.\nThe revenue breakdown by geography reflects strong growth in North America, Europe and Asia.\nOur three largest geographic regions.\nThe U.S., our largest market posted 7% organic growth in the quarter on solid order rates and retail fueling, marking and coding, biopharma connectors, food retail and can making among others and was partially offset by delayed shipments in waste hauling.\nEurope grew by 13% in the quarter on strong shipments in vehicle aftermarket, biopharma, industrial pumps and heat exchangers.\nAll of Asia returned to growth and was up 20% organically driven by China, which was up 60% against the COVID impacted comparable quarter in the prior year.\nMoving to the bottom of the page.\nBookings were up 27% organically reflecting the continued broad-based momentum we are seeing across the portfolio.\nIn the quarter, we saw organic bookings growth across all five segments.\nOverall, our backlog is currently up $626 million or 39% versus this time last year, positioning us well for the remainder of the year.\nLet's go to the earnings bridges on slide seven.\nOn the top of the chart, adjusted segment EBIT was up nearly $100 million.\nOn margin improvement -- but margin improved several hundred basis points as improved volumes continued productivity initiatives and strategic pricing offset input cost inflation.\nGoing to the bottom of the chart.\nThe adjusted net earnings improved by $60 million, as higher segment EBIT more than offset higher taxes as well as higher corporate expenses, primarily related to compensation accruals and deal expenses.\nThe effective tax rate excluding discrete tax benefits was approximately 21.7% [Phonetic] for the quarter compared to 21.5% [Phonetic] in the prior year.\nDiscrete tax benefits were $6 million in the quarter or approximately $3 million lower than in 2020.\nRightsizing and other costs were $4 million in the quarter or $3 million after tax.\nNow on slide eight.\nWe are pleased with the cash flow performance in the first quarter with free cash flow of $146 million or $110 million increase over last year.\nFree cash flow conversion stands at 8% of revenue in the first quarter, which is historically our lowest cash flow quarter due to seasonality of our production.\nLet's go to slide nine.\nWe expect demand in Engineered Products to improve sequentially through the remainder of the year, which is supported by a robust backlog.\nWe continue to see strong result with strong bookings trends in vehicle services and industrial automation.\nAerospace and defense have significant revenue visibility through its government programs and is booked well into the second half of the year.\nOrder rates and waste handling improved significantly during the first quarter, though the shipment schedule will be levered toward the second half and we are watching the supply chain here closely, which is a stabilizer we expect a gradual recovery through the second half of the year.\nAs communicated at our Investor Meeting in November, we expect Fueling Solutions to post modern organic growth for the year.\nThere was a known headwind from EMV roll-off in the U.S. but order trends support a number of positives offsetting it, including growth in systems and software recovery in underground businesses and growth in vehicle wash.\nWe also expect that Asia, particularly -- China in particular should stabilize and become a net positive for us in the second half.\nThe ICS acquisition, which we closed at the end of last year is off to a very good start as vehicle wash market is recovering healthily.\nImaging & ID is expected to perform well this year.\nOur core marking and coding business stalwart in 2020 is expected to continue to deliver low to mid single-digit growth with services and serialization products positively impacting performance.\nDigital textile printing remains slow, although we saw a year-over-year improvement in ink tonnage sales in Q1, as we continue executing our strategy to attach consumables to machine sales.\nWe expect recovery here in the second half.\nPumps & Process Solutions should have another solid year.\nDemand for biopharma and hygienic applications remains robust and trading conditions in industrial pumps rebounded quickly in the first quarter and momentum should continue.\nOur recent investments in biopharma capacity were prescient, and we are well positioned to continue capitalizing on the secular growth story.\nPlastics and polymers is expected to deliver steady performance as a global shortage of plastic and rubber, as well as petrochemical investments are driving increased investment in processing plants.\nPrecision components are stabilized and we expect it to contribute to year-over-year growth beginning in the second half of the year.\nAnd with its large backlog and high order rates, Refrigeration & Food Equipment is expected to have a strong year.\nNew orders in the core food retail businesses have been healthy in the last few quarters, as retailers that had paused their remodel programs last year amid the pandemic are restarting these strategic initiatives.\nAdditionally, we are capitalizing on our leadership position in natural refrigerant systems both in Europe and also in the U.S. where we believe the recent mandate in California will foretell a trend among the other 49 states to mandate the transition to more environmentally friendly solutions.\nWe also see good growth in our specialty product line and small format customer segment.\nBelvac continues to work through a record backlog and had another significant bookings quarter in Q1 they're booked for the year.\nOur heat exchanger business is seeing strong order rates across all verticals and geographies.\nWe are investing in capacity and new capabilities in these two businesses and are well positioned to capture growth.\nDemand is stabilized in foodservice equipment at restaurant chains.\nAnd we expect the institutional business to recover in the second half as students return to schools and traffic improves at stadiums and hotels.\nOur revised annual guidance is on page 10, we covered the most pertinent of these items in the slides and we summarized here for your reference.\nFinally, on slide 11, puts expected 2021 performance in a multi-year perspective.\n2020 was proof of lower topline cyclicality in a demanding environment and our ability to protect profitability.\nOperational excellence and operating margin expansion has been our priority over the last couple of years and we are on track to deliver more than 100 basis points of average margin expansion over that period.\nAnd we have the playbook and tools for this to continue.\nDover is positioned to deliver attractive double-digit earnings per share growth in line with our long-term corporate targets communicated in 2019.\nSo, Andrey, we can open it up for Q&A.\n", "role": "user" }, { "content": "sees fy adjusted earnings per share $6.75 to $6.85.\ncompname says guidance for full year 2021 revenue growth was raised to 10% to 12%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 second quarter results were strong across the board and we are especially pleased with the top-line performance considering the complicated operating environment.\nThe demand environment in the quarter was robust and continued the momentum from the first quarter and despite posting a 30% organic top-line growth, we exit Q2 with a sequentially higher order backlog.\nI'll focus on the bigger picture here and highlight again what we believe is underappreciated aspect of our portfolio, it's organic growth potential.\nOur revenue in the second quarter was above the pre-pandemic comparable quarter in 2019 and resulted in the highest revenue first half of the year in recent Dover history, meaning that the majority of our markets are not simply recovering but are operating in a growth environment.\nNew order bookings remain robust with all segments posting book-to-bill above one [Phonetic], resulting in sequential comparable growth in backlog as I mentioned earlier.\nOperating margin conversion was solid for the quarter as a result of good execution at the operating level on healthy mix of products delivered in the quarter.\nAll of this is well and good, but make no mistake, the operating environment remains very challenging.\nIt's been 90 days since the last time we were asked the question about the duration of \"transitory inflation\".\nAs we've discussed after the first quarter, we had some line of sight of raw materials cost trajectory coming into the year, which allowed us to get in front from a price cost perspective.\nWe have also proactively given our operating companies some leeway on working capital decisions to build inventories based on the backlog trajectory.\nWhat we underestimated was the -- was the total cost impacts of a strained logistics system and tight labor market that shows no signs of abating.\nThis has had two knock-on effects on our results.\nFirst, the absolute costs of inbound and outbound freight were materially higher, and second and more important, the costs associated with production line stoppages due to lack of labor and components caused by trends and time uncertainty and overall supply chain tightness.\nOur teams have done a commendable job navigating these choppy waters and continue shipping products and driving robust margin conversion and strong cash flow.\nOverall, we believe that our operating model has been an advantage to us as we are largely a localized producer and are not overly reliant on extended supply chains.\nThis is clearly reflected in our top-line performance in the quarter.\nAs we look to the second half of the year, our order backlogs make us confident in our top-line trajectory.\nOur forecast do not incorporate much in the way of an improvement nor deterioration of the operating challenges that we've witnessed during the first half.\nWe're just going to have to power through and work with our suppliers and customers to adapt to the prevailing conditions.\nWe are raising our annual revenue growth guidance to 15% to 17%, and our adjusted earnings per share guidance to $7.30 a share to $7.40 a share.\nWe also expect stronger cash flow as a result of the improved margin performance.\nSkip to Slide 4, which provides a more detailed overview of our results in the quarter.\nEngineered Products revenue was up 25% organically.\nVehicle services which is strong across all geographies and product lines and had record bookings during the quarter.\nIndustrial automation demand was strong across the automotive sector and in China.\nAerospace and defense posted an all-time record revenue during the second quarter.\nWaste hauling was flat year-over-year as the business continues to wrestle with component and labor availability issues that are constraining product shipments.\nImportantly, waste handling bookings were robust and the backlog was up nearly 75% versus the prior year.\nEngineered Products is our most exposed segment to input and logistics cost inflation due to materials intensity, contractual pricing dynamics and relatively higher share of international sourcing in vehicle services.\nYou can see it in the margin -- the segment's margin was flat year-over-year as strong volume leverage and pricing increases were offset by input cost and freight inflation, as well as labor and component availability challenges.\nFueling Solutions was up 25% organically in the quarter on the strength of the above ground and below ground retail fueling globally, including some remaining tailwinds from the EMV opportunity in the U.S. following the April deadline.\nVehicle wash has had -- has been strong this year and our recent ICS acquisition integration and performance is ahead of plan.\nActivity in China in fuel transport remains subdued, but there are signs of Chinese operators reopening their tendering activity.\nOrder backlogs were up 29%, and we expect our software and service business hanging hardware, vehicle wash and compliance-driven underground product offerings to help offset the anticipated headwinds from the EMV roll-off.\nThe segment posted another strong sequential margin performance on higher volumes, strategic pricing initiatives, productivity actions and mix.\nSales in Imaging & ID improved 20% organically.\nThe core marking & coding business grew well on strong printer demand across all geographies with China and India driving particularly strong performance.\nSerialization software also grew ahead of expectations.\nThe digital textile [Phonetic] printing business was up significantly against the comparable quarter when much of their operations were locked down in Northern Italy last year, but nevertheless, the business remains impacted though we are beginning to see growth in demand for large printers, particularly in Asia and continued growth in ink consumable volumes.\nMargins improved by 420 basis points on volume leverage, pricing and productivity initiatives.\nPumps & Process Solution posted another banner quarter at 34% organic growth on improved volumes across all businesses except Precision Components.\nDemand for biopharma connectors and pumps are intended to be -- to be strong driven by vaccine and non-COVID related pharmaceutical tailwinds.\nIndustrial pumps grew by over 20% on robust end customer demand with particular strength in China.\nPolymer processing shipments grew year-over-year and continued strength in Asia and is gaining momentum in the U.S. market.\nPrecision Components was slightly down in the quarter though demand conditions have stabilized and are recovering well in some end markets and geography giving us confidence in the second half trajectory.\nMargins in the quarter expanded by 910 basis points on strong volumes, favorable mix and pricing.\nTop-line growth in Refrigeration & Food Equipment continued its impressive clip posting a 44% organic growth.\nRevenue in the beverage can making doubled in the quarter and bookings nearly doubled as well.\nThe business is now booked into late 2022.\nFood retail saw broad-based growth across its product lines, door cases are now booking into 2022, and the demand for natural refrigerants is driving outside growth in our systems business in the U.S. and in Europe.\nBacklog in food retail is now double where it was last year.\nThe heat exchanger business grew on robust demand in all geographies with rebounding order rates and commercial HVAC in North America and record order intake in EMEA extending lead times for heat pumps and boilers.\nFoodservice equipment was up in the quarter on a tough comp, chain -- no, actually on an easy comp, and chain restaurant demand is robust, but the institutional market is still recovering.\nMargins in the segment improved by 580 basis points, driven by strong volumes and productivity actions partially offset by availability issues with installation raw materials and labor and food retail operations, we expect -- which we expect to subside in the second half.\nAnd I'll pass it on to Brad here.\nOur top-line organic revenue increased by 30% in the quarter with all five segments posting growth with particular strength in our Pumps & Process Solutions and Refrigeration & Food Equipment segments.\nFX benefited the top-line by about 5% or $68 million.\nAcquisitions added $19 million of revenue in the quarter.\nThere were no year over impacts from dispositions.\nThe revenue breakdown by geography reflect strong growth in North America, Europe and Asia, our three largest regions.\nThe U.S., our largest market posted 25% organic growth in the quarter on solid trading conditions in retail fueling, marking & coding, biopharma, food retail and can making.\nEurope grew by 30% on strong shipments in vehicle aftermarket, biopharma and industrial pumps and heat exchangers.\nAll of Asia was up 38% organically on growth in biopharma, marking & coding, plastics and polymers, heat exchangers and retail fueling demand outside of China.\nChina, which represents a little over half of our business in Asia was up 33% organically in the quarter.\nMoving to the bottom of the page, bookings were up 61% organically, reflecting continued broad-based momentum across the portfolio.\nIn the quarter, we saw organic growth across all five segments.\nGoing to the earnings bridges now on Slide 7.\nOn the top of the chart, adjusted EBIT was up $173 million and margin improved 400 basis points, as improved volumes, continued productivity initiatives and strategic pricing offset input cost inflation.\nAdjusted segment EBITDA was up 350 basis points.\nGoing to the bottom of the chart.\nAdjusted net earnings improved by $135 million as higher segment EBIT more than offset higher taxes, as well as higher corporate expenses primarily relating to compensation accruals and deal expenses.\nThe effective tax rate excluding discrete tax benefits was approximately 21.7% for the quarter compared to 21.6% in the prior year.\nDiscrete tax benefits were $11 million in the quarter or $9 million higher than 2020 for approximately $0.07 of a year-over-year earnings per share impact.\nRightsizing and other costs were $11 million in the quarter or $8 million after-tax.\nNow, on Slide 8.\nWe are pleased with the cash performance thus far this year, with free cash flow of $364 million, a $96 million increase over last year.\nFree cash flow conversion stands at 9% of revenue for the first half of the year, 80 basis points higher than the comparable period last year, despite a significant investment in working capital and the impact of prior year tax deferrals that did not repeat this year.\nAlso as we discussed last quarter, we remain focused on delivering against our customers' strong order rates and build inventory to ensure we can meet the current demand in the second half of the year.\nLet's try to pause here for a moment, because this is a complicated slide, but I think it's a transparent view of what we think is going to happen over the second half of the year and includes our current view of the outlook of the second half by segment provides context of how we are thinking about full-year guidance, which I'll get to shortly.\nRemember, the demand environment is strong across the portfolio, so let's not try to get overexcited about headwinds or mix commentary.\nWe managed it in H1 and we will do it again in H2, but this is the reality of the situation in terms of the dynamic of the business.\nWe expect top-line growth -- top-line in Engineered Products to remain robust through the remainder of the year based on solid backlog and good bookings trajectory.\nMomentum in the vehicle aftermarket, industrial automation should continue, while we expect the improved order rates and backlogs and solid waste handling and industrial winches to drive solid year-over-year growth in the second half.\nAerospace and defense is expected to be modestly down largely as a result of a difficult year-over-year comparison on -- on project deliveries.\nSupply chain constraints and cost inflation are expected to continue to have a material impact on the segment.\nWaste handling and automotive aftermarket businesses are our largest business exposed to the trifecta of raw materials inflation, extended supply chains and a larger proportion of assembly labor.\nOur management teams are winning in the marketplace considering the headwinds which is reflected in the growth rate and order books.\nBut we are clearly at the point of having defend our market position at the expense of the price cost dynamic, which will be detrimental to near-term margins, but not material, slightly detrimental.\nAnd we expect Fueling Solutions to provide organic growth for the full-year above our initial expectations on the back of growth in systems and software, recovering underground demand and vehicle wash.\nRecall that above ground business as a tough second half due to the North American EMV volumes.\nMargins in Fueling Solutions will be up for the full-year, though we expect modest margin compression in the second half relative to the first half on slightly lower volumes and negative product and geographic mix, which I think that we covered at the end of Q1 as with less North America volume due to EMV and more international volume that's slightly dilutive.\nTrading conditions in Imaging & ID are expected to continue their positive trajectory for the remainder of the year.\nOur core marking & coding business is expected to maintain its growth trajectory with services and serialization products positively impacting performance.\nDigital textile printing is recovering, and we expect the end of the year, we will well above 2020, but below its 2019 high watermark.\nWe expect operating margins to remain stable in the second half.\nPumps & Process Solutions should see a solid second half.\nDemand for biopharma and hygienic applications remain robust with customers now placing orders into 2022.\nWe are strategically investing an additional clean room capacity for this platform to support its growth.\nTrading conditions in industrial pumps are strong and driven by robust and customer demand as opposed to channel stocking.\nPlastics and polymers is expected to be steady though this business faces a difficult comparable period due to a strong performance last year.\nPrecision Components will return to growth in the second half as OEM new-builds will supplant increased activities at refineries and petrochemical plants.\nWe expect margins to remain strong in the segment, but we may see some minor dilution due to mix on the back half as our Precision Components business recovers, but the absolute profit trajectory of this segment is in very good shape.\nWith its large backlog and high sustained order rates, Refrigeration & Food Equipment will finish the year strong, with double-digit growth expected for all operating businesses.\nNew orders in core food retail business have been healthy across the product segments and the tailwinds from our leadership position and natural refrigerants are driving outside growth for our systems business.\nWe expect to begin to significantly ramp up shipments of our new digital door product.\nBelvac continues to work through its record backlogs.\nThey are now taking orders for late 2022 and even into 2023.\nHeat exchanger business is positioned well as they are seeing strong order rates across all verticals and geographies.\nWe have been investing in capacity and new capabilities in these two businesses and are well positioned to capture the growth.\nFoodservice equipment demand is normalized and returned to growth at restaurant chains and institutional business continues to improve.\nWe expect this business to post solid growth in the second half albeit against a low comparable.\nWe expect margins to continue their seasonally adjusted upward trajectory for the remainder of the year.\nImproved volume leverage, productivity gains and positive product mix and business mix should more than offset operational challenges related to component and labor shortages, increased logistics costs and input cost inflation.\nMoving to Slide 10.\nWe remain on the front foot investing behind our business to support the growth, productivity and long-term portfolio enhancement.\nOrganic high return on investment projects remain our top priority for capital allocation.\nOn the left hand, you can see a sample of the current growth and productivity capex projects that we are working on, that add up to $75 million of spend.\nThe project mix is balanced between growth and productivity with a skew toward new capacity and supporting long-term growth in key priority portions of our portfolio.\nOur next priority in capital allocation is strategic bolt-on acquisitions and enhance the long-term growth profile and attractiveness of our portfolio.\nYou can see that with that all four of our recent acquisitions were in either digital or high growth single use pumps markets.\nThese are small additions, but we are very excited about scaling up these highly innovative technologies as part of our G&A [Phonetic] portfolio.\nWe remain on the hunt for acquisitions, have a solid M&A pipeline as we enter the second half.\nOur current dry powder on a full-year '21 basis is approximately $3.3 billion.\nOur revised annual guidance is on Page 11.\nWe are increasing our top-line forecast to reflect the durability and demand trends that we are seeing.\nWe now expect to achieve 15% to 17% all-in revenue growth this year.\nOn the bottom of the page, we show our expected '21 performance in a multi-year perspective.\nWe remain on track to deliver strong returns through a combination of robust organic revenue growth, strong margin expansion and disciplined capital allocation.\nAnd with that Andrey, we'll open it up to Q&A.\n", "role": "user" }, { "content": "sees fy adjusted earnings per share $7.30 to $7.40.\nguidance for full year 2021 revenue growth was raised to 15% to 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: Let's begin with the summary of results on Page 3.\nAs we guided back in September.\nJuly August trends were positive and we are exceeding our internal forecast.\nThis dynamic continued through September.\nIn addition to the improving demand environment, we are very encouraged by our manufacturing operations and supply chain performance in the quarter.\nThis solid operation execution had two tangible benefits in Q3.\nFirst, it increased our capacity to deliver a higher volume than expected from the backlog in our long cycle businesses, and as you see the positive impact to the top line.\nAnd second, through a combination of mixed and fixed cost absorption, it drove a robust margin performance for the quarter.\nDemand trends continued to improve sequentially across most of the portfolio.\nThe trajectory continues to vary by market, and I'll talk more about that, but our diverse end market and geographic exposure is clearly an asset to us in the downturn.\nRevenue declined 5% organically and bookings were flat, with a third of our operating companies posting positive year-over-year bookings for the quarter, and more than half posting positive comparable growth in the month of September.\nWe are not out of the woods yet, but the trajectory is encouraging and we continue to carry a healthy backlog going into the fourth quarter and into next year.\nWe delivered strong margin performance in the quarter and year-to-date.\nWe achieved margin improvement in the quarter despite lower revenue, driven by our operational multiyear efficiency initiatives gaining further traction and by improved business mix, some of which we highlighted at our recent Investment Day, focused on the Pumps & Process Solutions segment and biopharma business in particular.\nWith the strong results to date, we expected to over deliver on our full-year conversion margin target and are now driving toward achieving a flat consolidated adjusted operating margin for the year.\nCash flow in the quarter was strong at 17% of revenue and 127% of adjusted net earnings.\nYear-to-date, we have generated $117 million more in free cash flow over the comparable period last year, owing to a robust conversion management and capital discipline.\nAs a result of our performance in the first three quarters of the year and a solid order backlog, we are raising our annual adjusted earnings per share guidance to $5.40 to $5.45 per share.\nWe are not in the clear on the macro backdrop and performance remains uneven between markets, but we believe that our performance to date and the levers we have in our possession will enable us to absorb any possible dislocations in the fourth quarter should they materialize.\nLet's move to Slide 4.\nGeneral industrial capital spending remains subdued in Q3, resulting in a 10% organic decline for an Engineered Products, driven by softness in capex levered industrial automation, industrial winches and waste handling.\nAdditionally, our waste handling business had the largest quarter ever in the comparable period last year, making it a challenging benchmark.\nOn the positive side, aerospace and defense grew double digits on shipments from a strong backlog and we've seen robust recovery in our vehicle aftermarket business after a difficult couple of quarters.\nProductivity actions, cost actions and favorable mix minimize margin erosion in the quarter, nearly offsetting the impact of materially lower volumes.\nAnd Fueling Solutions saw continued albeit sequentially slower growth in above-ground equipment in North America on EMV compliance and regulatory activity, whereas national oil companies in China continued to defer capital spending amid ongoing uncertainty.\nDemand for below-ground equipment has improved sequentially as construction activity restarted, but remain subdued globally.\nAnd in China, we are still weathering the roll off of the double-wall replacement mandate.\nMargin performance in the segment was very good and a testament to the operational focus and capability of the management team and was achieved through productivity improvements, cost controls and favorable regional mix, more than offsetting volume under-absorption.\nSales in Imaging & Identification declined 8% organically due to continued weakness in digital textile printing.\nWe've seen improving demand for textile printing consumables, reflecting recovering in printing volumes, however, has been insufficient to prompt fabric printers to invest in new machinery.\nWe expect conditions to remain challenged for the balance of the year.\nMarking and coding was flat on strong demand for consumables and overall, healthy activity in the US and Asia despite lingering difficulties with customer site access and service delivery.\nDespite segment margins being down relative to the comparable quarter driven by digital printing volume and fixed cost absorption, margin improved in marking and coding on flat revenue was a result of the mix of effect on consumables and operational initiatives undertaken in prior periods, which also provide a solid base for incremental margins in 2021 as textiles recover.\nPumps & Process Solutions continued to demonstrate the resilience of its product portfolio, some of which we highlighted in last month's Analyst and Investor Day.\nStrong growth continued in biopharma, medical and hygienic applications.\nPlastics and polymers shipped several large orders from its backlog, which were initially slated to ship in Q4, getting it to a slightly positive revenue performance year-to-date.\nCompression, components and aftermarket continue to be slow on weaker activity in US upstream and midstream.\nIndustrial pumps activity remained below last year's volumes, but has improved sequentially.\nThis was another quarter of exemplary margin performance in the segment, with more than 300 basis points of margin expansion driven by broad based productivity efforts, cost controlled and impacted businesses, favorable mix and pricing, which more than offset lower volume and some of the portfolio.\nMoreover, the recovery was broad based.\nOur food retail business, the largest in the segment, grew organically and restarted remodeling activity in supermarkets.\nBelvac, our can making business began shipping against its record backlog, which we believe is in the early innings of a secular growth trend.\nHeat exchangers were approximately flat with continued weakness in HVAC, offset by strength in residential and industrial applications, including semiconductor server and medical cooling.\nCommercial food service improved, but margins remain impacted due to continued weakness and institutional demand from schools and similar venues, while activity and large chains have slowly recovered.\nCost actions taken earlier this year, as well as improved efficiency in volume more than offset the demand headwinds in food equipment, resulting at appreciable margin accretion.\nWe expect to continue delivering improved comparable profits in the segment in line with our longer term turnaround plan.\nI'll pass it to Brad from here.\nLet's go to Slide 5.\nOn the top is the revenue bridge.\nSeveral of our businesses, including plastics & polymers, beverage can making and food retail returned to positive organic growth in the third quarter, while biopharma continued its strong growth trajectory from prior quarters.\nFX, which had been a net revenue headwind for us since mid-2018, flipped in the quarter and benefited top line by 1% or $12 million, driven principally by strengthening of the euro against the dollar.\nAcquisitions more than offset dispositions in the quarter by $3 million.\nWe expect this number to grow in subsequent quarters.\nThe revenue breakdown by geographic area reflects sequential improvement in each major geography, but particularly encouraging is the trajectory in North America and Europe.\nThe US, our largest market, declined by 4% organically due to softness in waste handling industrial winches and precision components, partially offset by a strong quarter in our above-ground retail fueling, marking and coding, beverage can making, and food retail businesses among others.\nEurope declined by 4% organically, a material improvement compared to a 19% decline in Q2, driven by constructive activity in our pumps, biopharma and hygienic, and plastics and polymer businesses.\nAll of Asia declined 10% organically, while China representing approximately half of our business in Asia, posted an 8% year-over-year decline.\nWe continue to face headwinds in China in retail fueling due to the expiration of the underground equipment replacement mandate and slower demand from the local national companies [Phonetic].\nOutside of retail fueling, we saw a solid growth in China.\nMoving to the bottom of the page.\nBookings were nearly flat, down 1% organically year-over-year, compared to a 21% decline in Q2, reflecting continued momentum across our businesses.\nIn the quarter, we saw organic declines across four segments, but sequential improvement across all segments, and a particularly strong booking quarter for our Refrigeration & Food Equipment segment, driven primarily by record order intake in our can making business.\nThese orders relate to large projects that are mostly projected to ship in 2021 and 2022.\nOverall, our backlog is currently approximately $200 million or 14% higher compared to this time last year, positioning us well for the remainder of the year and into 2021.\nNote that, a material portion of the backlog increase was driven by orders in our can making business, which I mentioned above.\nLet's go to the earnings bridges on Slide 6.\nOn the top of the chart, despite a $77 million revenue decline in the quarter, we were able to keep our adjusted segment earnings approximately flat year-over-year, a testament to our proactive cost containment and productivity initiatives that help drive 100 basis points of adjusted EBITDA margin improvement.\nSome of the recent initiatives will continue supporting margins into 2021.\nGoing to the bottom chart.\nAdjusted net earnings declined by $3 million, principally driven by higher corporate costs related to deal fees and expense accruals, partially offset by lower interest expense and lower taxes on lower earnings.\nThe effective tax rate excluding discrete tax benefits is approximately 21.5% for the quarter, substantially the same as the prior year.\nDiscrete tax benefits quarter-over-quarter were approximately $2 million lower in 2020.\nRight sizing and other costs were $6 million in the quarter relating to several new permanent cost containment initiatives that we pulled forward into this year.\nNow on Slide 7.\nWe are pleased with the cash performance, with year-to-date free cash flow of $563 million, a $117 million or [Indecipherable] over last year.\nOur teams have done a good job managing capital more actively in this uncertain environment, and with the improving sequential revenue trajectory in the third quarter, we rebuilt some working capital to support the businesses and our customers.\nFree cash flow now stands at 11.5% of revenue year-to-date, going into the fourth quarter, which traditionally has been our strongest cash flow quarter of the year.\nI'm on Page 8.\nLet's go segment by segment.\nIn Engineered Products, we expect similar performance as the third quarter.\nVehicle aftermarket had a very good Q3, as the business is able to deliver on pent up demand.\nNotably, we have a tough comp in Q4 due to some promotional campaigns, but this is a business which has excellent prospects for 2021.\nActivity in waste handling is picking up with private haulers, but orders placed are mostly for 2021.\nWe expect municipal volume to remain subdued for the balance of the year.\nDemand is reaccelerating for digital solutions in the space and overall, we are constructive on the outlook for this business into 2021.\nWe are seeing some encouraging signs in industrial automation and automotive OEM markets, in particular, in October.\nAerospace and defense continues to be steady, most of what we plan to deliver in the next quarter is in the segment's backlogs.\nWe don't expect material upside and/or downside from our forecasts.\nWe expect margin to be modestly impacted by volume and negative mix relative to Q3, largely due to demand seasonality.\nFueling Solutions remain constructive finishing the year and into 2021.\nAs we've been guiding all year, we have a tough comp in Q4 due to record volumes in the comparable period.\nDespite the top line headwinds, we expect to hold year-over-year absolute adjusted operating profit as a result of our efforts done on product line harmonization, productivity and pricing discipline.\nWe expect 2021 to be a good year as demand trends remain constructive for our above-ground and software solution businesses and we turn the corner on below-ground, fluid transfer and vehicle wash.\nImaging & ID should remain steady.\nWe saw robust activity in marking and coding exiting the third quarter and the backlog in the business is higher than last year.\nActivity in serialization software space is also picking up nicely.\nIn digital print, demand for inks has picked up, which is a sign of improving printing volumes.\nWe are seeing a pickup in quotations for new machines, but we expect a few more quarters before we return to normal levels in this market.\nIn Pumps & Process Solutions, we expect current trends to continue for biopharma, plastics and processing, continuing the robust trajectory in pumps recovering to more normal levels, particularly in defense and select industrial applications.\nCompression product lines within the precision components exposed to mid-and-downstream are likely to see continued weaknesses in Q4 as projects and maintenance continue to be deferred.\nOverall, the Pumps & Process Solutions outlook is supported by segment backlog that is aligned with what we had at this point last year.\nLet's get on to the last segment, Refrigeration & Food Equipment.\nFirst, as I said, we were in the early innings of what we believe to be a multi-year secular build-out of can making capacity, as evidenced by our backlog, driven by the transition from plastic to aluminum containers and also the spike in demand for cans at home consumption of food and beverages.\nIn food retail, we delivered low teens margin for Q3, converting on our backlog, providing us a baseline to reach our 2021 margin aspirations.\nOur backlog is beginning to build moving into 2021.\nAs you all know, this is a seasonal business, so Q4 volume and fixed cost absorption declines in Q4.\nAnd frankly, it's all about 2021 from here and Q3 was a sign of good progress.\nWe have a robust backlog in heat exchanges and are constructive in this market.\nOur capacity expansion projects are being completed and we have some interesting new products in the pipe.\nFinally, in commercial food service, large chain should continue to support activity, but will not fully offset weakness on the institutional side.\nOverall, for the segment, comparable profits and margins for the segment are forecasted to be up in Q4 to the comparable period.\nWith strong margin performance to date, we intend to deliver approximately flat year-over-year adjusted margin this year, despite a lower revenue base.\nAs you may recall, we entered the year with a program entailing $50 million in structural cost reductions as part of our multi-year program highlighted at our 2019 Investor Day.\nWe actioned more structural initiatives, which resulted in approximately $75 million of permanent cost reduction in 2020, leaving a $25 million annualized carryover benefit into 2021.\nWe view this as a down payment on the 2021 portion of our multi-year margin improvement journey.\nAnd we'll update that with more to come on 2021 when we report the fourth quarter.\nWe expect robust cash flow this year on the back of solid year-to-date cash flow generation and target free cash flow margin at the upper end of our guidance between 11% and 12%.\nCapital expenditures should tally up to approximately $159 for the year, with most of the larger outlays behind us.\nIn summation, we're raising our adjusted earnings per share guidance to $5.40 per share to $5.45 per share for the full year, above the top end range of our prior guidance.\nWe remain on the front foot in capital deployment posture with several bolt-ons closed last quarter.\nWe have multiple opportunities in the hopper, and we hope to report on those soon.\nAnd with that, Andrey, let's go to the Q&A.\n", "role": "user" }, { "content": "sees fy 2020 non gaap earnings per share $5.40 to $5.45.\ntrajectory of new orders continued to improve through q3 resulting in approximately flat bookings.\ncautiously optimistic about balance of year and set-up for 2021.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Let's go to Page 3.\nDover Corporation and its operating companies had a solid quarter.\nThe performance stats indicate that our product strategies, coupled with our ongoing productivity initiatives, continued to deliver top line growth, margin accretion and attractive cash flow to our investors.\nOur revenue and bookings growth continued to outpace our pre-pandemic levels and we exited the quarter with a record high and sequentially increased backlog while posting top line growth of 15% over the comparable period.\nDemand strength was broad based as each segment posted year-over-year growth in bookings and a book to bill above 1.\nRevenue growth, product -- positive product mix and ongoing productivity initiatives drove comparable operating margins up resulting in a 31% increase in US GAAP diluted earnings per share [Technical Issues].\nOur free cash flow performance was strong with an 18% year-over-year increase despite significant investments we've made in inventory as we begin to reap the benefits of investments in the centralization of financial processing activities.\nWe continued to enhance and improved our portfolio with several acquisitions completed in the last three months and the divestiture of our commercial foodservice business announced last week.\nOur organic investments in capacity expansions and productivity projects are on track, providing us the building blocks for the future top line growth and margin expansion.\nAs one of the first multi-industrials to report each quarter and because of our wide end market exposures, we have the pleasure to be the operating environment bellwether.\nSo let's get on the front foot here by providing some color on inflationary inputs, labor and supply chain challenges so that we have time to discuss the constructive demand environment for 2022 in the Q&A.\nLet me start by saying that we're particularly concerned that there have been no discernible policy changes, particularly in the US to deal with these headwinds.\nAnd in fact, many proposed policies run the risk of extending their duration.\nWe take no satisfaction in the fact that we've been telegraphing these issues all year and incorporating them into our forecast of the businesses that bear the brunt of these challenges, which I'll expand upon during the segment review.\nWe have taken the appropriate actions to offset these headwinds, moving into 2022 and we are comforted by the fact that we've been given the opportunity to demonstrate the resilience of our business model and the strength of the breadth of our product and geographic market exposures that are ultimately reflected in these quarterly results.\nTo be clear, we are very constructive about 2022 demand for our products and services and remain optimistic that there will be a recognition that protecting the duration of the current strong economic demand environment needs proactive policy decisions.\nWe are raising our full year earnings per share guidance as the result of our strong year-to-date performance.\nOur updated forecast do not incorporate any material improvement nor deterioration of the challenging operating environment in the fourth quarter.\nOur priorities remain the same, supporting our customers with products and services for the long term and the health and welfare of our employees.\nI'll skip to Slide 4, which provides a more detailed review of our results for the third quarter.\nSo let's move to Slide 5.\nEngineered Products revenue was up 14% organically with a significant portion of the growth from pricing actions.\nVehicle services posted a strong top line quarter and market indicators remain positive with vehicle miles driven recovering and average vehicle age continuing to increase.\nIndustrial automation demand was up double digits with strong activity in Americas and China.\nEnvironmental Services Group revenue was up year-over-year and its backlog remains strong moving into 2022.\nAerospace and defense posted a decline year-over-year largely a result to changes in programmed shipment timing.\nThe margin performance in the quarter was unfortunately what we expected to occur as we progressed through the year.\nOur Engineered Products segment, as we've discussed previously, has the largest exposure to raw materials, assembly labor as a percentage of cost of goods and supply chain complexity.\nAs such, it is more than just a price cost issue where even in equilibrium drives negative margin performance.\nIt is exasperated by numerous component supply issues that necessitated us to intermittently curtail production to stabilize the manufacturing system in the quarter.\nOur management team is doing exactly what we would expect of them to protect profitability in the short term while managing the relationships with our strategically important customers.\nI have absolute confidence that the profit margin of the segment will bounce back as we move into '22 as a result of actions already taken in price and as raw materials and supply chain constraints moderate as can be seen in the raw materials futures and stabilizing container shipping rates.\nFueling Solutions was up 3% organically in the quarter on solid demand in North America for above ground and below ground retail fueling.\nWe believe our production schedule and delivery times are driving share gains, particularly in the above ground category.\nVehicle wash posted another strong quarter with some encouraging customer conversion and cross-selling benefits from our recent ICS acquisition.\nActivity in China remains subdued driven by the lasting impacts of COVID and near-term uncertainty related to energy supply.\nFuel transport components were negative for the quarter, but we believe that this is expected to [Phonetic] improve moving forward.\nMargins in the segment declined 150 basis points in the quarter as productivity headwinds from supply chain constraints in sub components and negative mix more than offset higher volumes and pricing.\nWe have taken the appropriate actions on pricing to counter these headwinds going forward.\nSales in Imaging & Identification grew 7% organically.\nThe core marking and coding business grew well on good demand for printers and consumables.\nSerialization software also grew ahead of expectations and we are working to add additional resources here as we integrate the recently acquired Blue Bite brand management software into our solutions.\nThe digital textile printing business was up significantly year-over-year against a low bar comparable quarter and is continuing its gradual recovery.\nMargins in Imaging & ID improved by 250 basis points as volume leverage, pricing and productivity initiatives more than offset input cost inflation.\nPumps & Process Solutions posted another solid quarter of 25% organic growth.\nDemand for biopharma connectors and pumps continued to be strong.\nWe continue to expand clean room capacity for our biopharma connectors and single use pumps in the period and we are encouraged by specification wins in Em-tec biopharma flow meters, which we acquired last year.\nIndustrial pumps were up based on broad based end customer demand with particular strength in China.\nPrecision Components was up year-over-year as compression OEM and aftermarket businesses continued their recovery.\nPolymer processing was down in the quarter due to a combination of shipment timing and a very strong third quarter from the prior year, though new order rates remained strong and outlook is positive moving into 2022.\nMargins in the quarter expanded by a robust 630 basis points on strong volume, fixed cost absorption, favorable product mix and pricing.\nTop line results in Refrigeration & Food Equipment remained strong posting 16% organic growth.\nRevenue in beverage can making equipment doubled during the quarter.\nThe business is booked into late '22 and is taking orders for '23.\nThe heat exchanger business grew on robust demand in all geographies led by residential heating and industrial end markets and a recovery in the global commercial HVAC demand.\nOrder intakes continue to exceed our ability to ship.\nSo we are adding additional capacity in two geographies to ensure that we can meet forecasted demand in 2022.\nDemand in food retail remains robust with elevated bookings and backlogs across all our product lines.\nHowever, much like our Engineered Products business, we have a difficult time with labor constraints and, in particular, sub component supply which has necessitated significant operational costs in logistics, intermittent production curtailments and, in one case, the deferment of a delivery into 2022.\nAgain management is straddling cost recovery actions and meeting demands of our customers, but it clearly comes with a cost.\nMargins were largely flat in the quarter as excellent operating performance in SWEP and Belvac offset refrigeration headwinds despite their smaller revenue base.\nI'll pass it to Brad here.\nLet's go to Slide 6.\nOn the top is the revenue bridge.\nOur top line organic revenue increased by 13% in the quarter with all five segments posting growth with strong demand in our Engineered Products, Pumps & Process Solutions and Refrigeration & Food Equipment segments.\nFX benefited the top line by about 1% or $21 million.\nAcquisitions added $18 million of revenue in the quarter.\nThere was no year-over-year impacts from dispositions.\nThe revenue breakdown by geography reflects strong growth in North America and Europe, our two largest regions, and modest growth across Asia and the rest of the world.\nThe US, our largest market, posted 16% organic growth in the quarter on solid trading conditions in retail fueling, industrial automation, biopharma and can making.\nEurope grew by 16% in the quarter on strong shipments in marking, coding, biopharma and industrial pumps, can making and heat exchangers.\nAll of Asia was up 5% organically on growth in biopharma and industrial pumps and heat exchangers, partially offset by year-over-year declines in polymer processing, below ground retail fueling and fuel transport.\nChina, which represents approximately half of our business in Asia, was up 8% organically in the quarter.\nMoving to the bottom of the page.\nBookings were up 25% organically, reflecting the continued broad based momentum across the portfolio.\nIn the quarter we saw organic growth across all five segments.\nLet's go to the earnings bridges on Slide 7.\nOn the top of the chart, adjusted segment EBIT was up $64 million and adjusted EBIT margin improved 80 basis points as improved volumes, continued productivity initiatives and strategic pricing offset cost inflation and production stoppages.\nGoing to the bottom of chart, adjusted net earnings improved by $57 million as higher segment EBIT and lower corporate expenses more than offset higher taxes.\nDeal expenses in the quarter were $3 million.\nThe effective tax rate for the third quarter, excluding tax discrete benefits, was approximately 21.8% compared to 21.5% in the prior year.\nAnd our effective tax rate estimate pre-discrete for Q4 and the full year remains unchanged at 21% to 22%.\nDiscrete tax benefits were $8 million for the quarter or $4 million higher than in 2020 for approximately $0.03 of year-over-year earnings per share impact.\nRightsizing and other costs were a $2 million reduction to adjusted earnings in the quarter as a one-time recovery related to a cancellation settlement more than offset our ongoing productivity and rightsizing initiatives.\nNow on Slide 8.\nWe are pleased with the cash performance thus far this year with cash -- with free cash flow of $667 million, a $104 million increase over last year.\nFree cash flow conversion stands at 11% of revenue year-to-date despite a nearly $250 million investment in working capital.\nAs we discussed last quarter, we remain focused on delivering against our customers' strong order rates and we are carrying high inventory levels to ensure we can meet current demand for the rest of the year and into next year.\nI'm on Slide 9, which is a familiar format we used during the Investor Day in 2019 to describe our inorganic growth priorities.\nI'm pleased to report that our activity since then has aligned well with those priorities and we remain busy adding logical synergistic bolt-ons that will support the long-term growth of our core businesses.\nAs you can see there we are investing in the highest-priority platforms with an emphasis on high growth, high gross margin products and solutions.\nWe remain disciplined in our approach to acquisitions.\nAnd despite the challenging asset prices in today's environment, we have acquired seven bolt-on acquisitions year-to-date that meet our investment return criteria, including two in the third quarter and one that closed last week.\nThe most recent deals highlighted in green were CDS, an industrial 3D visualization software, which we expect to grow in third party revenues and also adopt across the Dover portfolio in our journey toward digitizing the front end of our businesses, lowering our transaction costs, Espy which complements our aerospace and defense business, the software-driven signal intelligence solutions, and LIQAL, which is an emerging leader in LNG and hydrogen dispensing solutions.\nEach transaction is modest addition to our aggregate portfolio.\nWe are very excited about scaling up these innovative and strategic technologies over time and the positive impact to earnings per share as these investments mature.\nWe remain on the hunt for acquisitions and have a solid M&A pipeline that aligns well with our portfolio of priorities.\nWe also took advantage of recent market activity in the food equipment sector to sell Unified Brands, our professional cooking equipment business for commercial foodservice operators.\nThe deal was announced in early October and is expected to close in the fourth quarter.\nUnified Brands represents less than 2% of our overall revenue and its sale will have negligible impact on our '21 adjusted EPS.\nAs we look to the end of the year demand outlook remains favorable across the majority of the portfolio, backlogs and bookings remain robust and we expect to post strong organic growth in Q4.\nOverall, we remain on track to deliver strong returns this year through a combination of robust growth in revenue, operating profit and cash flow, coupled with disciplined capital allocation.\nWe also look forward to closing out this year and laying the foundation for what we believe to be a positive demand environment in 2022.\nWe have clarity about the nature of the inflationary input and supply disruption costs that we have incurred in Q3 and expect to queue [Phonetic] in Q4 due to the challenging operating environment.\nAnd we have conviction that we can turn them into profitability tailwinds as conditions improve and the calendar progresses from here.\nAnd with that let's turn to Q&A.\n", "role": "user" }, { "content": "dover corp - do not anticipate challenges from q3 to abate and therefore remain focused on operational execution to deliver against robust demand.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Let's begin on Slide 3.\nOrder trends remain positive across the majority of our portfolios in September, and we had a strong finish to the year.\nOur year-over-year backlog is up 21% as a result of general recovery trends across the portfolio, a meaningful increase in the DFRE segment backlog and some recognition from our customers that raw material costs and supply chain constraints are becoming more challenging into 2021 driving preorders in some markets.\nRevenue of 1.8 billion was flat versus the comparable period.\nAdjusted segment operating margin at 7.1% was flat despite unfavorable revenue mix during the quarter.\nFor the full year, revenue was down 6% and adjusted segment margins up to 16.7% as a result of structural cost savings centered around strategic initiatives, tight cost controls, offsetting the impact of fixed cost under-absorption[Phonetic].\nAs we discussed at length in Q3, we are driving toward a strong cash flow performance in the 4th quarter, and we got it with full year free cash flow increasing 24% over 2019 achieving 14% of revenue.\nThis is what we would expect to happen as we liquidate working capital in excess of loss profits impact and as a result of efficiency gains from our back office consolidation program.\nWith that backdrop, we look into 2021 with conservative optimism.\nOur order book is solid, albeit with a different mix as compared to last year with DFRE having a material positive impact to the top and bottom line in '21.\nWith that, we are initiating full year guidance of 5% to 6% organic revenue growth and adjusted earnings per share of $6.25 to $6.45.\nI will not spend a lot of time on slide 4, which is a more detailed overview of the results of the 4th quarter, so let's move to slide 5.\nEngineered Products revenue declined to lower shipments and CapEx levered markets such as industrial winches, waste handling equipment, and vehicle services.\nESG had a tough Q4 comparable to overcome and VSG was coming off a strong Q3, so the performance was largely expected.\nBoth have strong backlogs into 2021.\nThe aerospace and defense business had a strong quarter that ended a record year for the business, and demand in industrial automation has shown robust recovery contributing to our backlog as global auto sequentially ramps production.\nIn fueling solutions, as we discussed at the end of Q3, the comparable benchmark for Q4 was tough.\nDespite the topline pressure, the segment posted another quarter of strong margin performance and lower volume as our, as our productivity actions remain durable.\nWe are beginning to see the mix benefits from our Helix and Anthem dispenser products which we believe are winning in the marketplace.\nWe completed the acquisition of Innovation Control Systems in the 4th quarter, which is a great addition to our vehicle launch platform.\nICS is a leading supplier of access, payment, and site management solutions and software, which fits into our strategy of driving long-term value from the large installed base of retail fuel sites which we presented in October.\nSales and imaging and identification declined 3% organically.\nThe core market in coating business grew on continued healthy demand for consumables and improvement in demand for printing equipment with particularly healthy activity in the United States.\nDigital textile printing CapEx remained slow, but it will begin seeing recovery in demand for consumables and small format machines which are likely [Technical Issue] of conditions normalizing in 2021.\nImaging and identifications is our highest gross margin segment.\nThe marking and coating business has delivered commendable margin performance this year, holding the profit line virtually unchanged; however, decrementals in textile printing on lower volumes weighed on the segment margins in Q4 and during the full year, we expect this to begin reversing progressively into 2021.\nPumps and process solutions returned to top line growth in the 4th quarter on strong growth in biopharma, medical, and hygienic applications.\nWe also began seeing cyclical recovery in industrial pumps, which posted growth after several soft quarters.\nCompression components and aftermarket continued to be slow, but recent trends in natural gas and LNG markets gives us grounds for optimism going forward.\nThe 4th quarter closed off a solid margin performance in this segment with margins expanding a 150 basis points in Q4 and 220 basis points for the full year.\nThis was driven by broad based productivity efforts, cost controls, favorable mix, and well-timed capacity expansion in biopharma and medical which we highlighted earlier in the year.\nRefrigeration and food equipment posted 13% organic growth with all businesses except food service equipment delivering the increase.\nA significant, a significant portion of the growth came from the well advertised strength in can making.\nWe are also very encouraged by activity in core food retail market, which grew organic top line at high single-digits in the quarter driven by the continued strength in the door case product line where we saw double-digit growth for the full year.\nThe heat exchanger business grew on robust demand in heat pumps and residential applications as well as refrigerated transport and industrial applications like semiconductors and data centers.\nMargin performance expectedly improved supported by volume and actions we took in the middle of 2020.\nAbsolute earnings increased 71% in the quarter of the comparable period.\nThis margin performance coupled with the upcoming ramp-up of automated case line in food retail positions us to deliver material margin expansion in 2021.\nI'll pass it to Brad here.\nLet's go to slide 6.\nOn the top is the revenue bridge.\nOur top line continued its recovery with sequential improvement in organic revenue over Q3.\nSeveral of our businesses including short cycle industrial pumps and heat exchangers returned to positive growth in the quarter.\nWhile biopharma, aerospace, and defense, marketing and coding, food retail, and can making continued their positive growth trajectory from prior quarters.\nFX benefited the topline by 2% or 34 million, driven principally by strengthening of the Euro against the Dollar.\nAcquisitions, more than offset[Phonetic] dispositions in the quarter by 12 million.\nWe expect this number to grow in subsequent quarters.\nThe revenue breakdown by geography reflects sequential improvement in each major geographies except with the exception of Asia.\nThe US, our largest market, posted a 1% organic decline in the quarter, an improvement over the 4% decline in Q3 and progressively improving order rates and a strong quarter in biopharma, marking and coding, food retail, and can making among others.\nEurope declined 3% organically driven by retail fueling and a difficult comparable quarter in vehicle services, though partially offset by continued strength in several of our pumps and process solutions businesses.\nAll of Asia was down 11% organically driven principally by China, which was down 16% organically.\nThis result in China was not unexpected, as we continue to face headwinds in retail fueling due to the expiration of the underground equipment replacement mandate.\nMoving to the bottom of the page.\nBookings were up 2% organically, reflecting the continued momentum we see across our businesses.\nIn the quarter, we saw organic growth in four out of our five segments.\nThe fifth segment fueling solutions faced a difficult comparable quarter in the prior year as previously discussed.\nOverall, our backlog is currently up approximately 300 million or 21% higher compared to this time last year, positioning us well as we enter 2021.\nLet's go to the earnings bridges on slide 7.\nWe delivered improved sequential results in the quarter after a significant decline in Q2 and recovery in Q3.\nOn the top chart, adjusted segment EBIT and margin were both essentially flat year-over-year as continued productivity initiatives offset negative organic growth and diluted impact of FX on margins.\nGoing to the bottom chart, the adjusted net earnings declined 1 million, as higher taxes in corporate expense offset improved segment EBIT.\nThe effective tax rate excluding discrete tax benefit was approximately 21.4% for the year compared to 21.5% in the prior year.\nDiscrete tax benefits were 8 million in the quarter and 22 million for the year or approximately 4 million lower than in 20 -- than in 2019.\nAs we move into 2021, excluding the impact of discrete taxes, we expect the effective tax rate remain essentially the same as 2020 at about 21.5% rightsizing and other costs were 21 million in the quarter or 17 million after tax relating to several new permanent cost containment initiatives and other items that we executed at the end of 2020.\nNow on slide 8.\nWe are pleased with the cash performance in 2020 with full year free cash flow of 939 million, a 181 million or 24% increase over last year.\nFree cash flow conversion stands at 21% of revenue for the 4th quarter, historically our highest cash flow quarter and 14% for the full year, a significant increase over the prior year.\nRecall, last quarters -- last quarter's earnings call, we decided to prioritize prudent working capital management over fixed course -- fixed cost absorption to close out the year, and you can see the value delivered in our year-over-year working capital comparison.\nWe have strong revenue visibility into Q1 and confidence in our team's ability to match industrial production with improved customer demand.\nI'm on page 9.\nLet me take a few moments to give you an update on our center led initiatives that we outlined in our strategic plan in September of 2019.\nWhile we could have not expected what transpired in 2020, we positive at the time that our portfolio had through cycle durability and that there were opportunities to drive synergies from our diverse portfolio to improve profitability over time.\nDespite this, we often hear a notion that Dover is a cost out story likely because we give measurable structural cost saving goals each year, implying a finite nature to such endeavor.\nThere is a lot more than cost reductions to our improvement journey, and we continue to reinvest a portion of the savings.\nSo, I will give you a short update on where we are in these strategic initiatives.\nThrough in 2019, we began with the right sizing of our SG&A base after a significant portfolio change.\nThis was necessary and required immediate intervention.\nSince then, the improvements have been driven by steady productivity and structural cost actions by our operating units and from our investments in four core enterprise capabilities that generate very attractive return on investment and can be leveraged across the portfolio.\nThe investments are substantial.\nBy the end of this coming year.\n, the head count involved a center led enterprise capabilities will have increased by over 50%.\nThese are transformational initiatives touching every corner of our global portfolio and delivering real results that you can see in our bottom line, and there is significant runway to drive value.\nWe are investing in the following four enterprise capabilities, and I'll highlight a few results, but I would encourage you to review the stats in the slides.\nFirst, Dover Digital on slide 10.\nThis work began in 2017 and accelerated in 2018 with the opening of our Dover Digital Center in Boston.\nWe have over 100 e-commerce connected product and software experts dedicated to this endeavor.\nThis team helps our business to lever each commerce at scale and improve the customer journey with ease of doing business as well as back end efficiency for sales and order entry.\nFor example, this year we target to reach a run rate of $1 billion of revenue processed through digital channels, much of which is service parts and catalog items compared to 100 million in 2019.\nThis is a multi-year journey, value creation journey, and we are very excited about what lies ahead for our digital team.\nMoving to slide 11.\nOur operation center of excellence is a central team of domain knowledge experts that delivers health and safety, supply chain management, lean operations, and advanced manufacturing and automation.\nThis team is instrumental in driving value through rooftop consolidation and automation projects.\nAs you know, we have a number of these in the works.\nWe are also excited about the results of the early lean initiatives this spearheading.\nThis is another multi-year journey that we continue -- will continue to deliver results.\nMoving on to slide 12 is our central back office system, which we call Dover Business Services.\nWe've been at this for several years, and we're still in the early innings of expanding the scale and scope of this capability.\nBy centralizing and offshoring transactional back office facilities, we multiply efficiency through scale, technology leverage, and unit cost arbitrage.\nDBS is and will remain an integral part of our margin enhancement story.\nAnd lastly moving to slide 3, the India Innovation Center is more than 600 person strong team that our operating companies can leverage for product engineering, digital solutions development, data information management, research and development, and intellectual property services.\nThe scale and expertise of this team allows our operating companies to tap resources that would have been unaffordable to them as stand-alone companies and allows for concurrent engineering on time sensitive projects.\nSo, let's sum this up on slide 14.\nWe laid out four pillars of our strategy in 2019 and have been delivering through cycle.\nWe have maintained our focus on margin improvement and continue to invest despite the economic difficulties of 2020.\nOur end market exposure, coupled with the strategic R&D investments, we are delivering attractive growth profile.\nWe are committed to reinvesting in our businesses as a top priority and capital allocation to maintain competitive competitiveness, fuel growth, and improve productivity.\nWe are making good strides on the inorganic front.\nFinally, we're staying disciplined in our capital allocation by returning excess capital to our shareholders, buying[Phonetic] growing dividends and share repurchases.\nMoving to 15, where does this leave this going into 2021.\nWe believe that our playbook offers us a significant runway to continue delivering attractive through cycle returns through mid single-digit topline growth, steady margin expansion, healthy cash conversion, and disciplined capital allocation and shareholder-friendly capital return posture.\nI'll step off the soapbox and let's move on to 16, we expect demand in engineered products to rebound in 2021.\nWe have seen strong bookings recently in vehicle services and Industrial automation with relevant automotive and vehicle usage statistics trending in the right direction.\nBookings have also improved recently waste handling, and we are nearly fully booked for the first quarter.\nMunicipal demand remains uncertain, but we see strong trends in the parts and digital business.\nAs we previewed in November, we expect fueling solutions to have a modest organic growth year, there is known headwind from EMV roll-off in the US, but there are a number of positive [Technical Issue].\nWe are encouraged by the prospects of our new Anthem user interface solution offering.\nWe expect robust growth in our systems and software business where we will be launching the industry first cloud platform developed.\nWe also see good setup for vehicle wash and are excited about having ICS in our portfolio.\nWe expect imaging and identification to perform well this year.\nMarking and coding saw limited downside in 2020, and we've been on a good trajectory in recent quarters, despite the tough comp in Q1 due to COVID-driven consumable stocking.\nWe expect further improvement in services as travel restrictions subside and activity and serialization software is also firming up.\nThe biggest factor in the segment is of course the digital textile printing unit.\nOur initial read is for the recovery to take place in the second half of the year when printers will be ramping up production for 2020 apparel collections.\nPumps and process solutions expected to have another solid year.\nWe expect robust growth in biopharma and hygienic applications and a continued recovery trend in industrial pump.\nPlastics and polymers is expected to deliver steady performance with a comparable basis to the second half bias to the second half.\nPrecision components is likely to experience a slower start to the year, and we are still comping versus last year's first quarter.\nThat's our robust upstream and downstream activity.\nAnd finally, we expect a very strong year in refrigeration and food equipment.\nThe core food retail business is operating with a strong backlog, and the order trajectory has been healthy in the last few quarters.\nWe expect retailers that had paused their remodel programs last year amid the pandemic to restart these strategic initiatives, and we are well positioned to participate in that activity.\nAdditionally, we see a good outlook for natural refrigerant systems, both in Europe and also in the US where California was the first state to recently mandate transition to natural refrigerant systems.\nWe were the pioneers in this space, and we are very well positioned to capitalize on this sustainability trends in the industry.\nBelvac as you know, is working through a record backlog and is booked for the year.\nOur heat exchanger business also exited 2020 with a record backlog and a constructive order trajectory across multiple verticals.\nThis will result in material margin improvement in this segment on the back of the case production automation project, higher volume positive business mix.\nWe covered most of the items on the earlier slides but summarize, but I summarize them here in the slide for your reference.\nThe Dover team has delivered strong results in it's difficult conditions, and I commend all of our employees for doing their part and Andre with that, let's move on to Q&A.\n", "role": "user" }, { "content": "sees fy 2021 adjusted earnings per share $6.25 to $6.45.\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: Today's call will feature commentary from Chief Executive Officer, Ritch Allison; and Chief Financial Officer, Stu Levy.\nBoth of those documents are available on our website.\nActual results or trends could differ materially from our forecasts.\nWe're excited to share our strong first-quarter results with you today.\nOverall, Domino's team members and franchisees around the world generated impressive operating results, leading to a diluted earnings per share of $3 for the first quarter.\nGlobal retail sales grew 16.7% in Q1 as compared to Q1 2020.\nAs a reminder, global retail sales growth includes both comp growth and unit growth, which I'll break down for you in a moment.\nWhen excluding the positive impact of foreign currency, global retail sales grew 14%.\nBreaking down that global retail sales growth, our US retail sales grew 15.3% and our international retail sales grew 18%.\nWhen excluding the positive impact of foreign currency, international retail sales grew 12.8%.\nWe continued to see positive momentum in both our US and international businesses in Q1, leading to both strong same-store sales performance and net unit growth.\nDuring Q1, we continued to lead the broader restaurant industry with 40 straight quarters of positive US comparable sales and 109 consecutive quarters of positive international comps.\nSame-store sales in the US grew 13.4% in the quarter, lapping a prior year increase of 1.6%.\nSame-store sales for our international business grew 11.8%, rolling over a prior year increase of 1.5%.\nBreaking down the US comp a bit further.\nOur franchise business was up 13.9% in the quarter, while our Company owned stores were up 6.3%.\nWe observed a larger spread than we've historically seen between the top line performance of our franchise stores and our company-owned stores, which we believe was primarily a result of the heavily urban and higher income footprint of our company-owned stores relative to a more diverse mix across our franchise base.\nThe corporate store comp was also disproportionately impacted by store splits resulting from our fortressing efforts as we opened more new corporate stores as a percent of the total corporate store base than we did franchise stores in 2020.\nThe US comp this quarter included a healthy mix of both ticket and order growth.\nThe ticket growth was driven by both an increase in items per order and a higher delivery mix, which also includes a transparent delivery fee.\nThe 11.8% international comp was driven by ticket growth.\nSimilar to our US business, that ticket growth was driven by a higher delivery mix and an increase in items per order.\nShifting to unit count.\nWe and our franchisees added 36 net stores in the [Technical Issues] US during the first quarter, consisting of 37 store openings and the closure of one of our corporate stores.\nOur international business added 139 net stores, comprised of 160 store openings and 21 closures.\nWe're very pleased with our net unit growth during Q1, which was an increase over the prior year quarter.\nTurning to revenues and operating margins.\nTotal revenues for the first quarter were approximately $984 million and were up approximately $111 million or 12.7% over the prior year quarter.\nThe increase was driven by higher global retail sales, which generated higher revenues across all areas of our business.\nChanges in foreign currency exchange rates positively impacted our international royalty revenues by $2.1 million in Q1 2021 as compared to prior year.\nOur consolidated operating margin as a percent of revenue increased to 39.6% in Q1 2021 from 39% in the prior year, due primarily to higher revenues from our US franchise business.\nCompany-owned store margin as a percent of revenues increased to 23.9% from 22.4%, primarily as a result of strong sales leverage.\nThis was also up sequentially from 21.9% in Q4 2020, driven by lower labor cost as a percent of revenue in Q1 2021.\nSupply chain operating margin as a percent of revenues decreased to 10.5% from 11.5% in the prior year quarter.\nAs a reminder, in 2020, we opened two new supply chain centers in South Carolina and Texas, respectively, as well as a new press product line in New Jersey, which increased our overall fixed operating costs as a percent of revenue.\nG&A expenses increased approximately $2.8 million in Q1 as compared to Q1 2020 resulting from a combination of higher advertising expenses and labor costs, partially offset by travel.\nNet interest expense increased approximately $0.9 million in the quarter, primarily the result of lower interest income.\nAs previously disclosed, in Q1 2021, we invested an additional $40 million in Dash brands, our master franchisee in China, following their achievement of previously established performance conditions.\nAccordingly, we remeasured the original $40 million investment we made in Q2 of last year due to the observable change in price from the valuation of the additional investment.\nThis $2.5 million gain was recorded in other income in the first quarter of 2021.\nOur effective tax rate was 21.3% for the quarter as compared to a negative 3.7% in Q1 2020.\nThe effective tax rate in Q1 2021 includes a 0.6 percentage point positive impact from tax benefits on equity-based compensation as compared to a 26 percentage point positive impact in Q1 2020.\nThis decrease was due to significantly fewer stock option exercises in Q1 of this year and we expect to see continued volatility in our effective tax rate related to these equity-based compensation tax benefits.\nCombining all of these elements, our first quarter net income was down $3.8 million or 3.2% versus Q1 2020.\nOn a pre-tax basis, income before provision for income taxes was up $32.3 million or 27.6%.\nOur diluted earnings per share in Q1 was $3 versus $3.07 in the prior year, a decrease of 2.3%.\nBreaking down that $0.07 decrease, most notably, our improved operating results benefited us by $0.61.\nThe gain on the Dash brands investment benefited us by $0.05.\nNet interest expense negatively impacted us by $0.02.\nA lower diluted share count driven by share repurchases over the trailing 12 months benefited us by $0.03.\nAnd finally, our higher effective tax rate resulting from lower tax benefits on equity-based compensation, as I mentioned previously, negatively impacted us by $0.74.\nOur economic model continued to generate significant cash flow throughout the quarter.\nDuring Q1, we generated net cash provided by operating activities of approximately $153 million.\nAfter deducting for capex, we generated free cash flow of approximately $136 million.\nRegarding our capital expenditures, we spent approximately $17 million on CapEx in Q1, primarily on our technology initiatives.\nAs previously disclosed, during Q1, we also repurchased and retired approximately 66,000 shares for $25 million.\nAs a reminder, in February, our Board approved a new $1 billion authorization for future share repurchases.\nWe also paid a $0.94 quarterly dividend on March 30.\nSubsequent to the end of the quarter, our Board of Directors declared a quarterly dividend of $0.94 per share to be paid on June 30.\nAs it relates to our capital structure, on April 16, we refinanced our debt to keep pace with our growing business.\nWe're very pleased with our gross issuance of $1.85 billion, which includes $850 million of seven-and-a-half-year to 2.662% fixed-rate notes and $1 billion of 10-year 3.151% fixed-rate notes.\nWe used a portion of the proceeds to retire our 2017 floating rate notes in our 2017 five-year fixed-rate notes to pre-fund certain interest payable and to pay transaction fees and expenses.\nWe expect to use the remaining proceeds for general corporate purposes, which may include distributions to holders of our common stock, other equivalent payments, and/or stock repurchases.\nThis recapitalization will reduce our weighted average borrowing rate from 3.9% as of the end of the first quarter to approximately 3.7%.\nAnd it will return our leverage to approximately 6 times EBITDA, consistent with our leverage model following previous recapitalizations.\nSince the onset of the pandemic, in previous earnings calls, we've provided updates on the impact of Covid19-related expenses, including safety and cleaning equipment, enhanced sick pay, and other compensation for our team members, and support for our franchisees, and our communities.\nThe estimated impact of these items in the first quarter of 2021 was not material.\nIn closing, our business continued its strong performance during the first quarter.\nAnd while we continue to closely monitor all aspects of our operations in these ever-changing times, we're confident in the strength and resilience of the Domino's brand, and of the Domino's franchisees, their team members, and our corporate teams worldwide.\nOur results would not be possible without their tireless efforts each and every day and we sincerely appreciate them.\nOverall, I am very pleased with our results this quarter and our strong start to 2021.\nWe are now more than one year into the Covid pandemic, the most challenging operating environment we've ever experienced as a Brand.\nI continue to be extremely proud of our global franchisees and their extraordinary efforts around product, service, image, and day-to-day execution.\nWe remain focused on providing outstanding food through safe and reliable delivery and carryout experiences.\nAnd as a brand, we are also proud to continue our position as an industry leader on value at a time when our customers need it the most.\nToday, I'll keep my comments rather brief as I highlight the first quarter results for our US and our international businesses.\nLet's start with the US business.\nOur US business performed extremely well during the quarter, highlighted by 15.3% retail sales growth and a 13.4% comp.\nThis marked our 40th consecutive quarter of positive US same-store sales growth.\nWe continue to see strong growth across our business in the first quarter and we did not witness any material differences between those markets that have largely reopened versus those that have remained more restricted.\nWe certainly saw some sales benefits from the federal government stimulus at the beginning and at the end of Q1, which were partially offset by the negative impact of the significant winter storms in February that impacted such a large portion of the country.\nDue to the positive sales impacts from the stimulus, we elected not to run any of our aggressive boost week promotions during the quarter, but instead, we remain focused on providing great service and offering great value to our customers every day.\nNow, like many of you, we are also watching the two-year stack on US same-store sales.\nAt 15% for the first quarter, we saw a slight sequential improvement of the two-year stack when compared to the fourth quarter of 2020.\nGiven the Covid overlaps, we will continue to look at the business through both the one-and-two-year lenses as we report to you throughout 2021.\nNow, beyond the comps, when you look at the absolute dollars, our first quarter same-store average weekly unit sales in the US exceeded $26,000.\nI am also quite pleased with our performance in the first quarter on the other critical component of our retail sales growth that's new store openings.\nOur addition of 36 net stores was a nice improvement over Q1 of 2020 and we anticipate a strong pipeline of future openings.\nI want to highlight that we had only one corporate store closure in the US during Q1, and we had zero-zero US franchise store closures, an impressive testament to the continued health of our US system.\nOn many occasions, you've heard me say that net unit growth and by extension store closures are one of the most important ways to measure a brand's health within our industry.\nA single store closure in the quarter, on a base of over 6,000 units, demonstrates the elite economic proposition that we offer to our franchisees.\nAnd on that note, I'm thrilled to report yet another record-setting year of franchisee profitability, with our final 2020 estimated average EBITDA number for US franchise stores coming in at just over $177,000; the highest in our history.\nWhile this result was certainly aided by the Covid demand tailwind, it clearly demonstrates not only the power of the Brand, but also the incredible work of our US franchisees and operators, and their relentless efforts throughout an incredibly busy 2020.\nOur fortressing strategy continues to build best-practice case study showcasing franchisee enterprise growth and ROI, which is a big part of the momentum and excitement behind the strategy.\nBut equally, as important, it sets us up extremely well to compete in 2021 and beyond, as we continue to drive lower relative costs, better service, higher runs per hour, and therefore, better economics for drivers, along with meaningful, incremental carry-out within our stores in fortress territories.\nWhile our carry-out order count remained pressured in Q1 as it was throughout the last year, we continue to grow awareness of Domino's car-side delivery.\nThis has created a new option to serve our customers effectively during Covid and will remain an important part of our strategy as we continue to evolve the carry-out experience; not only to enhance the loyalty of our current carry-out customers, but also to reach a new, different, and largely untapped drive-through oriented customer, going forward.\nOn the advertising front, I'm excited about the national TV campaign we launched this week, highlighting our very exciting partnership with Nuro.\nWe are delivering a true autonomous pizza delivery experience to select customers in Houston today, demonstrating our forward-thinking approach to innovation as we build and evolve the brand for the future.\nWe also brought back our old nemesis, the NOID, in this ad campaign, and it is already generating some incredible buzz around the Domino's Brand.\nThe combination of Covid, strong sales, the broader economy reopening, and the high level of government stimulus, it's creating one of the most difficult staffing environments that we've seen in a long time.\nThis puts pressure on our operators to meet demand while continuing to deliver great service to their customers.\nAs we close out our discussion on the US business, I would simply highlight that the Domino's brand is as strong as it has ever been and I remain confident in our ability to drive long-term growth.\nLet's move on now to the international business.\nIt was an outstanding quarter of performance for our international business.\nOur 12.8% retail sales growth was supported by a very strong 11.8% comp, continuing the momentum we saw toward the end of last year.\nQ1 also marked our 109th consecutive quarter of positive same-store sales and international; a tremendous accomplishment by our international franchise partners.\nAnd, in fact, the Q1 comp was the strongest result we've seen in more than a decade in that business.\nAs I discussed earlier with our US business, we are also watching the two-year comp stacks for international and we'll continue to do so throughout 2021.\nQ1 represented a 13.3% two-year stack, which was a 430 basis point improvement versus the fourth quarter of 2020.\nWe also continue to build momentum on store growth in our international business.\nOur 139 net stores in Q1 was a 100-store improvement versus the first quarter of 2020.\nWe expect that Covid will continue to have a significant impact on many of our international markets for some time to come and will bring ongoing challenges to new store openings.\nBut this acceleration in growth speaks to our outstanding unit-level economics and to the perseverance and commitment of our international master franchisees.\nWe continue to have temporary store closures around the world, but those have come down dramatically over the last few quarters and were below 100 at the end of the first quarter.\nNow, I'd like to highlight a few markets that drove terrific growth during the quarter.\nIndia, China, and Japan, once again, led our system in net unit growth.\nAnd I'd like to highlight another market, Guatemala, that also delivered terrific store growth.\nChina, Japan, Turkey, Colombia, Germany, and France, all drove impressive retail sales growth during the quarter.\nSo, once again, I am very proud of our master franchisees and their operators for a great start to 2021.\nThey are the best in the business and that's why I continue to be bullish about our international retail sales growth opportunity over the long term.\nSo, in closing, I'm very pleased with our quarter one results.\nOur incredible base of franchisees and operators, combined with outstanding unit-level economics place us in an enviable position of strength within our industry.\nQ1 reinforced our position as the global leader in QSR pizza, but there is still so much opportunity ahead of us to drive global retail sales growth and to capture additional meaningful share within the category.\nAs we look ahead to the rest of 2021 and beyond, we will, as always, stay focused on winning the long game.\nAnd we remain confident in our two-year to three-year outlook of 6% to 8% annual net store growth and 6% to 10% annual global retail sales growth.\n", "role": "user" }, { "content": "qtrly u.s. same store sales growth of 13.4%.\nqtrly international same store sales growth of 11.8%.\nrevenues increased $110.6 million, or 12.7%, in q1 of 2021.\nglobal retail sales increased 16.7% in q1.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's call will feature commentary from Chief Executive Officer, Ritch Allison and from the office of the CFO, Jessica Parrish.\nBoth of these documents are available on our website.\nActual results or trends could differ materially from our forecast.\nI'll request to our coverage analysts, we would like to accommodate as many of you as time permits.\nWith that, I'd like to turn over the call to our CEO, Ritch Allison.\nOverall, I am very pleased with our results this quarter, which once again demonstrated the strength of the Domino's brand around the world.\nWe are still navigating through the COVID pandemic across the globe.\nThroughout the last 18 months, our franchisees have continued to step up to the challenge in service to their customers, their communities and their team members.\nI continue to be extremely proud of our global franchisees and their extraordinary efforts to provide outstanding food through safe and reliable delivery and carryout experiences.\nYou've heard me speak often about the importance of global retail sales growth and how that drives our business model.\nDuring the second quarter, we delivered 17.1% global retail sales growth, excluding foreign currency impact, driven by a powerful combination of growth in US same-store sales, international same-store sales and global store counts.\nThe second quarter marked our 41st consecutive quarter of US same-store sales growth and our 110th consecutive quarter of international same-store sales growth.\nWe also reinforced our leadership position in the pizza category with a very strong quarter of global store growth, highlighted by the opening of our 18,000th store.\nWe celebrated this terrific milestone with the opening of a beautiful store in La Junta, Colorado.\nThe pace of net store growth has accelerated significantly during the first half of this year.\nWhen you look at it on a trailing four-quarter basis, our pace of net store growth is increased from 624 in Q4 2020 to 884 in Q2 2021.\nDuring the quarter, we also completed our $1.85 billion refinancing transaction, lowering the cost of our debt and giving us the capacity to return $1 billion to our shareholders through our recently completed accelerated share repurchase transaction.\nOverall, the Domino's brand continues to deliver, as our strong same-store sales, store growth and resulting retail sales growth deliver great returns to our franchisees and our shareholders.\nShe will take you through the details of the quarter and then after that, I'll come back and share some additional observations about the quarter and some thoughts around how we are approaching the business going forward.\nJessica, over to you.\nWe are excited to share our strong second quarter results with you today.\nOverall, Domino's team members and franchisees around the world generated impressive operating results, leading to a diluted earnings per share of $3.06 for Q2.\nOur diluted earnings per share as adjusted for certain items related to our recapitalization transaction completed during the quarter with $3.12.\nIn Q2, we continued to see positive momentum in both the US and international businesses in both same-store sales performance and net unit growth, leading to strong global retail sales growth.\nGlobal retail sales grew 21.6% in Q2, as compared to Q2 2020.\nWhen excluding the positive impact of foreign currency, global retail sales grew 17.1%.\nBreaking down total global retail sales growth, US retail sales grew 7.4% and international retail sales grew 39.7%.\nWhen excluding the positive impact of foreign currency, international retail sales grew 29.5% rolling over a prior year decrease of 3.4%.\nThe prior year decrease in international retail sales, excluding foreign currency resulted primarily from temporary store closures, changes in store hours and service method disruptions in certain international markets as a result of the COVID-19 pandemic.\nTurning to comps, during Q2, we continue to lead the broader restaurant industry with 41 straight quarters of positive US comparable sales and 110 consecutive quarters of positive international comps.\nSame-store sales in the US grew 3.5% in the quarter lapping a prior-year increase of 16.1%.\nSame-store sales for our international business grew 13.9% rolling over a prior year increase of 1.3%.\nBreaking down the US comp, our franchise business was up 3.9% in the quarter, while our company-owned stores were down 2.6%.\nAs we noted on our Q1 call, we continue to observe a larger spread between the top line performance of our franchise stores and our company-owned stores than we have historically seen.\nWe believe this is primarily a function of the heavily urban and higher income footprint of our company-owned store markets relative to the more diverse mix across our franchise space.\nThe US comp this quarter was driven by ticket growth due to increases in items per order in our transparent delivery fee as well as the mix of products we sell.\nOrder count on a same store basis were consistent with Q2 2020 levels, which were higher than Q2 2019 levels, as a result of customer ordering behavior during the pandemic.\nThe international comp was driven by order growth due to the return of non-delivery service methods, the resumption of normal store hours and the reopening of stores that were temporarily closed in certain of our international markets in Q2 2020.\nShifting to unit count, we and our franchisees added 35 net stores in the US during the second quarter, consisting of 39 store openings and foreclosures.\nOur international business added 203 net stores comprised of 217 store openings and 14 closures.\nTurning to revenues and operating margins.\nTotal revenues for the second quarter were up approximately $112.4 million or 12.2% over the prior year quarter.\nThe increase was driven by higher global retail sales, which generated higher revenues across all areas of our business.\nChanges in foreign currency exchange rates positively impacted our international royalty revenues by $4 million in Q2 2021 as compared to the prior year quarter.\nOur consolidated operating margin as a percentage of revenues increased to 39.5% in Q2 2021 from 38.8% in the prior year, due primarily to higher revenues from our US franchise business.\nCompany-owned store margin as a percentage of revenues increased to 24.5% from 23.1% primarily as a result of lower labor costs, partially offset by higher food costs.\nRecall that we incurred additional bonus pay in the second quarter of last year for team members on the front lines during the COVID-19 pandemic.\nSupply chain operating margin as a percentage of revenues decreased to 11% from 11.9% in the prior year quarter, resulting primarily from higher insurance and food costs, as well as higher fixed operating costs driven by depreciation and our new supply chain facilities opened last year.\nThese increases were partially offset by lower labor costs.\nG&A expenses increased approximately $12.3 million in Q2 as compared to Q2 2020, resulting from higher labor costs, including higher variable performance-based compensation and non-cash compensation expense, partially offset by lower professional fees.\nAdditionally, as we discussed on our Q1 call, we completed our most recent recapitalization transaction during the second quarter in April.\nNet interest expense increased approximately $6.7 million in the quarter, driven by a higher average debt balance.\nOur weighted average borrowing rate for Q2 2021 was 3.8%, down from 3.9% in Q2 2020.\nOur effective tax rate was 19.6% for the quarter as compared to 4.7% in Q2 2020.\nThe effective tax rate in Q2 2021 includes a 2.3 percentage point positive impact from tax benefits on equity-based compensation.\nThis compares to an 18.5 percentage point positive impact in Q2 2020.\nThis decrease was due to significantly fewer stock option exercises in Q2 of this year.\nWe expect to see continued volatility in our effective tax rate related to these equity-based compensation tax benefits.\nCombining all of these elements, our second quarter net income was down $2 million or 1.7% versus Q2 2020.\nOn a pre-tax basis, we were up $20.6 million or 16.5% over the prior year.\nOur diluted earnings per share in Q2 was $3.06 versus $2.99 in the prior year.\nOur diluted earnings per share as adjusted for the impact of the recapitalization transaction was $3.12, an increase of $0.13 or 4.3% over the prior year.\nBreaking down that $0.13 increase in our diluted earnings per share as adjusted, most notably, our improved operating results benefited us by $0.53, net interest expense adjusted for the impact of the items affecting comparability I discussed previously negatively impacted us by $0.08, a lower diluted share count driven by share repurchases over the trailing 12 months benefited us by $0.12, and finally our higher effective tax rate, resulting from a lower tax benefits on equity based compensation negatively impacted us by $0.44.\nShifting to cash, our strong financial model continue to generate significant cash flow throughout the second quarter.\nDuring Q2, we generated net cash provided by operating activities of approximately $143 million.\nAfter deducting for capex, we generated free cash flow of approximately $126 million.\nRegarding our capital expenditures, we spent approximately $17 million on capex in Q2, primarily on our technology initiatives, including our next-generation point-of-sale system.\nAs previously disclosed, during Q2, we also entered into an accelerated share repurchase transaction for $1 billion.\nWe received and retired approximately 2 million shares at the beginning of the ASR.\nThe ASR settled yesterday and we received a retired an additional 238,000 shares in connection with this transaction.\nIn total, the average repurchase price throughout the ASR program was $444.29 per share.\nWe also paid a $0.94 quarterly dividend on June 30.\nSubsequent to the end of the quarter, our Board of Directors declared a quarterly dividend of $0.94 per share to be paid on September 30.\nIn closing, our business continued its strong performance during the second quarter and we are very pleased with the results our franchisees and team members around the world delivered.\nAnd I'll begin my comments with a look at our US business.\nFor months now, many of you have been asking how we would lap the tough comparisons from Q2 of last year.\nMy answer has always been that we're not focused on managing to a 12-week quarter.\nWe are focused on building the business for the long term and that long-term focus on great product, service, image and technology is precisely why we were able to deliver a terrific quarter, highlighted by 7.4% US retail sales growth, lapping 19.9% from Q2 2020.\nTurning to same-store sales, perhaps the thing I'm most pleased about when I look at the 3.5% US comp is the fact that we were able to hold orders flat while overlapping the big gains from Q2 2020.\nI'm also pleased that our ticket growth was driven by a very healthy balance of more items per order and modest menu price and delivery fee increases.\nWe achieved positive comps in both our delivery and carryout businesses, with delivery driven by ticket and carryout driven by a balance of order count and ticket growth.\nWe continue to see strong growth across our business in the quarter.\nYou've often asked, if our sales growth might be weaker in markets that had more fully reopened, but to the contrary, the opposite trend emerged through the second quarter where we saw higher levels of sales growth in the second quarter in the markets with fewer COVID-related restrictions.\nSimilar to Q1, we saw the comp growth in rural areas outperformed urban areas, and less affluent areas outperformed more affluent areas.\nThese differences, combined with the impact of more aggressive fortressing, accounted for much of the same-store sales gap between our corporate store and franchise store businesses.\nWe saw sales benefits during the quarter from the federal government stimulus, particularly the checks that we delivered back in March.\nIt's difficult to quantify the magnitude of the impact of the one-time distributions and the ongoing unemployment and other government payments to consumers, but we believe that they do continue to have some positive sales impact on our business.\nDue to the strong sales throughout the quarter, we once again elected not to run any of our aggressive boost week promotions, but instead remain focused on providing great service and offering great value to our customers every day.\nAs we continue to experience COVID overlaps, we believe it will be instructive to continue to look at the cumulative stack of comparable US same-store sales anchored back to 2019 as a pre-COVID baseline.\nAt 19.6% for Q2, we saw a material sequential improvement of the two-year stack when compared to the first quarter.\nBeyond the comps, when you look at the absolute dollars, our second quarter same store average weekly unit sales in the US exceeded $27,000, another sequential uptick from the levels seen in the first quarter.\nNow turning to the other critical component of our retail sales growth, new store openings, our addition of 35 net stores was softer than we expected.\nWe have a very strong pipeline of future openings, but had a number of stores delayed due to store level staffing challenges and construction, permitting or equipment delays.\nWe hope to accelerate the pace of openings during the second half of the year as some of the delays in unit growth may subside.\nI'll turn and speak now about the carryout and the delivery businesses.\nWe saw the return of carryout order growth in Q2 and we continue to build awareness of Domino's car-side delivery.\nWe ran a brief 49% off car-side delivery awareness campaign during the quarter and just recently launched a campaign highlighting our Car Side Delivery 2-Minute Guarantee.\nThis campaign hits on two key elements of the Domino's brand, service and value.\nOur franchisees and operators have fully embraced car side delivery and we are consistently averaging below 2 minutes out the door and on our way to the customer's cars.\nThis is a great technology enabled way to serve our customers and will remain an important part of our strategy as we continue to evolve the carryout experience, not only to enhance the loyalty of our current carryout customers, but also to reach a new different and largely untapped drive-through oriented customer going forward.\nFor the delivery business, I was also very pleased to see positive delivery same-store sales growth during Q2, while facing very difficult overlaps.\nWe brought back the noise to highlight our partnership with Nuro for autonomous delivery.\nThis campaign hits on our technology and innovation leadership, while having a little bit of fun with our old nemesis, The Noid.\nWe continue to learn as we pilot a true autonomous pizza delivery experience to select customers in the Houston market.\nNow turning to staffing, I'll reiterate something I said back in April.\nWe continue to operate in a very difficult staffing environment for our stores and our supply chain centers.\nThe combination of COVID, strong sales, the accelerating economic growth across the country and the ongoing government stimulus continue to result in one of the most difficult staffing environments that we've seen in a long time.\nAnd frankly, this led to higher margins in our corporate store business than we would like to see.\nThe reality is that we were operating during the quarter with fewer team members than we would like to have in many of our stores.\nThis puts pressure on our operators to meet demand, while continuing to deliver great service.\nIn the back half of the year, we expect to implement additional wage increases across certain corporate store markets and positions.\nAnd as we look forward in the US business, we will continue to make the necessary investments to drive retail sales growth into the future.\nWe recently announced our plans to build another supply chain center in Indiana, which we expect to complete by the end of 2022.\nWe are making solid progress on the rewrite of our POS point-of-sale system and we'll continue that multiyear investment, along with additional investment in our enterprise systems to support the business.\nWe will continue to invest in technology, operations and product innovation to support our carryout and our delivery businesses.\nWe are continuing to raise wages and invest in our hourly team members and of course as always we will remain focused on value for our customers.\nSo I'll close out our discussion of the US business by simply saying that the Domino's brand has never been stronger and I remain confident in our ability to drive sustainable long-term growth.\nNow let's move on to international.\nIt was an outstanding quarter of performance for our international business.\nOur 29.5% international retail sales growth, excluding foreign currency impact was supported by an exceptional 13.9% comp, continuing the momentum we had in the first quarter.\nAs I discussed earlier with our US business, we're also watching the two-year comp stacks for international, anchoring back to pre-COVID 2019 and we'll continue to do so throughout 2021.\nQ2 represented a 15.2% two-year stack, a sequential improvement over the first quarter.\nI'm particularly pleased with our strong momentum on store growth as international provides a significant push toward our two to three-year outlook of 6% to 8% global net unit growth.\nOur 203 net stores in Q2 increased our trailing four quarter pace of international store growth to 653 net stores.\nOur accelerated store growth continues to be driven by our outstanding unit level economics and the strong commitment of our international master franchise partners.\nDuring the quarter, COVID continue to have a significant impact on many of our international markets and we expect COVID to remain a challenge in many parts of the world for some time to come.\nAt the end of the quarter, we had fewer than 175 temporary store closures, with many of those located in India, which has been hit particularly hard by COVID.\nThe company mounted a series of initiatives to support their employees and families through this unprecedented crisis.\nThis included a cross-functional team that provided employee assistance 24/7 as well as several COVID isolation centers with oxygen concentrator banks.\nJubilant mounted a massive vaccination drive for all of their employees and dependent family members.\nChallenging times always bring out the best in Domino's franchisees and I could not be more proud of our leaders in India and how they have responded to this crisis.\nI'd also like to highlight a few international markets that drove terrific growth during the quarter.\nChina passed the 400 store milestone during Q2 and once again Dash, our master franchise partner delivered outstanding retail sales growth for the brand.\nChina is without question, one of the most exciting businesses in the Domino's system with significant long-term runway for growth.\nJapan reached the 800 store milestone in the weeks following the close of our second quarter and continued the outstanding performance under master franchisee Domino's Pizza Enterprises ownership.\nThe UK, Germany, Mexico and Turkey were also large market highlights in a strong quarter of performance across our international business.\nI am proud of our master franchisees and their operators for their great work thus far in 2021, and I remain optimistic about our international retail sales growth opportunity over the long term.\nSo in closing, I'm very happy with our Q2 results.\nGreat franchisees and operators, combined with outstanding unit level economics place us in an enviable position within our industry and give us a strong foundation for future growth.\nThere is absolutely no question that Domino's is the global leader in QSR pizza, but there is still so much opportunity ahead of us to drive global retail sales growth and to grow market share around the world in both our delivery and carryout businesses.\nAs we look to the back half of the year and beyond, you can be confident that we will remain focused on winning the long game.\n", "role": "user" }, { "content": "compname reports q2 earnings per share of $3.06.\nq2 adjusted earnings per share $3.12.\nq2 earnings per share $3.06.\nqtrly international same store sales growth of 13.9%.\nqtrly u.s. same store sales growth of 3.5%.completed $1.0 billion accelerated share repurchase transaction in july 2021.\ngiven our current operating environment, we are watching our two-year sales trends anchored to pre-covid fiscal 2019 results.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's call will feature commentary from Chief Executive Officer.\nRitch Allison and from the office of CFO, Jessica Parrish.\nI ask that members of the media and others to be in a listen-only mode.\nBoth of these documents are available on our website.\nActual results or trends could differ materially from our forecast.\nI'll request to our coverage analysts, we would like for you to accommodate that -- we would like to accommodate as many of you as time permits.\nSo we encourage you to ask only one one-part question on the call if you could, please.\nOverall, I'm happy with our results this quarter, which once again demonstrated the powerful growth potential of the Domino's brand around the world.\nThe third quarter presented significant challenges related to COVID and specifically the rise in the Delta variant across the U.S. and around the world.\nOur system had to pivot yet again in response to the resulting changes in public health guidance and requirements.\nAs this pandemic extends deep into its second year, I'm proud to say that our franchisees have continued to step up to meet the ongoing challenge in service to their customers, their communities and their team members.\nThroughout the Domino's system, we'll remain committed to serving our customers with outstanding food through safe and reliable delivery and carryout experiences.\nNow, you've heard me say it many times.\nGlobal retail sales growth is the engine that drives our business model.\nDuring the third quarter, we delivered 8.5% global retail sales growth, excluding foreign currency impact, driven by a combination of store growth and same store sales.\nThat 8.5% result was lapping a 14.8% from the third quarter of 2020.\nThe third quarter extended our unmatched streak of international same store sales growth to 111 consecutive quarters.\nWhile our 41 quarter streak of positive same store sales in the U.S. ended during the quarter, I'm pleased that we still grew our U.S. retail sales during the quarter, while rolling over 21.3% retail sales growth in Q3 2020.\nDuring the quarter, we also accelerated our pace of global store growth on a trailing four-quarter basis, we have opened 1124 net new stores, that's an increase of 500 relative to where we were in Q4 2020.\nOver the last four quarters, we've averaged just a touch above three net new stores every day.\nSo, overall the Domino's brand continues to deliver.\nShe will take you through the details of the quarter and then I'll come back to share some additional thoughts about the business.\nJessica, over to you.\nWe are pleased to share our third quarter results with you today.\nOverall, Domino's team members and franchisees around the world continue to generate healthy operating results, leading to a diluted earnings per share of $3.24 for Q3.\nIn Q3, we sustain our positive momentum in both our U.S. and international businesses, resulting in year-over-year global retail sales growth.\nGlobal retail sales excluding the positive impact of foreign currency grew 8.5% in Q3 as compared to Q3 2020.\nBreaking down total global retail sales growth, U.S. retail sales grew 1.1% rolling over a prior year increase of 21.3%.\nInternational retail sales excluding the positive impact of foreign currency grew 16.5% rolling over a prior year increase of 8.5%.\nDuring Q3, we continued our streak of 111 consecutive quarters of positive international comps.\nSame store sales for our international business grew 8.8% rolling over a prior year increase of 6.2%.\nThe U.S. comp was negative in Q3 following 41 straight quarters of positive same store sales growth.\nSame store sales in the U.S. declined 1.9% in the quarter rolling over a 17.5% increase in same store sales in Q3 of 2020, the highest quarterly U.S. comp we have ever achieved since becoming a publicly traded company in 2004.\nBreaking down the U.S. comp, our franchise business was down 1.5% in the quarter, while our company-owned stores were down 8.9%.\nWe continue to observe a larger spread between the top line performance of our franchise stores and our company-owned stores than we historically observed, which we believe is a function of the heavily urban and higher income footprint of our company-owned store markets relative to a more diverse mix across our franchise base.\nMore aggressive purchasing in our company-owned store markets also contributed to the same store sales gap between our corporate store and franchise store businesses.\nThe decline in U.S. same store sales this quarter was driven by lower order counts.\nOur U.S. order counts during Q3 were pressured by a very challenging staffing environment, which had certain operational impacts such as shortened store hours or customer service challenges in many of our stores.\nAdditionally, since the onset of the pandemic, our comps had also benefited from significant economic stimulus activity in the U.S., the effects of which largely tapered off in the third quarter, which we believe pressured our order counts as compared to Q3 2020.\nTicket growth partially offset the decline in order counts as we continue to see consumers or there are more items per transaction during Q3.\nThe ticket comp also benefited from increases to our transparent delivery fee as well as the mix of products we sell.\nThe international comp was primarily driven by order growth due to the return of non-delivery service methods across a number of international markets as well as the resumption of normal store hours in the reopening of stores that were temporarily closed in certain of our international markets in Q3 2020 due to the COVID-19 pandemic.\nShifting to unit count, we and our franchisees added 45 net stores in the U.S. during the third quarter, consisting of 46 store openings and only one closure.\nOur international business added 278 net stores comprised of 287 store openings and 9 closures.\nTurning to revenues and operating margins.\nTotal revenues for the third quarter were up approximately $30.3 million or 3.1% over the prior year quarter.\nThe increase was driven by higher retail sales, which generated higher international royalty, supply chain and U.S. franchise revenues.\nChanges in foreign currency exchange rates positively impacted our international royalty revenues by $1.3 million in Q3.\nOur consolidated operating margin as a percentage of revenues increased to 38.6% in Q3 2021 from 37.4% in the prior year, due primarily to higher revenues from our global franchise businesses.\nCompany-owned store margin as a percentage of revenues was flat year-over-year at 19.8%.\nAs a percentage of revenues, food and occupancy costs were higher year-over-year, offset by lower labor costs.\nRecall that we incurred additional bonus pay in the third quarter of last year for frontline team members and although we did make investments in frontline team member wage rates during Q3, we continue to experience staffing shortages in certain of our company-owned stores.\nSupply chain operating margin as a percentage of revenues increased to 10.7% from 10.2% in the prior year quarter.\nWhile the market basket increased 2.1% year-over-year, higher product and supplies expenses related to certain COVID related safety and sanitizing equipment negatively affected the supply chain operating margin in Q3 2020, which did not recur in the current quarter.\nThis year-over-year decrease in product costs was partially offset by higher labor costs.\nG&A expenses increased approximately $4.7 million in Q3 as compared to Q3 2020 resulting from higher travel and labor costs, including higher non-cash compensation expense, partially offset by lower professional fees.\nNet interest expense increased approximately $7.1 million in the quarter, driven by a higher average debt balance due to our recent recapitalization transaction completed in Q2.\nOur weighted average borrowing rate for Q3 decreased to 3.8% from 3.9% in Q3 2020 due to lower interest rates on our outstanding debt as a result of this recapitalization transaction.\nOur effective tax rate was 10.7% for the quarter as compared to 19.9% in Q3 2020.\nThe effective tax rate in Q3 2021 included a 10.4 percentage point positive impact from tax benefits on equity-based compensation.\nThis compares to a 2.8 percentage point positive impact in Q3 2020.\nThis increase was due to more stock option exercises in Q3 of this year.\nWe expect to see continued volatility in our effective tax rate related to these tax benefits from equity-based compensation.\nCombining all of these elements, our third quarter net income was up $21.3 million or 21.5% versus Q3 2020.\nOur diluted earnings per share in Q3 was $3.24 versus $2.49 in the prior year quarter.\nBreaking down that $0.75 increase in our diluted EPS, most notably, our improved operating results benefited us by $0.36.\nOur lower effective tax rate, primarily due to higher tax benefits on equity based compensation positively impacted us by $0.34.\nA lower diluted share count driven by share repurchases over the trailing 12 months benefited us by $0.19 and higher net interest expense negatively impacted us by $0.14.\nShifting to cash, our strong financial model continues to generate significant cash flows.\nDuring Q3, we generated net cash provided by operating activities of approximately $189 million.\nAfter deducting for capex, we generated free cash flow of approximately $172 million.\nRegarding our capital expenditures, we spent approximately $17 million on capex in Q3, primarily on our technology initiatives, including our next-generation point-of-sale system and our new supply chain center.\nOur strong free cash flow generation allowed us to continue our long-term commitment to returning cash to shareholders.\nAs we discussed on the Q2 earnings call, we completed our $1 billion accelerated share repurchase transaction during Q3.\nSubsequent to the settlement of the ASR, during Q3, we repurchased and retired approximately 153,000 shares for $80 million or an average price of $521 per share.\nAs of the end of Q3, we had approximately $920 million remaining under our current Board authorization for share repurchases.\nWe have continued to repurchase and retire shares subsequent to the end of the quarter and through October 12, we had repurchased and retired an additional 205,000 shares for approximately $100 million or an average price of $488 per share.\nWe also returned $35 million to our shareholders during Q3 in the form of a $0.94 per share quarterly dividend.\nShifting gears, as we look toward our fourth quarter, we wanted to provide an update on our annual guidance measures for full year 2021 provided earlier this year.\nWe previously provided guidance that our store food basket pricing in our U.S. system would increase approximately 2.5% to 3.5% over 2020 levels.\nWe previously provided guidance that foreign currency could have a $4 million to $8 million positive impact on royalty revenues as compared to 2020.\nWe previously provided guidance of $415 million to $425 million for G&A expense.\nBased on our current outlook, we expect each of these three measures to come in at the high end of these current estimates.\nWe continue to expect that our full year capex investments will be approximately $100 million.\nKeep in mind that these metrics can change based on economic and other factors outside of our control.\nOur G&A expense is also affected by our own performance versus our plan, which affects variable performance-based compensation expense.\nThese estimates also reflect our normal 16-week Q4, which will be rolling over the 17-week Q4 we had in 2020 due to the inclusion of a 53rd week in our fiscal year.\nRecall that the 53rd week last year contributed an incremental $0.39 to our earnings per share in Q4 2020 due to the additional week of revenues and the costs attributable to the 53rd week.\nIn closing, our business continued its solid performance during the third quarter and we are proud of the results our franchisees and team members around the world delivered.\nI'll begin my comments with a look at our U.S. business.\nRetail sales grew 1.1% in the third quarter, lapping a 21.3% increase from Q3 2020.\nOur 1.9% same store sales declined during the quarter, was offset by the positive impact of 232 net new stores that we have opened over the trailing four quarters.\nNow let's take a few minutes to further break down the U.S. retail sales growth into it's two components: store growth and same store sales.\nOur 45 net new stores in Q3 was a sequential improvement over Q2, but still came in softer than we would like to see.\nWhile cash on cash returns remain very strong and we continue to see a robust pipeline of future openings, we and our franchisees had a number of store openings delayed due to a variety of factors.\nWe and our franchisees saw delays in construction, equipment, utility hookups and inspections.\nIn addition, franchisee staffing challenges also resulted in some delays.\nWe remain very bullish on the unit growth potential in the U.S., but believe that we may continue to see some of these challenges in the months ahead.\nNow let's turn to same store sales.\nAs we continue to experience COVID overlaps, we believe it's instructive to look at the cumulative stack of comparable U.S. same store sales anchored back to 2019 as a pre-COVID baseline and we'll continue to do so for as long as we believe it is useful in understanding our business performance.\nAt 15.6% for Q3, we saw a sequential decline of the two-year stack when compared to the second quarter, bringing us back more in line with the two-year stack we saw in Q1 of this year.\nSo what changed from Q2 to Q3.\nJessica highlighted several key drivers that I'll expand on here.\nFirst, we believe that government stimulus had an impact on our sales in Q2 that waned in the third quarter as we moved further away from the spring one-time payments and as other enhanced benefits tapered off.\nSecond, we saw more pronounced staffing challenges across the country, resulting in reduced operating hours and service challenges in a number of stores across the network.\nWe believe these challenges posed a more significant headwind on orders and sales during the third quarter than they did during the first half of this year.\nWe and our franchisees are taking a number of actions to address the staffing issues.\nA new applicant tracking system rolled out a few weeks ago that will make it easier for candidates to apply for openings and to be onboarded at both corporate and franchise locations across our U.S. system.\nWe are also sharing operational best practices to eliminate unnecessary time-consuming tasks in the operation of stores, like pre-folding boxes, for example.\nThey can drive both team member and customer satisfaction.\nIn our corporate stores, we have recently implemented meaningful increases in team member compensation and are also piloting new approaches to team member onboarding, training and development.\nWhile I'm optimistic about the efforts that we and our franchisees have underway, we believe that staffing may remain a significant challenge in the near term as the labor market continues to evolve.\nNow I'll share a few thoughts specifically about the carryout and delivery businesses.\nWe saw a positive carryout same store sales growth during Q3, as we continue to build awareness of Domino's car side delivery.\nWe are on air for several months with a fun campaign highlighting our car side delivery two-minute guarantee.\nThis campaign hits on two key elements of the Domino's brand.\nI'm very pleased with our car side delivery performance as our franchisees and operators have enthusiastically embraced this new service method.\nIt's also bringing in new customers.\nWe have consistently averaged below two minutes out the door and on our way to the customer's cars.\nIn fact, we have many stores across the country that are consistently below 1 minute.\nIt's a great technology enabled way to serve our customers and will remain an important part of our long-term strategy to serve our existing carryout customers and to attract new QSR drive through oriented customers going forward.\nI'm also excited to talk about our latest menu innovations.\nJust this past Monday, we went on air to launch three great new products to support our signature $7.99 carryout offer.\nWe call them dips and twists and they hit the mark for great taste and consumer appeal with terrific economics for our franchisees.\nI'm excited about the impact these can have on sales and on store level profitability.\nI really hope you'll get out and try them.\nWe have one sweet and two savory dip options in this new product line.\nBaked apple, five Cheese and my personal favorite cheesy marinara.\nTurning to our delivery business.\nQ3 saw a same store sales decline relative to 2020, but delivery sales remain significantly above 2019 levels.\nDuring the quarter, we believe that the stimulus wind down and the staffing challenges that I referenced earlier, had a disproportionate impact on our delivery business.\nJust a few weeks ago, we launched a new ad campaign to support the delivery business.\nIt plays on a key tension that consumers have with third-party delivery apps, the surprise fees that are often charged for service, for small orders or simply because you live in a certain zip code.\nConsumers also tell us that they hate the fact that these charges are often confusing, hidden or buried in the receipt.\nDomino's and our franchisees never charge surprise fees.\nWe charge one transparent delivery fee.\nSo, we decided to give our customers surprise frees instead of surprise fees.\nDuring this campaign, one out of every 14 digital delivery orders receives a free item.\nThat item could be a pizza, stuffed cheesy bread, lava cakes or any one of a number of other great items.\nOver the course of the campaign, Domino's and our franchisees will give away $50 million worth of surprise frees to delivery customers.\nNow this campaign supports two of our key brand attributes: value and transparency.\nI'll also share a few important milestones that occurred in the U.S. during the quarter.\nFirst, we broke ground.\nJust a few weeks ago on a new supply chain center in Indiana, which we expect to complete and open by the end of 2022.\nAnd second, we are now running a pilot version of our new Pulse point-of-sale system in a live store environment and we will continue to invest in that multi-year project going forward.\nSo, as we look forward in the U.S. business, I remain optimistic about our ability to continue driving long-term growth.\nWe'll manage through the staffing and other challenges in the short term.\nFrankly, that's what Domino's franchisees and operators do and have always done and will continue to leave the brand with a clear focus on long-term profitable growth for our franchisees and DPZ.\nNow moving on to international.\nIt was another outstanding quarter of performance for our international business.\nOur 16.5% international retail sales growth, excluding foreign currency impact, was supported by a very strong 8.8% comp.\nWhen you look at it on a trailing four-quarter basis, excluding the impact of foreign currency and the 53rd week of 2020, Domino's International retail sales grew by 16.2%.\nAs I discussed earlier with our U.S. business, we are also watching the two-year comp stacks for international, anchoring back to pre-COVID 2019.\nQ3 represented a 15% two-year stack, which was very consistent with the second quarter.\nInternational store growth was a highlight during the quarter.\nOur international master franchisees opened 278 net new stores during the quarter, which increased the trailing four-quarter pace to 892 stores for the international business.\nThis acceleration and international store growth combined with our U.S. store growth has driven the global pace of store growth back into our two to three-year outlook range of 6% to 8% global net unit growth.\nI was also very pleased to see that we had only nine closures in international and only 10 closures on a global basis during the quarter.\nThis low level of store closures is driven by two factors.\nFirst, our outstanding unit level economics and second and very importantly, the strong commitment of our franchisees across the globe.\nDuring the quarter, COVID continue to have a significant impact on many of our international markets and we expect COVID to remain a challenge in many parts of the world for some time to come.\nAt the end of the quarter, we estimate Domino's had fewer than 175 temporary store closures, with many of those located in India and New Zealand.\nI'll highlight a few of the international markets that contributed significantly to our growth during the quarter.\nWe successfully converted 52 stores in Poland as Dominion pizza rebranded to become part of the Domino's family.\nThis provides important scale for us in Poland, fast-forwarding us to 119 total stores in the market at the end of the third quarter.\nWe now have 24 international markets with 100 or more Domino's stores.\nWe opened our 93rd international market during the quarter, officially welcoming Lithuania to the Domino's family.\nWe're off to a great start there with the first store opening and we have a second one coming very soon.\nIndia resumed an impressive pace of store growth, while becoming the first Domino's market outside the U.S. to reach 1400 stores.\nI could not be more proud of Jubilant, our master franchise partner, and the efforts they have made to fight through COVID, taking care of their people, while still growing their business.\nJapan had another outstanding quarter, passing the 800-store milestone and continuing its impressive streak of growth.\nThe transformation of the market by master franchisee Domino's Pizza Enterprises has been remarkable.\nChina delivered double-digit same store sales growth, while continuing its strong pace of store growth.\nWith each passing quarter, we become even more confident about the long-term growth potential for the Domino's brand in China.\nIn addition to those markets, the U.K., Mexico, the Netherlands, Turkey and Colombia were additional large market highlights in a strong quarter of performance across our international business.\nAnd along with those markets, we also saw robust regional growth across the Middle East and Northern Africa during the quarter.\nI have long been convinced that we have the best international franchise partners in the restaurant business and they certainly prove me right during the third quarter.\nSo in closing, I'm pleased with our third quarter results.\nOur outstanding franchisees and operators continue to battle through a challenging set of circumstances, while delivering strong growth for the Domino's brand around the world.\nThese passionate Dominoids combined with our outstanding unit level economics, position us incredibly well for the future.\nThere is no doubt that we will continue to experience challenges with COVID, with staffing, and other factors.\nWe also expect inflationary headwinds to continue impacting Domino's and the broader restaurant industry over the coming quarters.\nBut we will face all of these challenges and headwinds from a position of strength and with the unwavering commitment of our franchisees and team members who proudly wear the Domino's logo.\nMy team and I are proud to serve them each and every day.\n", "role": "user" }, { "content": "q3 earnings per share $3.24.\nqtrly u.s. same store sales decline of 1.9%.\nqtrly diluted earnings per share up 30.1% to $3.24.\nqtrly international same store sales growth of 8.8%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ materially from those implied by our comments today.\nWe made excellent progress in the quarter, reducing our cash burn rate, improving our total liquidity and reopening hotels for the eventual recovery.\nThe second quarter, however, was unlike any in the history of the hotel industry.\nWhen we last spoke in May, we were in the midst of the largest contraction in GDP ever experienced in the U.S. as government restrictions were imposed to curtail the spread of COVID-19 in order to protect the general public.\nWhile some communities were able to reduce the spread of the virus, other locations experienced sudden increases in the transmission of this terrible virus.\nContemporaneously, the concerns over systematic bias in our society led to demonstrations across the United States involving an estimated 15 million to 25 million people.\nThe overall environment experience in 2020 is the very definition of unprecedented.\nBefore going any further, I want to recognize the hard work of our hotel operating teams and their dedication to the health and safety of our guests.\nI also want to recognize our corporate employees for their agility, creativity and perseverance to ensure that DiamondRock is secure and well positioned for a profitable future.\nLet me recap those for you.\nOne, the second quarter is expected to be the worst period in the year.\nThe demand recovery will come in stages with leisure demand from drive to resorts coming back first, followed slowly by emerging business transient customers and, finally, by the return of large group meetings likely in 2021.\nSupply is going to be constrained going forward as new construction starts to evaporate and obsolete hotels shut their doors for good.\nAccording to F.W. Dodge, rolling three-month hotel construction starts were down 56% in June as compared to the prior year.\nMoreover, last quarter, we suggested as much as 10% of the existing supply in Midtown East, New York, may not reopen.\nThere's reason to believe that our early estimate may be conservative.\nFourth and finally, this is an opportunity to reinvent the operating model by identifying lasting opportunities to increase efficiencies through new best practices, promoting technology adoption like digital check-in and supporting emerging customer priorities such as the green room initiative.\nWe are optimistic that this could lead to increased profit margins once we return to pre-COVID-19 levels of demand.\nLet's talk specifically about the second quarter.\nIn response to travel demand declining by over 90%, we suspended operations at 20 of our 30 operating hotels, leaving just 10 hotels open at one point in April.\nThe quick action taken by the team allowed us to realize a 72% reduction in hotel-level expenses excluding wage of benefit accruals.\nImpressively, compared to the prior year, second quarter man hours decreased 83% at open hotels and 99% at hotels with suspended operations.\nThe decision to reopen hotels has been and continues to be dynamic and data driven.\nAs we articulated in the past, our plan is to reopen hotels if we can lose less money doing so.\nAccordingly, starting in May, we prioritized our drive to resorts based on returning demand visible through various channels.\nAnd ultimately, we reopened a total of 12 additional hotels in the second quarter.\nThe 22 hotels we had opened at the end of the quarter represent 58% of our hotel rooms.\nBut since the openings were staggered, the math works such that just 43% of our rooms were available in the quarter.\nDemand got a little better as the quarter progressed.\nWeekly occupancy for our operating hotels, which had bottomed at 6.8% at the end of March, rose steadily to 27.8% by the last week in June.\nThis trend has continued beyond Q2 with occupancy for operating hotels in July over 200 basis points higher than the full month of June.\nOver the course of the quarter, we saw a growing number of hotels achieve breakeven profitability, and we expect that this trend continued in July.\nIn April, five hotels achieved breakeven profitability on a GOP basis, and this figure grew to seven hotels in May and 10 hotels in June.\nOn a hotel EBITDA basis, two hotels generated profits in April and account increased to four hotels in May and six hotels in June.\nThe consistent theme is nearly is that nearly every one of these hotels is among our collection of drive to resorts.\nLeisure was clearly the brightest segment during the quarter and certainly a source of strength in DiamondRock's portfolio.\nAs you might have guessed, weekends were the strongest.\nFrom early May to the end of June, weekend occupancy at our resorts increased from 11% to nearly 56%, with healthy gains in ADR for the majority of the weeks.\nFor the second quarter, leisure transient ADR was 1.6% higher than in the second quarter of 2019.\nThe resilience of rate in the leisure category tells us that price is not a gating issue for those customers.\nTrends at our resorts in July were encouraging.\nThe Shorebreak in Surf City Huntington Beach averaged nearly 50% occupancy in July.\nOur L'Auberge de Sedona, Orchards Inn and Havana Cabana Key West, each ran occupancy over 60%.\nL'Auberge actually had an average rate in July of $553, which was a 14% increase over the prior year.\nBut our little star of the month was Landing in Lake Tahoe, which had 80% occupancy in July with average rate up nearly $100 a night to over $519.\nAs for business transient, we are not expecting a significant recovery after this summer.\nIn fact, we do not expect a true recovery in business transient demand until folks return to the office, which appears drifting toward early 2021 for many major employers.\nNevertheless, there are individuals traveling for business, and we did see a gradual improvement in our room and total revenue activity each month over the course of the quarter.\nIn April, the weakest month of the quarter, we saw less than $400,000 of revenue from business transient channels, but this grew to $1 million in May and $2.5 million in June.\nThese are meager beginnings.\nBut longer term, we are optimistic that as a consequence of more office personnel working from home, there may be increase in hotel meeting activity to plan strategy, conduct training and foster corporate culture.\nThe group segment has certainly experienced an enormous deferral of business.\nGlobally, C-Band had two billion RFPs passed through their system in the second quarter of 2020 as compared to six billion in the second quarter of 2019.\nGroup trends are challenging, and we expect this segment will be the final one to recover.\nWhile DiamondRock does not have the depth of exposure to group, particularly large group as some of our peers, we thought that the limited data points we were seeing could be of value.\nSince the start of the COVID impact and through the second quarter, our portfolio experienced approximately $117 million of canceled group revenue.\nOver 80% of these cancellations occurred in March and April.\nThe pace of cancellations was initially as high as $20 million per week in March, but has since slowed to just $2 million to $3 million per week.\nWe expect cancellations will persist as we move throughout the year.\nHowever, it was encouraging to see 250,000 to 350,000 room nights of group leads generated each month during the second quarter.\nSome of the early lead volume was rebooking activity.\nShort term, group bookings are increasingly weighted toward SMERF association and wedding events.\nWe're seeing larger pieces of group business, which are typically corporate, look at dates in 2021 and 2022.\nOverall, rate expectations are consistent with pre-COVID levels.\nWhile there have been short-term opportunistic groups booked in 2020, rate parameters for the 2021 and 2022 periods have been normal.\nInstead, the main request is around terms for cancellations and rebookings, highlighting that groups do want to meet, but desire flexibility until there is greater visibility.\nI want to touch on a few financial items in Q2, address our capital markets activity in the quarter and I'll conclude with an update on our liquidity and cash burn rate.\nTotal revenue decreased 92.1% in second quarter 2020 as a result of a 92.8% decline in RevPAR.\nTotal revenues were $3.3 million in April with 10 hotels open, $5.7 million in May with 12 hotels open and $10.9 million in June with 22 hotels open.\nExcluding the Sonoma Renaissance, which opened July 1, the same 22 hotels are on pace for nearly $13 million of revenue in July.\nAs Mark mentioned, we decreased hotel-level operating expenses 72% from $170 million to approximately $48 million, excluding nearly $3 million of accrued benefits for furloughed employees.\nWe were able to slash variable expenses by 80%.\nIt is critical to understand that we achieved this level of cost reduction despite over 70% of our hotels partially open during the quarter.\nHotel adjusted EBITDA in the quarter was negative $30.4 million.\nCorporate adjusted EBITDA in the quarter was negative $37 million.\nFinally, second quarter adjusted FFO per share was negative $0.20.\nFor CapEx, we have canceled or delayed over 65% of our original capital expenditure plans.\nIn the second quarter, we restricted capex spending to only $20.7 million, including $8.5 million for Frenchman's Reef to put the project in a position where we could pause work.\nOur primary focus remains conserving capital, so we are prioritizing only those expenditures where we have high confidence that they can produce a near-term earnings benefit and high return on investment at minimal cost and complexity.\nIn this regard, we spent $4.5 million to complete the F&B repositioning initiatives at our Renaissance hotels in Sonoma, Worthington and Charleston as well as the JW Marriott Cherry Creek.\nWe expect these investments will be earnings contributors in 2021, and the average IRR is forecast to be over 30%.\nWe remain in a strong liquidity position.\nAt the end of the quarter, we have $364 million of total liquidity between corporate and hotel level cash and undrawn revolver availability.\nI'm also pleased to report that through hard work, we are able to meet our initial expectations for our overall cash burn rate.\nAt the hotel operating level, we averaged a $10.1 million monthly loss in the quarter, surpassing our initial forecast by 16%.\nIncluding corporate G&A, the average monthly loss was approximately $12 million or 12% ahead of our expectation.\nFinally, our total burn rate, including debt service, was approximately $17 million.\nCompared to our average pace in second quarter 2020, we expect our burn rate will improve slightly in July, mainly because we had 58% of our rooms open at the end of June as compared to only 43% during the quarter.\nOur preliminary estimate for our hotel-level cash burn in July is approximately $9 million to $10 million, which is potentially $1 million or 10% lower than the average monthly pace seen in the second quarter.\nIncluding cash, G&A and debt service, this works out to an overall burn rate of $16 million to $17 million and provides a runway before capex of up to 23 months based upon our total liquidity of $364 million at the end of the quarter.\nI want to make a few additional comments on the balance sheet.\nThe erosion in EBITDA obscures the strong balance sheet DiamondRock wielded before going into the pandemic.\nFor example, net debt to undepreciated book value as of second quarter 2020 was just 26%.\nWe ended the second quarter with net debt of only $106,000 per key on a portfolio with a replacement cost in the range of $450,000 per key.\nThis implies a net debt to replacement cost of less than 24%.\nImportantly, DiamondRock's debt is well structured.\nIt is diversified between nonrecourse CMBS and bank mortgage debt as well as unsecured bank debt.\nAt the end of the quarter, we had $605 million of nonrecourse mortgage debt at a weighted average interest rate of 4.1%.\nWe had $550 million of bank debt, comprised of $400 million in unsecured term loans and just under $149 million on our unsecured revolving credit facility.\nWe finalized an amendment to our credit facility in the quarter.\nWe had several objectives in this process, but there are three I'd like to highlight.\nFirst, secure a waiver through the end of the first quarter of 2021 and relaxed covenants through year-end 2021.\nCovenant tests restart in the second quarter of 2021 using annualized results to wash out 2020 from our financial results.\nSecond, flexibility for investment.\nCollectively, we have $110 million for capital investment, which has proved to be one of the largest capital investment allowances relative to assets or pre-COVID EBITDA.\nThird, flexibility for acquisition.\nWe have no limitation on our ability to pursue equity funded unencumbered acquisitions, and our $300 million limitation on encumbered acquisitions is proportionately larger than the limitation many peers have on total acquisitions.\nI think a key competitive advantage that will come into sharper focus in the next year is our maturity schedule.\nWe have no debt maturities for the balance of 2020.\nWe have no maturities in 2021, and we have only one loan for $48 million due in 2022 and even that can be extended to 2023 under certain conditions.\nOur first significant maturity is our revolver which matures in 2023, but this too can be extended one year into 2024.\nThe combination of a conservatively leveraged balance sheet, a diversified source of debt capital and one of the best maturity schedule in the sector is a measurable competitive advantage for DiamondRock.\nIn closing, I want to point out, we've expanded our disclosure to provide monthly detail on hotels open the entire quarter, hotels partially open during the quarter and hotels that remain closed.\nIt is here that you can see how the hotels progressed as we move through this most difficult period.\nMoreover, we provided the number of days each hotel was open to give you context to revenue, expense and EBITDA that each hotel produced.\nAnd on that note, I'll hand the call back to Mark for final comments.\nI want to make a few comments about the future.\nAlthough we saw improvement in the second quarter, we expect uncertainty will persist until there is an effective vaccine, improved patient outcomes, broad acceptance of safety protocols such as social distancing and wearing mask or some combination of the above.\nEncouragingly, there are already 30 vaccines in human trial.\nBecause of the wide array in variables related to the resolution of the healthcare crisis, we are not in a position today to provide you with company guidance.\nWe do expect the balance of 2020 to be difficult, with drive to resorts doing best, only very modest increases in BT business and large group business not meaningfully returning until 2021.\nWe did want to provide you with some of the ways in which we are positioning DiamondRock for the future.\nLet me highlight a few.\nOne, we have a great portfolio that is increasingly weighted toward drive to resorts.\nWe have 13 of 31 hotels that are leisure oriented.\nThis has been a multiyear strategic initiative as seven or last eight hotel acquisitions fit into this category.\nWe were early to recognize the trend here and remain committed believers.\nTwo, small hotels have been outperforming.\nAccording to STR, hotels under 300 rooms have shown the best relative performance.\nDue to our focus on boutiques and drive to resorts, the median hotel in DiamondRock's portfolio is just 265 rooms.\nThree, the portfolio has numerous ROI projects, many with 30% plus IRRs.\nThese include the just completed rebranding of the Sheraton Key West to the Barbary Beach House resort as well as the upcoming luxury upbranding of our Vail Resort.\nFour, while we pause the reconstruction of Frenchman's Reef, we remain excited about its long-term prospects.\nEssentially, this is a nugget of future value for our shareholders.\nAnd finally, we have a solid balance sheet to allow us to withstand a substantial downturn and then position us to be offensive at the right time.\nWe are already seeing some interesting opportunities in the market.\nWe have great assets, a solid balance sheet, strong industry relationships and an experienced management team that has weathered numerous prior downturns over the last 30 years.\n", "role": "user" }, { "content": "q2 adjusted ffo loss per share $0.20.\nnot providing updated guidance at this time.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Joining me on the call today are Gene Lee, Darden's CEO; and Rick Cardenas, CFO.\nWe plan to release fiscal 2021 second quarter earnings on December 18 before the market opens followed by a conference call.\nAnd then Rick will provide more detail on our financial results and share our outlook for the second quarter.\nAs a reminder, all references to the industry benchmark during today's call refer to estimated Knapp-Track, excluding Darden, specifically, Olive Garden and LongHorn Steakhouse.\nDuring our first fiscal quarter, industry same restaurant sales decreased 26%.\nGiven the ever-changing environment we continue to operate in, I am very pleased with what we accomplished during the quarter.\nWe are focused on four key priorities.\nThe health and safety of our team members and guests, in restaurant execution in a complex operating environment, investing in and deploying technology to improve the guest experience and transforming our business model.\nThe progress we made in these areas combined with our operating results, gave us the confidence to repay the $270 million term loan and reinstate a quarterly dividend.\nLet me provide more detail on the four priorities.\nFirst, the health and safety of our team members and guests remains our top priority.\nFollowing CDC guidelines and local requirements, our teams continue to practice our enhanced safety protocols, including daily team member health monitoring.\nWe also continue to configure our dining rooms with social distancing that create a safe, welcoming environment, while maximizing allowable capacity.\nA key part of this work is installing booth partitions to enable us to safely increase capacity where permissible.\nAt the end of August, we had completed installation in just over 500 restaurants in our total portfolio.\nOperating in this environment adds another layer of complexity to an already complex operation, and I'm proud of the commitment our teams make every day to keep our guests and each others safe.\nSecond, we are laser focused on our back to basics operating philosophy to drive restaurant-level execution that creates guest experience, whether that's in our dining rooms, outdoors on our patios or in their homes, but it's not easy.\nExecuting at a high level is more complex today due to COVID-19 restrictions that vary by market.\nAdditionally, the constantly changing mix between on-premise and off-premise, plus expanded outdoor dining that is weather-dependent, leads to unpredictability in sales.\nThis is why the work we continue to do to streamline our menus and improve our processes and procedures is so important.\nMoving complexity from our operations has allowed our restaurant teams to execute more consistently in this unique environment.\nOur operators continued to deliver great guest experiences by displaying a high level of flexibility, creativity and passion every day, and I'm thrilled to see that reflected in our guest satisfaction metrics.\nThird, we are continuing to invest in and implement technology to remove friction from the guest experience.\nThis includes providing multiple ways for our guests to order inside and outside the restaurant across our digital storefronts.\nAdditionally, we are deploying mobile solutions to make it easy for our guests to let us know when they have arrived to dine or pickup curbside order to go.\nWe are also expanding mobile payment options providing additional convenience for our guests.\nFor our three largest brands combined, more than 50% of our off-premise sales during the quarter were fully digital transactions where guest ordered and paid online.\nFinally and most importantly, we transformed our business model.\nEven with the sales declines we are experiencing, our restaurants continue to produce high absolute sales volumes.\nTherefore, we made the strategic decision to focus on adjusting our cost structure in order to generate strong cash flows, while making the appropriate investments in our businesses.\nThis provides us a stronger foundation for us to build on sales as build on sales -- build upon as sales trends improve.\nThe first step in this process was to reimagine our offerings.\nThis resulted in simplified menus across the platform driving significant efficiencies in food waste and direct labor productivity.\nAdditionally, due to capacity restrictions, we significantly reduced marketing promotional spending along with other incentives we have historically used to drive sales.\nWe will continue to evaluate our marketing promotional activity as the operating environment evolves.\nFinally, we have further optimized our support structure which is driving G&A efficiencies.\nThe results of all these efforts to transform our business model can be seen in the fact that we generated adjusted EBITDA of $185 million for the quarter.\nTurning to our business segments.\nOlive Garden delivered strong average weekly sales per restaurant of $70,000 while significantly strengthening our business model, resulting in higher segment profit margin than last year.\nThey were able to capitalize on simplification initiatives that strengthen the business model while making additional investments in abundance and value.\nThis work was critical to position Olive Garden to drive future profitable top-line sales as capacity restrictions ease.\nOlive Garden same-restaurant sales for the quarter declined 28.2%, 220 basis points below the industry benchmark.\nOverall, capacity restrictions continue to limit their top-line sales, particularly in key high volume markets like California and New Jersey where dining rooms were closed for the majority of the quarter.\nIn fact, restaurants that had some level of dining room capacity for the entire quarter averaged more than $75,000 in weekly sales, retaining nearly 80% of their last year's sales.\nGiven the limited capacity environment during the quarter, Olive Garden made a strategic decision to reduce their marketing spend as well as incentives and eliminate their promotional activity.\nThey will continue to evaluate their level of marketing activity as capacity restrictions ease.\nAdditionally, off-premise continue to see strong growth with off-premise sales increasing 123% in the quarter, representing 45% of total sales.\nFinally, Olive Garden successfully opened three new restaurants in the quarter, which are exceeding expectations.\nLongHorn had a very strong quarter.\nSame-restaurant sales declined 18.1%, outperforming the industry benchmark by 790 basis points.\nTheir strong guest loyalty and operational execution helped drive their outperformance, while they also benefited from their geographic footprint.\nIn fact, same-restaurant sales were positive for the quarter in Georgia and Mississippi.\nAdditionally, the LongHorn team made significant investments in food quality and operational simplicity, which led to improve productivity and better execution.\nThey also took a number of steps to improve the overall guest -- the overall digital guest experience.\nOff-premise sales grew by more than 240%, representing 28% of total sales.\nFinally, LongHorn successfully opened two restaurants during the quarter.\nThe brands in our Fine Dining segment are performing better than anticipated.\nWhile weekday sales continued to be impacted by a reduction in business travel, conventions and sporting events, we saw strong guest traffic on the weekends, and believe there will be additional demand as capacity restrictions begin to ease.\nAnd lastly, our other business segment also delivered strong operational improvement with segment profit margin of 12.8%.\nThis was only 130 basis points below last year despite a 39% decline in same-restaurant sales.\nYard House's footprint in California is impacting same-restaurant sales in this segment.\nFinally, I continue to be impressed by how our team members are responding to take care of our guests and each other.\nThe encouraging trends and performance we experienced toward the end of the fourth quarter continued into the first quarter of fiscal '21.\nFurthermore, the actions we took in response to COVID-19 to solidify our cash position, transform the business model, simplify operations and strengthen the commitment of our team members helped build a solid foundation for the future.\nThese actions and our continued focus on pursuing profitable sales have resulted in strong first quarter performance that significantly exceeded our expectations.\nFor the quarter, total sales were $1.5 billion, a decrease of 28.4%.\nSame-restaurant sales decreased 29%.\nAdjusted EBITDA was $185 million.\nAnd adjusted diluted net earnings per share were $0.56.\nTurning to the P&L.\nlooking at the food and beverage line, favorability from menu simplifications more than offset increased To Go packaging costs.\nHowever, beef inflation of over 7%, primarily impacting LongHorn, drove food and beverage expense 20 basis points higher than last year for the company.\nRestaurant labor was 20 basis points lower than last year, with hourly labor as a percent of sales improving by over 350 basis points, driven by operational simplifications.\nThis was mostly offset by deleveraging management labor.\nRestaurant expense, including $10 million of business interruption insurance proceeds related to COVID-19 claims submitted in the fourth quarter of fiscal 2020.\nExcluding this benefit, we reduced restaurant expense per operating week by over 20% this quarter.\nFor marketing, we lowered absolute spending by over $40 million, bringing marketing as a percent of sales to 1.9%, 130 basis points less than last year.\nAs a result, restaurant-level EBITDA margin was 17.8%, 20 basis points below last year, but particularly strong given the sales decline of 28%.\nGeneral and administrative expenses were $10 million lower than last year as we effectively reduced expenses and rightsized our support structure.\nInterest was $5 million higher than last year, mostly related to the term loan that was outstanding for the majority of the quarter.\nAnd finally, our first quarter adjusted effective tax rate was 9%.\nAll of this culminated in adjusted earnings after-tax of $73 million, which excludes $48 million of performance-adjusted expenses.\nThese expenses were related to the voluntary early retirement incentive program and corporate restructuring completed in the first quarter of fiscal '21.\nApproximately $10 million of this expense is non-cash and the remaining will be cash outflows through Q2 of fiscal 2022.\nThis restructuring resulted in a net 11% reduction in our workforce in the restaurant support center and field operations leadership positions.\nIt is expected to save between $25 million and $30 million annually.\nWe expect to see approximately three quarters of these savings throughout the remainder of fiscal '21.\nLooking at our segment performance this quarter.\nDespite a sales decline of 28%, Olive Garden increased segment profit margin by 110 basis points to 22.1%.\nThis strong profitability was driven by simplified operations, which reduced food and direct labor costs as well as reduced marketing spending.\nLongHorn Steakhouse, Fine Dining and the other business segment delivered strong positive segment profit margins of 15.1%, 11.9% and 12.8% respectively despite a significant sales decline experienced in the quarter.\nThese brands also benefited from simplified operations, keeping segment profit margin at these levels.\nIn the first quarter, 68% of our restaurants operated with at least partial dining room capacity for the entire quarter.\nThese restaurants had average weekly sales per restaurant of $69,000 and the same-restaurant sales decline of 21.9%.\nAnd while Olive Garden and the Fine Dining segment had fewer dining rooms opened than our average, these restaurants had the highest average weekly sales per restaurant of almost $76,000 and $90,000 respectively.\nAt the start of the second quarter, we had approximately 91% of our restaurants with dining rooms opened operating in at least limited capacity.\nNow turning to our liquidity and other matters.\nDuring the quarter, as we saw steadily improving weekly cash flows, we gained confidence in our estimated cash flow ranges.\nWe fully repaid the $270 million term loan we took out in April.\nWe ended the first quarter with $655 million in cash and another $750 million available in our untapped credit facility, giving us over $1.4 million of available liquidity.\nWe generated over $160 million of free cash flow in the quarter and improved our adjusted debt to adjusted capital to 59% at the end of the quarter, well within our debt covenant of below 75%.\nGiven our strong liquidity position, improvements in our business model and better visibility into cash flow projections, our board reinstated a quarterly dividend.\nThe board declared a quarterly cash dividend of $0.30 per share.\nThis dividend represents 53% of our first quarter adjusted earnings after-tax within our long-term framework for value creation.\nWe will continue to have regular discussions with the board on our future dividend policy.\nOur first quarter results were significantly better than we anticipated.\nThe actions we took to simplify menus and operating procedures and capture other cost savings, along with our choice to pursue profitable sales, have yielded strong results.\nAnd now, with a full quarter operating under this environment, we have even better visibility into our business model.\nWe anticipate EBITDA between $200 million and $215 million and diluted net earnings per share between $0.65 and $0.75 on a diluted share base of 131 million shares.\nIn this environment, we continue to focus on building absolute sales volumes week-to-week and quarter-to-quarter.\nThis may result in variability in sales comparisons to last year as capacity constraints lead to less seasonality than we would have experienced historically.\nSaid another way, if capacity and social distancing restrictions remained similar to where they are today, it will be challenging to dramatically increase our on-premise average unit volumes.\nOur second quarter is typically our lowest average unit volume quarter and our third quarter is typically our highest.\nAdditionally, as capacity restrictions ease and sales normalized, we will be able to reinvest to drive the top-line and a better overall guest experience.\nBased on our strong business model enhancements, we now think we can get to our pre-COVID EBITDA dollars at approximately 90% of pre-COVID sales, while still making appropriate investments in our business.\n", "role": "user" }, { "content": "sees q2 earnings per share $0.65 to $0.75 from continuing operations.\nq1 adjusted earnings per share $0.56 from continuing operations excluding items.\nqtrly same-restaurant sales down 28.2% for olive garden.\ndarden restaurants -reiterated full year outlook for 35-40 net new restaurants and total capital spending of $250 to $300 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: Joining me on the call today are Gene Lee, Darden's Chairman and CEO; Rick Cardenas, President and COO; and Raj Vennam, CFO.\nAny reference to pre-COVID when discussing first quarter performance is a comparison of the first quarter of fiscal 2020.\nThis is because last year's results are not meaningful due to the pandemic's impact on the business and the limited capacity environment that we operated in during the first quarter of fiscal '21.\nWe plan to release fiscal 2022 second quarter earnings on Friday, December 17 before the market opens, followed by a conference call.\nRick will give an update on our operating performance, and Raj will provide more detail on our financial results and an update of our fiscal '22 financial outlook.\nOur teams continue to operate effectively in a challenging environment.\nAnd I'm proud of their focus and ability to deliver another quarter of strong sales and profitability.\nAll of our segments delivered record first quarter profit.\nOur ability to drive profitable sales growth is a testament to the strength of our business model and our continued to adherence this strategy we implemented six years ago.\nOur brands remain laser focused on executing our back-to-basics operating philosophy anchored in food, service and atmosphere, while at the Darden level, we concentrate on strengthening and leveraging our four competitive advantages of significant scale, extensive data and insights, rigorous strategic planning, and our results-oriented culture.\nOur first quarter sales trends started strong.\nThis momentum carried over from the fourth quarter, and they further strengthened and peaked in July.\nHowever, in August, sales slowed due to the impact of the Delta variant, but remained positive relative to pre-COVID levels.\nFor the first quarter, sales per operating week were up 4.8% relative to pre-COVID.\nAnd through the first three weeks in September, sales per operating week were up approximately 7% relative to pre-COVID.\nRegardless of the operating environment, our unwavering commitment to our strategy ensures we will stay focused on what we do best, providing exceptional guest experiences.\nThroughout this unique period, our operators have shown tremendous flexibility, while remaining locked in on the fundamentals of running great restaurants.\nAt the same time, our focus helps us continue to find ways to make our competitive advantages work even harder for us.\nOne of the ways we do this is by leveraging our ability to open value-creating new restaurants.\nWe opened seven new restaurants during the quarter, all of which are exceeding our expectations.\nAnd we remain on track to open approximately 35 to 40 new restaurants this fiscal year.\nA long-term framework calls for 2% to 3% sales growth from new restaurants.\nGiven our stronger unit economics, our development team is working hard to build out a pipeline of locations for fiscal '23 and beyond that would put us at or above the higher end of our framework.\nAs I visit our restaurants and talk with our teams, I'm constantly reminded why our people are our greatest competitive advantage.\nTheir passion for being of service to our guests and each other fuels our success.\nOur success this quarter was driven by the work we have done to simplify our processes and our menus to drive execution at the highest level.\nWe also paused any new initiatives in order to further eliminate distractions for our restaurant teams and allow them to focus on what it takes to run 14 great shifts a week.\nIn addition, To-Go sales continue to benefit from the ongoing evolution of our digital platform.\nThis platform makes it simpler for our guests to visit, order, pay and pick up, all while making it easier for our teams to execute at the highest level, both in the dining room and off-premise.\nThis served our teams well, as To-Go sales remained high through the quarter.\nFor the quarter, off-premise sales accounted for 27% of total sales at Olive Garden and 15% of total sales at LongHorn Steakhouse.\nDigital transactions accounted for 60% of all off-premise sales during the quarter, and guest satisfaction metrics for off-premise experiences remained strong.\nAs we navigate short-term external pressures, our focus is simple.\nWe must continue to win when it comes to our people and product.\nFrom a people perspective, the employment environment is challenging.\nThat's why our top priority during the quarter was staffing our restaurants.\nOur operators and HR teams have done a great job sourcing talent.\nWe recently launched a new talent acquisition system that helps increase our pool of candidates by allowing applicants to apply and schedule an interview in five minutes or less.\nAdditionally, our brands are successfully utilizing their digital platforms, including social media to promote our employment proposition and drive applications.\nAs a result, we are netting more than 1,000 new team members per week, and our team member count is approximately 90% of our pre-COVID levels.\nThe biggest operational challenge we've been dealing with is a temporary exclusion of team members identified through contact tracing.\nGiven our commitment to health and safety, we are diligent about exclusions, but they create sudden staffing disruptions for our operators.\nDespite being appropriately staffed in the majority of our restaurants, these exclusions reduce the number of available team members with little notice for our operators to prepare.\nThis volatility can negatively impact sales in these restaurants for the duration of the exclusion period.\nGetting and staying staffed also requires a strong focus on training.\nAs we continue to hire, it is critical that we have the right training in place to ensure we continue to execute at a high level.\nThat's why our operations leaders are validating the quality of our training during their restaurant visits, ensuring new team members receive the appropriate amount of training and successfully complete the required assessments.\nOur team members are the heart and soul of our business, and we are constantly focused on our employment proposition.\nThe investments we have made and continue to make in our people are helping us retain and attract top talent, and I'm confident in our ability to address our staffing needs.\nWhen it comes to product, our significant scale, including our dedicated distribution capabilities, enables us to manage through the challenges affecting the global supply chain and maintain continuity for our restaurants.\nOur supply chain team continues to work hard to ensure we successfully manage through any spot outages we encounter, and our restaurants have the key products they need to serve our guests.\nDuring the quarter, we had to secure more product than usual on the spot market, because our brands exceeded sales expectations and some of our suppliers experienced capacity challenges.\nRaj will share more details in a moment, but these higher sales volumes, as well as freight costs have contributed to higher-than-expected inflation.\nOur scale advantage provides the opportunity for us to price below our competition and inflation, which is a strategy we have executed successfully.\nOur competitive advantage of extensive data and insights allows us to be surgical in our pricing approach, positioning us well to deal with these higher costs and maintain our value leadership.\nThe rich insights we gather from our analytics help us find the right opportunities to price in ways that minimize impact to traffic over time.\nWe still expect pricing to be well below the rate of inflation for the year, further strengthening our value proposition.\nEnsuring our restaurants are appropriately staffed and our supply chain continues to avoid significant disruptions, will be the most important factors of our continued success in the short term.\nTo wrap up, I also want to recognize our outstanding team.\nI'm inspired by the dedication and winning spirit that our leaders and team members, both in our restaurants and in our support center continue to demonstrate.\nTotal sales for the first quarter were $2.3 billion, 51% higher than last year, driven by 47.5% same restaurant sales growth and the addition of 34 net new restaurants.\nDiluted net earnings per share from continuing operations were $1.76.\nWe returned approximately $330 million to our shareholders this quarter, paying $144 million in dividends and repurchasing $186 million in shares.\nWe had strong performance this quarter, despite increased inflationary pressures with EBITDA of $370 million and EBITDA margin of 16%, 250 basis points higher than pre-COVID.\nOur sales results were better than expected requiring us to go out and purchase more product on the spot market, in particular, proteins, as our LongHorn and Fine Dining segments had the largest sales outperformance versus our expectations.\nThe market for proteins this quarter was very strong with spot premiums as high as 30% above our contracted rates.\nThis resulted in higher average cost per pound for our proteins contributing to total commodities' inflation for the quarter of approximately 5.5%.\nGiven the heightened attention on inflation, I want to clarify that we use a conventional approach to calculating the rate of inflation.\nWe're only measuring change in average price holding product mix and usage constant.\nWe follow the same approach for calculating wage inflation rate, in which we keep the hour and job mix constant and only look at change in wage.\nWhile we expect higher rates of inflation to persist for the remainder of the year versus what we initially planned, we believe our scale and recent enhancements to our business model enable us to deliver significant margin expansion, while still adhering to our strategy of pricing below inflation.\nNow looking at the P&L for the first quarter of 2022, we're providing a comparison against pre-COVID results in the first quarter of 2020, which we believe is a more comparable to normal business operations and with how we've been talking about our margin expansion.\nFor the first quarter, food and beverage expenses were 150 basis points higher, driven by investments in both food quality and pricing significantly below inflation.\nRestaurant labor was 110 basis points lower, driven primarily by hourly labor improvement, due to efficiencies gained from operational simplifications and was partially offset by elevated wage pressures.\nRestaurant expenses were also 110 basis points lower due to sales leverage.\nMarketing spend was $45 million lower, resulting in 220 basis points of favorability.\nAs a result, restaurant-level EBITDA margin for Darden was 20.9%, 290 basis points better than pre-COVID levels.\nG&A expense was 30 basis points higher, driven primarily by approximately $10 million of stock compensation expenses related to the immediate expensing of equity awards for retirement eligible employees.\nAdditionally, we had approximately $5 million of expense related to mark-to-market on our deferred compensation.\nAs a reminder, due to the way we hedge this expense, it's largely offset on the tax line.\nOur effective tax rate for the quarter was 12.6%, which benefited from the deferred compensation hedge I just mentioned.\nExcluding this benefit, our effective tax rate would have been closer to the top end of our guidance range for the year.\nTurning to our segment performance.\nFirst quarter sales at Olive Garden were flat to pre-COVID, while segment profit margin increased 220 basis points.\nThis was strong performance despite elevated inflation and two-year check growth of only 2.4%.\nLongHorn had the best sales performance across our segments with sales increasing by 26% versus pre-COVID, while growing segment profit margin by 250 basis points.\nSales at our Fine Dining segment increased 24% versus pre-COVID in what's traditionally their slowest quarter from a seasonal perspective.\nSegment profit margin grew by 490 basis points, driven by strong sales leverage and operational efficiencies, which more than offset double-digit commodity inflation.\nOur Other segment grew sales by nearly 5% and segment profit margin by 360 basis points.\nWe continue to be excited about the long-term prospects of this segment, as it's driving the strongest underlying business model improvement of all our segments.\nFinally, turning to our financial outlook for fiscal 2022.\nBased on our performance this quarter and expected performance for the remainder of the year, we increased our outlook for the full year.\nWe now expect total sales of $9.4 billion to $9.6 billion, representing growth of 7% to 9% from pre-COVID levels; same restaurant sales growth of 27% to 30% and 35 to 40 new restaurants; capital spending of $375 million to $425 million; total inflation of approximately 4% with commodities inflation of 4.5% and total restaurant labor inflation of 5.5%, which includes hourly wage inflation of about 7%; EBITDA of $1.54 billion to $1.60 billion; and annual effective tax rate of 13% to 14% and approximately 131 million diluted average shares outstanding for the year, all resulting in diluted net earnings per share between $7.25 and $7.60.\nThis outlook implies EBITDA margin growth versus pre-COVID, in line with our previous outlook as higher sales are helping offset elevated inflation.\nThis will be a net negative to second quarter from a sales perspective.\n", "role": "user" }, { "content": "darden restaurants q1 earnings per share $1.76 from continuing operations.\nq1 earnings per share $1.76 from continuing operations.\nsees fiscal 2022 same-restaurant sales versus.\nfiscal 2021 of 27% to 30%.\nsees 2022 total sales of approximately $9.4 to $9.6 billion.\nsees 2022 diluted net earnings per share from continuing operations of $7.25 to $7.60.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Joining me on the call today are Gene Lee, Darden's CEO; and Rick Cardenas, CFO.\nWe plan to release fiscal 2021 third quarter earnings on March 25 before the market opens followed by a conference call.\nRick will then provide more detail on our financial results and share our outlook for the third quarter.\nAnd then Gene will share some closing comments.\nAs -- we continue to operate in a very fluid environment, and I was pleased with our ability to once again deliver strong profitability in an unpredictable sales environment.\nTotal sales from continuing operations were $1.7 billion, a decrease of 19.4%, same-restaurant sales decreased 20.6% and diluted net earnings per share from continuing operations were $0.74.\nThe last two weeks of the quarter negatively impacted our same-restaurant sales by approximately 200 basis points as we quickly went from 97% of our dining rooms being opened in the middle of the quarter to only 80% being open at the end of the quarter.\nDuring the quarter, we remain focused on four key priorities.\nThe health and safety of our team members and guests, in restaurant execution in the complex operating environment, deploying technology to improve the guest experience and transforming our business model.\nThe health and safety of our team members and guest has always been our top priority.\nWe continue to follow latest guidance from the CDC as well as our own enhanced safety protocols to create a safe environment for everyone.\nThis includes daily team member health monitoring, requiring mask for every team member, enhanced cleaning procedures and social distancing protocols.\nI'm proud of the commitment our teams make every day to keep our guests and each other safe.\nSecond, our restaurant teams remain focused on our Back-to-Basics operating philosophy to drive restaurant level execution that results in great guest experiences whether our guests are dining with us or ordering curbside to-go.\nOur teams have been operating in this environment for 10 months, and they have become very adept at adjusting to the ever-changing COVID restrictions, but it's still not easy.\nThat's why we remain committed to our simplified operations, including streamline menus, processes and procedures which continue to strengthen our execution and our guest satisfaction metrics confirm that our restaurant teams are doing a great job delivering exceptional guest experience in this challenging environment.\nThird, we continue to deploy technology to improve the guest experience.\nOur brands benefit from the technology platform Darden provides, allowing each of them to compete more effectively by harnessing the power of our digital tools, including the 25 million email addresses in our marketing database.\nDuring the quarter, Olive Garden LongHorn Steakhouse launched refresh websites and all our brands continue to use their digital storefronts effectively.\nMore than 55% of our off-premise sales during the quarter were fully digital transactions where guest ordered and paid online.\nAnd at Olive Garden, 20% of our total sales for the quarter were digital.\nDuring the quarter, we also rolled out Curbside I'm Here, which allows our guests to easily notify the restaurant that they've arrived to pick up their curbside to-go order by simply tapping on a link embedded in a text message.\nAs a result, our operators are spending less time on the phone and more time focused on ensuring orders are accurate and on-time, which is leading to improved guest satisfaction scores.\nWe also introduced Wait List Visibility, allowing guest to see their place on the waiting list using their phone regardless of whether they've checked in online or in person.\nAnd we're working on several other initiatives, including streamlining our online checkout process and adding additional mobile payment options to provide even more convenience for our guest.\nWe continue to accelerate our digital journey, and I'm encouraged by the progress we are making.\nFinally, we continue to view this environment as a rare opportunity to transform our business model for long-term growth.\nWe continue to make investments in our team members, product quality and portion sizes to ensure we emerge even stronger and better positioned to grow share.\nOlive Garden same-restaurant sales declined 19.9% as capacity restrictions continue to limit their top-line sales.\nOlive Garden began November with 56 dining rooms closed, and that number accelerated to 208 by the end of the month.\nHowever, they were able to deliver strong average weekly sales during the quarter of more than 73,000 per restaurant, retaining 80% of last year's sales.\nOlive Garden also continue to realize operational efficiencies and strengthened margin as a result of their simplified menu and the elimination of promotional activity, including discounts.\nIn the current limited capacity environment, their reduced marketing spend was focused on showcasing the convenience of their off-premise experience, while featuring compelling core menu items rather than limited time promotions.\nThis led to increased segment profit margin, while making additional investments in abundance and value.\nAdditionally, off-premise sales grew 83% in the quarter, representing 39% of total sales.\nEnabled by the technology investments I mentioned earlier, Olive Garden improved their to-go experience and achieved another all-time high in guest satisfaction for having orders ready to pick up at the time promised.\nFinally, Olive Garden successfully opened three new restaurants in the quarter.\nLongHorn Steakhouse had another solid quarter.\nSame-restaurant sales declined 11.1%.\nAlmost 20% of their restaurants grew same-restaurant sales in the quarter.\nThey also successfully opened three new restaurants during the quarter.\nThe LongHorn team remains laser focused on their strategy of increasing the quality of their guest experience, simplifying operations to drive execution and leveraging their unique culture to increase team member engagement.\nDuring the quarter, the team did a great job of managing controllable costs while their simplified menu drove improved labor productivity.\nFinally, LongHorn grew off-premise sales by more than 175%, representing 22% of total sales.\nFor the second quarter, total sales were $1.7 billion, a decrease of 19.4%.\nSame-restaurant sales declined 20.6%, EBITDA was $206 million and diluted net earnings per share from continuing operations were $0.74.\nOur second quarter start was encouraging with weekly sales building on results from the first quarter.\nHowever, as COVID-19 cases began increasing in November and many state and local governments reimposed dining room restrictions, the last two weeks of the quarter trended down significantly.\nWe estimate that this downward shift in sales over the last two weeks negatively impacted operating income by approximately $15 million.\nTurning to the P&L.\nFood and beverage expense was 30 basis points higher than last year, primarily driven by investments in food quality and increased to-go packaging.\nRestaurant labor was 140 basis points lower than last year with hourly labor improving by over 310 basis points, driven by operational simplification.\nThis was partially offset by deleverage and management labor due to sales declines and $3 million of emergency pay net of retention credits as we reinstated our emergency pay program for our team members impacted by dining room closures.\nRestaurant expense per operating week was 13% lower than last year, driven by lower repairs, maintenance and utilities expenses.\nHowever, sales deleverage resulted in restaurant expense as a percent of sales coming in 170 basis points higher than last year.\nWe reduced marketing spend by almost $50 million this quarter with total marketing 210 basis points favorable to last year.\nRestaurant level EBITDA margin was 17.9%, 140 basis points above last year despite the sales decline of 19%.\nGeneral and administrative expenses were negatively impacted by $8 million of mark-to-market expense on our deferred compensation.\nThis is related to significant appreciation in both the Darden share price and equity markets this quarter.\nAs a reminder, due to the way we hedge this expense, it is mostly offset in the tax line.\nOur hedge reduced income tax expense by $6.4 million, resulting in a net mark-to-market reduction to earnings after-tax this quarter of $1.7 million.\nThe effective tax rate of 8.3% this quarter was lower by 5.1 percentage points due to the tax benefits from the deferred compensation hedge I just mentioned.\nAfter adjusting for this, the normalized effective tax rate for the second quarter would have been 13.4%.\nLooking at our segment performance this quarter.\nOlive Garden, LongHorn Steakhouse and our Other segment, all saw a segment profit margin increase despite sales declines.\nThis was driven by our continued focus on simplified operations, which significantly reduced direct labor and lower marketing expenses.\nOur Fine Dining segment profit margin of 18.8% was impressive, although below last year, driven by a 30% sales decline.\nWe ended the second quarter with $770 million in cash and another $750 million available in our untapped credit facility, giving us over $1.5 billion of available liquidity.\nWe generated over $150 million of free cash flow in the quarter and improved our adjusted debt to adjusted capital to 58% at the end of the quarter, well within our debt covenant of 75%.\nThe board declared a quarterly cash dividend of $0.37 per share, 50% of our Q2 diluted earnings per share within our long-term framework for value creation.\nWe will continue to have regular discussions with the board on our future dividends.\nAs I mentioned earlier, the quarter started with sales building upon first quarter results.\nAs dining room closures increased, these improving sales trends reversed.\nAs of today, we have approximately 77% of our restaurants operating with at least partial dining room capacity versus a peak of 97% in the middle of the second quarter.\nMoving forward, we may experience further dining room closures and increasing capacity restrictions in the third quarter.\nAs you may recall, in our last earnings call, we mentioned that the third quarter is historically our peak seasonal sales quarter, driven by the Christmas, New Year's and Valentine's Day holidays as well as travel time during this time of year.\nAt that time, we also stated that it will be more difficult to increase on-premise average unit volumes if capacity restrictions do not ease.\nCurrent dining room closures, capacity restrictions and reductions in travel will exacerbate our same-restaurant sales comparison to last year due to the higher sales -- seasonal sales from last year.\nAdditionally, there are still uncertainties surrounding further capacity limitations and dining room closures and the duration of these impacts.\nGiven all these factors, we are providing a broad range of expectations for the third quarter.\nWe expect total sales to be between 65% and 70% of prior year levels, resulting in total sales of between $1.53 billion and $1.65 billion, EBITDA between $170 million and $210 million and diluted net earnings per share from continuing operations between $0.50 and $0.75 on a diluted share base of 132 million shares.\nWith dining rooms closures increasing, we are focusing on our playbook of expense management and off-premise sales.\nWhile there is encouraging news on the broad distribution of COVID-19 vaccine in the spring, we currently don't anticipate meaningful sales trend improvements until some time in the fourth quarter of fiscal 2021.\nDespite the short-term headwinds we faced with sales trends, operational complexity and impacts to our team members, I'm confident we are making the right decisions for the long-term to create a better guest experience and strengthen our business.\nAnd consistent with our messaging last quarter, we continue to believe we can achieve 100% of our pre-COVID EBITDA dollars at approximately 90% of pre-COVID EBITDA -- pre-COVID sales, while continuing to make appropriate investments in our business.\nRick's career represents what our industry is all about.\nHe joined Darden as a Buster at Red Lobster 1984 and has worked extremely hard mastering many functions.\nOn January 4, he will become the President of the world's largest full service restaurant company.\nHe's been a great partner to me over the last five years, and I look forward to working side-by-side with him in his new role.\nAdditionally, we announced that Raj Vennam will become our Chief Financial Officer.\nRaj began his career at Darden in 2003, and has done an exceptional job in every role he has held.\nHis promotion recognizes the significant contributions he has made to our individual brands as well as the greater organization.\nWith a brilliant mind and a keen understanding of our industry, Raj is the perfect person to take over for Rick.\nI'm excited to see him expand his role in the company as CFO.\nRick and Raj are here with me in the room today, and I want to take this opportunity to congratulate both of them.\nI want to close by recognizing our team members in the restaurants and at the support center.\nI can't say enough about the dedication they've demonstrated throughout the year.\nTheir focus, commitment and determination is exceptional.\nWith multiple jurisdictions implementing dining room closures, we know many team members will not get the hours they needed during this holiday season.\nThat is why we have reintroduced our emergency pay program that will provide three weeks of emergency pay to team members who are furloughed from their restaurant when dining rooms are closed.\nOur [Technical Issue] our greatest competitive advantage, and we are committed to taking care of them.\nI wish you all a safe and a happy holiday season.\n", "role": "user" }, { "content": "sees q3 earnings per share $0.50 to $0.75 from continuing operations.\nqtrly negative blended same-restaurant sales of 20.6%.\nqtrly diluted net earnings per share from continuing operations were $0.74.\nsees fiscal 2021 q3 total sales between 65% to 70% of prior year.\nsees fiscal 2021 q3 ebitda of $170 to $210 million.\nqtrly same-restaurant sales down 19.9% for olive garden.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 Gene Lee, Darden's Chairman and CEO; Rick Cardenas, COO; and Raj Vennam, CFO.\nWe plan to release fiscal 2021 fourth quarter earnings on June 24 before the market opens, followed by a conference call.\nIt's hard to believe it's been a year since the pandemic began to significantly impact our business.\nWhen I reflect back on everything that has transpired, it is clear to me the strategy we developed six years ago provided a strong foundation to help us navigate this period of unprecedented change and uncertainty.\nOur portfolio of iconic brands has been focused on executing our Back to Basics operating philosophy while leveraging our four competitive advantages of significant scale, extensive data and insights, rigorous strategic planning and our results oriented culture.\nAnd while our four competitive advantages were critical to our business and operational success this past year, our significant scale and results oriented culture have played an outsized role in our ability to emerge stronger.\nOur significant scale enabled us to quickly react to the turbulent operating environment.\nThe depth and breadth of our supply chain relationships ensured that we could adjust our product supply as needed without experiencing any significant interruptions.\nWe have our own dedicated distribution network, and the assurance of an uninterrupted supply chain provided consistency and a high level of certainty for our operators.\nOur scale also enabled us to significantly accelerate the development of online ordering and several other digital initiatives and cascade them across our brands quickly and effectively.\nThe robust expansion of our digital platform over the past year has provided us a richer set of first-party data on new and existing guest.\nFinally, our scale provided us with multiple levers to pull to ensure we have the liquidity we needed during the early days of COVID-19.\nAs soon as our liquidity needs were solved for, our brands were able to focus on strengthening their value propositions and transforming their business models.\nAs our Founder Bill Darden said, the greatest competitive advantage our Company has is the quality of our employees, evidenced by the excellent job they do every day.\nThroughout this past year, Darden and our brands have emerged stronger and our success is a direct result of our team members and their relentless commitment to delivering safe and exceptional guest experiences.\nThat is why we've continued to invest in our team members throughout the past year.\nSince March of 2020, we have invested more than $200 million in our people through programs such as paid sick leave, COVID-19 emergency pay and covering insurance payments and benefit deductions for team members who were furloughed.\nThese investments also include our recent decision to provide all hourly restaurant team members up to four hours of paid time off for the purpose of receiving the COVID-19 vaccine.\nIn addition, these investments include the one-time bonus we announced today, totaling approximately $17 million, which will impact nearly 90,000 hourly team members.\nBeginning Monday, every hourly team member, tipped and non-tipped, will earn at least $10 per hour, inclusive of tip income.\nAdditionally, we are committed to raising that amount to $11 per hour in January 2022 and to $12 per hour in January 2023.\nThese investments further strengthen our industry-leading employment proposition.\nLastly, I continue to be impressed and inspired by our team members who have shown extraordinary resilience and passion during the past year.\nYou are the heart and soul of our Company and on behalf of the management team, we're extremely grateful to you.\nAs Gene said, it's hard to believe we've been operating in this environment for a year.\nIn addition to executing our Back to Basics operating philosophy, our restaurant teams have continued to successfully manage through this situation by remaining focused on the four key priorities we established at the onset of the pandemic: one, ensuring the health and safety of our team members and guests; two, simplifying operations and strengthening execution; three, deploying technology to improve the guest experience; and four, transforming our business model.\nThe health and safety of our team members and guests remains our top priority.\nThroughout the past year, our team members have done a fantastic job of upholding our safety protocols while taking great care of our guests.\nToday, even as restrictions are easing in some parts of the country, we continue to follow our enhanced safety measures.\nThis includes daily team member health monitoring, requiring masks for every team member, enhanced cleaning procedures and social distancing protocols.\nOur second priority has been to continue finding ways to simplify our operations and drive in-restaurant execution at each of our brands.\nThis environment gave us a once in a lifetime opportunity to evaluate every aspect of how we operate and make decisions we would not have been able to do in a normal operating environment.\nA good example of this work all of our brands have done to streamline menus and remove low preference or low satisfaction items.\nThis focus makes it easier for our restaurant teams to consistently execute our highest preference items which means we are serving our most popular dishes to more guests.\nIn fact, a year ago, the top 10 entrees at Olive Garden accounted for about 48% of guest preference, and today they account for approximately 55%.\nReducing the bottom selling items eliminates distractions and allows us to execute at a high level.\nWe have dramatically reduced low volume items which reduces the need to prepare them, saving time and reducing food waste.\nFor example, at LongHorn Steakhouse, the number of total items with less than 1% preference is down to eight from more than 25 pre-COVID.\nThird, we continue to deploy technology to improve the guest experience and build on the progress we have made over the last 12 months.\nWhen the pandemic began and our dining rooms were closed, we were able to quickly roll out online ordering at our brands that had yet to deploy it.\nWe also streamlined the curbside to-go pickup process by rolling out the Curbside I'm Here text message notification feature so guests can easily alert us when they arrive.\nThese technology enhancements and other process improvements helped Olive Garden achieve new all-time high guest satisfaction ratings for delivering on time and accurate off-premise experiences during a quarter that included three busy off-premise days: Christmas Eve, New Year's Eve and Valentine's Day.\nIn fact, Valentine's Day was our highest sales day since the start of the pandemic.\nAlso during the quarter, several brands, including Olive Garden LongHorn implemented enhancements to their websites to streamline the online checkout process.\nThis resulted in a meaningful reduction in order abandonment rates.\nOur continuous digital transformation is resonating with our guests.\nIn fact, during the quarter, nearly 19% of total sales were digital transactions.\nFurther, 50% of all guest checks were settled digitally, either online or on our tabletop tablets or via mobile pay.\nWe have made great strides in our digital journey over the past year and we will continue to strengthen our digital platform and provide our brands with the tools to compete more effectively.\nAnd finally, the investments we've made to simplify our business through menu and process simplification have resulted in significant transformation of our business model.\nFor example, across Darden, our hourly labor productivity has improved by over 20%, with some brands improving by well over 30% such as Cheddar's.\nWe thought it would be helpful to provide a bit more insight into what the business model transformation has done to Cheddar's P&L.\nYear-to-date through the third quarter, Cheddar's has grown the restaurant level margins by over 300 basis points on a year-to-date sales retention of 75%.\nWhen Cheddar's reaches 100% of the pre-COVID sales, we expect their restaurant level margins to be well in the high teens.\nWhile we don't intend to continue to provide this level of detail in the future, this illustration helps to highlight the business model improvements our brands are making.\nAs we have mentioned previously, the simplifications across all of our businesses are expected to result in a 150 basis points of margin improvement with 90% of pre-COVID sales.\nOur business model transformation also strengthens our belief in our ability to open value creating new restaurants across all of our brands.\nDue to this transformation, the sales required to exceed our return expectations are much lower today.\nIn fact, we opened six new restaurants during the quarter and each is exceeding our expectations.\nAs Gene said, our success is a direct result of their hard work.\nBeing of service is at the heart of our business and our team members demonstrate that every day through their commitment to our guests and each other.\nFor the third quarter, total sales were $1.73 billion, a decrease of 26.1%.\nSame restaurant sales decreased 26.7%.\nEBITDA was $236 million, and diluted net earnings per share from continuing operations were $0.98.\nTurning to this quarter's P&L.\nFood and beverage expenses were 80 basis points higher than last year, primarily driven by investments in food quality and mix.\nRestaurant labor was 20 basis points higher.\nAs Gene mentioned, we invested approximately $17 million in team member bonuses this quarter.\nExcluding the team member bonuses, restaurant labor would have been 80 basis points favorable to last year.\nThe favorability to last year was driven by hourly labor improvement of 280 basis points due to efficiencies gained from operational simplifications Rick discussed.\nThe hourly labor improvement was partially offset by deleverage in management labor due to sales declines.\nRestaurant expense per operating week was 16% lower than last year, driven by lower workers' compensation, utilities, repairs and maintenance expense.\nRestaurant expense as a percent of sales was 250 basis points higher than last year due to sales deleverage.\nMarketing spend was $52 million lower than last year, with total marketing 200 basis points favorable to last year.\nThis all resulted in restaurant level EBITDA margin of 18.4%, only 150 basis points below last year.\nExcluding the one-time hourly team member bonus, restaurant level EBITDA margin would have been even stronger at 19.4%.\nWe impaired one Yard House restaurant this quarter, resulting in a non-cash impairment charge of $3 million.\nThis location was in Portland, Oregon, and had been temporarily closed since April.\nWe finalized the legal recovery during the quarter, resulting in favorability of $16 million.\nThis favorability was partially offset by $8.8 million of mark-to-market expense on our deferred compensation.\nExcluding these two items, G&A would have been $86 million this quarter.\nAs a reminder, the mark-to-market expense is related to significant appreciation in both the Darden share price and equity market this quarter, and due to the way we hedge this expense, it is mostly offset on an after-tax basis.\nOur hedge reduced income tax expense by $7.2 million, resulting in a net reduction to earnings after-tax this quarter of $1.6 million.\nOur effective tax rate of 2.3% this quarter was unusually low due to two factors.\nFirst, the tax benefit from the deferred compensation hedge I just mentioned reduced the tax rate by 5 percentage points.\nSecond, the stock option exercises this quarter drove approximately $7 million of excess tax benefit, reducing the tax rate by 4.8 percentage points.\nAfter adjusting for these factors, our normalized effective tax rate for the third quarter would have been 12.1%.\nLooking at our segment performance this quarter, Olive Garden saw segment profit margin increase versus last year despite sales declines.\nOur continued focus on simplified operations, which significantly reduced direct labor, combined with lower marketing expenses, drove this margin improvement.\nSegment profit margin declined for LongHorn as higher than average beef inflation and other investments drove higher food and beverage expense.\nIn addition, both labor and restaurant expenses were higher as a percent of sales due to sales deleverage.\nSegment profit margin declined for Fine Dining and Other segments due to deleverage across the P&L from the significant sales decline year-over-year.\nWe generated over $240 million of free cash flow this quarter, ending the third quarter with over $990 million in cash.\nOur recent performance has given us better visibility into the durability of our cash flows.\nTherefore, we will return to our 50% to 60% dividend payout target applied to future earnings to determine our dividend.\nTo that end, the Board declared a quarterly cash dividend of $0.88 per share, matching our pre-COVID dividend level.\nThe ability to resume pre-COVID dividend levels just 12 months after suspending it is a testament to the strength of our business model and the durability of our cash flows.\nAnd finally, today we announced a new share repurchase authorization of $500 million which replaces all previous authorizations.\nTurning to the fourth quarter.\nAs of today we have 99% of our dining rooms open with some capacity.\nTaking that all into consideration, we currently expect, for the fourth quarter, total sales of approximately $2.1 billion, EBITDA between $345 million and $360 million and diluted net earnings per share from continuing operations between $1.60 and $1.70 on a diluted share base of 132 million shares.\nWe've also updated our full year outlook for capital expenditures to be between $285 million and $295 million, and we anticipate opening 33 net new restaurants for the year.\nWe continue to believe we can achieve pre-COVID EBITDA dollars on 90% of pre-COVID sales, resulting in 150 basis points of EBITDA margin growth, and our Q4 outlook falls within this framework.\nAs we move beyond the fourth quarter, there are additional costs such as training, travel, growth cost, incremental marketing and other investments that we expect will need to come back into the P&L.\nAnd while it's too early to provide insights into fiscal '22 sales and earnings, we did want to provide some preliminary guidance for a few items.\nWe expect total capital spending between $350 million and $400 million and open approximately 35 new restaurants in fiscal '22.\nWe also anticipate an effective tax rate in the range of 12% to 13% for fiscal '22.\n", "role": "user" }, { "content": "compname reports q3 revenue $1.73 bln.\ncompname reports fiscal 2021 third quarter results; announces team member investments; declares quarterly dividend; authorizes new $500 million share repurchase program; and provides fiscal 2021 fourth quarter outlook.\nsees q4 earnings per share $1.60 to $1.70 from continuing operations.\nq3 revenue $1.73 billion versus refinitiv ibes estimate of $1.61 billion.\nqtrly reported diluted net earnings per share from continuing operations were $0.98.\nsees q4 2021 total sales of approximately $2.1 billion.\nanticipates opening 33 net new restaurants and total capital spending between $285 and $295 million for full 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: Joining me on the call today are Gene Lee, Darden's Chairman and CEO; Rick Cardenas, President and COO; and Raj Vennam, CFO.\nAny reference to the pre-COVID when discussing fourth quarter performance is a comparison to our fourth quarter of fiscal '19.\nAnd anyone -- annual reference to pre-COVID is the trailing 12 months -- ending February of fiscal '20.\nThis is because last year's results are not meaningful due to the pandemic's impact on the business as dining rooms closed and we pivoted to go-only model during the fourth quarter of fiscal '20.\nWe plan to release fiscal '22 first quarter earnings on September 23 before the market opens followed by a conference call.\nDuring our call a year ago, I talked about the resiliency of the full-service dining segment and the confidence we had in the industry's ability to bounce back from the impacts of the pandemic.\nAnd we've begun to see demand come back at strong levels.\nAs we think about the industry, our consumer insights team has done a lot of good work to better understand the size of the full-service dining segment.\nThere are multiple sources of data that offers sales estimates for the restaurant industry and the size of the industry and the full service industry specifically varies considerably across these sources.\nThis year we are adopting Technomic as our data source, which we believe better reflects the sales contribution from independent operators, provides a broader view of the restaurant industry and aligns more closely with the census data.\nGoing forward, we will be referencing industry data provided by Technomic which sizes the casual dining and fine dining categories for fiscal 2020 at $189 billion and for fiscal 2019 at $222 billion.\nGiven the strong demand we're seeing in the financial health of the consumer, we believe the categories will return to that size or greater, it's quite having approximately 10% fewer units than before the onset of the pandemic.\nOver the last 15 months, we have made numerous strategic investments.\nAt the restaurant level, we've invested in food quality and portion size that will help strengthen the long-term value perceptions for each brand.\nWe also made considerable investments in our team members to ensure our employment proposition remains a competitive advantage.\nAnd we invest in technology, particularly within our To Go capabilities, I mean our guest growing need for convenience and desire for the off-premise experience.\nOur business model has evolved and is much stronger today.\nAs we begin our new fiscal year, we will remain disciplined in our approach to growing sales.\nMore specifically, our focus is on driving profitable sales growth.\nGiven the business transformation work we have done and the demand we are seeing from the consumer, we are well positioned to thrive in this operating environment.\nThis was without a doubt the most challenging year in our company's history.\nOur results this quarter are a combination of the business model transformation work that Gene referenced as well as a simplification efforts we implemented throughout the year.\nSignificant process in menu simplification at each brand has enabled us to drive high levels of execution and strengthen margins, further positioning our brands for long-term success.\nAs we began the quarter, our restaurant teams remain disciplined, while continuing to operate in a difficult and unpredictable environment.\nThis enabled us to deliver record setting results.\nFor example Olive Garden broke its all-time single day sales record on Mother's Day.\nAdditionally, both Olive Garden and LongHorn Steakhouse achieved the highest quarterly segment profit in their history.\nEven as capacity restrictions eased and we were able to utilize more of our dining rooms, off-premise sales remained strong during the quarter.\nOff-premise sales accounted for 33% of total sales at Olive Garden, 19% at LongHorn and 16% at Cheddar's Scratch Kitchen.\nGuest demand for off-premise has been stickier than we originally thought, and this is driven by the focus of our restaurant teams and the investments we made to improve our digital platform throughout the year.\nTechnology enhancements to online ordering and the introduction of new capabilities such as To Go capacity management and Curbside I'm Here notification improved the experience for our guests, while making it easier for our operators to execute.\nAs a result, during the quarter, 64% of Olive Garden's To Go orders were placed online, and 14% of Darden's total sales were digital transactions.\nNearly half of our guest checks were settled digitally, either online on our tabletop tablets or via mobile pay.\nThe business model improvements we have made also reinforce our ability to open value creating new restaurants across all of our brands.\nDuring the quarter, we opened 14 new restaurants and these restaurants are outperforming our expectations.\nWhile, Raj will discuss specific new restaurant targets for fiscal '22, we are working to develop a pipeline of restaurants and future leaders that would put us at the higher end of our long-term framework of 2 %to 3% sales growth from new units as we enter fiscal 2023.\nFinally, the strength of the Darden platform has helped our brands navigate near term external challenges.\nThe employment environment has been an issue for the industry.\nHowever, the power of our employment proposition strengthened by the investments we have made in our people continue to pay off as we retain our best talent and recruit new team members to more fully staff our restaurants.\nSo, while there are staffing challenges in some areas, we are not experiencing systematic issues.\nAdditionally, the strength of our platform has helped us avoid significant supply chain interruptions.\nOur supply chain team continues to leverage our scale to ensure our restaurant teams have the key products they need to serve our guests.\nNotably, the few spot outages we have experienced are related to warehouse staffing and driver shortages, not product availability.\nTo wrap up, I also want to recognize our outstanding team members.\nDuring my restaurant visits, I'm inspired by the positive attitude and flexibility you demonstrate every day.\nTotal sales for the fourth quarter were $2.3 billion, 79.5% higher than last year, driven by 90.4% same restaurant sales growth and the addition of 30 net new restaurants, partially offset by one less week of operations this year.\nThe improvements we made to our business model combined with fourth quarter sales accelerating faster than cost grows strong profitability, resulting in adjusted diluted net earnings per share from continuing operations of $2.03.\nOur reported earnings were $0.76 higher due to a non-recurring tax benefit of $99.7 million.\nThis benefit primarily relates to our estimated federal net operating loss for fiscal year 2021, which we will carry back in the preceding five years.\nLooking at our performance throughout the quarter, we saw same restaurant sales versus pre-COVID improving from negative 4.1% in March, positive 2.4% in May.\nAnd same restaurant sales for the first three weeks of June were positive 2.5% compared to two years ago.\nTo Go sales for Olive Garden and LongHorn continue to be significantly higher than pre-COVID levels.\nWe have seen a gradual decline in weekly To Go sales, however that decline is being more than offset by an increasing dining sales.\nTurning to the fourth quarter P&L, compared to pre-COVID results, food and beverage expenses were 90 basis points higher, driven by investments in both food quality and pricing below inflation.\nFor reference, food inflation in Q4 was 4.3% versus last year.\nRestaurant labor was 190 basis points lower driven by hourly labor improvement of 320 basis points due to efficiencies gained from the operational simplification and was partially offset by continued wage pressures.\nMarketing spend was $44 million lower, resulting in 200 basis points of favorability.\nG&A expense was 30 basis points lower driven primarily by savings from the corporate restructuring earlier in the year.\nAs a result, we achieved record restaurant level EBITDA margin for Darden of 22.6%, 310 basis points above pre-COVID levels and record quarterly EBITDA of $412 million.\nWe had $5 million in impairments due to the write-off of multiple restaurant-related assets and our effective tax rate for the quarter was 12% excluding the impact of the non-recurring tax benefit I previously mentioned.\nLooking at our segments.\nWe achieved record segment profit dollars and margins at Olive Garden, LongHorn, and the other business segment this quarter.\nFine dining improved segment profit margins versus pre-COVID despite sales declines.\nThese results were driven by reduced labor and marketing expenses as we continue to focus on simplified operations while also continuing to invest in food quality and pricing below inflation.\nFiscal 2021 was a year like no other and despite the challenges of constantly shifting capacity restrictions and an uncertain guest demand, we delivered $7.2 billion in total sales.\nThe actions we took in response to COVID-19 to solidify our cash position and transform our business model help build a solid foundation for recovery and resulted in over $1 billion in adjusted EBITDA and over $920 million of free cash flow.\nAs a result, we repaid our term loan, reinstated our pre-COVID dividend and quickly built up our cash position.\nOur disciplined approach to simplifying operations and driving profitable sales growth positions us well for the future.\nThis results in a yield of 3.2% based on yesterday's closing share price.\nFinally, turning to our financial outlook for fiscal 2022, we assume full operating capacity for essentially all restaurants and we do not anticipate any significant business interruptions related to COVID-19.\nBased on these assumptions, we expect total sales of $9.2 billion to $9.5 billion, representing growth of 5% to 8% from pre-COVID levels, same restaurant sales growth of 25% to 29% and 35 to 40 new restaurants.\nCapital spending of $375 million to $425 million, total inflation of approximately 3% with commodities inflation of approximately 2.5%, and hourly labor inflation of approximately 6%.\nEBITDA of $1.5 billion to $1.59 billion, and annual effective tax rate of 13% to 14% and approximately 131 million diluted average shares outstanding for the year.\nAll resulting in a diluted net earnings per share between $7 and $7.50.\n", "role": "user" }, { "content": "qtrly adjusted diluted net earnings per share was $2.03.\nsees fiscal 2022 total sales of about $9.2 to $9.5 billion.\nsees fiscal 2022 same-restaurant sales versus.\nfiscal 2021 of 25% to 29%.\nsees fiscal 2022 diluted net earnings per share from continuing operations of $7.00 to $7.50.\nqtrly same-restaurant sales (open 16 months or greater) for consolidated darden up 90.4%.\ndarden restaurants - qtrly same-restaurant sales (open 16 months or greater) for olive garden up 61.9%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 high-level review of our 2020 results and highlight the many accomplishments that we were able to deliver during the year.\nThese accomplishments were achieved despite the tremendous challenges presented by the global pandemic.\nI will then provide some closing comments and open the call to questions.\nThe pandemic brought immense challenges to our industry customers and our employees and their family.\nWhether their jobs were performed in our manufacturing facilities, on a rig servicing our customers, or working remotely, all of our employees adjusted their lives for the good of the organization and in service to our customers.\nI am grateful for all their contributions.\nAlthough our 2020 results were challenged by the pandemic and associated oil and gas demand destruction, it was not a year without significant progress and accomplishments for Dril-Quip.\nThe transformation and productivity journey we started in 2019 positioned us well for this challenging environment.\nWe were able to conclude 2020 with $365 million of revenue and $32 million of adjusted EBITDA.\nAlthough a decrease from our 2019 results, we successfully responded to the challenging environment by mitigating the impact of the pandemic as seen in our operating and financial results and continued delivering products and services to our customers.\nWe also celebrated many accomplishments in our research and development efforts during 2020.\nIn May, we were presented with our fifth spotlight on new technology award by the Offshore Technology Conference for our VXTe Subsea Tree System.\nThe VXTe system is a disruptive technology in the subsea production system space.\nVXTe provides significant cost and time savings for our customers, which improves their IRR by reducing capital and time to first oil, with the added benefit of reducing their carbon footprint.\nThe VXTe offers the operator the ability to drill the well to completion and land the tubing hanger in the wellhead as part of their normal drilling operations without regard to its orientation.\nThis eliminates the traditional development well scenario, whereby the operator will cease drilling operations, pull the BOP stack and run the horizontal tree or tubing spool and then rerun the BOP stack to drill the well to completion.\nWe estimate that this, combined with our other e-Series technology products, will save operators approximately $5 million per well and five days of rig time.\nWe have seen incredibly positive response from our customers about the potential to improve their operations with this technology.\nOur R&D and manufacturing teams worked hard through the pandemic to complete all qualification tests and maintain the production schedule of the first VXTe tree.\nWith the tree now in final assembly, we expect to make delivery in the first quarter and hopefully, installing the first VXTe this year.\nWhile we are aware that consolidation is needed in our sector, we also know the difficulties in quickly executing that strategy.\nAccordingly, we embarked on a strategy of consolidation through collaboration.\nIn 2020, we entered into a strategic collaboration agreement with Proserv for the manufacture and supply of subsea control systems.\nThis nonexclusive collaboration achieved two main priorities.\nFirst, it allowed us to offer our customers the latest subsea controls technology without having to make the significant research and development investment of $8 million to $10 million per year over the next three years, as well as eliminated the associated operating costs of maintaining that product line.\nSecond, this win-win scenario allows us to bundle our award-winning subsea trees with Proserv's state-of-the-art control systems and offer our customers significant value.\nThe collaboration with Proserv was part of a larger strategy to continue down our transformation path to align our business with market activity.\nAllowing us to refocus our engineering and manufacturing resources toward solutions that set us apart from our peers and offer the highest return on invested capital.\nThis strategy led us to the difficult decision to transition and consolidate our subsea tree manufacturing from Aberdeen to Houston as we saw the subsea tree market decline from close to 300 subsea trees to a little over 100 tree awards in 2020.\nAberdeen is a critical location for our operations, and therefore, we still have a significant presence there.\nThis includes sales, project management, fabrication, final assembly and aftermarket operations serving our customers.\nIn total, the productivity initiatives executed in 2020 reduced our costs by approximately $20 million on an annualized basis and helps us to continue on maintaining profitability and a strong balance sheet.\nAs we view the market today, it seems probable that a longer, more gradual post-pandemic recovery is likely.\nThis means it could take several years to return to 2019 activity levels.\nThe recovery is also likely to vary by geography and customer profile.\nLow-cost areas of offshore development, like the Caribbean, or with the support from subsidies and parts of the North Sea, are expected to see activity levels remain steady.\nThe same can be said for national oil companies that typically drill for domestic energy consumption.\nIn contrast, the most recent developments in the U.S. regulatory environment through executive order has created uncertainty around future projects in the U.S. Gulf of Mexico.\nOverall, our outlook on the market takes into account multiple factors, including demand recovery, supply control from OPEC, and increased emphasis by government regulators on transitioning toward less consumption of fossil fuels in favor of alternative energy sources.\nThe energy transition is a process we believe should be guided by market forces and approached rationally with regulatory consistency.\nWe recognize the transition is under way, but will take time and resources to accomplish.\nFurthermore, we believe hydrocarbons will continue to play an important role in this transition, continuing to provide affordable, reliable and often cleaner energy to help lift developing nations out of poverty, while developed nations move more toward alternative energy sources.\nDril-Quip has a role to play in both parts of the transition solution.\nAs part of our commitment to this transition, we have always prioritized helping our customers efficiently produce hydrocarbons and our latest e-Series suite of products continues that legacy.\nMany of our customers have made pledges to reduce emissions or become carbon neutral in the coming years.\nA large part of these commitments, in some cases, as high as 70% reduction in carbon emissions, will come from the vendors who supply these companies.\nDril-Quip's innovative line of products are green by design, offering significant reductions in material or equipment that must be installed.\nThis design methodology, which has always been part of Dril-Quip's DNA, eliminated the carbon associated with manufacturing equipment as well as reducing the offshore installation days.\nThese products are thoroughly tested to improve reliability, which leads to better well integrity and fewer workovers.\nFor example, the combination of our e-Series technologies can help reduce roughly 40 tons of steel from traditional operations.\nThe elimination of this component alone reduces carbon emissions by approximately 70 tons as the process needed to produce the steel is no longer required.\nWe look forward to continuing to lead in the technologies and products that help our customers achieve their operational objectives.\nHowever, as we make the energy transition together, we do not lose sight of the very important role the industry currently plays today in providing reliable, affordable energy, and we take great pride in being part of that solution as well.\nI'm going to walk through Q4 performance and also provide a review for the full year of 2020.\nWe executed well, given the challenges we saw in the overall market.\nRevenue for the fourth quarter fell slightly from the prior quarter to $87 million.\nThis decline was mainly due to lower manufacturing production hours related to increasing levels of quarantines from rising COVID-19 cases, seen mainly in the U.S. Adjusted EBITDA for the fourth quarter was $9 million, a decrease of $1 million from the prior quarter.\nThe same factors impacting our revenue fell through to the bottom line.\nWe also saw regional government subsidies implemented as a result of the pandemic being reduced during the quarter.\nFor the full year 2020, our revenues were $365 million, a decrease of $50 million versus 2019.\nThis was driven by the impacts of the pandemic on overall oil and gas demand.\nAdjusted EBITDA for the full year 2020 was $32 million, a decrease of $22 million from the previous year.\nWe were successful in addressing this market decline by swiftly taking steps to reduce costs and optimize our global footprint.\nAs a result of this execution, we saw our margin profile improve significantly in the second half of 2020 as we realize the benefit of these cost actions.\nWe met our $20 million cost reduction target in 2020.\nThese are always difficult decisions, but were necessary in this environment.\nWe expect these cost reductions to be sustainable going forward.\nWhile most of our regions saw headwinds to product and leasing revenues during the year, our service revenue saw an increase year-over-year.\nThis was primarily due to an increase in installations from orders booked in previous years, coupled with the growth in our downhole tools business.\nOur downhole tools business was able to outpace the market by gaining share in key markets in the Middle East and Latin America as a result of service quality and execution.\nI'll now move on to margins.\nGross margins were under pressure.\nBut given the environment, it held up falling by only 3%.\nOur decision to take actions early in the year helped to support margins as the year progressed.\nWe saw EBITDA margins improve 3% from the first half to the second half 2020 after normalizing for mix and the impact of disruptions related to COVID-19.\nMoving to SG&A expenses.\nFor the fourth quarter of 2020, SG&A was $26 million, an increase of $5 million compared to the third quarter.\nThis increase was mainly due to short-term legal expenses.\nWe expect these legal expenses to continue into the first half of 2021, mostly in connection with the trial currently scheduled for April.\nFor the full year 2020, SG&A expenses decreased by $8 million to $90 million after excluding these short-term legal expenses.\nThese improvements in SG&A stem from our 2020 cost out initiatives.\nOn the engineering R&D side, we saw a modest increase in 2020 to $19 million as we work to bring the VXTe to market.\nNow looking at bookings for the year.\nProduct bookings were negatively impacted by the difficult market conditions in 2020.\nAfter approximately $388 million in bookings during 2019, the uncertainty surrounding the pandemic and its impact on commodity prices led to customers holding off or delaying decisions to book orders for their upcoming projects.\nWe saw smaller orders with less predictable timing.\nWe now see one or two orders being the difference between a $40 million or a $60 million bookings quarter.\nWe expect the effects of the pandemic to persist into the first half of 2021, but are cautiously optimistic that things will gradually recover as the year progresses.\nWe believe there is some upside if operators see increased stability in prices and confidence in the global economic recovery returns with the recent rollout of COVID-19 vaccines.\nWe expect the road to recovery to be more gradual.\nWe are taking actions related to our productivity initiatives driven by our LEAN management philosophy and are targeting a $10 million cost improvement on an annualized basis.\nThese savings will come primarily from changes in our manufacturing and supply chain functions, including an increase in outsourcing for our downhole tools business.\nThe timing of these productivity actions will take place over the course of the year and is expected to deliver roughly $5 million of realized benefit in 2021.\nMoving on to capital expenditure or capex.\nIn the fourth quarter of 2020, our capex totaled just under $2 million.\nAnd for the full year, it was around $12 million.\nThis represents a minimum maintenance level of capex that we have seen over the past two years.\nWe are, however, anticipating an increase in capex to range in between $15 million to $17 million in 2021.\nThe increase is partly related to growth in our downhole tools business.\nWe are also investing in manufacturing safety and equipment and our information technology infrastructure.\nWe will monitor conditions to adjust our capex if necessary, but we believe these investments will support growth and improve our long-term efficiency and profitability.\nNow let me turn to the balance sheet.\nWe continue to maintain a strong balance sheet and remain focused on protecting our cash position with no debt.\nAt year-end, we had cash on hand of $346 million and a further $40 million of availability in our ABL facility.\nThis results in approximately $386 million of available liquidity.\nOur balance sheet and liquidity position are critical for us.\nIt gives our customers confidence in our ability to execute on our commitments and provides financial flexibility.\nMoving on to free cash flow.\nFree cash flow for the fourth quarter was a negative $18 million.\nFor the full year, it was negative $33 million.\nBoth the quarter and full year free cash flow was slowed by several headwinds, many of which were related to the pandemic.\nFirstly, we saw a number of large customers whole payments that were due at year-end until early in January.\nWhile we are accustomed to disturb our balance sheet management by our customers, this amount was beyond our normal experience.\nSecondly, we saw inventory build in 2020, driven by customers requesting delays in shipments and our need to continue to procure materials for upcoming projects.\nWe also strategically added inventory for our expanding downhole tools business and subsea trees for stocking programs.\nBoth these factors led to an increase in inventory.\nThese working capital increases were partially offset by a federal tax refund.\nWe believe we have laid the foundation for a strong recovery.\nWe executed in improving billing turnaround and worked to improve our collection efforts and expand payment terms with vendors.\nWe expect we will see benefits of these efforts more clearly in 2021.\nFree cash flow is a primary focus for us as a management team.\nWe have tied all annual incentives for our entire leadership team to free cash flow.\nWe are focused on all aspects of working capital.\nWe have dedicated a cross-functional team working on inventory reduction in a more gradual recovery environment.\nOur auditor cash teams are gaining traction on reducing time to bill.\nAnd we are continuing to leverage our supply base by moving to a more vendor-managed inventory program.\nIn the current environment and given the initiatives I just mentioned, we expect to be able to generate 5% free cash flow yield.\nThe bottom line is that free cash flow is a key metric for the management team.\nPrior to turning the call back over to Blake for closing comments, I will give some color on what we expect to see in 2021.\nBased on the current view and the conversations with customers, we expect 2021 bookings to be around $200 million for the year.\nAt these product booking levels and with the anticipated growth in our downhole tools business, we expect to see revenue to come in flat to slightly down from 2020.\nWe are forecasting 40% decremental margins for any given decline in revenue as we hold costs critical to address a recovery.\nAs I mentioned earlier, we are forecasting a free cash flow yield around 5% in 2021.\nWe are well positioned to achieve this goal and have aligned management objectives and incentives toward meeting this target.\nTo sum up, while we see near-term headwinds from the hangover of the pandemic, we see a gradual recovery in sight.\nWe have a proven track record of executing and meet these near-term challenges head on as we prepare for the recovery and focus on our strategic initiatives.\nWe have a strong financial position and a strong management team to execute in this market environment.\nAs we enter 2021, we believe there are signs to be optimistic that a recovery, even a more gradual one, is beginning to take form.\nWe have established several strategic initiatives, which will position Dril-Quip to thrive in the years ahead.\nFirst, we are continuing to progress our consolidation through collaboration strategy through peer-to-peer collaborations that help to expand market access for our technology.\nWe see these collaborations through several lenses.\nWith respect to VXTe, we believe via conversations and significant pull from both customers and peers in the market that VXTe monetization remains a midterm opportunity via Dril-Quip providing the IP kit to our peers for delivery to end customers.\nWith wellheads, as a best-in-class wellhead provider, we believe both our superior technology and qualification lend themselves to partnering with multiple peers in integrated offerings.\nFinally, with our connectors, we believe that real opportunity exists to partner with pipe providers around the world to build out better supply chains to improve delivery to our customers.\nThe common theme of these strategies is to expand share while reducing overall industry capacity.\nSecond, we have a downhole tool business that we believe has not fulfilled its potential.\nWe would expect to have a business here that has a market share similar to our wellhead franchises in most markets.\nQuite frankly, we've struggled over the last few years with that business.\nBut we've laid the foundation in 2020 for significant growth in 2021.\nWe have a new leader.\nWe've shuttered underperforming bases.\nWe place smart bets with stock and added business development resources in key regions.\nFurther, we are only beginning to capitalize on our technology as outlined via our XPak DE technology.\nFinally, as I'm sure you followed, we've moved from an organization of transformation to an organization that demands real annual productivity improvements.\nThese productivity initiatives span our organization and will make us nimble in difficult times while allowing us to scale up when the market returns.\nProductivity and LEAN are now the way we do business and will serve us well in good and bad times.\nAs we look to the market increasingly focused on energy transition, we are continuing to be green by design, delivering lower carbon options for our customers, continuing to drive R&D that reduces the carbon footprint for our customers and following our customers in their transition.\nWhile we are in the early stages of our R&D, rest assured that you can expect us to bring the same level of innovation to energy transition that we have to our customers over the last several decades.\nIn conclusion, the culmination of all these efforts leads to increasing market share by using technology and execution as a differentiator.\nWe will be keenly focused on free cash flow generation in a competitive free cash flow yield to attract investment and ultimately benefit our shareholders.\nAs Raj indicated, we are continuing several key working capital reduction initiatives in 2021.\nWe take these commitments seriously and have tied our annual performance compensation toward meeting these goals.\nI look forward to providing further updates on the progress we are making across all our strategic areas in the coming quarters and sharing the benefits of success with our employees, customers and shareholders.\n", "role": "user" }, { "content": "anticipate that orders could continue to be lumpy and remain in a $40 to $60 million range per quarter for 2021.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I hope everyone is staying healthy and safe.\nLet's start on slide four.\nWe are making great progress this year at DTE for our team, our customers and our communities positioning us to deliver for our investors.\nThis progress has produced a strong second quarter and positions us well for continued growth.\nOur company celebrated Juneteenth together last month with a series of virtual meetings, we pay tribute to this important day with global community partners.\nA number of employees offered reflections on what the day means to them personally.\nOverall, it was a great way to come together and honoured a significant holiday.\nWe continue to focus on service excellence for our customers and delivering clean, safe and reliable energy as we continue our clean energy transformation.\nDTE Electric received approval from the MPSC to further expand the voluntary renewable program MIGreenPower, while also making it even more affordable, including increased access for low-income customers.\nAdditionally, we partnered with Ford Motor Company to install new rooftop solar and battery storage technology at the Ford Research and Engineering Center.\nThe array includes an integrated battery storage system and will be used to power newly installed electric vehicle chargers.\nThis can generate over 1,100 megawatt hours of clean energy.\nWe also continue to support the communities where we live and serve.\nWe were also recognized by Points of Light for the fourth consecutive year as one of the Civic 50.\nThis award highlights DTE as one of the top 50 community-minded companies nationwide and corporate citizenship.\nWe also launched a Tree Trim Academy to create 200 high-paying jobs in Detroit.\nDTE has a need for Tree Trimmers, and the community has a need for good high-quality jobs.\nIt will also help us continue to improve electric liability as Trees account for over 70% of our customer outages.\nOn the investor front, we completed the spin of the midstream business.\nNow DTE Midstream is a stand-alone company and DTE Energy is a predominantly pure-play utility with 90% of operating earnings coming from our utilities.\nThe transaction went very smoothly and was well received by all stakeholders.\nWe didn't miss a beat on a very strategic transaction and many said, we made it look easy.\nWe delivered a strong second quarter with earnings of $1.70 per share and we are raising our 2021 operating earnings guidance and continue to pay a strong dividend.\nDTE is continuing to deliver successful operating results.\nAt DTE Electric, we made another significant step toward our goal of reducing carbon emissions as we retired River Rouge Power Plant in the second quarter.\nFor over 60 years, the River Rouge Power Plant delivered safe, reliable and affordable energy for community throughout, Southeast Michigan.\nRiver Rouge is one of the three coal-fired power plants, DTE is retiring by the end of 2022, which is an integral part of our company's clean energy transformation.\nWe continue to look at ways to accelerate our coal fleet retirements and potentially file our updated IRP before September of 2023.\nWe continue to expand on our voluntary renewable program, which is exceeding our high expectations.\nIn the first quarter, we announced the commitment of new customers to MIGreenPower, including the State of Michigan, Bedrock and Trinity Health.\nDuring the second quarter, we signed up a number of new large customers, including Detroit Diesel, which is now one of our largest voluntary renewable customers.\nThe program continues to grow at an impressive rate.\nSo far, we've reached 950 megawatts of voluntary renewable commitments with large business customers and approximately 35,000 residential customers.\nWe have an additional 400 megawatts in the very advanced stages of discussion for future customers.\nMIGreenPower is one of the largest voluntary renewable programs in the nation and helps advance our work toward our net 0 carbon emission goal while helping our customers meet their decarbonization goals.\nWe have made progress with our expedited tree trimming program, which is greatly improving reliability for our customers and have received Michigan Public Service Commission approval to securitize the tree trimming costs along with costs associated with the River Rouge Power Plant retirement.\nAt DTE Gas, we are on track to achieve net 0 greenhouse gas emissions by 2050.\nWe began the second phase of construction on our major transmission renewal project in Northern Michigan in June.\nThe project includes the installation of a new pipeline as well as facility modification work which will reduce the risk of significant customer outages.\nProject is on track to be in service by the first quarter of next year.\nLast quarter, we announced our New CleanVision Natural Gas Balance program.\nThis program provides the opportunity for customers to purchase both carbon offsets and renewable natural gas.\nWe enable them to reduce their carbon footprint.\nWe are proud of how fast the program is growing.\nFinally, we have over 3,000 customers subscribed, and we are looking forward to seeing it become as successful as our voluntary renewable program at DTE Electric.\nOn our Power and Industrial business, we continue to add new projects as we began construction on a new RNG facility, our large dairy farm in South Dakota.\nThis will be P&I's largest dairy RNG project to date.\nProject will directly inject RNG into the Northern Natural Gas system for sale into the California transportation fuels market.\nFacility is expected to be in service in the third quarter of 2022.\nWe are also in advanced discussions on several new industrial energy and RNG projects and we'll provide updates on these as they progress.\nP&I was also recognized by the Association of Union Contractors with the 2020 Project of the Year Award for the Ford Dearborn cogeneration project.\nOverall, I am extremely proud of the team's accomplishments year-to-date, and I'm looking forward to more successes in 2021 and beyond.\nNow moving on to slide six.\nAs I said, we've had a very strong start to 2021.\nWe are raising our operating earnings guidance midpoint from $5.51 per share to $5.77 per share, moving our year-over-year growth and operating earnings per share guidance from 7.4% to a robust 12.5%.\nWe are able to use some of this favorability to position the company to continue to deliver in future years.\nWe mentioned in Q1, we were deep into planning for 2022 in a great level of detail.\nWith all of this work, we feel great about achieving a smooth 5% to 7% growth trajectory into 2022 and through the five-year plan.\nYou are not going to see any surprises from us in our growth rate in 2022 in spite of the area roll off [Phonetic] and the converts coming due.\n90% of our future operating earnings will be from our two regulated utilities, where we have a large investment agenda with $17 billion of capital investment in our five-year plan, focused on clean energy and customer reliability.\nOverall, we feel very confident with our performance in 2021 and our future operational and financial performance.\nDave, over to you.\nLet me start on slide seven to review our second quarter financial results.\nTotal operating earnings for the quarter were $329 million.\nThis translates into $1.70 per share.\nYou can find a detailed breakdown of earnings per share by segment, including our reconciliation to GAAP reported earnings in the appendix.\nI'll start the review at the top of the page with our utilities.\nThe second quarter was a really warm quarter for us here in Michigan.\nIn fact, it was the seventh warmest on record.\nDTE Electric earnings were $238 million for the quarter, which was $19 million higher than the second quarter of 2020, primarily due to higher commercial sales, rate implementation and warmer weather offset by nonqualified benefit plan gains that we had in 2020.\nAs we mentioned in the first quarter call, we've taken steps to reduce the variability of these investments going forward.\nMoving on to DTE Gas.\nOperating earnings were $7 million, $4 million lower than the second quarter of last year.\nThe earnings decrease was driven primarily by the warmer weather in 2021, offset by new rates.\nLet's keep moving to the Gas Storage and Pipelines business on the third row.\nOperating earnings for GSP were $86 million.\nThis was $16 million higher than the second quarter of 2020, driven primarily by the LEAP pipeline going into service and strong earnings across the pipeline segment.\nOn the next row, you can see our Power and Industrial segment operating earnings were $34 million.\nThis is a $9 million increase from second quarter last year due to new RNG projects beginning operation.\nOn the next one, you can see our operating earnings at our Energy Trading business were $21 million, which is $16 million higher than second quarter earnings last year due primarily to strong performance in the gas portfolio.\nYear-to-date through the second quarter, this positions us positive to our expectation and our original guidance for the year.\nFinally, Corporate and Other was unfavorable $22 million quarter-over-quarter, primarily due to the timing of taxes and higher interest expense.\nOverall, DTE earned $1.70 per share in the second quarter of 2021, which is $0.17 per share higher than 2020.\nMoving on to slide eight.\nGiven the strong start to the year, we were able to use this favorability to position ourselves to continue to deliver for our customers and investors in future years.\nAnd we are also increasing our 2021 operating earnings per share guidance midpoint $5.51 per share to $5.77 per share.\nThe increase in guidance is due primarily to warmer-than-normal weather, sustained continuous improvement, and uncollectible expense variability at DTE Electric, higher REF volumes at P&I, and stronger performance of energy trading due to the realization of gains from a small, long physical storage position during the extreme cold weather event in Texas in the first quarter.\nIn the third quarter, we are seeing additional sales upside for Electric compared to our plan and higher than planned REF volumes at P&I.\nWe are continuing to explore opportunities to support future years through our invest strategy and to support future customer affordability.\nAs you can see on the slide, there is no Gas Storage and Pipeline segment in our operating guidance for this year.\nThe GSP segment will be classified as discontinued operations starting in the third quarter.\nWe continue to focus on maintaining solid balance sheet metrics.\nDue to our continued strong cash flows, DTE is targeting no equity issuances in 2021 and has minimal equity needs in our plan beyond the convertible equity units in 2022.\nWe have a strong investment-grade rating and targeted an FFO-to-debt ratio of 16%.\nWith the proceeds from the spin-off of DTM, we are retiring long-term parent debt of approximately $2.6 billion after debt breakage costs.\nThese were NPV-positive transaction and immediately earnings per share accretive as we were able to retire a higher interest rate debt to support our current plan and to deliver our 5% to 7% operating earnings per share growth rate.\nWe feel great about our second quarter accomplishments, and we are confident in achieving our increased 2021 guidance and continuing to deliver on our long-term 5% to 7% operating earnings per share growth rate.\nOur utilities continue to focus on our infrastructure investment agenda specifically investments in clean generation and investments to improve reliability and the customer experience.\nWe continue to focus on maintaining solid balance sheet metrics and are targeting no equity issuances in 2021.\nIn closing, after executing a successful spin of our midstream business, DTE continues to be well positioned to deliver the premium, total shareholder returns that our investors have come to expect over the past decade with strong utility growth and a growing dividend.\n", "role": "user" }, { "content": "compname says operating earnings for q2 were $329 million, or $1.70 per diluted share.\noperating earnings for q2 were $329 million, or $1.70 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 appreciate your continued interest in our company.\nI'm Jim Gustafson, Vice President of Investor Relations.\nOver the last several months, we have made incredible progress in our efforts to combat the COVID-19 pandemic.\nAnd it's with continued optimism that I provide several updates today, starting with vaccination followed by a summary of the first quarter performance then an update on our improved outlook for the year and finally, an overview of our ongoing commitment to ESG.\nQ1 brought a lot of smiles as the Kidney Care community administered hundreds of thousands of vaccines to its patients.\nProviders worked closely with the Biden Administration, the CDC and state government so that dialysis patients could be vaccinated in a trusted and convenient side of care.\nWe knew that this would help our patients overcome transportation and other access challenges getting to third-party sites.\nAnd we had confidence that the hesitancy rate would decline when they received education from a trusted caretaker.\nWe also saw an opportunity to positively impact health equity by administering COVID vaccine in our clinics.\nSimilar to the early results in the broader U.S. population, in the first few weeks of the vaccine rollout, we saw the vaccination rate for Black and Hispanic were approximately 40% below that of White and Asian American.\nThis did not sit well with us.\nWe've got to work and mobilized our care teams, including social workers, dietitians and medical directors to have one-on-one conversations with patients to address common causes of hesitancy.\nOur Hispanic patients have now been vaccinated at nearly the same rate as white patients and the gap for our black patients has been reduced to 10%.\nWe are not done.\nOur pursuit for health equity continues.\nOn to our first quarter financial results.\nWe delivered solid performance in Q1 as our operating margins returned to 15.7% in the quarter, while we continue to lead through the continued challenges presented by the pandemic.\nAs we covered on our last call, treatment volumes declined in Q1.\nOur treatments per day hit a low point in mid-February, including the impact of approximately 25,000 missed treatments from the winter storm.\nSince then, our daily treatment trends have steadily improved.\nAs these trends continue, absent any further infection surges, we believe that our sequential patient census growth through the end of the year could return to pre-COVID levels, which is what we incorporated in our guidance ranges we provided last quarter.\nLet me provide a bit more detail on volume that supports our outlook.\nFirst, since our update in Q1, COVID case counts and new infections within our dialysis population have continued to decline.\nAs of last Friday, the number of active cases among our patients across the country decreased approximately 85% from peak prevalence on January 6, 2021, and the last seven-day incidence rate for new cases decreased approximately 91% from the week ending January 9, 2021.\nSecond, we're grateful that we're seeing a dramatic decline in the mortality rates associated with COVID.\nWe've previously shared that the unfortunate incremental mortality associated with COVID was approximately 7,000 in 2020.\nIn 2021, both our patient mortality count and mortality count in the general population peaked in January.\nIn the first quarter, incremental mortality associated with COVID was approximately 3,300 lives, with more than half of that number occurring in January, decreasing to approximately 600 in March.\nIt is too early to provide an estimate for April, but we expect the results will improve versus March.\nShifting to full year outlook, our view of core operation performance for the year remains largely unchanged from our original guidance.\nHowever, now that the likelihood of some downside scenarios have decreased due to the trends I've previously mentioned, we are increasing our adjusted earnings per share guidance range to $8.20 to $9 per share and our adjusted operating income guidance range to $1.75 billion to $1.875 billion.\nAt the midpoint of our revised adjusted operating income guidance, this would represent approximately a 4% growth year-over-year.\nThese revised ranges assume no further major disruption from the virus strain.\nMy final topic is our ongoing commitment to environmental, social and governance matters or ESG.\nESG has become a more significant topic of conversation in the investment community over the last couple of years, but these are not new areas of focus for us at DaVita.\nOur beliefs are incorporated into our stated vision of social responsibility that has three components: caring for our patients, caring for each other and caring for the world around us, including both our communities and our environment.\nDaVita continues to execute against this vision, providing top quality clinical care for our patients is at the core of what we do and because I've already spoken at length about our patients care and our efforts to vaccinate our patients, I would like to highlight a few of our achievements in caring for our teammates and caring for the world around us.\nI believe that fostering an environment rich in diversity and where we all feel that we belong is imperative to our culture and how we connect with each other and how we connect with our patients every day.\nAnd our commitment to cultivating diversity is evident throughout the organization.\nIt starts with the Board of Directors, currently made up of nine leaders, of whom 67% are diverse, including four women and three people of color.\nThe diversity of our team extends to the leaders who run the core operations in our clinics of whom 52% are female and 27% are people of color.\nThese results have been achieved through thoughtful and deliberate practices to create a diverse pipeline of talent.\nIn 2021, we published our first report on diversity and belonging, disclosing many of our company's diverse metrics and our ongoing efforts to cultivate a diverse organization in which everyone feels that he or she belongs.\nWe also recently published our 14th Annual Corporate Social Responsibility Report and our first ESG Report.\nThese reports disclose the progress we made in 2020 and lay out our ambitious ESG goals for 2025, including goals to reduce carbon emissions by 50% and to have vendors representing 70% of emissions set by climate change goals and to achieve engagement scores of 84% or higher among our teammate population.\nWe are pleased with our progress to date on diversity and ESG.\nAnd as you can see by our goal, we have a lot more we hope to accomplish.\nQ1 was a strong start to the year with solid financial performance.\nFor the quarter, we recorded revenue of approximately $2.8 billion, operating income of $443 million and earnings per share of $2.09.\nAs Javier referenced, treatment volume was a large headwind and our nonacquired growth was negative 2.2% compared to negative 0.3% in Q4.\nWhile COVID presented the main challenge to NAG in Q1, winter storms, particularly Uri, were responsible for about 30 basis points of the NAG decline.\nTreatments per day bottomed out during the first quarter, so we expect to start seeing quarter-over-quarter growth in Q2.\nWe continue to expect that NAG will be negative for the year, although we expect to see an acceleration of NAG in 2022 and 2023 as mortality rates may be lower than the pre-COVID levels for a few years.\nU.S. dialysis revenue per treatment grew sequentially by almost $3 this quarter as a result of the Medicare rate increase, higher enrollment in MA plans, a slight improvement in commercial mix and higher volume from our hospital services business, partially offset by the seasonal impact of coinsurance and deductible.\nU.S. dialysis patient care costs declined sequentially by approximately $6 per treatment.\nAlthough we continue to experience elevated costs due to the pandemic, such as higher PPE and certain clinical level expenses from continued infection control protocols, our Q1 patient care costs included a nearly $2 per treatment benefit from our power purchase agreement, a benefit that we do not expect to persist through the rest of the year.\nFor the quarter, the net headwind related to COVID was approximately $35 million, consisting primarily of higher PPE costs and the compounding effect of patient mortality associated with COVID, partially offset by the benefit from the sequestration suspension with a number of other items that largely offset each other.\nFor fiscal year 2021, we now estimate the net negative impact from COVID to be approximately $50 million lower than our guidance last quarter.\nThis is the result of lower COVID impact in Q1, the recently passed extension of the Medicare sequestration relief through the end of the year and lower other offsets, including T&E in the back half of the year.\nAt the middle of our guidance range, this would equate to $150 million negative impact from COVID in 2021.\nOur DSO increased by approximately seven days in Q1 versus Q4, primarily due to temporary billing holds related to the winter storm and the changes in calcimimetics reimbursement.\nIn certain circumstances, we hold claims to make sure we have complete and accurate charge information for payments.\nThis quarter, we had more of these holes and the single largest driver was related to winter storm Uri, which impacted more than 600 of our centers until right in the middle of the quarter.\nThis has the effect of pushing a significant amount of cash flow from this quarter to the next and caused the corresponding DSO increase in the interim.\nWhile claim holds shift cash flow between quarters, they have no negative impact on what we ultimately expect to collect.\nWe've already seen a significant increase in cash collections in April and expect a corresponding positive impact on both cash flow and DSOs over the next two quarters.\nA couple of final points.\nIn the first quarter, we repurchased 2.9 million shares of our common stock.\nAnd to date, in April, we repurchased approximately one million additional shares.\nDebt expense was $67 million for the quarter.\nWe expect quarterly debt expenses to increase to approximately $75 million beginning next quarter as a result of the $1 billion of notes issued in late February.\nBefore we open up the line for Q&A, let me share some reflections.\nOver the past year, our teams and our business experienced unusual volatility and challenges due to the pandemic.\nWe have weathered this very difficult period because of our dedication of our people, our scale, our innovation and our holistic platform and approach to patient care.\nAs I look forward, our organization is stronger, our relationships with patients have deepened and I have even more resolve that our comprehensive Kidney Care platform is well positioned to deliver a best-in-class value proposition to our patients, physicians in hospitals and payer partners.\nNow let's open it up for Q&A.\n", "role": "user" }, { "content": "1st quarter 2021 results.\nq1 earnings per share $2.09 from continuing operations.\nnow sees fy 2021 adjusted net income from continuing operations per share $8.20 - $9.00.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We appreciate your continued interest in our company.\nWe are excited to talk to you today about our strong Q2 performance.\nOur 2021 financial outlook and recent development on our effort to transform kidney care.\nFirst, let me start the conversation with the clinical highlights.\nKidney transplant is the best treatment option for eligible patients with kidney failure.\nDaVita has worked hard over the years to help our patients gain access to transplant through education and direct support for patients to get on and stay on the transplantation waitlist.\nThe cumulative impact is meaningful.\nLast December, we announced a milestone of 100,000 DaVita patients who have received transplant since the year 2000.\nFurther advance the cause of transplantation are collaborating on a yearlong pilot aim at improving health equity in kidney transplantation with a focus on living donors.\nIncreasing living donor transplant expands access to transplantation by increasing the availability of organ, which has been the limiting factor in the number of transplants performed annually.\nThis pilot provides high touch and customized information to patients and families seeking a kidney transplantation from a living donor.\nWe look forward to learning more from this pilot, improving the health equity of kidney transplant and continuing to be the leader in supporting our patients to receive kidney transplant.\nShifting to the latest update on COVID, we have made incredible progress in our efforts to combat the COVID 19 pandemic over the past several months.\nNew COVID infections among our patients continue to drop significantly through the last week of June down more than 90% from the peak in early January.\nHowever, similar to the rest of the country, we have started to see an uptick over the last few weeks.\nAs of last week on a rolling seven day average basis new infection, they're still down more than 90% from the peak.\nThus far, mortality continues to remain low on an absolute basis as we believe that are vaccinated patient are more protected from severe cases of COVID.\nWe continue to educate our patients about the benefits of vaccine to reduce vaccine hesitancy and we remain confident in our policies and procedures designed to keep our patients and our teammates safe while they're in our care.\nNow let me turn to our financial performance in the second quarter, we delivered strong results in both operating income and earnings per share, our margin expanded as we continue to manage cost while delivering quality care.\nAs a result, we delivered 6% year-over-year growth in adjusted operating income and 35% year-over-year growth in our adjusted earnings per share.\nOur free cash flow was particularly strong this quarter, we continue to return cash to our shareholders through our stock buyback.\nWith the first half of the year behind us.\nWe are now increasing the midpoint of guidance for the full year.\nLet me transition to update our progress in our integrated Kidney Care efforts, otherwise known as by IKC.\nValue-based care for our patients with kidney disease is gaining momentum and appears to have reached an inflection point.\nWe have always believed the core name dialysis care with the broader healthcare needs of KB and SKG patients with simultaneously improve outcomes and reduce total healthcare costs.\nFor years, we've been participating in a variety of small programs and pilots to build our integrated care capability and better understand the economics we believe we are at that point now where we are ready to shift to the next stage of the evolution of integrated care.\nYou might be wondering why now, the trend toward value-based care is not new either in kidney care or other segments of healthcare so what's changed to make the development of scale business viable today.\nThere's a couple of reasons.\nFirst with the growth of Medicare Advantage payers are looking for innovative ways to manage the increasing number of ESKs patients choosing MA plans these patients tend to be more complex and most of them MA patient and should benefit from tailored care management.\nSecond, CMS recently initiated the payment models and kidney modern in kidney care.\nWe are preparing to partner with nephrologists and up to 12 markets beginning in January of next year to participate in CKCC voluntary program.\nOur participation and CKPKC model will also provide us with operational scale in more geographies to enter into other value based arrangements, we've increased our confidence in our capabilities to deliver clinical and economic value at scale and have lean in on our willingness to take risk.\nWe believe we're well positioned to win an integrated care because of our strong partnership with nephrologists, our regular and consistent interactions with patients, a broad Kidney Care platform that spans various modalities and care setting.\nAnd a clinical data set and analytics that we used to create develop clinical interventions to support our patients holistically.\nWe have a demonstrated track record of improving patient outcome care, and lowering costs for patients in risk arrangement for example, in our FCOS [Phonetic], we were able to generate non-dialysis cost savings in the high single digits which translated into more than double the average savings rates compared to the rest of the industry over the life of the program.\nWith our special needs plan we have been able to lower mortality by 23% relative to other patients within the same-center and county.\nTo give you a better sense of the scale of the business.\nAs of today, approximately 10% of our US dialysis patients are in value-based care arrangements in which Tervita is responsible for managing the total cost of care.\nThis represents almost $2 billion of annual medical cost under management.\nIn addition, we have various other forms of value based care arrangements with payers in.\nWe have economic incentives for improving quality and lowering costs.\nIn 2022, we expect our integrated Kidney Care business to double inside both the number of patients in risk arrangement and the dollars under management.\nWe also expect to see a dramatic increase in the number of CKB Live we have under risk in 2022.\nTo prepare for this growth.\nWe are currently scaling up our clinical team and furthering building out our support.\nBecause of the investment as well as the delays and cost savings impact of our model of care and revenue recognition.\nWe expect to incur a net operating loss of $120 million in 2021 in our US ancillary segment this outcome is consistent with the OII headwinds from ITC growth, we called out at the beginning of the year and is of course included in our full year guidance.\nThe doubling of the business next year could result and an incremental operating loss in our ancillary segment of $50 million in 2022.\nWe expect significant improvement in our financial performance beginning in 2023 as we begin to recognize savings from the new contracts that we entered in 2021 and 2022.\nOver the five-plus-year horizon, we believe that our IKC business could become a sustainable driver of significant operating income growth.\nCurrently we serve approximately 200,000 dialysis patients across the country, we utilize over $12 billion in health services outside of the dialysis facility, including the cost of hospitalization, our patient procedures and physician services.\nIn addition, we see an opportunity to manage the care of up streams CKD patients who currently do not dialyzed in our centers.\nAssuming that we are managing the total cost of care for more than half of our dialysis patients as well as others CKD patients at low-to-single digit margin, we believe that this could be meaningful financial opportunity.\nIn summary all of healthcare has been talking about value based for years.\nWe are excited for DaVita to lead the way.\nWe had a strong quarter despite the continuing operational challenges presented by COVID primarily as a result of strong RPT performance and continued discipline on cost.\nFor the quarter, operating income was $490 million and earnings per share were $2.64.\nOur Q2 results include a net COVID headwind of approximately $35 million similar to what we saw in Q1.\nPrimarily the impact of excess mortality on volume and elevated PPE costs partially offset by sequestration relief and reduced travel and meeting expenses.\nIn Q2 treatments per day increased by 0.4% compared to Q1.\nExcess mortality declined significantly in Q2 from approximately 3,000 in Q1 to fewer than 500 in Q2.\nAt this point, we are cautiously optimistic that the worst is behind us.\nBut we're closely monitoring the potential impact of the delta Varian especially within pockets of the country that have lower vaccination rates.\nLonger term, we continue to believe that we will return to pre-pandemic treatment growth levels with an additional tailwind from lower than normal mortality rate.\nOur US dialysis revenue per treatment grew sequentially by almost $6 this quarter, primarily due to normal seasonal improvements from patients meeting their co-insurance and deductible obligations.\nWe also saw favorable changes in government rate and mix including the continued growth in the percentage of patients enrolled in Medicare Advantage.\nPatient care costs and G&A expense per treatment in total were relatively flat quarter-over-quarter.\nOur patient care costs decreased sequentially primarily due to reductions in labor costs.\nOur G&A increased slightly, primarily due to charitable contributions and increases in personnel costs.\nAs expected, our US dialysis and lab DSO decreased by approximately six days in Q2 versus Q1.\nPrimarily due to collections on the temporary billing holds related to the winter storms in the first quarter.\nThe majority of the impact of the storms on DSO and cash flow, we reversed in Q2.\nBut we may see an ongoing smaller benefit through the balance of the year.\nDuring the second quarter, we generated a gain of approximately $9 million on one of our DaVita Venture Group investments which hit the other income line on our P&L.\nWe have a small investment in medical that recently went public.\nThe value of this investment at quarter end was $23 million going forward market-to-market every quarter.\nNow turning to some updates on the rest of this year and some initial thoughts on 2022.\nAs Javier mentioned, we are raising our guidance ranges for 2021 as follows.\nAdjusted earnings per share of $8.80 to $9.40.\nAdjusted operating income of $1.8 billion to $1.875 billion and free cash flow of $1 billion to $1.2 billion.\nAlso we now expect our 2021 effective tax rate on income attributable to DaVita to be between 24% and 26% lower than the 26% to 28% range that we had communicated at the beginning of the year.\nThese new guidance ranges exclude the potential impact of a significant fourth COVID surge later this year.\nI'll call out two notable potential headwind during the second half of the year.\nFirst is COVID we continue to expect the impact of excess mortality will be higher in the back half of the year than in the first half of the year due to the compounding impact of mortality through 2021.\nWe're also expecting an uptick on costs related to testing, vaccinations and teammate support as a result of the delta variant.\nAs a result, we are increasing the middle of the range of COVID impact for the full year to $170 million from $150 million.\nThat implies a $30 million headwind from COVID in the second half of the year compared to the first half of the year.\nAs a reminder, this is the middle of what is a wide range of possible impacts depending on the impact of the delta or other variance and any additional COVID mandate.\nSecond, we expect to experience losses in our US ancillary segment of approximately $70 million in the second half of the year compared to $50 million in the first half of the year.\nThis incremental loss is due primarily to new value based care arrangements and start-up costs associated with the CKCC program that launches in 2022.\nLooking forward to 2022 we do not expect anything unusual among the primary drivers of the business, including RPT, cost per treatment or capital expenditures.\nHowever we expect pressure on OI growth from the increased spend on growing our IKC business, the possibility of union activity in 2022 that we did not face in 2021 and the first year of depreciation expense associated with our new clinical IT platform that we have been developing for the past several years.\nWe will provide more specific 2022 guidance on a future earnings call.\n", "role": "user" }, { "content": "2nd quarter 2021 results.\nq2 earnings per share $2.64 from continuing operations.\nsees fy 2021 adjusted diluted net income from continuing operations per share attributable to davita $8.80 - $9.40.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We appreciate your continued interest in our company.\nQ3 was another strong quarter for DaVita in the face of a challenging operating environment.\nDespite another rise in COVID case counts across the United States and an increasingly challenging labor market, we continue to provide quality care to our patients and execute on our strategic objectives.\nI want to begin my remarks by highlighting an exciting milestone, we took past 15% of our patients dialyzing at home.\nThis means that approximately 30,000 of our patients receive the clinical and lifestyle benefits of home dialysis.\nAs we've explained before, to be sustainable provider home dialysis, it requires a comprehensive infrastructure, including convenient and easy access to a home center for training sessions, and recurring visits with our care team.\nOur current network of centers provides that easy access such that 80% of our dialysis patients live within 10 miles of a DaVita home center.\nIn addition, we continue to innovate on our platform to help make home dialysis, an easier choice for patients and their physicians and to extend the duration on home dialysis once patients have made that choice.\nA few highlights of note.\nFirst, we recently rolled out an enhanced education program along with supporting technology for our new patients to ensure that they receive timely and comprehensive modality education, which is tailored to each patient's individual needs.\nWe also continue to work on additional enhancements and customization to our education process for different communities, such as black and Hispanic patients to improve their chance of selecting this modality and therefore improve health equity.\nSecond, we developed a patient portal and telemedicine platform that supports remote monitoring and communications between DaVita caregivers, our nephrologist partners, and our home patients.\nThird, we developed a team of industry-leading home physicians to create an expert network, which works closely with practicing physicians and practice leaders to help them understand the benefits of home modalities, troubleshooting complex clinical issues and elevate their home clinical skill.\nLast, we're testing out our AI and other technologies to optimize PD prescription, alerting physicians in real time when an update prescription might be needed.\nWe will discuss the strategic advantage of our platform in greater detail on November 16 on our Virtual Capital Markets Day.\nOn to our Q3 results.\nOur business model continues to prove resilient in face of operating challenges.\nQ3 operating income grew approximately 9% year-over-year, and adjusted earnings per share grew by more than 31% over the same period However, the ongoing COVID pandemic continues to take its toll on too many human lives in the world at large, and among our patients.\nAcross the broad US population, the current surge driven by the Delta variant appears to have peaked in early September, with new case accounts reaching approximately two-thirds of the peak during the past winner.\nFortunately, within our dialysis patient population, the new case count peaked approximately one-third of the winner peak and mortality rates were relatively lower, likely due to the vaccination rates among our patients.\nIncremental mortality increased from fewer than 500 in Q2 to approximately 2000 in Q3.\nAfter quarter end, COVID infections continue to decline, with our new case count during the week ending October 16 down by approximately 60%, relative to the recent Delta peak.\nSwitching to vaccines, approximately 73% of our patients have now been vaccinated.\nIn addition, we've started the rollout of vaccine boosters for eligible patients in accordance with CDC guidelines.\nWe're hopeful that any future COVID surges and breakthrough infections will be more limited relative to what we saw in the peak of last winter.\nCost management continued to be strong in the quarter, although we are facing the same competitive dynamics in the market for healthcare workers, as other companies have mentioned.\nDespite these challenges, I am pleased with how our frontline leadership team has been responding.\nIt has long been a key part of our mission to be the employer of choice.\nHow we live this aspect of our mission has been evident throughout the pandemic, as our team has retained relentless focus on the safety and care of our patients, as well as one another.\nAs we have discussed in past calls, we continue to offer a safe and fulfilling work environment and have provided incremental pay and benefits to help our frontline caregivers during this challenging time.\nThese efforts are ongoing.\nGiven the current environment, we expect to provide our teammates with higher annual compensation increases than in typical years.\nThis will put additional pressures on our cost structure but we believe this will help us attract and retain the talent needed to achieve our long-term objective.\nJust as critical, it aligns with our mission and builds on our history of investing in our people.\nFinally, I would like to say a few words about Integrated Kidney Care or IKC.\nLast quarter, we shared details on our planned investment in IKS and long-term opportunity this creates for patients, payers and our shareholders.\nAt the end of Q3, we now have over 22,000 patients in some form of integrated care arrangements, representing 1.7 billion of value-based care contracts.\nNext year, we expect to approximately double the size of our IKC business driven primarily by our participation in the federal government's news cheap KCC program.\nWhile it is still early and contingent on successful execution, we believe that investing in IKC represents a new and potentially meaningful earnings opportunity for us in the coming years.\nThis is another area we plan to discuss in detail at our upcoming Virtual Capital Markets Day.\nDespite the operating challenges Javier referenced, we delivered another quarter of strong results.\nOperating income was $475 million and earnings per share was $2.36.\nOur Q3 results include a net COVID headwind of approximately $55 million, an increase relative to the quarterly impact that we experienced in the first half of the year.\nAs Javier mentioned, the latest COVID surge resulted in excess mortality in the quarter of approximately 2000 compared to fewer than 500 in Q2.\nWe're also anticipating the mortality in Q4 to be higher than it was in Q2, although we've seen a decrease in the last few weeks that we hope continues.\nOur current view of the OI impact of COVID for the year is worse by approximately $40 million compared to our expectations from last quarter.\nFor 2021, we now expect a total net COVID impact of approximately $210 million.\nTreatments per day were down by 536 or 0.6% in Q3 compared to q2.\nThe primary headwind was the increase in our estimated excess mortalities and higher mistreatment as a result of the COVID surge.\nIn addition, the quarter had a higher ratio of Tuesdays, Thursdays and Saturdays, which lowered treatments per day for the quarter by approximately 300.\nIn light of the current Delta surge, and the compounding impact of mortalities on our year-over-year growth, we believe that the timing of a return to positive nag will now be delayed into 2022.\nRevenue per treatment was essentially flat quarter-over-quarter, patient care cost per treatment was up approximately $5 quarter-over-quarter, primarily due to higher teammate compensation and benefit expenses.\nThis is the result of higher wages, additional training costs associated with an increase in our new hires and seasonality in healthcare benefit expenses, which we expect to continue into Q4.\nOur Integrated Kidney Care business saw an improvement in its operating loss in the quarter, which is due primarily to positive prior period development in our special needs plan.\nWe continue to expect increased costs in Q4, especially in our projected CKCC markets, as we ramp up staffing in preparation for 2022.\nDSOs for our US dialysis and lab business increased by approximately three days quarter-over-quarter, primarily due to fluctuations in the timing of billing and collections.\nOther loss for the quarter was 7.6 million, primarily due to a $9 million decline in the mark to market of our investment in Miromatrix.\nThe value of this investment at quarter end was $14 million.\nNow turning to some updates for the rest of the year and beyond.\nAs I mentioned on the Q2 earnings call, we excluded any impact of a significant surge in COVID from the Delta variant in our revised guidance, but noted that a wider range of outcomes was possible depending in part on how a fourth surge would develop.\nNow that we've seen the impact of the Delta surge, we are increasing our estimate of COVID impact for the year by $40 million.\nGiven where we are in the year, we are now incorporating this COVID impact into our revised adjusted OI guidance of $1.76 billion to $1.81 billion.\nWe are also narrowing our guidance for adjusted earnings per share to $8.80 to $9.15 per share.\nAnd we are maintaining our free cash flow guidance of $1 billion to $1.2 billion, although there is some chance that our free cash flow may fall below the bottom end of the range, depending on the timing of our DSO recovery.\nOur revised OI guidance implies a decline in our Q4 financial performance relative to Q3.\nThis is partially explained by the incremental COVID mortality impact, and by expected higher salaries and wages for existing frontline teammates.\nOur guidance anticipates Q4 operating income to be negatively impacted by approximately $75 million of seasonally high or one-time items, including certain compensation expenses, elevated training costs, higher health benefit expenses, and G&A.\nLooking ahead to 2022, the three expected headwinds I talked about on the Q2 earnings call remain.\nAs a reminder, we expect to have added expense related to the greatest portion of the industry effort to counter the ballot initiative in California.\nWe anticipate a year-over-year incremental investment in the range of $15 million as we continue to grow our ITC business.\nAnd we will also begin depreciating our new clinical IP platform, which we expect to be approximately $40 million.\nA few additional things to help you with our thinking about 2022.\nCOVID remains a big uncertainty.\nWe are anticipating the end of the temporary sequestration suspension, which would be a $70 million headwind for the full year.\nWe also expect that some of the costs that spiked during COVID, in particular PPE, may not return as quickly to pre-COVID levels due to the challenges of the global supply chain.\nFinally, COVID impact on mortality next year remains a large swing factor.\nAnother winter surge would negatively impact treatment volume and could delay the timing of achieving positive NAG.\nHowever, if the recent surge proves to be the last significant COVID search, then we would expect a tailwind from lower than typical mortality, which could result in treatment growth higher than pre-COVID level.\nIn 2022, we expect net labor costs will increase more than in typical years as a result of market pressures.\nOur current estimate is a net headwind of $50 million to $75 million.\nWe expect to offset a significant amount of these incremental costs, with continuing MA penetration growth above historical level, and strong management of non-labor patient care costs.\nFrom an operating income growth perspective, we expect 2022 will be a transition year with some significant but largely temporary headwinds to get through, after which we expect our platform to continue to support strong profit growth.\nWhile the range of potential outcomes for 2022 is broad, a reasonable scenario could result in an OI decline of $150 million from our 2021 guidance.\nThis includes the impact from the expected ballot initiative, IKC and the increased depreciation.\nThis scenario also includes a modest headwind from COVID, although there are scenarios where the impact of COVID could be significantly worse.\nLooking forward to 2023, we anticipate a reversal of the net impact of these 2022 headwinds, plus incremental operating income growth, such that we expect 2023 operating income to show a low-to-mid single digit CAGR from the midpoint of our updated 2021 guidance, which would be in line with the multi-year outlook we have shared historically.\nWe expect this to be the result of the lack of ballot initiative-related costs, the recognition of savings in IKC, an improved COVID situation, and continued growth of the core business.\nWe'll have more to say about long term guidance at our Capital Markets Day in a couple of weeks.\nFinally, during the third quarter, we repurchase 2.7 million shares of our stock and in October to date, we repurchased an additional 1.2 million shares.\nOperator, please open the call for Q&A.\n", "role": "user" }, { "content": "compname reports q3 earnings per share of $2.36 from continuing operations.\n3rd quarter 2021 results.\nq3 earnings per share $2.36 from continuing operations.\nsees 2021 adjusted diluted net income from continuing operations per share attributable to davita inc. $8.80 to $9.15.\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 appreciate your continued interest in the company.\nI'm Jim Gustafson, vice president of investor relations.\nEach quarter, for the last two years, I hope it's the last time that the pandemic is the start of my discussions with you, yet COVID continues to evolve and have a direct impact on our world, especially on our healthcare system.\nSimilar to what's been seen in the general population, COVID infections within our patient population spiked significantly in late December through January.\nAt a peak during the second week of January, the new case count was more than twice as high as a peak from last winter.\nGratefully, the mortality rate to date with the latest surge has been lower than in prior surges.\nFor the fourth quarter, we estimate that the incremental mortality due to COVID was approximately 1,100, compared to approximately 1,600 during the third quarter.\nDespite the challenges associated with COVID, I continue to be in awe at the resilience and dedication of our teammates across the DaVita Village.\nFrom our direct patient caregivers to our corporate teammates, all are unrelenting in their commitment to provide high-quality care, respond to quickly changing environment, and show incredible compassion and support for our patients.\nFor the balance of my remarks, I will cover five topics: transplant; labor market; our supply chain; Integrated Kidney Care, IKC; and then I will wrap up with our fourth-quarter results and our outlook.\nTransplant is a preferred treatment option for most of our patients and during 2021, despite the challenges posed by the COVID pandemic, we celebrated that nearly 8,000 DaVita patients received a transplant, exceeding our pre-pandemic level.\nWith that said, the transplant process is long and complicated with an average wait time of between four and five years for an organ.\nStaying active on the waitlist for such a long time is difficult.\nAs a result, patients sometimes miss their window or a transplant.\nWe've been working to address some of these challenges through our industry-leading transplant smart education program and our partnership with The NKF to help more patients find living donors.\nIn early January, we announced the acquisition of MedSleuth, whose software enables closer partnerships and better coordination between transplant centers, nephrologists, and kidney care providers, with all three working together to support our patient transplant journey.\nThese efforts can also benefit another meaningful goal of ours, to improve health equity.\nMany process and outcome results in transplant are quite inequitable, different by race and ethnicity, economic means, and insurance coverage.\nWe believe it doesn't have to be this way, removing barriers to access, making process as easy as possible, and providing strong care coordination and support through the transplant journey can all contribute to making transplant not just more available, but also more equitable for our patients.\nNow let me shift to an update on the labor markets.\nI've been fortunate enough to be part of DaVita Village for over 20 years and in all that time across my many roles, I've never experienced the labor market as challenging as we face today.\nTo help deal with the challenge, we have provided incremental pay-in benefits to help our frontline caregivers during COVID.\nWe've also accelerated wage increases with a particular focus on our teammates in the clinic.\nAs previously communicated, we expect higher-than-usual wage increases in 2022, which will put some additional pressure on our cost structure going forward.\nWe believe this investment in our people will contribute to our ability to track and retain the talent needed to achieve our long-term objective.\nThat said, the labor markets remain highly dynamic and will continue to be a swing factor for the year.\nOver the years, in particular, during the pandemic and natural disasters, we have navigated many supply chain challenges.\nTo date, our supply chain has proven very resilient.\nCurrently, we're working through a supply shortage primarily related to dialysis, which is a fluid solution used in hemodialysis to filter toxins and fluid from the blood.\nThe shortage has rippled through the entire kidney care community and as a community, we have once again come together in support of our dialysis patients and thus far, have been able to provide uninterrupted life-sustaining care.\nWe expect that these challenges related to dialysis will remain with us until the second quarter.\nWe now have confirmation on the markets where we will partner with physicians under the federal government's new five-year CKCC demonstration.\nThese programs added approximately 12,000 ESKD patients and an additional 12,000 CKD patients across 11 value-based programs in different markets.\nWe're engaging with our nephrologist partners to develop personalized care plans for each covered patient and identify opportunities to improve clinical outcomes and lower cost for each patient.\nParticipating in these and other programs will more than double the number of patients we serve in value-based care arrangements.\nIn light of our upfront cost of these programs and the lag of shared savings payment, as we discussed in November, we continue to expect that our operating loss in 2022 in our U.S. ancillary segment will increase by approximately $50 million, although this could increase or decrease depending on the number of new arrangements we enter into during the year.\nWe believe that we are well-positioned for the future and in particular, to deliver positive clinical and financial results in our IKC business over the long term.\nNow, let me finish with fourth-quarter results and our updated outlook.\nDespite the negative impact of the omicron surge, our fourth-quarter results were slightly above the midpoint of our revised guidance.\nThis resulted in a full-year adjusted operating income increase of approximately 3% over 2020.\nAdjusted earnings per share from continuing operations grew by approximately 26% year over year, and we generated more than $1.1 billion of free cash flow, which we largely deployed to return capital to our shareholders.\nFor 2022, we expect adjusted operating income guidance of $1.525 billion to $1.675 billion.\nThe midpoint of this guidance range is $35 million below our expectations from Capital Markets Day last November, which is primarily driven by our updated views on COVID and labor costs.\nAs we said previously, while 2022 will be a transition year due to some near-term investment and challenges that we're facing, we continue to believe that we're well-positioned to perform across the kidney care continuum in the years to come.\nWe still believe we can deliver the long-term compounded annual growth of adjusted operating income of 3% to 7% that we discussed at Capital Markets Day.\nAs Javier mentioned, our fourth-quarter results were slightly above the midpoint of our revised guidance.\nQ4 results included a net COVID headwind of approximately $80 million, an increase relative to the quarterly impact that we experienced in the first three quarters of the year primarily due to the impact of the incremental mortality from the delta surge in Q3 and some temporary labor cost increases.\nFor the year, we experienced a net COVID headwind of approximately $200 million.\nAs Javier said, the incremental mortality due to COVID in the fourth quarter was approximately 1,100, compared to approximately 1,600 in Q3.\nWhile it's too early to accurately forecast incremental mortality in 2022, given the significant uptick in infections in January, we expect COVID-driven mortality in the first quarter to be at or above what we experienced in Q4.\nU.S. dialysis treatments per day were down 135 or 0.1% in Q4 compared to Q3.\nThe primary headwind was the increase in mortality and higher missed treatments as a result of the ongoing COVID pandemic.\nU.S. dialysis patient care cost per treatment were up approximately $6 quarter over quarter, primarily due to the increased wage rates and health benefit expenses.\nOur Integrated Kidney Care business saw an increase in its operating loss in Q4, which is due primarily to positive prior-period development in our special needs plans recognized in the third quarter and increased costs incurred in Q4, including preparation for new value-based care arrangements effective in 2022.\nOur adjusted effective tax rate attributable to DaVita was 16% for the fourth quarter and approximately 22% for the full year.\nThe adjusted effective tax rate was lower quarter over quarter, primarily due to a favorable resolution of a state tax issue during Q4.\nFinally, in 2021, we repurchased 13.9 million shares of our stock, reducing our shares outstanding by 11.5% during the year.\nWe have repurchased to date an additional 1.4 million shares in 2022.\nNow looking ahead to 2022, our adjusted OI guidance is a range of $1.525 billion to $1.675 billion, and our adjusted earnings per share guidance is $7.50 to $8.50 per share.\nThe midpoint of the OI guidance range is $37 million below the $1.635 billion that we discussed during our recent Capital Markets Day due to offsetting puts and takes.\nFirst, we have a tailwind from both higher final Medicare rate update, as well as a partial extension of Medicare sequestration relief.\nHowever, this is more than offset by headwinds due to the recent COVID surge, as well as incremental wage rate pressure.\nAt the midpoint of our guidance range, we have incorporated the following assumptions related to COVID: excess patient mortality due to COVID of 6,000.\nThis, along with our normal growth drivers, would result in a total treatment growth range of approximately 1.5% to 1%.\nA year-over-year improvement to COVID-driven costs such as PPE, which will be largely offset by the loss of revenue from Medicare sequestration relief beyond Q2 2022.\nAs you would expect, the high and low end of our guidance incorporates a range of COVID scenarios for 2022.\nThere are scenarios could lead us to performance above or below this range.\nIn addition to COVID, the expected headwinds I talked about on the Q3 earnings call and at our Capital Markets Day remain.\nAs a reminder, we expect to incur expenses related to the biggest portion of the industry effort to counter the expected ballot initiative in California.\nOur guidance assumes an incremental increase of between $100 million and $125 million in labor costs above a typical year's increase, which is $50 million higher than what we communicated at Capital Markets Day.\nThird, we anticipate a year-over-year incremental operating loss in the range of $50 million as we continue to invest to grow our IKC business; and fourth, we will also begin to depreciate our new clinical IT platform, which we expect to be approximately $35 million in 2022 and will begin in Q2.\nA few additional things to help you with our current thinking about 2022.\nWe expect to offset a significant amount of these incremental costs with continuing MA penetration growth above historical levels and strong management of nonlabor patient care costs.\nWe are forecasting our tax rate at 25% to 27% due to nondeductibility of valid expense.\nRegarding seasonality, remember that Q1 had seasonally higher payroll taxes and seasonal impact of copayments and deductibles.\nThe vast majority of our ballot-related expenses will fall in Q3.\nWe have historically experienced higher G&A in Q4.\nLooking past 2022, we continue to expect compounded annual OI growth relative to 2021 of 3% to 7% and compounded annual adjusted earnings per share growth relative to 2021 of 8% to 14%.\nFinally, we expect free cash flow of $850 million to $1.1 billion in 2022.\nAs we communicated at Capital Markets Day, we expect free cash flow to remain above adjusted net income with that difference contracting over time.\nOperator, please open the call for Q&A.\n", "role": "user" }, { "content": "davita fourth quarter 2021 results.\n4th quarter 2021 results.\nsees 2022 adjusted diluted net income from continuing operations per share attributable to davita inc. $7.50 to $ 8.50.\nsees 2022 free cash flow from continuing operations $850 million to $1,100 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: Also joining me on the call today are Rick Muncrief, our president and CEO; Clay Gaspar, our chief operating officer; Jeff Ritenour, our chief financial officer and a few other members of our senior management team.\nDevon's second quarter can best be defined as one of comprehensive execution across every element of our disciplined strategy that resulted in expanded margins, growth and free cash flow and the return of significant value to our shareholders through higher dividends and the reduction of debt.\nFollowing our transformative merger that closed earlier this year, I'm very pleased with the progress the team has made and our second-quarter results demonstrate the impressive momentum our business has quickly established.\nEven today, as we celebrate Devon's 50th anniversary as a company this year, we're only getting started and our talented team is eager, energized and extremely motivated to win.\nAs investors seek exposure to commodity-oriented names, it is important to recognize that Devon is a premier energy company and a must-own name in this space.\nWe have the right mix of assets, proven management, financial strength and a shareholder-friendly business model designed to lead the energy industry in capital discipline and dividends.\nNow, turning to Slide 4.\nThe power of Devon's portfolio was showcased by our second-quarter results as we continue to deliver on exactly what we promised to do both operationally and financially.\nEfficiencies drove capital spending 9% below guidance.\nStrong well productivity resulted in production volumes above our midpoint.\nThe capture of merger-related synergies drove sharp declines in corporate cost.\nThese efforts translated into a sixfold increase in free cash flow from just a quarter ago.\nAnd with this excess cash, we increased our dividend payout by 44% and we retired $710 million of low premium debt in the quarter.\nNow, Jeff will cover the return of capital to shareholders in more detail later, but investors should take note, this systematic return of value to shareholders is a clear differentiator for Devon.\nNow, moving to Slide 5.\nWhile I'm very pleased with the results our team that delivered year-to-date, the setup for the second half of the year is even better with our operations scale that generate increasing amounts of free cash flow.\nThis improved outlook is summarized in the white box at the top left of this slide.\nWith the trifecta of an improving production profile, lower capital and reduced corporate cost, Devon is positioned to deliver an annualized free cash flow yield in the second half of the year of approximately 20% at today's pricing.\nI believe it is of utmost importance to reiterate that even with this outstanding free cash flow outlook, there is no change to our capital plan this year.\nTurning your attention to Slide 7.\nNow with this powerful stream of free cash flow, our dividend policy provides us the flexibility to return even more cash to shareholders than any company in the entire S&P 500 Index.\nTo demonstrate this point, we've included a simple comparison of our annualized dividend yield in the second half of 2021, assuming a 50% variable dividend payout.\nNow as you can see, Devon's implied dividend yield is not only best-in-class in the E&P space, but we also possess the top rank yield in the entire S&P 500 Index by a wide margin.\nIn fact, at today's pricing, our yield is more than seven times higher than the average company that is represented in the S&P 500 Index.\nFurthermore, our dividend is comfortably funded within free cash flow and is accompanied by a strong balance sheet that is projected to have a leverage ratio of less than one turn by year-end.\nInvestors need to take notice, Devon offers a truly unique investment opportunity for the near 0 interest rate world that we live in today.\nNow, looking beyond Devon to the broader E&P space, I'm also encouraged this earnings season by the announcement from Pioneer on their variable dividend implementation as well as a growing number of other peers who have elected to prioritize higher dividend payouts.\nThese disciplined actions will further enhance the investment thesis for our industry, paving the way for higher fund flows as investors rediscover the attractive value proposition of the E&P space.\nNow, moving to Slide 10.\nWhile the remainder of 2021 is going to be outstanding for Devon, simply put, the investment thesis only gets stronger as I look ahead to next year.\nWe should have one of the most advantaged cash flow growth outlooks in the industry as we capture the full benefit of merger-related cost synergies, restructuring expenses roll-off and our hedge book vastly improves.\nAt today's prices, these structural tailwinds could result in more than $1 billion of incremental cash flow in 2022.\nTo put it in perspective, this incremental cash flow would represent cash flow per share growth of more than 20% year over year, if you held all other constants -- all other factors constant.\nNow while it's still too early to provide formal production and capital targets for next year, there will be no shift to our strategy.\nWe will continue to execute on our financially driven model that prioritizes free cash flow generation.\nGiven the transparent framework that underpins our capital allocation, our behavior will be very predictable as we continue to limit reinvestment rates and drive per share growth through margin expansion and cost reductions.\nWe have no intention of adding incremental barrels into the market until demand side fundamentals sustainably recover and it becomes evident that OPEC+ spare oil capacity is effectively absorbed by the world markets.\nThe bottom line is we are unwavering in our commitment to lead the industry with disciplined capital allocation and higher dividends.\nAs Rick touched on from our operations perspective, Devon continues to deliver outstanding results.\nOur Q2 results demonstrate the impressive operational momentum we've established in our business, the power of Devon's asset portfolio and the quality of our people delivering these results.\nI want to pause and congratulate the entire Devon team for the impressive work of overcoming the challenges of the pandemic and the merger while not only keeping the wheels on but requestioning everything we do and ultimately building better processes along the way.\nWe've come a long way on building the go-forward strategy, execution plan and culture and I see many more significant wins on the path ahead.\nTurning your attention to Slide 12.\nMy key message here is that we're well on our way to meeting all of our capital objectives for 2021.\nAt the bottom left of this slide, you can see that my confidence in the '21 program is underpinned by our strong operational accomplishments in the second quarter.\nWith activity focused on low-risk development, we delivered capital spending results that were 9% below plan, well productivity in the Delaware drove oil volumes above guidance and field level synergies improved operating costs.\nWhile the operating results year-to-date have been great, the remainder of the year looks equally strong, a true test of asset quality, execution and corporate cost structure proves out in sustainably low reinvestment rates, steady production and significant free cash flow.\nThis is exactly what we're delivering at Devon.\nWe plan to continue to operate 16 rigs for the balance of the year and deliver approximately 150 new wells to production in the second half of 2021.\nDuring the quarter, our capital program consisted of 13 operated rigs and four dedicated frac crews, resulting in 88 new wells that commenced first production.\nThis level of capital activity was concentrated around the border of New Mexico and Texas and accounted for roughly 80% of our total companywide capital investment in the quarter.\nAs a result of this investment, Delaware Basin's high-margin oil production continue to rapidly advance, growing 22% on a year-over-year basis.\nWhile we had great results across our acreage position, a top contributor to the strong volume were several large pads within our Stateline and Cotton Draw areas that accounted for more than 30 new wells in the quarter.\nThis activity was weighted toward development work in the Upper Wolfcamp, but we also had success co-developing multiple targets in the Bone Spring within our Stateline area.\nThe initial 30-day rates from activity at Stateline and Cotton Draw average north of 3,300 BOE per day and recoveries are on track to exceed 1.5 million barrels of oil equivalent.\nWith drilling and completion costs coming in at nearly $1 million below predrill expectations, our rates of return at Cotton Draw and Stateline are projected to approach 200% at today's strip pricing.\nWhile we've all grown weary of quoted well returns, this is the best way that I can provide insight to you on what we're seeing in real time and what will be flowing through the cash flow statements in the coming quarters.\nWhile we lack precision in these early estimates, I can tell you, these are phenomenal investments and will yield significant value to the bottom line of Devon and ultimately, to the shareholders through our cash return model.\nAnd lastly, on this slide, I want to cover the recent Bone Spring appraisal success that we had in the Potato Basin with our three well Yukon Gold project.\nHistorically, we focused our efforts in the Wolfcamp formation in this region and Yukon was our first operated test of the second Bone Spring interval in this area.\nGiven the strong results from Yukon plus additional well control from nonoperated activity, this will be a new landing zone that works its way into the Delaware Basin capital allocation mix going forward.\nThis is another example of how the Delaware Basin continues to give.\nThis new landing zone required no additional land investment, very little incremental infrastructure and as a result, the well returns have a direct path to the bottom line of Devon.\nMoving to Slide 14.\nAnother highlight associated with the Delaware Basin activity was the improvement in operational efficiencies and the margin expansion we delivered in the quarter.\nBeginning on the left-hand side, our D&C costs have improved to $543 per lateral foot in the quarter, a decline of more than 40% from just a few years ago.\nTo deliver on this positive rate of change, the team achieved record-setting drill times in both Bone Spring and Wolfcamp formations with spud to release times and our best wells improving to less than 12 days.\nOur completions work improved to an average of nearly 2,000 feet per day in the quarter.\nI want to congratulate the team and I fully expect that these improved cycle times will be a tailwind to our results for the second half of the year.\nShifting to the middle of the slide, we continue to make progress capturing operational cost synergies in the field.\nWith solid results we delivered in the second quarter, LOE and GP&T costs improved 7% year over year.\nTo achieve this positive result, we adopted the best and most economic practices from both legacy companies and leveraged our enhanced purchasing power in the Delaware to meaningfully reduce costs associated with several categories, including chemicals, water disposal, compression and contract labor.\nImportantly, these results were delivered by doing business in the right way with our strong safety performance in the quarter and combined with company delivered some of the meaningful environmental improvements over a year-over-year basis.\nAnd my final comment on this slide -- on the chart to the far right, the cumulative impact of Devon's strong operational performance resulted in significant margin expansion compared to both last quarter and on a year-over-year basis.\nImportantly, our Delaware Basin operations are geared for this trend to continue over the remainder of the year and beyond.\nMoving to Slide 15.\nWhile the Delaware Basin is clearly the growth engine of our company, we have several high-quality assets in the oil fairway of the U.S. that generate substantial amounts of free cash flow.\nThese assets may not capture many headlines but they underpin the success of our sustainable free cash flow-generating strategy.\nIn the Delaware Basin, cash flow nearly doubled in the quarter on the strength of natural gas and NGLs.\nOur Dow joint venture activity is progressing quite well and we're bringing on the first pad of new wells this quarter.\nThe Williston continues to provide phenomenal returns and at today's pricing, this asset is on track to generate nearly $700 million of free cash flow for the year.\nIn the Eagle Ford, we have reestablished momentum with 21 wells brought online year-to-date, resulting in second-quarter volumes advancing 20%.\nAnd in the Powder River, we're encouraged with continued industry activity and how -- in evaluating how we create the most value from this asset.\nWe have a creative and commercially focused team working with this asset, many of which bring fresh set of eyes on how we approach this very substantial oil-rich acreage position.\nOverall, another strong quarter of execution and each of these asset teams did a great job delivering within our diversified portfolio.\nThe team here at Devon takes great personal pride in delivering affordable and reliable energy that powers every other industry out there as well as the incredible quantity and quality of life we appreciate today.\nWe absolutely believe that in addition to meeting the world's growing energy demand, we must also deliver our products in an environmentally and commercially sustainable way.\nAs you can see with the goals outlined on this slide, we're committing to taking a leadership role by targeting to reduce greenhouse gas emissions by 50% by 2030 and achieving net zero emissions for Scope 1 and 2 by 2050.\nA critically important component of this carbon reduction strategy is to improve our methane emissions intensity by 65% by 2030 from a baseline in 2019.\nThis emissions reduction target involves a range of innovations, including advanced remote leak detection technologies and breakthrough designs like our latest low-e facilities in the Delaware Basin.\nWe also plan to constructively engage with upstream and downstream partners to improve our environmental performance across the value chain.\nWhile it's a journey, not a destination, environmental excellence is foundational to Devon.\nMy comments today will be focused on our financial results for the quarter and the next steps in the execution of our financial strategy.\nA great place to start today is with a review of Devon's strong financial performance in the second quarter, where we achieved significant growth in both operating cash flow and free cash flow.\nOperating cash flow reached $1.1 billion, an 85% increase compared to the first quarter of this year.\nThis level of cash flow generation comfortably exceeded our capital spending requirements, resulting in free cash flow of $589 million for the quarter.\nAs described earlier by Rick and Clay, our improving capital efficiency and cost control drove these outstanding results, along with the improved commodity prices realized in the second quarter.\nOverall, it was a great quarter for Devon and these results showcased the power of our financially driven business model.\nTurning your attention to Slide 6.\nWith the free cash flow generated in the quarter, we're proud to deliver on our commitment to higher cash returns through our fixed plus variable dividend framework.\nOur dividend framework is foundational to our capital allocation process, providing us the flexibility to return cash to shareholders across a variety of market conditions.\nWith this differentiated framework, we've returned more than $400 million of cash to our shareholders in the first half of the year, which exceeds the entire payout from all of last year.\nThe second half of this year is shaping up to be even more impressive.\nThis is evidenced by the announcement last night that our dividend payable on September 30 was raised for the third consecutive quarter to $0.49 per share.\nThis dividend represents a 44% increase versus last quarter and is more than a fourfold increase compared to the period a year ago.\nOn Slide 8, in addition to higher dividends, another way we have returned value to shareholders is through our recent efforts to reduce debt and enhance our investment-grade financial strength.\nIn the second quarter, we retired $710 million of debt, bringing our total debt retired year-to-date to over $1.2 billion.\nWith this disciplined management of our balance sheet, we're well on our way to reaching our net debt-to-EBITDA leverage target of one turn or less by year-end.\nOur low leverage is also complemented by a liquidity position of $4.5 billion and a debt profile with no near-term maturities.\nThis balance sheet strength is absolutely a competitive advantage for Devon that lowers our cost of capital and optimizes our financial flexibility through the commodity cycle.\nLooking ahead to the second half of the year, with the increasing amounts of free cash flow our business is projected to generate, we'll continue to systematically return value to our shareholders through both higher dividend payouts and by further deleveraging our investment-grade balance sheet.\nAs always, the first call in our free cash flow is to fully fund our fixed dividend of $0.11 per share.\nAfter funding the fixed dividend, up to 50% of the excess free cash flow in any given quarter will be allocated to our variable dividend.\nThe other half of our excess free cash flow will be allocated to improving our balance sheet and reducing our net debt.\nOnce we achieve our leverage target later this year, this tranche of excess free cash flow that was previously reserved for balance sheet improvement has the potential to be reallocated to higher dividend payouts or opportunistic share buybacks should our shares remain undervalued relative to peers in the broader market.\nSo in summary, our financial strategy is working well.\nWe have excellent liquidity and our business is generating substantial free cash flow.\nThe go-forward business will have an ultra-low leverage ratio of a turn or less by year-end and we're positioned to substantially grow our dividend payout over the rest of the year.\nI would like to close today by reiterating a few key thoughts.\nDevon is a premier energy company and we are proving this with our consistent results.\nOur unique business model is designed to reward shareholders with higher dividend payouts.\nThis is resulting in a dividend yield that's the highest in the entire S&P 500 Index.\nOur generous payout is funded entirely from free cash flow and backstopped by an investment-grade balance sheet.\nAnd our financial outlook only improves as I look to the remainder of this year and into 2022.\nWith the increasing amounts of free cash flow generated, we're committed to doing exactly what we promised and that is to lead the industry in capital discipline and dividends.\nWe'll now open the call to Q&A.\nPlease limit yourself to one question and follow up.\nWith that, operator, we'll take our first question.\n", "role": "user" }, { "content": "fixed-plus-variable dividend increased by 44 percent to $0.49 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: Also joining me on the call today are Rick Muncrief, our president and CEO; Clay Gaspar, our chief operating officer; Jeff Ritenour, our chief financial officer; and a few members of our senior management team.\nWe appreciate everyone taking the time to join us on the call today.\nDevon's third quarter results were outstanding.\nOnce again showcasing the power of our Delaware focused asset portfolio and then the benefits of our financially driven business model.\nOur team's unwavering focus on operations excellence has established impressive momentum that has allowed us to capture efficiencies, accelerate free cash flow, reduce leverage, and return of market-leading amount of cash to shareholders.\nSimply put, we are delivering on exactly what our shareholder-friendly business model was really designed for, and that is to lead the energy industry in capital discipline and cash returns.\nNow moving to Slide 4.\nWhile our strategy is a clear differentiator for Devon, the success of this approach is underpinned by our high-quality asset portfolio that is headlined by our world-class acreage position in the Delaware Basin.\nSo with this advantaged portfolio, we possess a multi-decade resource opportunity in the best position plays on the U.S. cost curve.\nAnd with this sustainable resource base, we are positioned to win multiple ways with our balanced commodity exposure.\nWhile our production is leveraged to oil, nearly half our volumes come from natural gas and NGLs, providing us with meaningful revenue exposure to these valuable products.\nThis balance and diversification are critically important to Devon's long-term success.\nAs you can see on Slide 5, the strength of our operations and the financial benefits of our strategy were on full display with our third quarter results.\nThis is evidenced by several noteworthy accomplishments, so including: we completed another batch of excellent wells in Delaware Basin that drove volumes 5% above our guidance.\nWe maintained our capital allocation in a very disciplined way by limiting our reinvestment rates to only 30% of our cash flow.\nWe're continuing to then the capture synergies and drive per unit cost lower.\nWe are also achieving a more than eightfold increase in our free cash flow.\nWe're increasing our fixed and variable dividend payout by 71%.\nWe're also improving our financial strength by reducing net debt 16% in the quarter.\nOverall, it was another tremendous quarter for Devon, and I especially want to congratulate our employees and our investors for these special results.\nNow moving to Slide 6.\nWhile 2021 is wrapping up to be a great year for Devon, the investment thesis only gets stronger and as I look ahead to next year.\nAlthough we're now still working to finalize the details of our 2022 plan, I want to emphasize that our strategic framework remains unchanged, and we will continue to prioritize free cash flow generation over the pursuit of volume growth.\nAs we have stated many times in the past, we have no intention of adding incremental barrels into the market until demand side fundamentals sustainably recover and it becomes evident that OPEC+ spare oil capacity that's effectively absorbed by the world markets.\nWith this disciplined approach and to sustain our production profile in 2022, we are directionally planning on an upstream capital program in the range of $1.9 billion to $2.2 billion.\nImportantly, with the operating efficiency gains and improved economies of scale, we can fund this program at a WTI breakeven price of around $30.\nThis low breakeven funding level is a testament to the great work the team has done over the past few years to streamline our cost structure and to really optimize capital efficiency.\nBeing positioned as a low-cost producer provides us with a wide margin of safety to continue to execute on all facets of our cash return model.\nWith our 2022 outlook, Devon will have one of the most advantaged cash flow growth outlooks in the industry.\nAt today's prices, with the full benefit of the merger synergies and an improved hedge book, we're positioned for cash flow growth of more than 40% compared to 2021.\nAnd as you can see on the graph, this strong outlook translates into a free cash flow yield of 18% at an $80 WTI price.\nThe key takeaway here is that 2022 is shaping up to be an excellent year for Devon shareholders.\nNow jumping ahead to Slide 8, the top priority of our free cash flow is then fund our fixed plus variable dividend.\nThis unique dividend policy is specifically designed for our commodity-driven business and provides us the flexibility to return more cash to shareholders than virtually any other opportunity in the markets today.\nNow to demonstrate this point, so we've included a simple comparison of our estimated dividend yield in 2022 based on our preliminary guidance.\nAs you can see, Devon's implied dividend is not only more than double that of the energy sector, but this yield is vastly superior to us in every sector in the S&P 500 index.\nIn fact, at today's pricing, Devon's yield is more than seven times higher than the average company that is represented in the S&P 500 Index.\nNow that's truly something to think about in the yield-starved world we currently live in.\nAnd moving on to Slide 9.\nWith our improving free cash flow outlook and strong financial position, I'm excited to announce the next step in our cash return strategy with the authorization of a $1 billion share repurchase program.\nThis program is an equivalent to approximately 4% of Devon's current market capitalization and is authorized through year-end 2022.\nJeff will cover this topic in greater detail later in the call, but this opportunistic buyback is a great complement to our dividend strategy and provides us with another capital allocation tool to enhance per share results for the shareholders.\nBeginning on the far left chart of our business is positioned to generate cash flow growth of more than 20 -- 40% in 2022, which is vastly superior to most other opportunities in the market.\nAs you can see in the middle chart, this strong growth translates into an 18% free cash flow yield that will be deployed to dividends, buybacks, and the continued improvement of our balance sheet.\nAnd lastly, on the far right chart, and even with all of these outstanding financial attributes, we still trade at a very attractive valuation, especially compared to the broader market indices.\nWe believe this to be another catalyst for our share price appreciation as more and more of the investors discover Devon's unique investment proposition.\nIn summary, Devon's third quarter impressive results were the result of tremendous execution across nearly every aspect of our business.\nWe had wins in environmental and safety performance.\noperational improvements, continued cultural alignment, strong well productivity, cost control, significant margin expansion and ultimately, excellent returns on the invested capital.\nThis recurring trend in our operational excellence while managing significant organizational change and macro stress has now been established over multiple quarters and is a testament to the Devon employees and strong leadership throughout the organization.\nAs I look forward to '22 and beyond, I believe we're positioned to continue delivering but also take our performance to an even higher level of cohesion and productivity.\nProviding the energy to fuel today's modern world is critically important work.\nI'm very proud of what we do and how we do it.\nAs I look forward to Devon's near and also long-term goals, I'm confident in our ability to deliver on society's ever-increasing expectations.\nDevon's operational performance in the quarter is once again driven by our world-class Delaware Basin assets, where roughly 80% of our capital was deployed.\nWith this capital investment, we continue to maintain steady activity levels by running 13 operated rigs and four frac crews, bringing on 52 wells during the quarter.\nAs you can see in the bottom left of the slide, this is just focused development program translated into another quarter of robust volume growth, and our continued cost performance allowed us to capture the full impact of the higher commodity prices.\nTurning your attention to the map on the right side, our well productivity across the basin continue to be outstanding in the quarter with the results headlined by our Boundary Raider project.\nSome may recall that this is not the first time we've delivered on impressive results from this well pad.\nBack in 2018, our original Boundary Raider project that's developed a good package of Bone Spring wells that set a record for the highest rate wells ever brought online in the Delaware Basin.\nFast forward to today, this addition of the Boundary Raider went further downhole to develop an overpressured section in the Upper Wolfcamp.\nThis project also delivered exceptionally high rates with our best well delivering an initial 30-day production rates of 7,300 BOE per day, of which more than that -- more than 60% of that was oil.\nI call that pretty good for a secondary target.\nMoving a bit east into Lea County, another result for this quarter was the Cobra project, where the team executed on a 3 mile Wolfcamp development.\nThis pad outperformed our predrill expectations by more than 10% with the top well achieving 30-day rates as high as 6,300 BOE per day.\nIn addition to the strong flow rates, this activity helped us prove the economics of the Wolfcamp inventory in this area to further deepening the resource-rich opportunity we hold in the Delaware.\nTurning to Slide 14.\nWith the strong operating results we delivered this quarter, high-margin oil production in the Delaware Basin continue to expand and rapidly advance, growing 39% year over year.\nImportantly, the returns on invested capital to deliver this growth were some of the highest I have seen in my career, bolstered by rising strip prices and our capital efficiency improvements we have delivered this year.\nThese efficiencies are evidenced on the right-hand chart, where our average D&C costs improved to $554 per lateral foot in the third quarter, a decrease of 41% from just a few years ago.\nWhile we have likely found the bottom of this cycle earlier this year, the team continues to be able to make operational breakthroughs that have thus far fought back most of the inflationary pressure.\nWe continue to win from a fresh perspective, blending teams and also still relatively -- we're still working to know each other pretty early on.\nThese accomplishments are clearly demonstrated and the great work our team has done to drive improvements across the entire planning and execution of our resource.\nTo maintain this high level of performance into 2022, and we are focused on staying out ahead of the inflationary pressures that are impacting not just our industry, but all aspects of the broader society.\nWhile our consistency and scale in the Delaware are a huge advantage, the supply chain team is working hard to anticipate issues, mitigate bottlenecks, and work with the asset teams to adjust plans to optimize our cost structure and future capital activity.\nTurning to Slide 15.\nAnother asset I'd like to put in the spotlight today is our position in the Anadarko Basin, where we have a concentrated 300,000 net acre position in the liquids-rich window of the play.\nAs you may know, Rick and I both have a historical tie to this basin, and we're thrilled to get to see the great work that our teams are doing to unlock this value for investors.\nA key objective for us this year in the Anadarko Basin is to reestablish operational continuity by leveraging the drilling carry from our joint venture agreement with Dow.\nBy way of background, in late 2019, we formed a partnership with Dow in a promoted deal, where Dow earns half of our interest on 133 undrilled locations in exchange for $100 million drilling carry.\nWith the benefits of this drilling carry, we're drilling around 30 wells this year, and our initial wells from this activity were brought on during the quarter.\nThe four-well Miller/Miller project is an up-spaced Woodford development in Canadian counter -- County and is off to a great start with both our D&C costs and well productivity outperforming pre-drill expectations.\nInitial 30-day rates averaged 2,700 BOE per day, and completed well costs came in under budget at around $8 million per well.\nWhile I'm proud of how well the team hit the ground running now as we get into our processes lined out and efficiencies dialed in, I foresee material improvements in well costs ahead.\nThe leverage returns from this carried activity will complete -- will compete effectively for capital with any asset in our portfolio.\nIn fact, the strength of natural gas and NGL pricing, the performance we're also seeing that in the Anadarko Basin will likely command relatively more capital than it did in '21.\nMoving to Slide 16.\nWhile the Delaware Basin is clearly the growth engine of our company and we're excited about the upside for the Anadarko, we also have several high-quality assets in the oil fairway of the U.S. that generates substantial free cash flow.\nWhile these assets don't typically grab the headlines, their strong performance is central to this continued success of our strategy.\nThese teams are doing great work to improve our environmental footprint, drive the capital program, optimize base production, and hopefully, keeping our cost structure low.\nAs an example, Williston will generate over $700 million of 2021 free cash flow.\nCollectively, these assets are on pace to generate nearly $1.5 billion of free cash flow this year.\nLastly, on Slide 17, with our diversified portfolio concentrated in the very best U.S. resource plays, we have a deep inventory of opportunities that underpin the long-term sustainability of our business model.\nSo, as you may have heard me talk about in prior quarters, we have a brutal capital allocation process in regards to the competitiveness of how we seek the best investment mix for the company.\nThis is the first step of this process is to make sure that all the teams are working from the same assumptions and inputs.\nSince the close of our merger earlier this year, we have undertaken a very disciplined and rigorous approach to characterize risk, force rank the opportunity set across our portfolio.\nThis inventory disclosure is the result of our detailed subsurface work and evaluation across our portfolio that we converted into a single consolidated platform to ensure consistency.\nTurning your attention to the middle bar on the chart.\nAt the current pace of activity, we possess more than a decade of low-risk and high-return inventory of what we believe to be in a mid-cycle price deck.\nAs you would expect, about 70% of our inventory resides in the Delaware Basin, providing the depth of inventory to sustain our strong capital efficiency for many years to come.\nLet me be clear.\nAnd this exercise, we are focused on compiling a very important slice of our total inventory.\nThis summary is not meant to convey the full extent of the possible with these incredible resources.\nThese are really operated, essentially all long lateral up-spaced wells that deliver competitive returns in a $55 oil environment.\nMoving to the bar on the far right of the chart, we also expect inventory depth to continue to expand as we capture additional efficiencies, optimize spacing, and further delineate the rich geologic column across our very acreage footprint.\nExpect -- we expect a significant portion of the upside opportunities to convert into our derisked inventory over time.\nSo the examples of this upside include the massive resource potential in the lower Wolfcamp intervals, continued appraisal success in the Powder River Basin and the significant liquids-rich opportunity we possess in the Anadarko Basin.\nThe bottom line here is that we have that in abundance of high economic opportunity to not only sustain but grow our cash flow per share for many years to come.\nI'd like to spend my time today discussing the substantial progress we've made advancing our financial strategy and highlight the next steps we plan to take to increase cash returns to shareholders.\nA good place to start is with the review of Devon's financial performance in the third quarter, where Devon's earnings and our cash flow per share growth rapidly expanded and comfortably exceeded consensus estimates.\nOperating cash flow for the third quarter totaled $1.6 billion, an impressive increase of 46% compared to last quarter.\nThis level of cash flow generation comfortably funded our capital spending requirements and generated $1.1 billion of free cash flow in the quarter.\nThis result represents the highest amount of free cash flow generation Devon has ever delivered in a single quarter and is a powerful example of the financial results in our cash return and that the business model can deliver.\nTurning your attention to Slide 7.\nWith this significant stream of free cash flow, a differentiating component of our financial strategy is our ability and willingness to accelerate the return of cash to shareholders through our fixed plus variable dividend framework.\nThis dividend strategy has been uniquely designed to provide us the flexibility to optimize the return of cash to shareholders across a variety of market conditions through the cycle.\nUnder our framework, we pay a fixed dividend every quarter and evaluate a variable distribution of up to 50% of the remaining free cash flow.\nSo, with the strong financial results we delivered this quarter, the board approved a 71% increase in our dividend payout versus last quarter to $0.84 per share.\nThis is the fourth quarter in a row we have increased the dividend and is by far the highest quarterly dividend payout in Devon's 50-year history.\nAs you can see on the chart to the left, at current market prices, we expect our dividend growth story to only strengthen in 2022.\nIn fact, at today's pricing, we are on pace to nearly double our dividend next year.\nMoving to Slide 10.\nIn addition to higher dividends, we've also returned value to shareholders through our efforts to reduce debt and improve our balance sheet.\nSo far this year, we've made significant progress toward this initiative by retiring over $1.2 billion of outstanding notes.\nIn conjunction with this absolute debt reduction, we've also added to our liquidity, building a $2.3 billion cash balance at quarter end.\nWith this substantial cash build and reduction in debt, we've reached this debt-to-EBITDA leverage target of one turn or less.\nEven with this advantaged balance sheet, we're not done making improvements.\nWe have identified additional opportunities to improve our financial strength by retiring approximately $1.0 billion of premium -- excuse me, low-premium debt in 2022 and 2023.\nImportantly, Devon has the flexibility to then execute on this debt reduction with cash already accumulated on the balance sheet.\nWhile the top priority for free cash flow remains the funding of our market-leading dividend yield, we also believe that this buyback authorization provides us another excellent capital allocation tool to enhance per share results for shareholders.\nGiven the cyclical nature of our business, we'll be very disciplined with this authorization, only transacting when our equity trades at a discounted valuation to historical multiples and in multiple levels of our highest quality peers.\nWe believe the double-digit free cash flow yield our equity delivers, as outlined on Slide 6, represents a unique buying opportunity.\nThe reduction in outstanding shares further improves our impressive cash flow per share growth and adds to the variable dividend per share for our shareholders.\nWith these disciplined criteria, guiding our decision making, we'll look to opportunistically repurchase our equity in the open market once our corporate blackout expires later this week.\nSo in summary, the financial strategy is working well.\nWe have excellent liquidity and our business is generating substantial free cash flow.\nWe're positioned to significantly grow our dividend payout to over the next year.\nThe go-forward business will have an ultra low leverage ratio of a turn or less, and we'll look to boost per share results is really opportunistically repurchasing our shares.\nIn closing today, I'd like to highlight a few things.\nNumber one, Devon is meeting the demands of investors with our capital discipline, earnings and cash flow growth, market-leading dividend payout, debt reduction, and now a share buyback program.\nNumber two, Devon is also meeting the demands of our market with strong oil production results, great exposure to natural gas and NGLs, along with our consistent execution.\nAnd number three, lastly, Devon is also meeting the demands of society by providing a reliable energy before this pandemic, during the pandemic, and as we emerge from the pandemic.\nAnd so our people throughout the five states where we operate continue to show up for work and work safely.\nWe didn't overreact with our capital program during the pandemic like many others did.\nWe actually strengthened the company with a merger.\nAnd finally, we're laser-focused on then achieving the stated short-term, midterm, and long-term ESG targets.\nWe're proud of the work we've done and look forward to continuing meeting the needs of investors, the market, and society for the foreseeable future.\nDevon is a premier energy company, and we're excited about the value we'll be able to consistently provide to our important stakeholders.\nWe'll now open the call to Q&A.\n[Operator instructions] With that, operator, we'll take our first question.\n", "role": "user" }, { "content": "now expects its production and capital spending to be at the high end of its 2021 guidance range.\nin 2022, devon will continue to prioritize free cash flow generation over the pursuit of volume growth.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: And our actual results could differ materially.\nIn addition, our discussion today will include references to certain supplemental non-GAAP financial measures and should be considered in addition to and not as a substitute for our GAAP results.\nAlso, during the call today, we will be referring to the slide deck posted on our website.\nI'm excited to share this update with all of you today, which continues to expand on our themes of exceptional growth and market-leading innovation.\nFirst, as a quick snapshot of our recent growth, in the fourth quarter of 2021, we delivered $106 million of revenue and 38% adjusted EBITDA margins, ending a year of exceptionally strong execution on a high note.\nIn 2021, we measured 4.5 trillion ad impressions, resulting in record revenue of $333 million, an increase of 36% compared with a year ago.\nWe grew faster than the digital advertising industry and significantly outperformed the industry's programmatic, social, and CTV growth trajectories, while generating 33% adjusted EBITDA margins.\nWe completed strategic acquisitions of Meetrics and OpenSlate and successfully continue to evolve our customer value proposition from protection to performance with the launch of two new identity independent performance solutions that do not rely on third-party cookies or persistent identifiers, custom contextual and DV authentic attention.\nBuilding on the update we provided at our investor day on February 25, I will discuss the current and future scaling of our business within the context of our five key growth drivers, which are product evolution, channel extension, international expansion, current client upsell and cross-sell, and new client acquisition and strategic M&A.\nNicola will then discuss our fourth quarter and 2021 results, as well as our outlook for 2022.\nBeginning with product evolution.\nOur expansion of pre-campaign activation solutions that drive performance continued to be led by authentic brand suitability, or ABS.\nABS was the largest driver of revenue growth for our advertiser programmatic business.\nABS revenue grew 77% in 2021 and contributed approximately $85 million to our top line.\nFor most of last year, ABS revenue was fueled by continued customer adoption and volume expansion on major buying platforms, most notably Google's DV360 and The Trade Desk, where it was launched in 2020.\nConsiderable ABS growth also came from upgrading current clients to ABS, as well as selling ABS to new clients at the outset of their relationship with DV.\nWhile a significant majority of our top 100 clients are now using ABS in some applications, their usage of the product tends to be in North America where programmatic buying is dominant.\nThere is a substantial and growing opportunity to upsell ABS to our biggest clients in their international markets, where adoption of this premium performance product has just begun.\nIn the fourth quarter, for example, we activated ABS with Disney in Latin America, Colgate in EMEA, and Nike in 21 global markets.\nWe have just started to scratch the surface of ABS growth with current clients in markets outside of North America.\nBeyond our top 100 customers, approximately 40% of our top 500 clients still do not use ABS in any market, representing a solid expansion opportunity among this established customer base.\nWe are focused on making ABS and all of our performance solutions an integral component of an unmatched suite of independently accredited pre-campaign activation and post-campaign measurement tools that drive better outcomes for advertisers.\nWhile we're discussing DV's programmatic activation products, I'd like to highlight our MRC pre-bid accreditation announcement made last week, establishing DV as the only provider currently accredited for predicted viewability targeting, as well as property-level ad verification, inclusive of brand suitability and contextual targeting within programmatic media campaigns.\nTo put it simply, we have the only fully accredited programmatic suite in the market today.\nWe expect this unique differentiator of DV's programmatic solutions, including ABS and DV custom contextual to further drive our programmatic sales momentum and support DV's overall RFP win rate, which was 80% in 2021.\nBeyond our core Programmatic solutions, we're excited about the growth opportunities with our newest performance products, authentic attention, custom contextual, OpenSlate's pre-campaign social targeting tools and our audience verification solution with Comscore.\nToday, let's dig deeper into two of them, authentic attention and audience verification.\nDV authentic attention, which you'll be hearing a lot about over the next few quarters, builds upon the baseline quality and safety metrics established by the DV authentic ad.\nFor ad impressions that meet the standards of the authentic ad, attention measurement provides a real-time impression level view of engagement and exposure, which allows advertisers to optimize media based on what's resonating most with audience.\nAs traditional performance metrics like reach and frequency lose their efficacy due to privacy and policy changes, we believe that attention will be the next currency that advertisers rely on to drive outcomes.\nOur go-to-market strategy for authentic attention leverages DV's established customer base of over 1,000 leading brands to drive ubiquitous uptake of these new data sets.\nWe essentially have a built-in pool of trial customers.\nIn Q2, we will provide a preview of attention metrics through our software platform, Pinnacle, to all customers that use the DV authentic ad, exposing the biggest brands on the planet to the performance solution of the future.\nToday, we are the only leading verification company to have built and launched a comprehensive attention solution.\nWe've already secured accreditation for fully on-screen measurement and attention metrics specific to CTV and we'll continue to expand our lead in accreditations of all our attention metrics over time.\nTurning to our upcoming audience verification solution.\nWe are excited to launch a market-leading product in partnership with Comscore.\nBy using audience verification, advertisers will be assured that the cross-platform audiences they are measuring are free of invalid traffic, delivered in view into the right geography and in the right brand environment.\nThis is an industry-first measurement solution that combines media quality verification data with audience data to help advertisers maximize campaign performance and drive real business outcomes.\nWe expect to launch the first iterations of this evolving joint offering for a select group of customers as early as the second quarter of 2022.\nMoving on to our second growth driver, channel extension.\nWe are excited about our continued growth in Social and CTV.\nSocial revenue grew by nearly 50% in 2021 with strong performance across Facebook, YouTube, Twitter, Snapchat, and Pinterest as more than 300 new advertisers activated DV's social media verification solutions last year.\nWe believe the prospects for social growth in 2022 and beyond are exceptional for two key reasons.\nFirst, we are expanding our solutions and coverage on both emerging and leading social platforms, including TikTok, Twitter and several others.\nAnd second, we have accelerated our product road map in social through the successful integration of OpenSlate's pre-campaign social activation solutions into our sales process, providing an expansion opportunity with all existing DV customers and prospects.\nBeginning with TikTok, we continue to expand coverage of our viewability solution, which is now available in 67 countries.\nOur solution has been used by nearly 30 advertisers, resulting in average monetized impression growth of approximately 220% over the last six months.\nOn brand safety and TikTok, DV's advertiser activated brand safety controls continue to expand and have now been rolled out in North America, the U.K., Australia and the Middle East, with 82 advertisers using the solution.\nIn addition, we continue to develop end-to-end in-feed solutions in conjunction with TikTok.\nWith coverage of viewability, fraud and in-geo, as well as our brand safety controls, DV offers the most comprehensive measurement and activation product offering across TikTok today.\nOn Twitter, we're developing a brand safety and suitability measurement solution for Twitter's news feed, known as timeline, and expect to launch this in the first half of 2022.\nMoving on to pre-campaign social solutions that we are integrating into our platform via the OpenSlate acquisition, we're actively working to capitalize on both immediate and long-term revenue opportunities.\nWe have begun cross-selling our combined pre-campaign activation solution to DV's expansive global customer base.\nOur research demonstrates that when our pre-campaign activation and social solutions are paired with our post-bid measurement products, we can deliver significantly improved outcomes for our customers.\nOn YouTube, we saw that when our pre-campaign activation solutions are applied to campaigns, brand suitability incidents are reduced by up to 50%.\nWe expect to be able to drive even better advertising outcomes for advertisers as the operational integration progresses.\nOn CTV, our impression volumes grew 57% in 2021.\nAnd by the fourth quarter, 25% of our tag-based advertiser video impressions were CTV.\nSo in essence, one of every four of DV's open internet video impressions are attributable to CTV, over-indexing relative to CTV share of the digital video across the industry and underscoring the growing importance of verification in this fast-growing sector.\nOur CTV products are becoming essential to advertisers because fraud and viewability are emerging as real challenges to advertiser and media investment confidence.\nFraud continues to violate unprotected digital transactions with increasing incidences of counterfeit SSAI servers generating fake CTV inventory across countless apps, IPs and devices.\nAs recently as last month, DV discovered a new scheme that we've dubbed ViperBot, which strips the code that verifies ad impressions and then conceals and redirect this code through real devices to hide the fraudulent activity and attempt to go undetected.\nDV customers are fully protected from this scheme, which continues to scoop more than 5 million devices and over 80 million ad requests per day, undercutting ad investments and underlining performance.\nIn addition to fraud, viewability, which has generally been assumed by CTV advertisers is also being challenged in CTV.\nIn a recent study, DV discovered that one in four analyzed CTV environments continue to play programming content, including recording ad impressions after the television was turned off.\nThe ad was delivered, but certainly was not viewed, rendering performance measurement invalid and diverting media investment.\nTo combat this latest viewability challenge, last month, DV launched fully on-screen prebid targeting, enabling connected advertisers to target inventory from sources that are tested and evaluated by DV to ensure ads are only displayed 100% on screen and when the TV screen is turned on.\nThrough this first-of-a-kind solution, DV complements our post-bid measurement capabilities with pre-bid targeting, empowering programmatic advertisers to address CTV's viewability challenges across the media transaction.\nDV fully on-screen prebid segments are available on Amobee, MediaMath and Microsoft Xandr with more media buying platforms coming.\nIn addition to these CTV solutions, DV is the first and only verification provider to provide effective brand suitability controls in CTV environments.\nWe currently offer CTV app inclusion and exclusion lists and app level controls that are utilized in both monitoring and active prebid avoidance.\nAnd we will be launching content level classification in CTV in 2022.\nShifting to international expansion.\nInternational revenue grew by almost 70% last year with APAC revenue growing by 84% and EMEA by 61%, all outpacing the industry and our competitors.\nInternational now contributes 26% of our overall direct revenue.\nWe currently generate revenue in 93 countries and from our expanding base of 20 locations outside the United States, we will leverage our exceptional RFP win rate to take advantage of the expansion opportunity that exists in markets around the world.\nIn 2021, 55% of our headcount growth was driven by international hires as we continue to invest in expanding our global presence.\nTurning to client upsells and new client acquisition.\nWe signed 176 new advertising customers in 2021, including brands such as Target, GEICO, Diageo, BMW, Bumble and Apple services.\n61% of our new logo wins were greenfield, while 39% were competitive wins.\nIn addition, on the supply side of the business, we added numerous new platform clients such as Amazon, Taboola, AdTheorent, Smartclip, and Verve, as well as 19 new publishers to the fold.\nThe platform and publisher businesses are additional great examples of how we can extend our core data assets into entirely new revenue lines.\nWith regard to our final growth lever, strategic M&A, the integrations of Meetrics and OpenSlate are progressing well, and we have received client and partner endorsement of the additional global breadth and product depth that they have delivered to DV.\nWith a strong and growing cash position and zero debt, we are exceptionally well-positioned to take advantage of global market expansion, product acceleration and solution extension opportunities that exist in the market.\nWrapping up with a quick take on our innovation story, DV continues to lead the industry with unique value-driving solutions that set us apart from our competitors, paving the road for additional growth ahead.\nIn the last 12 months, DV has launched or expanded the only widely available attention solution, the only comprehensively accredited programmatic suite, the only solution for measuring and filtering fully on-screen CTV impressions, the only certified CTV fraud program for programmatic partners, and we are the only leading verification company to root out and publicize the numerous new fraud attacks that shake the confidence of digital advertisers around the globe.\nAnd soon, we will launch the only verified audience solution along with Comscore.\nAnd now we are the only independent leading verification company that is not in the conflicted business of selling digital ads.\nWe lead and differentiate with innovation and earn our customers' trust through independence.\nLet me begin with a review of our fourth quarter and full year 2021 performance before discussing our 2022 outlook.\nGrowth and profitability accelerated in the fourth quarter.\nWe generated $106 million of revenue, representing year-over-year growth of $27 million or 34%.\nWe grew fourth quarter adjusted EBITDA to $40 million or 46% year over year, representing a 38% adjusted EBITDA margin.\nFor context, DV generated more revenue and more adjusted EBITDA in the fourth quarter of 2021 than it did in all of 2018.\nFourth quarter results were ahead of our expectations as the impact of supply chain disruption on CPG and auto ad spend was lower than we had anticipated going into the quarter.\nStronger-than-expected growth from verticals such as financial services, retail and entertainment more than offset the slight weakness in CPG and auto, demonstrating the benefits of our well-diversified customer base.\nThe acquisition of OpenSlate completed at the end of November did not have a material impact on fourth quarter results.\nAnd as previously mentioned, we anticipate the integration of OpenSlate solution to generate between $15 million and $18 million in 2022.\nRevenue growth was broad-based across advertisers, platforms and publishers and each revenue type grew sequentially from the third to the fourth quarter, which is our seasonally strongest quarter.\nFor the full year 2021, we delivered $333 million in revenue, up 36% year over year and adjusted EBITDA of $110 million, up 50% year over year and representing a 33% adjusted EBITDA margin.\nIn 2021, advertiser programmatic grew 45%, driven by ABS, which grew 77% and represented 50% of advertiser programmatic revenue.\nAdvertiser direct revenue grew 27%, driven by social revenue growth of 47%.\nSocial represented 33% of our advertiser direct revenue, up from 29% in 2020.\nFinally, supply side revenue grew 38% in 2021, driven by new deals with large platforms such as Yahoo!\nJapan and Amazon, as well as the 19 new publishers we signed on during the year.\nThe basis for our strong advertiser revenue performance is an attractive set of KPIs, which drive the recurring nature of our business.\nOur 2021 net revenue retention rate was 126% and while gross revenue retention was 98%.\nOur customer tenure was 6.9 years for our top 75 customers.\nFor our top 100 customers, we grew average revenue per customer from $1.8 million in 2020 to $2.2 million in 2021.\nAnd finally, we increased the number of customers generating more than $1 million in revenue by 42% in 2021.\nOur cost of revenue increased by $19 million year-on-year in 2021, primarily due to an increase in costs from revenue sharing arrangements with our Programmatic partners as Programmatic revenue grew as a percentage of total revenue.\nIn addition, we continue and intend to accelerate our investments in cloud-based hosting solutions to provide the scale and flexibility necessary to support our geographic expansion.\nGAAP product development and sales and marketing expenses, which include stock-based compensation, increased at a rate below our top line growth reflecting the operating efficiency of our business model.\nIn 2021, we expanded adjusted EBITDA margins to 33% while continuing to invest in the business.\nWe added over 200 employees during 2021, including approximately 100 from our two acquisitions.\nIn terms of cash flow and balance sheet, we generated $83 million in cash from operating activities in 2021, a nearly fourfold increase from the $21 million generated in 2020.\nWe had approximately $222 million of cash at the end of the year and zero debt on the balance sheet.\nTurning to 2022 guidance.\nWe expect to continue to deliver high revenue growth and high profitability in 2022.\nWe expect full year 2022 revenue in the range of $429 million to $437 million, a year-over-year increase of 30% at the midpoint.\nAnd we expect full year 2022 adjusted EBITDA in the range of $126 million to $134 million, representing a 30% adjusted EBITDA margin at the midpoint.\nWe expect a quarterly share of full year revenue to be similar to the seasonal patterns that we achieved in 2021.\nFor the first quarter of 2022, we expect revenue in the range of $89 million to $91 million, which implies a 33% growth at the midpoint.\nAnd we expect first quarter adjusted EBITDA in the range of $21 million to $23 million, which represents a 24% adjusted EBITDA margin at the midpoint.\nWhile we anticipate realizing synergies from the acquisitions of OpenSlate and Meetrics by eliminating duplicative costs over time, we expect operating expenses to trend higher in the first half of 2022 and this is reflected in our first quarter EBITDA guidance.\nStock-based compensation expense for the first quarter of 2022 is expected in the range of $9 million to $10 million.\nFor the full year, stock-based compensation expense is expected in the range of $44 million to $49 million and shares outstanding for the first quarter are expected in the range of 170 million to 173 million.\nAs mentioned during investor day, starting with first quarter 2022, advertiser programmatic will be renamed Activation Revenue and will include programmatic revenue in addition to pre-campaign social revenue, including revenue contribution expected from selling OpenSlate solutions.\nadvertiser direct will be renamed Measurement Revenue and will continue to include DV's post-campaign measurement business on social, CTV and the open web.\n", "role": "user" }, { "content": "qtrly total revenue of $105.5 million, an increase of 34%.\nsees q1 revenue of $89 to $91 million, a year-over-year increase of 33% at midpoint.\nsees q1 adjusted ebitda in range of $21 to $23 million, representing a 24% margin at midpoint.\nsees 2022 revenue of $429 to $437 million, a year-over-year increase of 30% at midpoint.\nsees 2022 adjusted ebitda in range of $126 to $134 million, representing a 30% margin at midpoint.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm pleased that you're joining us for DXC Technology's first-quarter 2022 earnings call.\nOur speakers on the call today will be Mike Salvino, our president and CEO; and Ken Sharp, our executive vice president and CFO.\nIn accordance with SEC rules, we provided a reconciliation of these measures to their respective and most comparable GAAP measures.\nA discussion of these risks and uncertainties is included in our annual report on Form 10-K and other SEC filings.\nToday's agenda will begin with a quick update on our solid Q1 performance, which continues to show that revenue, adjusted EBIT margin, book-to-bill and non-GAAP earnings per share all have a positive trajectory compared to past quarters.\nDuring our Investor Day in June, we gave you additional insights into the steps of our transformation journey, and those steps are: inspire and take care of our colleagues, focus on our customers, optimize costs, seize the market and build a strong financial foundation.\nI will give updates on each step, and then hand the call over to Ken to share our Q1 financial results, guidance and more details on how we are building a strong financial foundation.\nRegarding our Q1 performance, our revenues were $4.14 billion, and our adjusted EBIT margin was 8%.\nThis represents the fourth straight quarter of both revenue stabilization and sequential margin expansion, and we expect both trends to continue in Q2.\nBook-to-bill for the quarter was 1.12.\nThis is the fifth straight quarter that we delivered a 1.0 or better book-to-bill, and we expect our success of winning in the market to continue in Q2.\nOur non-GAAP earnings per share was $0.84 in the quarter, which is up 300%, as compared to $0.21 that we delivered in Q1 of FY '21.\nThe positive trajectory of all four of these numbers gives us confidence that our playbook is working.\nAs a refresher, our playbook has three phases.\nThe stabilization phase was completed in FY '21.\nThis phase enabled us to make great progress with our colleagues, customers, on revenue, margin, book-to-bill and reducing our debt.\nWe are now focused on the foundation phase.\nThis phase focuses on the steps that will allow us to deliver growth.\nThe goals of this phase are: first, continue to increase our employee engagement, all while we attract and retain highly talented colleagues; second, stabilize year-on-year organic revenue; third, expand adjusted EBIT margins; fourth, consistently deliver a book-to-bill number of 1.0 or greater, with a nice mix of new work and renewals; and finally, under Ken's leadership, deliver a financial foundation that increases discipline and improves our cash flow and earnings power.\nNow I will discuss the good progress we are making on each step of our transformation journey, beginning with inspire and take care of our colleagues.\nWe are executing a people-first strategy.\nAttracting and retaining talent is fundamental to enable our growth.\nOur refreshed leadership team has deep industry experience and is delivering.\nBrenda, who is our chief marketing officer, is our newest addition.\nBrenda is a strategic results-oriented leader who brings deep marketing experience to DXC.\n75% of our leadership team is now new to DXC and bringing in talent based on their personal credibility as talent follows talent.\nWhat the team is finding is that the new DXC story is resonating in the market, and new-hires are wanting to join DXC because they see the opportunity to progress their careers with a company that's on the right trajectory.\nWe mentioned during our investor call that nearly 50% of our vice presidents across the company are new to DXC within the last 22 months.\nAlso, we are investing in our people.\nThis quarter, we rewarded high performance by paying annual bonuses that benefited roughly 45,000 of our colleagues.\nIn Q2, we are planning merit increases that will benefit roughly 77,000 of our colleagues.\nIn addition to these investments, we are doing a great job of taking care of our colleagues and their families during the pandemic.\nThis focus on our colleagues is unique and builds trust with them, increases employee engagement, allows us to compete for talent and enables us to deliver for our customers.\nFocus on our customers is the second step of our transformation journey.\nOur investment in our customers is the primary driver of revenue stabilization.\nIt was clear from their comments that the new DXC story is resonating with them because we are delivering.\nThese are all large global companies, and they are saying that their IT estates are important.\nIn fact, they use the word critical.\nOur strategy of delivering ITO services builds customer intimacy and develops trust that when our customers want to further transform their business, they turn to us, and allows us to move them up the enterprise technology stack.\nAdditional evidence that our strategy is working is the nice progress we have made on our GBS business, along with the cloud and security layer of our GIS business.\nAll of this gives us confidence that we will deliver on our financial commitments.\nNow let me turn to our cost optimization program.\nWe continue to do well, optimizing our costs and delivering for our customers without disruption.\nThese levers have helped us expand our margin going from 7.5% last quarter to 8% this quarter.\nYou will hear from Ken that we expect to continue to expand margins in Q2.\nNext, seize the market is where we are focused on cross-selling to our existing customers and winning new work.\nThe 1.12 book-to-bill that we delivered this quarter is evidence that our plan is working.\nIn Q1, 57% of our bookings were new work and 43% were renewals.\nYou will see that we are running specific sales campaigns.\nAn example of these campaigns is ITO modernization, which is focused on improving the performance of our customers' IT estates.\nAnother example is our campaign to show our customers how to think about cloud, which combines on-prem, private cloud and public cloud technology.\nOur ability to deliver a consistent book-to-bill of 1.0 in each of the last five quarters is evidence that these sales campaigns are working and that we can win in the IT services industry.\nThis momentum and success in the market gives us confidence that we will deliver another book-to-bill of 1.0 or greater in Q2.\nTurning to our financial performance on Slide 12.\nFor the quarter, DXC exceeded the top end of our revenue, margin and earnings guidance, and continued to deliver a strong book-to-bill.\nGAAP revenue was $4.14 billion, $10 million higher than the top end of our guidance range.\nAdjusted EBIT margin was 8% in the quarter, an improvement of 380 basis points as compared to the prior quarter.\nIn Q1, bookings were $4.6 billion for a book-to-bill of 1.12, the fifth straight quarter of a book-to-bill greater than one.\nMoving on to Slide 13.\nOur Q1 non-GAAP earnings per share was $0.84 or $0.08 higher than the top end of our guidance, benefiting $0.05 from a lower tax rate.\nRestructuring and TSI expenses were $76 million, down 58% from prior year.\nFree cash flow was a use of cash of $304 million, as compared to a use of cash of $106 million in the prior year.\nWe expect free cash flow to improve significantly as the year progresses.\nAs the next slide shows, our Q1 FY '22 performance continues our trajectory as we deliver on our transformation journey.\nStarting with organic growth progression, we went from approximately 10% decline in the first three quarters of FY '21 to down 6.5% in the fourth quarter and now down to a decline of 3.7%.\nThis is a 40% improvement from the prior quarter.\nOur previous organic revenue growth calculation was not performed in this manner.\nAs a result, we have revised the organic growth rates for the prior-year periods in our earnings deck and have further supplemented our organic calculation to include all the information to support the calculation, providing you complete transparency.\nThis change does not yield a meaningful difference to our historically reported organic revenue growth rates, trajectory or guidance.\nAdjusted EBIT margin expanded 380 basis points.\nExcluding the impact of dispositions, margin expanded almost 600 basis points.\nWe continue to market with five consecutive quarters of a book-to-bill greater than one, and lastly, non-GAAP earnings per share quadrupled.\nNow moving to our GBS business, composed of analytics and engineering, applications and business process services.\nRevenue was $1.9 billion in the quarter.\nOrganic revenue growth was positive 2% as compared to prior year.\nIn terms of quarterly progression, organic revenues declined about 6% to 7% in the first three quarters of FY '21, declined 3.4% in the fourth quarter and turned to positive 2% this quarter.\nGBS segment profit was $272 million with a 14.4% profit rate, up 450 basis points from the prior year.\nGBS bookings for the quarter were $2.4 billion for a book-to-bill of 1.29.\nAs you have seen for a number of quarters, the demand for our GBS offerings, the top half of our technology stack have been quite robust and now yielding positive organic revenue growth.\nTurning to our GIS segment, consisting of IT outsourcing, cloud and security, and modern workplace.\nRevenue was $2.3 billion, down 9.1% year over year on an organic basis.\nWe are seeing the rate of decline moderate this quarter despite the headwinds from our modern workplace business.\nGIS segment profit was $131 million with a profit margin of 5.8%, a 480-basis-point margin improvement over the prior-year quarter.\nGIS bookings were $2.2 billion for a book-to-bill of 0.97, compared to 0.77 in the prior year.\nIt is safe to say revenues continue to stabilize and demonstrate that with improved customer intimacy and delivery, our revenue is not running away, allowing us to build our growth foundation.\nNow I will break down our segment results, GBS and GIS, into the layers of our enterprise technology stack, starting with GBS.\nAnalytics and engineering revenues were $482 million, up 12.9% as compared to prior year.\nWe continue to see high demand for our offerings with a book-to-bill of 1.32 in the quarter.\nApplications also continued to demonstrate solid progress with revenue of $1.246 billion, growing organically almost 1%.\nApplications also continues its strong book-to-bill at 1.32.\nBusiness process services revenues were $118 million, down 13% compared to the prior-year quarter with a book-to-bill of 1.13.\nCloud and security revenue was $549 million, up 4.9% as compared to the prior year.\nThe cloud business is benefiting from increased demand associated with our hybrid cloud offerings.\nBook-to-bill was 0.85 the quarter.\nIT outsourcing revenue was $1.13 billion, down 9% as compared to prior year.\nTo put this decline in perspective, last year, this business declined almost 20% year over year.\nWe expect this momentum to continue and organic declines to further abate as the year progresses.\nModern workplace revenues were $577 million, down 19.7% as compared to prior year.\nBook-to-bill was 1.0 in the quarter.\nAs you may recall, modern workplace was part of our strategic alternatives and was not part of our transformation journey until recently.\nAs a result, we previously disclosed that the performance would be uneven as we invest in the business, enhancing our offerings and innovating the end-user experience.\nAs our transformation journey takes hold, we expect modern workplace performance to improve similar to the trend we have seen with our ITO business.\nOne of our key initiatives to drive cash flow and improve earnings power is to wind down restructuring in TSI costs.\nWe expect to reduce this from an average of $900 million per year over the last four years to $550 million in FY '22 and about $100 million in FY '24.\nOn Slide 19, we detail our efforts to strengthen our balance sheet.\nWe are proud of what we achieved on this front, reducing our debt by $7 billion, while improving our net debt leverage ratio to 0.9 times.\nFurther, we have reached our targeted debt level of $5 billion with relatively low maturities through FY '24.\nFrom our improved balance sheet, let's move to cash flow for the quarter.\nFirst-quarter cash flow from operations totaled an outflow of $29 million.\nFree cash flow for the quarter was negative $304 million.\nAs you likely realize, with Mike's leadership, we will continue to make decisions to better position the company for the longer term, creating a sustainable business.\nCertain of these decisions impacted cash flow this quarter.\nAs our guidance anticipated, we plan to take certain actions that impacted the Q1 cash flow.\nWe remain on track to deliver our full-year free cash flow guidance of $500 million.\nLet's now turn to our financial priorities on Slide 21.\nWe are working to build a stronger financial foundation and use that base to drive the company forward in a disciplined and rigorous fashion, unleashing DXC's true earnings power.\nOur second priority is to have a strong balance sheet.\nWe achieved our targeted debt level.\nWe are encouraged by our almost 50% year-over-year interest expense reduction.\nWe continue to focus on reducing interest expense and are evaluating refinancing options given the advantageous interest rate environment.\nThird, we will focus on improving cash flow.\nDuring the quarter, we paid $88 million to draw to conclusion a long-standing $3 billion take-or-pay contract for IT hardware.\nThese types of contracts are not efficient, and we are reducing our exposure.\nAdditionally, we paid down $300 million of capital leases and asset financing in order to allow us to dispose of IP hardware purchased under the previously mentioned take-or-pay arrangement and realizing tax deduction once we dispose of the unutilized assets.\nGiven our relatively low borrowing cost, it makes less sense to enter into capital leases as the borrowing costs are higher and creates other complexities.\nWe continue to reduce capital lease and asset financing origination from approximately $1.1 billion in FY '20 to $450 million in FY '21 and believe that we will remain at that level or lower for FY '22.\nAs we continue to curtail capital lease origination, our average quarterly lease payment will reduce from about $230 million a quarter in FY '21 to about $170 million near term.\nOur efforts to limit capital leases does create upward pressure on capital expenditures.\nThough, on balance, we expect to reduce cash outflows for both capital leases and capital expenditures over time.\nLastly, we terminated our German AR securitization program, negatively impacting cash flow by $114 million for the quarter.\nGoing forward, this will result in interest savings, strengthen our balance sheet, but more importantly, it will bring us closer to our customers as cash collections is tied to their success.\nFourth, we will reduce restructuring and TSI expense, improving our cash flow.\nFifth, as we generate free cash flow, we will appropriately deploy capital to invest in our business and return capital to our shareholders, all the while continuing to maintain our investment-grade credit profile.\nDuring the quarter, we executed $67 million of stock buybacks to offset dilution, taking advantage of what we believe was an attractive valuation in the market.\nI should note, we continue to make progress with our efforts to optimize our portfolio, unlocking value as we divest noncore assets, including both businesses and facilities.\nWe expect to continue these efforts.\nOur results today include the benefit from the sale of assets, partially offset by other discrete items, and the headwind of 30 basis points of margin associated with the disposition of our healthcare provider software business.\nMoving on to second-quarter guidance on Slide 22.\nRevenues between $4.08 billion and $4.13 billion.\nThis translates into organic revenue declines of down 1% to down 3%.\nAdjusted EBIT margins of 8% to 8.4%.\nNon-GAAP diluted earnings per share in the range of $0.80 to $0.84.\nAs we look forward to the rest of the year, I would note that we expect $175 million of tax payments in Q2 related to the gains on dispositions.\nWe also updated our FY '22 interest guidance to approximately $180 million, a $20 million improvement; and reduced our full-year non-GAAP tax rate by 200 basis points to 26%.\nAs noted on Slides 23 and 24, we are reaffirming our FY '22 and longer-term guidance.\nLastly, we expect to see further improvement in the quarterly year-over-year organic revenue growth rates as we move through the year.\nLet me leave you with three key takeaways.\nFirst, I couldn't be more pleased with the trajectory of the business.\nOur improvement in revenue, margins and earnings per share is evident, and we expect this success to continue.\nSecond, we have momentum and continue to win in the market.\nWe expect our progress in driving a book-to-bill of over 1.0 to continue.\nThird, our financial foundation is coming together nicely under Ken's leadership.\nWe have made great progress on debt reduction, reducing our restructuring and TSI expense, and delivering on our capital allocation priorities.\nThese three key takeaways show that we have good momentum, we are building the foundation for growth, and we are confident that we will deliver on our financial commitments.\n", "role": "user" }, { "content": "q1 non-gaap earnings per share $0.84.\nq1 revenue $4.14 billion versus refinitiv ibes estimate of $4.11 billion.\nbookings of $4.6 billion and book-to-bill ratio of 1.12x in q1 fy22.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm pleased that you are joining us for DXC Technology's third-quarter fiscal 2021 earnings call.\nAfter the call, we will post these slides to the investor relations section of our website.\nIn accordance with SEC rules, we have provided a reconciliation of these measures to their respective and most directly comparable GAAP measures.\nA discussion of these risks and uncertainties is included in our annual report on Form 10-K and other SEC filings.\nI will walk through today's agenda in a moment.\nAs we announced last month, we received an unsolicited and nonbinding proposal from Atos to purchase DXC.\nOur Board reviewed the proposal carefully with our financial and legal advisors and found it to be inadequate and lacking certainty, given the value our Board believes we can create on a stand-alone basis by executing on our transformation journey.\nAfter sharing some high-level information with Atos to help them understand why their proposal undervalue DXC, Atos and DXC agreed to discontinue further discussions.\nWe are confident in our transformation journey, and our Q3 results show strong evidence that our team is executing.\nWe are flattered that Atos saw the value we are creating and clearly has taken notice of our new leadership team and how we are delivering for our customers and winning in the market.\nI was pleased with how we managed the proposal.\nAs it did not linger, we stayed focused on our business and it helped highlight some areas where we can accelerate our transformation journey and create additional value.\nWith the new leadership team in place, I'm looking forward to sharing the details of our FY '22 full year plan and longer-term expectations on our Q4 earnings call.\nWe're also planning an Investor Day to discuss in more detail our plans and introduce you to our leadership team.\nNow let me turn to today's agenda.\nI will start by giving you a quick update on our strong Q3 performance.\nNext, I will highlight the progress we're making on our transformation journey.\nOur strong Q3 results were driven by executing against the three key areas of our transformation journey, which are focused on customers, optimize cost and seize the market.\nI will then hand the call over to our new CFO, Ken Sharp, to share our detailed Q3 financial results and guidance for Q4.\nRegarding our Q3 performance, our revenues were $4.29 billion, approximately $90 million above the top end of our guidance.\nThis is the second straight quarter of revenue stabilization, and we expect this trend to continue in Q4.\nOur sequential revenue stabilization is positive evidence that we will achieve year-on-year revenue stability.\nConcerning adjusted EBIT margin, we delivered 7%, also higher than the top end of our guidance.\nLike revenue, we expect margins to continue to expand in Q4.\nBook-to-bill for the quarter was 1.13, underscoring the success of bringing the new DXC, which focuses on our customers and people to the market.\nThis is the third straight quarter that we've delivered a 1.0 or better book-to-bill, and we also expect this trend to continue in Q4.\nI'm pleased about the level of stability and momentum we are achieving.\nWe have done well attracting talent, improving the environment for our people, strengthening our customer relationships, taking out cost without disruption and continuing to win in the market.\nNow before I go through the progress of our transformation journey, I would like to comment on two recent hires that have allowed me to finalize our new leadership team.\nWe completed our CFO search and hired Ken Sharp.\nKen returns to DXC after being the CFO of Northrop Grumman's Defense Systems business.\nPrior to that, Ken was SVP of finance at Orbital ATK and has over a decade of experience in our industry.\nKen has a strong operational focus and has led large-scale finance transformations.\nThese skills are important to us as we continue executing on our transformation journey.\nWe also added Michael Corocoran to our team.\nMichael has joined us as chief strategy officer and has a track record of transforming and growing businesses.\nMichael joins us from WPP, where he led strategy and operations.\nPrior to WPP, Michael was at Accenture, where he spent a number of years with me and created the strategy for Accenture operations.\nThe amount of transformation and industry experience of this team is substantial, and they are the main reason for our strong execution and results.\nYou will hear in a moment why Ken joined DXC and his comments concerning the opportunity to create value do a really nice job capturing why talent joins DXC.\nNow I will cover the good progress we are making on our transformation journey, starting with our customers.\nOur focus on customers continues to be the primary driver of revenue stabilization.\nAs I've said time and time again, when we deliver for our customers and are seen as a trusted partner, customers are more likely to renew existing work and consider us for new work.\nLet me give you two good examples that have happened in Q3.\nMolson Coors renewed two pieces of work with us this quarter.\nThe first is in application management, and the second is across multiple layers of the enterprise technology stack, including ITO, Modern Workplace, cloud and security.\nNext, our strong relationship and flexible delivery model led to an expanded agreement with Pacific Life insurance, which includes application development and support for its retirement and life divisions, enabling them to reduce cost and improve efficiency.\nThese are two perfect examples of the great job we're doing, strengthening our customer relationships and gives us confidence that we can continue to stabilize revenue.\nNow let me turn to our cost optimization program.\nWe will achieve our goal of $550 million of cost savings this year.\nOur cost optimization program was responsible for our strong adjusted EBIT margin of 7% in Q3.\nWe were able to expand margins despite a 200 basis point headwind from the sale of the U.S. state and local health and human services business.\nWe have done well optimizing our costs and continuing to deliver for our customers without disruption.\nSeize the market is the final area of our transformation journey.\nIn this area, we are focused on cross-selling to our existing accounts and winning work with new customers.\nThe 1.13 book-to-bill number that we delivered this quarter is consistent evidence that our plan is working.\nIn Q3, 55% of our bookings were new work and 45% were renewals.\nLet me give you a good example of new work with a new customer.\nWe signed a three-year deal with Ferrari, where we will modernize their IT platforms with services, including security and modern workplace.\nOur ability to deliver a consistent book-to-bill number of over 1.0 in the first three quarters of FY '21 is clear evidence that our transformation journey is not only working but we can absolutely win in the IT services market.\nTurning now to our healthcare provider software business.\nWe are on track to complete the sale of this business and use the roughly $450 million of net proceeds to pay down debt, further strengthening our balance sheet.\nLet me begin by saying how excited I am to join DXC and be part of the team that Mike has assembled.\nLet me provide you some insight into my thought process on why I joined, which came down to three main factors: the team Mike assembled; the transformation journey; and third, the investment thesis of how DXC would create value.\nAfter spending time with Mike and the team, I'm convinced that DXC can execute on the investment thesis I was contemplating.\nThis includes stabilizing revenue, expanding margins and delivering free cash flow.\nWhen we achieve this thesis, I believe DXC will be successful in unlocking significant value.\nNow let me talk about the team Mike assembled.\nCompanies with the best people win.\nThe strength of the team delivering on the transformation journey is clearly visible in our Q3 results.\nAt DXC, there are three main areas that our finance team will focus on.\nFirst, we will work hard to demonstrate the true earnings power of DXC.\nWe will focus on cash flow, paying particular attention to reducing outflows.\nWe intend to continue investing in our people and delivering for our customers.\nAt the same time, we will be disciplined in reducing spend in areas such as restructuring, transaction and integration, capital expenditures, excess facilities and our outsized overhead.\nWe believe we will create the most value by growing the underlying business.\nThat means organic growth and at the same time improving cash flow.\nSecond, we are committed to putting in place a disciplined capital deployment program that will maximize the value creation of our cash flow engine.\nBased on rigorous analysis, we will carefully evaluate the returns associated with capital deployment options.\nNow that we've strengthened our balance sheet, we are turning to solidify our cash flow.\nWith a strong balance sheet and a cash flow outlook, we will be in a position to execute a disciplined capital allocation program.\nThird, we will improve our financial visibility.\nWe are committed to providing annual guidance and our longer-term expectations on our next earnings call.\nWe are also planning an Investor Day to discuss in more detail our longer-term plans and introduce you to our leadership.\nMoving on to our Q3 results.\nIn the quarter, DXC exceeded the top end of our revenue, adjusted EBIT and non-GAAP earnings per share guidance.\nGAAP revenue was $4.29 billion and $88 million better than the top of our guidance range.\nCurrency was a tailwind of $58 million sequentially and $118 million year over year.\nOn an organic basis, revenue increased 1.7% sequentially.\nOrganic revenue declined 10.5% year over year due to previously disclosed runoffs and terminations.\nWe expect this to be the high watermark for organic year-over-year revenue declines.\nAs you will see from our Q4 guidance, we expect to continue delivering stable sequential revenue.\nAnd during fiscal year '22, we expect this to translate into year-over-year revenue stability.\nAdjusted EBIT was $300 million.\nOur adjusted EBIT margin was 7%, a sequential improvement of 80 basis points despite an approximate 200 basis point headwind from the HHS sale.\nNon-GAAP income before taxes was $246 million.\nNon-GAAP diluted earnings per share was $0.84 due to a lower-than-expected tax rate of 10.2%.\nUsing our guidance tax rate of 30%, non-GAAP earnings per share was $0.65.\nThis was $0.10 higher than the top end of our guidance range.\nOur Q3 tax rate primarily benefited from the reversal of certain tax reserves related to tax audits, the expectation of higher utilization of foreign net operating losses and the ability to utilize state tax credits related to the HHS sale.\nIn Q3, bookings were $4.9 billion for a book-to-bill of 1.13.\nLike Mike mentioned earlier, we are encouraged to see three consecutive quarters with a book-to-bill greater than 1.0.\nTurning now to our segment results.\nThe GBS segment, the top of our technology stack, includes analytics and engineering, applications and the horizontal BPS business.\nThe GBS segment previously included the HHS business, which we sold on October 1 and includes the healthcare provider software business, which we are in the process of selling.\nGBS revenue was $1.92 billion or 45% of our total Q3 revenue.\nOrganic revenues increased 2.2% sequentially, primarily reflecting the strength of our analytics and engineering business.\nYear over year, GBS revenue was down 7% on an organic basis.\nGBS segment profit was $273 million and profit margin was 14.2%.\nMargins improved 10 basis points sequentially despite a headwind of about 300 basis points from the HHS sale.\nGBS bookings for the quarter were $2.7 billion for a book-to-bill of 1.35.\nNow turning to our GIS segment, which consists of IT outsourcing, cloud and security and the modern workplace layers of our enterprise technology stack.\nRevenue was $2.37 billion, up 1.3% sequentially and down 13.2% year over year on an organic basis.\nGIS segment profit was $88 million with a profit margin of 3.7%, a 210 basis points margin expansion over Q2.\nGIS bookings were $2.2 billion for a book-to-bill of 0.95.\nNow before I discuss the details of the enterprise technology stack on Slide 13, I wanted to point out that there is no better slide that drives home the positive impact of our transformation journey.\nThe proof points on the slide include continued revenue stabilization and strengthening of our book-to-bill for each layer of our stack that has been part of the transformation journey since Q1.\nAs you can see in Q1, all four layers of our stack had negative sequential growth, whereas we are now reporting sequential growth improvement for all layers in Q3.\nAlso, it is positive to see the revenue mix beginning to change in shifting up the stack.\nNow let me drill down one level to comment on the performance of the layers of our enterprise technology stack.\nIT outsourcing revenue was down 1.8% sequentially, an improvement as compared to Q2 where it was down 4.7%.\nITO revenues declined 17.7% year over year due to the previously disclosed runoffs and terminations.\nBook-to-bill was 0.96 in the quarter.\nWe believe building strong relationships with our ITO customers and delivering effective solutions will improve revenue performance.\nCloud and security revenue was up 4.7% sequentially and down 1% year over year.\nBook-to-bill was 1.0 in the quarter.\nMoving up the stack, the applications layer posted 2.6% sequential revenue growth and was down 9.3% year over year.\nAnalytics and engineering was up 4.6% on a sequential basis and flat compared to the prior year.\nAnalytics and engineering book-to-bill was 1.2 in the quarter.\nThe modern workplace and BPS businesses increased 2.6% sequentially and was down 12.6% compared to the prior year.\nI should note that Q3 positively benefited from increased volume of resales.\nAs you may recall, these two businesses were part of the strategic alternatives initiative and are just beginning their transformation journey.\nAs a result, you should expect some unevenness in performance.\nMoving on to cash flows on Slide 14.\nOur cash flow from operations totaled an outflow of $187 million, and adjusted free cash flow for the quarter came in at negative $318 million.\nAs discussed on our prior earnings call, we had cash disbursements of $332 million that impacted free cash flow related to the HHS sale.\nIn addition, during the quarter, we normalized payments to our suppliers and partners.\nOur effort to normalize our supplier and partner payments is not expected to reoccur and had an approximate $400 million negative cash flow impact in the quarter and $500 million negative cash flow impact through the first three quarters of our fiscal year.\nWe believe treating our partners appropriately will allow us to further leverage the partner ecosystem.\nIf these two items had not occurred, our free cash flow would have been more than $700 million higher in the quarter.\nThe company has traditionally reported adjusted free cash flow that adjusts for capital expenditures, restructuring, transaction, separation and integration costs.\nOn Slide 15, we detail the efforts we have undertaken to strengthen our balance sheet.\nAs we previously disclosed, we utilized $3.5 billion of net proceeds from our HHS sale to reduce debt.\nAdditionally, we continue to make progress on our plan to sell our healthcare provider software business, and we will use the proceeds to pay down debt and further strengthen our balance sheet.\nCash at the end of the quarter was $3.9 billion.\nTotal debt, including capitalized leases, was $6.2 billion for a net debt of $2.3 billion.\nWe expect to make tax payments of approximately $900 million in Q4 related to our divestitures.\nI would like to emphasize our commitment to an investment-grade credit rating.\nAs you can see, our net debt to EBITDA improved more than one full turn from 2.4 times at the end of September 2020 to 1.2 times at the end of December.\nWe fully expect our leverage ratio to continue to improve.\nMoving on to guidance on Slide 16.\nWe are targeting Q4 revenues of $4.25 billion to $4.3 billion, adjusted EBIT margins of 7% to 7.4%, non-GAAP diluted earnings per share of $0.65 to $0.70, net interest expense of $60 million and an effective non-GAAP tax rate of about 28%.\nAnd let me share three key takeaways on our progress we are making at DXC.\nFirst, we're bringing the new DXC to the market and have demonstrated solid momentum in executing on our transformation journey.\nThis is translating into consistent quarter-on-quarter revenue stability, sequential margin expansion and a book-to-bill number of one or greater.\nSecond is we are on track to complete the sale of the healthcare provider software business and use the proceeds to pay down debt, further strengthening our balance sheet.\nThird, with the additions of Ken and Michael, we have built and finalized the new leadership team that is executing on our transformation journey and producing strong results.\nIn closing, I am pleased with the level of stability and momentum we are achieving.\nWe have done well attracting talent, improving the environment for our people, strengthening our customer relationships, taking out costs without disruption and continuing to win in the market.\nWe expect all of this positive momentum to continue in Q4.\n", "role": "user" }, { "content": "compname reports q3 non-gaap earnings per share of $0.84.\nq3 non-gaap earnings per share $0.84.\nq3 earnings per share $4.29.\nq3 revenue $4.3 billion versus refinitiv ibes estimate of $4.2 billion.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm pleased that you're joining us for DXC Technology's third quarter 2022 earnings call.\nOur speakers on the call today will be Mike Salvino, our president and CEO; and Ken Sharp, our EVP and CFO.\nIn accordance with SEC rules, we provide a reconciliation of these measures to their respective and most directly comparable GAAP measures.\nA discussion of these risks and uncertainties is included in our annual report on Form 10-K and other SEC filings.\nAnd I hope you and your families are doing well.\nToday's agenda will begin with an update on Q3, which was another strong quarter of operational execution for DXC.\nNext, I will cover how we are consistently delivering on our transformation journey.\nAs a result of this execution, organic revenue, margin, and earnings per share all continue to improve.\nIn addition, you will see the outstanding results for book-to-bill and free cash flow.\nThe best part about this performance is we expect it to be sustainable.\nAnd then I will hand the call over to Ken to share our Q3 results along with our Q4 and full year guidance.\nRegarding our Q3 performance, our revenues were $4.09 billion compared to $4.03 billion in Q2.\nOrganic revenue continued to improve as we progressed from minus 2.4% in Q2 to minus 1.4% in Q3.\nI see this as a significant improvement as only a year ago, our organic revenues were minus 9.7%.\nI was also very pleased to see the organic revenue growth in GBS accelerate, from positive 3.4% in Q2, to positive 7% in Q3.\nOur strategy to grow DXC relies on GBS consistently growing, and we are clearly delivering against this piece of our growth strategy.\nOur adjusted EBIT margin was 8.7%, up 170 basis points as compared to last year driven by our operational work that we are doing to optimize our business.\nOur non-GAAP diluted earnings per share was $0.92 in the quarter, which is up 10% as compared to $0.84 last year.\nWhile the quarter was strong across the board, the 2 strongest financial results were book-to-bill and free cash flow generation.\nWe delivered $5 billion in bookings for a book-to-bill of 1.23 times.\nThis gets us to a book-to-bill of 1.08 times on a trailing 12-month basis.\nAnd in Q3, we delivered $550 million in free cash flow.\nNow let me turn to the progress we are making on our transformation journey.\nThe first step of the journey is to inspire and take care of our colleagues.\nHiring was a major focus of ours.\nAnd we ramped up our hiring engine to meet the high level of demand and to activate more project work.\nIn the quarter, we increased our headcount by 3% and increased project work by 13%.\nWe continue to see our people-first strategy and our virtual-first model is resonating in the market and helping us in our recruiting efforts.\nWe recently hired Kristie Grinnell as our new CIO.\nAnd she specifically called out our virtual-first model as one of the key items that drew her to DXC.\nIn addition, I am pleased with how we continue to deliver for our people through the COVID pandemic.\nIt is due to all these points that our attrition at DXC has stabilized and it remains below industry average.\nFocus on the customer is the next step of our transformation journey and continues to be the primary driver of our success in improving organic revenue.\nA key metric that we measure is our Net Promoter Score, and I'm happy to report that we continue to see improvement.\nCurrently, our 12-month rolling NPS score is at the upper end of the industry best practice range of 20 to 30.\nAnother piece of our growth strategy is to run our customers' mission-critical systems, which mainly make up our GIS business, and ultimately have these customers award us new work.\nRunning these mission-critical systems builds trust with our customers.\nThis strategy is being successful because we are winning more work from our customers in both GIS and GBS, and our revenues are clearly not going backwards.\nA great example of this strategy working is the new agreement with Lloyd's.\nWhen I started DXC a little over two years ago, Lloyd's was contemplating a significant reorganization without DXC, which would have caused a negative impact to our revenue.\nRunning Lloyd's' mission-critical systems well has built trust that enabled us to be chosen to build the future at Lloyd's, which will be the most advanced insurance marketplace in the world.\nDXC will rearchitect and develop a cloud-native platform running on AWS to replace their legacy mainframe platform.\nSimply put, leveraging the trust we have built with our customers by running their mission-critical systems is how we are stabilizing our revenues and setting ourselves up for growth.\nNow let me turn to our cost optimization program.\nWe continue to make progress in optimizing our cost and delivering for our customers without disruption.\nManaging our cost includes executing portfolio-shaping initiatives.\nWe have identified businesses with roughly $500 million in revenues that are not strategic and will not help us grow.\nSelling these businesses will improve our organic revenue growth and our overall margin.\nWe expect the sale of these businesses to result in an additional $500 million in proceeds within the next 12 months.\nAt the same time, we are focused on prudently investing in assets that will enable us to grow.\nA great example of this is our recently announced relationship with ServiceNow.\nHere, we are leveraging our proprietary technology called Platform X, which is a data-driven intelligent automation platform that helps us detect, prevent and address issues before they happen within our customers' cloud and on-prem IT estates.\nNelsonHall named DXC's Platform X as a leader in cognitive and self-healing IT infrastructure management, reflecting DXC's ability to deliver immediate results through automation.\nNext, seize the market is where we are focused on, cross-selling to our existing customers and winning new work.\nWe had a strong quarter of bookings, totaling $5 billion and a book-to-bill of 1.23 times.\n58% of the bookings were new work and 42% were renewals.\nWe are winning in the ITO market.\nAnd this is helping us with our organic revenue growth, significantly limiting the declines from double-digit to low single-digit negative declines.\nModern Workplace is following a very similar path.\nOur strong 12-month book-to-bill of 1.1 times gives us confidence that, like ITO, we can take this business from double-digit to low single-digit decline in the next 12 months.\nAnalytics and Engineering is a great story as we are converting our strong book-to-bill of 1.29 times on a 12-month basis and growing this business 18.7% in Q3, which is helping us consistently grow our GBS business.\nWe are seeing increased opportunities in the market.\nWe have shown the ability to win, and the investment we have made in execution is paying off, with good deals turning into good revenue as you can see in ITO and Analytics and Engineering.\nTurning to Slide 11.\nOur transformation journey remains on track, with strong progress across all four key metrics.\nOrganic revenue improved 100 basis points from Q2 to a decline of 1.4%.\nAdjusted EBIT margin is up to 8.7%.\nYear-over-year, our adjusted EBIT margin expanded 170 basis points, while we substantially reduced our restructuring and TSI expense.\nQ3 book-to-bill was 1.23 times and 1.08 times on a trailing four quarters.\nFrom our perspective, looking at book-to-bill over a trailing four quarters is more meaningful than looking at one quarter in isolation.\nNon-GAAP diluted earnings per share was $0.92, up $0.08 compared to the prior year.\nOur earnings per share expanded despite $0.23 of headwinds from taxes.\nThe tax rate headwinds were more than offset by increased margins and lower interest expense.\nMoving to our segment results on Slide 12.\nGBS continued its strong performance, accelerating organic revenue growth to 7%, our third consecutive quarter of organic revenue growth.\nGBS is benefiting as we leverage our relationships with our platinum customers.\nOur GBS business has higher margins and lower capital intensity.\nSo as we grow this business, it has a disproportionately positive impact on margins and cash flow.\nOur GBS profit margin was 16.2%, up 200 basis points compared to the prior year.\nGIS organic revenue declined 8.3%.\nGIS profit margin was 4.8%, an improvement of 110 basis points compared to prior year.\nOur focus with GIS heretofore has been on improving delivery, to deliver for our customers while stabilizing the margins.\nAs we set up for next year, we are putting in place a program to drive cost out of GIS to move the margins forward.\nTurning to our enterprise technology stack.\nAnalytics and Engineering revenue was $545 million and organic revenue was up 18.7%.\nWe continue to see high demand in this area.\nOf note is the success we are seeing with our platinum customer channel.\nApplications organic revenue increased 4.8%, also accelerating.\nBPS, our smallest layer of the enterprise technology stack, generated $116 million of revenue, and organic revenue was down 8.3%.\nWe expect the declines in this business to moderate as we move forward and put our new strategy in place.\nFor our GBS layers of our technology stack, our book-to-bill was 1.28 times and 1.17 times on a trailing 12-month basis.\nCloud and Security revenue was $471 million and organic revenue was down 12.2%.\nIT Outsourcing revenue was $1.11 billion and organic revenue was down 1.9%.\nLet me remind you that this business declined 19% in Q3 FY '21.\nThis is a significant improvement that we indicated last quarter.\nWe expect IT Outsourcing to continue to decline in low single digits, ideally 5% or better.\nLastly, Modern Workplace revenue was $561 million, and organic revenue was down 16% as compared to prior year.\nWe remain positive about our prospects.\nAnd our strong book-to-bill of 1.11 times over the trailing 12 months is expected to stabilize Modern Workplace as we move through FY '23.\nFor our GIS layers of the technology stack, our book-to-bill was 1.18 times and 1.01 times on a trailing 12-month basis.\nAs you think about organic revenue growth prospects for GIS, our focus on improving the quality of revenue by expanding margins, reducing capital intensity and driving cash flow may create headwinds for organic revenue growth.\nFor example, using our capital to buy laptops, bearing the risk and ultimately recovering our cash over three to four years with relatively low returns does not feel like a great economic model.\nAt the end of the day, we would prefer to provide our offerings and services and forego the revenue associated with buying the assets to improve the underlying economics.\nNext up, let me touch on our efforts to build our financial foundation.\nThis quarter, we made particularly strong progress with cash generation and continued reduction of restructuring and TSI expense.\nWith regard to financial discipline, remediating our material weakness is a top priority.\nWe are in the late stage of our efforts to remediate the material weakness, and we have fully implemented our 11-point remediation plan.\nAs a result, we expect to remediate our material weakness in Q4.\nI should note, as it relates to the material weakness in governance more holistically, we are clear-eyed on how we think about governance.\nWe do not find our current governance score to be acceptable.\nWe are working hard to ensure we improve its trajectory like many things at DXC.\nWe are finishing the unfinished homework, creating a sustainable business brick by brick.\nIn addition to our material weakness remediation, we are committed to improving our pay practices.\nAs part of good governance, our board members and management are continuing to engage with our shareholders to proactively take their feedback as we work together to design and set our short-term and long-term incentive structure.\nOur focus is to set metrics and targets that are highly aligned to what our shareholders want, all the while incentivizing management to improve the company's performance, creating an enduring and sustainable business.\nThe execution of the transformation journey has made measurable improvement, allowing us to put the business on a firmer financial foundation, expanding margins, and generating and keeping more cash.\nSlide 15 shows the results of the structural improvements we have made.\nWe reduced our debt from $12 billion to $4.9 billion and are now below our targeted debt level.\nWe have reduced our quarterly net interest expense to $23 million, a $31 million reduction as compared to prior year.\nAs you recall, we were able to term out a significant portion of our debt last quarter with principally all of our outstanding borrowings at fixed rates.\nWe expect to continue the lower interest expense at approximately $25 million per quarter.\nWe also continue to make progress on reducing restructuring and TSI expense.\nThis reduction contributed $195 million to cash flow during the quarter as compared to the prior year.\nFurther, this also achieves one of our goals of narrowing the difference between GAAP and non-GAAP earnings.\nI should note that while we have been reducing restructuring and TSI expense, we have also been able to expand margins.\nLastly, as you can see, we have also reduced operating lease cash payments from $156 million in the third quarter of the prior year to $117 million in the third quarter of FY '22.\nMoving to Chart 16.\nLet's talk about the focus we've brought to capital expenditures, including capital leases.\nOur capital expenditures were reduced from $219 million in Q3 FY '21 to $146 million in Q3 FY '22.\nWe are closely managing our capital lease originations, which ultimately means our capital lease debt and associated payments continues to decline.\nIn FY '20, we had a $270 million quarterly run rate for originations while our last two quarters averaged less than $60 million.\nWe made $207 million of capital lease payments in Q3 last year, which is now down to $184 million in the current quarter.\nFor Q4, we expect a further reduction of capital lease payments to approximately $140 million.\nA metric we like to look at to gauge capital efficiency is capital expenditures and capital lease originations as a percentage of revenue.\nWe are now tracking at 5.2% for two consecutive quarters, down from roughly 10% in FY '20.\nClearly, our focus has been on improving our cash flow.\nSpecific to new business, we have been focused on structuring our transactions to have lower capital intensity, potentially trading off revenue in favor of cash flow.\nAs you can see, from my prior comments, our focus on driving structural changes has improved our ability to generate and hold on to more cash.\nCash flow from operations totaled an inflow of $696 million.\nFree cash flow for the quarter was $550 million, an increase of $956 million as compared to prior year and moves our year-to-date free cash flow to $650 million or $150 million above our full year guidance.\nFurther, cash in the quarter was negatively impacted by two previously disclosed payments, totaling approximately $130 million.\nThese payments were offset by much stronger performance due to improvements in the business and benefits from timing on payments and receipts in the quarter.\nWe expect this timing to create some headwinds in Q4 cash flow.\nSlide 18 shows our trended cash flow profile.\nOur progress in Q2 and Q3 gives us confidence as we work toward delivering our longer-term FY '24 guidance of $1.5 billion in free cash flow.\nMoving to Slide 19.\nLet's revisit our relatively simple capital allocation formula.\nWe are targeting a debt level of approximately $5 billion and a cash level of $2.5 billion.\nWith debt at our target debt level, cash over $2.5 billion is excess cash, which we expect to deploy.\nBased on this formula, we expect to self-fund stock repurchases of $1 billion over the next 12 months.\nThe $1 billion in repurchases will be funded from a combination of cash generated from operating our business as well as proceeds from our portfolio-shaping efforts.\nWe recently executed a number of sale agreements and expect to divest businesses and assets with approximately $500 million of revenue and will generate $500 million of proceeds in the next 12 months.\nThese businesses are not synergistic and cannot be leveraged more broadly in our platinum channel.\nAs you will see in our 10-Q, we entered into an agreement to sell our German financial service subsidiary that includes both of our banks for approximately $340 million.\nAs noted in the liquidity section of our previously filed financials, the German financial services business has cash held on deposit for the bank's customers.\nThe current cash balance related to these deposits is $670 million.\nWe also announced an agreement for the sale of our Israeli business for $65 million.\nThe valuation for these assets are accretive to our valuation.\nFurther, we do not expect these divestitures to create headwinds related to achieving our FY '24 longer-term guidance for organic revenue growth, adjusted EBIT margin, and free cash flow.\nWe continue to assess our portfolio to ensure we have businesses that are aligned to our strategy and not a distraction for our management team.\nNow let me cover our progress on share repurchases.\nIn Q3, we repurchased $213 million of common stock, bringing our FY '22 year-to-date repurchases to $363 million or 10.6 million shares.\nOur share repurchases are self-funded.\nAs noted, we expect to repurchase $1 billion of our common stock over the next 12 months as we firmly believe our stock is undervalued.\nTurning to the fourth quarter guidance.\nRevenues between $4.11 billion and $4.15 billion.\nIf exchange rates were at the same level as when we gave guidance last quarter, our fourth quarter revenue guidance range would be $20 million higher.\nOrganic revenue declined, minus 1.2% to minus 1.7%.\nAdjusted EBIT margin in the range of 8.7% to 9%.\nNon-GAAP diluted earnings per share of $0.98 to $1.03 per share.\nFor Q4, we expect a tax rate of approximately 26%.\nAs we look to the end of FY '22, I would like to update our current fiscal year guidance.\nBased on the strengthening U.S. dollar, our revenues are expected to be negatively impacted by approximately $40 million.\nWe now expect to come in at approximately $16.4 billion.\nOrganic revenue growth range of minus 2.2% to minus 2.3%, which is slightly lower than our previous range.\nAdjusted EBIT margin, 8.5% to 8.6%.\nWe continue to expand margins while significantly lowering restructuring and TSI expense and are now guiding to $400 million for FY '22.\nTo put this all in context, we expect to spend $500 million less on restructuring and TSI spend than last year, while expanding margins by over 200 basis points.\nOur focus is to embed these types of expenses over time into the normal performance of the business and believe we have taken significant strides in doing so.\nNon-GAAP diluted earnings per share of $3.64 to $3.69.\nLastly, we are increasing free cash flow guidance to over $650 million, $150 million improvement to our prior FY '22 guidance.\nFourth quarter cash flow is expected to be impacted by timing, which boosted Q3 cash flow and in addition, a $100 million payment in Q4 to terminate a financial structure put in place a number of years ago.\nWe are reaffirming our guidance for FY '24.\nThis reflects our strong execution and driving forward on our transformation journey.\nOverall, we are making great progress driving efficiency in the business and generating strong free cash flow.\nWe are utilizing those cash flows to drive significant value for our shareholders through our stock repurchase program.\nLet me leave you now with a few key takeaways.\nAs I think about finishing out FY '22, we are making great progress.\nDuring our June investor day, we committed to making progress on all nine of these points, and let me quickly give you an update on each.\nWin in the market and a book-to-bill of greater than 1x.\nOur trailing 12-month average is now 1.08 times.\nThis year, we produced relatively stable revenues in Q2, Q3, and we expect this to continue in Q4.\nStrengthening the balance sheet.\nOur debt is now at $4.9 billion, and our refinancing has significantly lowered our interest expense.\nAchieved organic revenue growth of minus 1% to minus 2% in FY '22.\nThis is where we're coming up a little short, anticipating negative 2.2% to negative 2.3% organic revenue growth.\nRemediate material weakness and improve governance score.\nAs Ken indicated, we will remediate the material weakness in Q4, and we have plans to continue to improve our governance score.\nReduce restructuring and TSI.\nWe have taken it from over $900 million to roughly $400 million in FY '22.\nWe have expanded margins every quarter throughout FY '22.\nImprove free cash flow.\nWe exceeded the $500 million guidance for FY '22.\nAnd finally, resume capital deployment to shareholders.\nWe have repurchased $363 million and plan to do another $1 billion over the next 12 months.\nIn addition to this progress, we are also committed to portfolio-shaping.\nWhat this means is we are making the right bets and investments like what we are doing with Platform X and ServiceNow and divesting assets that are not core to our strategy and will not help us grow.\nOur portfolio-shaping is anticipated to drive $500 million in excess cash in the next year.\nIn closing, I am confident that by staying focused on our transformation journey, we will continue to deliver on our commitments both in the short term and the long term.\n", "role": "user" }, { "content": "dxc technology - q3 non-gaap earnings per share $0.92.\ndxc technology - q3 revenue fell 4.6 percent to $4.09 billion.\ndxc technology - sees fy 2022 non gaap diluted earnings per share $3.64 to $3.69.\nintends to self-fund $1 billion of additional share repurchases over next twelve months.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm pleased that you're joining us for DXC Technology's fourth-quarter fiscal 2021 earnings call.\nOur speakers on the call today will be Mike Salvino, our president and CEO; and Ken Sharp, our executive vice president and CFO.\nIn accordance with SEC rules, we've provided a reconciliation of these measures to their respective and most directly comparable GAAP measures.\nA discussion of these risks and uncertainties is included in our annual report on Form 10-K and other SEC filings.\nToday's agenda will start by giving you a quick update on our strong Q4 performance.\nNext, I will highlight the progress we are making on our transformation journey.\nOur strong Q4 results were driven by executing on the three key areas of our transformation journey, which are focused on our customers, optimize cost, and seize the market.\nI will then hand the call over to Ken to share our detailed Q4 financial results, guidance for FY '22, and longer-term outlook.\nRegarding our Q4 performance, our revenues were $4.39 billion, approximately $85 million above the top end of our guidance.\nThis is the third straight quarter of revenue stabilization and we expect this trend to continue in FY '22.\nConcerning adjusted EBIT margin, we delivered 7.5%, also higher than the top end of our guidance.\nThis, too, is the third straight quarter of sequential margin expansion and is driven by our cost optimization program.\nWe expect margins to continue to expand in Q1 of FY '22.\nBook-to-bill for the quarter was 1.08, underscoring the success of bringing the new DXC, which focuses on our customers and colleagues to the market.\nThis is the fourth straight quarter that we've delivered a 1.0 or better book-to-bill.\nWe expect our success of winning in the market to continue in Q1 of FY '22.\nI am pleased with the momentum we have achieved.\nAll the work in FY '21 to inspire our people, invest in our customers, take costs out without disruption and win in the market has positioned us very well for financial success in FY '22 and longer term.\nNow, I will cover the good progress we are making on our transformation journey, starting with our customers.\nOur investment in our customers continues to be the primary driver of revenue stabilization.\nWhen we deliver for our customers and are seen as a trusted partner, customers are more likely to renew existing work and consider us for new work.\nLet me give you an example.\nWe recently signed a five-year expansion with Zurich Insurance Group.\nWe'll provide IT outsourcing and security services as part of their global IT transformation, focused on improving the customer and employee experience.\nThis is a perfect example of delivering for a customer, strengthening the relationship and then a customer wanting to work with DXC in the future.\nThis is strong evidence that our investment in our customers is paying off, which gives us confidence that we can flatten organic revenue during FY '22.\nNow, let me turn to our cost optimization program.\nWe have achieved our goal of $550 million of cost savings in FY '21.\nOur cost optimization program was responsible for the strong adjusted EBIT margin of 7.5% in Q4.\nWe have done well optimizing our costs and continuing to deliver for our customers without disruption.\nYou will hear from Ken that we expect to continue to expand margins in FY '22.\nSeize the market is the final area of our transformation journey.\nIn this area, we are focused on cross-selling to our existing accounts and winning new work.\nSo the 1.08 book-to-bill that we delivered this quarter is consistent evidence that our plan is working.\nIn Q4, 53% of our bookings were new work and 47% were renewals.\nAhold Delhaize is a great example of an existing customer who has renewed work with DXC and given us new work.\nWe will be providing infrastructure services, application outsourcing, cloud migration, and workplace services in a hybrid cloud environment for the retail business services group, to reduce costs and support their business-critical systems that enable each of their local brands to stock their shelves.\nOur ability to deliver a consistent book-to-bill of over 1.0 in each of the four quarters of FY '21 is clear evidence that we can win in the IT services industry.\nThis is translating into improving quarterly organic revenue growth, which we expect will flatten during FY '22.\nAs we are witnessing the ongoing impact of COVID-19, our focus continues to be on our people.\nCurrently, we are focused on the more severely impacted areas of India and the Philippines.\nThe dedication of our team is a source of great pride for us at DXC as our people continue to take care of themselves, their families and to deliver for our customers.\nIn the past three quarters, we have stabilized our revenue on a sequential basis and guided to the fourth quarter of revenue stability.\nThis is a significant accomplishment by my DXC colleagues.\nIt is not lost on Mike and me that investors look at revenue growth on a year-over-year basis.\nHowever, when a company has a period of significant decline and change to its business, strategy, and leadership, you first have to stabilize revenue sequentially.\nAs we all know, once you achieve four quarters of sequential revenue stability, you achieve year-over-year revenue stability.\nGoing forward, we will pivot our narrative accordingly.\nTurning on to our financial priorities on Slide 10.\nWe are working to build a stronger financial foundation and drive the company in a disciplined and rigorous fashion to unleash the true earnings power.\nTo that end, remediating our material weakness and the impact it has on our corporate governance is a key focus.\nOur second priority is to have a strong balance sheet.\nWe paid down $6.5 billion of debt in the past nine months and subsequent to year-end, retired an additional $500 million.\nWe are now approaching a far more manageable $5 billion debt level.\nFurther, we have relatively low maturities over the next three years.\nWe remain committed to an investment-grade credit profile, and I believe our actions more than demonstrate our commitment.\nThird, we will focus on improving cash flow.\nWe expect this will improve our focus on our true earnings power and will allow you to better understand our performance.\nAs part of our focus on the business and cash optimization, we will continue our portfolio-shaping efforts to increase the focus on our core business.\nFourth, we will reduce restructuring and TSI expense to approximately $550 million in FY '22 to under $100 million in FY '24, ultimately improving cash flow.\nFifth, have a thoughtful and disciplined approach to capital allocation.\nAs we generate free cash flow, we will appropriately deploy capital to invest in our business and return capital to our shareholders, all the while staying focused on maintaining our investment-grade credit rating.\nFor the quarter, DXC exceeded the top end of our revenue, adjusted EBIT margin, and non-GAAP diluted earnings per share guidance.\nGAAP revenue was $4.39 billion, $85 million higher than the top end of our guidance.\nOn an organic basis, revenue increased 0.4% sequentially.\nOrganic revenue declined 7% year over year due to the previously disclosed runoffs and terminations.\nAs we mentioned on our third-quarter earnings call, our Q3 10.5% year-over-year decline would be the high watermark.\nGAAP EBIT margins were negative 16.8% in the fourth quarter, impacted by approximately $1.1 billion of costs, including pension mark-to-market, asset impairments, restructuring TSI, loss on disposals, and debt extinguishment costs.\nExcluding these items, adjusted EBIT margin was 7.5% in the fourth quarter, an improvement of 50 basis points from the third quarter.\nNon-GAAP diluted earnings per share was $0.74 and was negatively impacted by $0.04 due to a higher-than-expected tax rate of 32%.\nIn Q4, bookings were $4.7 billion for a book-to-bill of 1.08, the fourth straight quarter of a book-to-bill greater than one.\nFor the full year, this takes our book-to-bill to 1.12, compared to 0.9 in FY '20.\nTurning now to our segment results.\nThe GBS segment, the top half of our technology stack, includes analytics and engineering, applications in the horizontal BPS business.\nGBS was $2 billion or 46% of our total Q4 revenue.\nOrganic revenues increased 2% sequentially, primarily reflecting the strength of our applications and analytics and engineering business.\nYear over year, GBS revenue was down 4% on an organic basis.\nGBS segment profit was $315 million with a 15.8% profit rate, up 160 basis points from Q3.\nGBS bookings for the quarter were $2.39 billion for a book-to-bill of 1.2 and a full-year book-to-bill of 1.32, compared to 0.99 in the prior year.\nNow, turning to our GIS segment, which consists of IT outsourcing, cloud and security, and the modern workplace.\nRevenue was $2.39 billion, down 0.9% sequentially and down 9.3% year over year on an organic basis due to the previously disclosed terminations and runoffs.\nOur ITO business had positive sequential revenue growth in the quarter.\nThe ITO business benefited from approximately $100 million of resale revenue, resulting from a typical Q4 increase of customer demand due to their fiscal year-end.\nGIS segment profit was $98 million with a profit margin of 4.1%, a 40-basis-point margin improvement over the third quarter.\nGIS bookings were $2.3 billion for a book-to-bill of 0.98.\nBook-to-bill for FY '21 was 0.94, compared to 0.83 in the prior year.\nNow, turning to one of my favorite slides, our enterprise technology stack.\nThis slide demonstrates how winning in the market for four consecutive quarters translates into revenue stability and the progression that our team has been able to achieve by focusing on our customers.\nBefore I get into the details, I want to provide you the three changes to the stack you can expect for next year.\nFirst, as we think about next year, you will see our sequential-quarter comparison give way to a year-over-year comparison.\nSecond, we delivered on the sale of the healthcare provider software business.\nTherefore, this will no longer be included.\nThird, the modern workplace and horizontal BPS businesses will be integrated into the enterprise technology stack above.\nOnce again, we had three layers of the stack achieve a book-to-bill greater than one and sequential growth.\nNow, let me drill down one level.\nIT outsourcing revenue was $1.19 billion in the quarter, up 1.4%, the first positive sequential growth since we began tracking in this manner.\nITO book-to-bill was 0.98 in the quarter.\nCloud and security revenue was $524 million, declined 1.6% sequentially, and was down 5.7% year over year.\nThe cloud and security business had a difficult compare as the third quarter grew 4.7% sequentially.\nBook-to-bill was 1.08 in the quarter.\nMoving up the stack, the applications layer posted a 1.9% sequential growth and was down 7.2% year over year.\nAnalytics and engineering revenues were $478 million, up 2% on a sequential basis and up 8.4% compared to prior year.\nAnalytics and engineering book-to-bill was 1.46 in the quarter.\nThe modern workplace and BPS revenues were $795 million, down 3.3% sequentially and down 10.5% compared to the prior year.\nAs we previously mentioned to you, these two businesses just began their transformation journey so you should expect some unevenness in performance.\nMoving on to cash flows on Slide 15.\nFourth-quarter cash flow from operations totaled an outflow of $280 million.\nFree cash flow for the year was negative $652 million, impacted primarily by four nonrecurring items.\nQ4 tax payments of $531 million related to the business sale.\nAs you may recall, we planned $900 million of tax payments, so this result surpassed our expectation.\nAs we told you before, in Q3, $832 million related to readying the U.S. state and local Health and Human Services business for sale and normalizing payables and $200 million related to deferrals of certain tax payments due to COVID relief legislation that will be paid during FY '22.\nOne of our key initiatives we are employing to drive cash flow and improve earnings power is to wind down restructuring and TSI costs.\nSince DXC was formed four years ago, we had significant cash outflows with approximately $900 million in expense per year on average.\nIn FY '22, this will be reduced to approximately $550 million, with a larger portion being allocated to facilities restructuring efforts to improve the work experience for our people as we reshape our portfolio for our virtual model.\nWe have heard from many of our analysts and investors that our cash flow is hard to understand.\nWe believe this will allow investors to better understand our performance.\nAs part of our effort to build a sustainable business, we will continue to evaluate these historical practices of using capital leases to a much greater level, long-term purchase commitments, and selling our receivables.\nUnwinding these historical practices may have an impact on short-term cash flow.\nWe will also focus our efforts to build the necessary rigor associated with capital budgeting to better control our outsized capital spend.\nOn Slide 17, we detail our efforts we have undertaken to strengthen our balance sheet.\nAs you can see, we have achieved a lot in this area, reducing our net debt leverage ratio by more than one turn from the high watermark of 2.4 to one at the end of March.\nAnother goal we gave you was to improve financial visibility, and we are committed to providing annual and longer-term three-year guidance.\nStarting with our first-quarter guidance on Slide 18.\nOrganic revenues declines are expected to moderate, down 2% to down 4% in the first quarter year over year.\nThis translates into reported revenues between $4.08 billion and $4.13 billion.\nOur sequential revenue is lower for two reasons: first, previously mentioned lumpiness of resale revenue that occurs in Q4; second, our portfolio-shaping efforts reduced revenue by about $100 million.\nEBIT margin 7.4% to 7.8% includes 20 basis points of margin headwinds due to the sale of our healthcare provider software business.\nNon-GAAP diluted earnings per share in the range of $0.72 to $0.76.\nMoving on to our FY '22 guidance on Slide 19.\nOrganic revenue growth of minus 1% to minus 2%.\nOn a year-over-year basis, divestitures will account for $1.2 billion of the revenue decline.\nOur previously disclosed terminations and runoffs wind down in the first half of FY '22.\nWe expect to see further improvement in the quarterly year-over-year organic revenue growth rates as we move through the year.\nThis translates into revenue of $16.6 billion to $16.8 billion; EBIT margin, 8.2% to 8.7%; non-GAAP diluted earnings per share of $3.45 to $3.65, an increase of 42% to 50% year over year; free cash flow of $500 million.\nNow, moving on to our longer-term expectations on Slide 20.\nOrganic revenue growth of 1% to 3%; adjusted EBIT margin of approximately 10% to 11%; non-GAAP diluted earnings per share of $5 to $5.25; free cash flow of approximately $1.5 billion.\nI should note our guidance does not anticipate additional portfolio shaping.\nLet me share three key takeaways on the progress we are making at DXC.\nFirst, as I reflect on FY '21, we delivered on our commitments, and here's how.\nWith regard to our people, we moved from a workforce that was not engaged to one that is now engaged and inspired.\nConcerning our customers, we went from challenged accounts to building a level of customer intimacy where we are delivering, building strong partnerships, and being proactive with our customers.\nCustomers are clearly seeing the new DXC.\nWe changed the direction of our revenues and margin from declining to improving.\nIn the market, we went from losing to winning, and we repaid over $6 billion in debt, taking our balance sheet from highly leveraged to strengthened.\nThe next key takeaway is that FY '22 will be the year we build the foundation for growth.\nWhat that means is we will retain and continue to attract talent.\nWe will build off our customer intimacy to deliver revenue stability and continue to win in the market all while we expand margins and deliver increased free cash flow.\nFinally, we expect to deliver positive organic revenue growth longer term.\nIn closing, we are confident that the momentum we created in FY '21 will continue in FY '22.\nWe hope that you will join us on June 17 for our Analyst Day as we're excited to showcase the strength and depth of our new leadership team and discuss our business in more detail.\n", "role": "user" }, { "content": "compname reports q4 non-gaap earnings per share $0.74.\nsees fy 2024 adjusted earnings per share $5.00 to $5.25.\nq4 non-gaap earnings per share $0.74.\nsees q1 revenues $4.08 billion to $4.13 billion.\nsees q1 adjusted earnings per share $0.72 - $0.76.\nsees fy 2022 revenues $16.6 billion to $16.8 billion.\nsees fy 2022 adjusted earnings per share $3.45 - $3.65.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We appreciate you joining us.\nJoining me on the call is Byron Boston, Chief Executive Officer, and Chief Investment Officer and co-Chief Investment Officer; Smriti Popenoe, President and co-Chief Investment Officer, and Steve Benedetti, Executive Vice President, Chief Financial Officer, and Chief Operating Officer.\n2021 continues to be a good environment for Dynex to deploy capital.\nOur financing costs remain pegged at very low levels and has resulted in steady earnings in a wider net interest spread as shown on Slide 25.\nWe began this year believing we will get multiple opportunities to invest at attractive returns that the yield curve steepens or spreads widen.\nAs such we have raised capital, maintain lower leverage, and methodically deployed capital at attractive return levels.\nAs of mid-year, we are sticking with our strategy.\nNonetheless, we're in an evolving health and economic environment, and the capital markets have reflected this uncertainty.\nAs such, our book value has fluctuated this year from being up 5.2% in the first quarter, to declining 6.6% in the second quarter.\nOur year-to-date performance remained solid as our total economic return deposited 2.4%.\nOur tactical deployment of capital at attractive levels and our ability to out-earn our dividend has helped cushion our book value during this period of volatility.\nLet me remind you that we managed Dynex Capital for the long term.\nOur goal is to generate a cash return between 8% to 10%.\nWhile maintaining book value at steady levels over time.\nWe will continue to create value for our shareholders by using a very disciplined top-down research-driven approach to develop strategies for multiple future scenarios in the short, medium, and long term.\nThis has been especially important since the global market environment changed in January 2020.\nMost importantly, since this new era in history began last year, we have outperformed our industry and other income-oriented vehicles with a 28% total shareholder return as noted on Slide 5.\nI will emphasize the fact that we have an experienced team and experience will be a major factor for creating value through these transitional times in the global capital markets and economies.\nWe will continue to emphasize liquidity with a balance sheet of high-quality assets.\nFor the second quarter, we reported a comprehensive loss of $0.98 per common share, and a total economic return of minus $0.93 per common share or a minus 4.6%.\nWe also reported core net operating income of $0.51 per common share, an increase of 10% over last quarter's $0.46 per common share, and well exceeding our $0.39 quarterly common stock dividend.\nBook value per share declined $1.32 or minus 6.6%, principally from economic losses on the investment portfolio of $48 million or $1.49 per common share, driven in part by mortgage spread widening and in part due to the lower rate environment during the quarter versus our hedge position.\nIn terms of specific performance, TBAs and dollar roll specialness continue to be important contributors to results for the quarter, adding an incremental $0.06 per common share to core net operating income, which was partially offset by lower earnings from a smaller pass-through portfolio.\nIn addition, G&A expenses were lower by $0.02 on a per-share basis and preferred stock dividend on core earnings per share was lower by $0.04 per share.\nBoth reflecting the benefit of our capital management activities year-to-date.\nAs Smriti will discuss later, with the ongoing favorable conditions in the funding and TBA dollar roll markets, we expect continued sequential core net operating income growth in the third quarter.\nAverage interest-earning assets, including TBAs increased to $4.8 billion versus $4.3 billion, as we deploy the capital raised over the first half of the year.\nAt quarter end, interest-earning assets, including TBAs, were $5.4 billion versus $5.2 billion at the end of last quarter and leverage including TBA dollar rolls, was 6.7 times versus 6.9 times last quarter.\nThe lower overall leverage quarter-to-quarter primarily is due to the capital growth of the company and portfolio adjustments during the second quarter.\nAdjusted net interest income was higher on an absolute dollar basis, given the growth in the investment portfolio during the quarter, inclusive of TBA securities, but was lower on a per-share basis, however, reflecting the new shares issued in the first half of the year and the conservative leverage posture of the company.\nThe increase in adjusted net interest income on an absolute dollar basis was due to the continued decline in repo borrowing cost and the increase in TBA dollar roll positions during the quarter, as previously noted.\nAdjusted net interest spread increased eight basis points this quarter to 195 basis points, driven largely by the company's TBA position and a modest decline in repo borrowing cost.\nThe company's implied funding cost for its TBA dollar roll transactions was approximately 49 basis points lower than its repurchase agreement financing rate during the second quarter of 2021, an increase of 10 basis points in specialness relative to the prior quarter.\nAs a result, TBA dollar roll transactions contributed in eight basis point increase to adjusted net interest spread during the quarter.\nRegarding Agency RMBS prepayment speeds, they were essentially unchanged at 19% CPR for the quarter versus 18.6% EPR for quarter 1.\nOverall, total shareholders' capital grew approximately $25 million during the quarter.\nThis includes $68 million in new common equity raised through at the market offerings in the quarter.\nMarket conditions were favorable to issue equity and continue to unlock the operating leverage of the company.\nOur capital issuances added $0.07 per common share to book value for the quarter.\nI want to start by building on Byron's comments by describing the principles that have been consistent throughout our portfolio management history here at Dynex.\nThe first is a sound macroeconomic process and framework to assess the environment.\nThe second is a flexible mindset to be able to pivot when the environment shifts.\nAnd finally, the right amount of patience in decision-making.\nThe environment we have been in since January 2020 has required all three of these principles in real-time, especially now, as the markets are still seeking a direction and level.\nThe most important principle for what we are in right now is patients.\nWhile we continuously assess the environment because the passage of time, is what is now needed for the data and the market direction to become clear.\nEven so, this remains a very favorable environment in which to generate long-term returns.\nAs shown on Slide 25, our repo financing cost declined seven basis points over the quarter.\nFinancing in the TBA market has continued to be strong, contributing 1% to 3% excess core ROE versus pools.\nSince year-end, as Byron mentioned, we have used bouts of volatility to invest capital, and we did that late in the second quarter, and have done so into the third.\nAs spreads tightened in late April, we reduced our leverage by a full turn.\nAnd as returns are now in the 10% to 12% core ROE range, we have reinvested a portion of that capital, growing the balance sheet from a low point of $4.5 billion in the second quarter to $5.6 billion thus far in the third quarter.\nWe allocated out of TBAs into specified pools as pay-ups declined substantially in May, and we added outright marginal investments in Fannie 2.5 specified pools as well as Fannie two TBAs with wider spreads in June and July.\nOur total economic return year-to-date is 2.4%, with book value on June 30 at $18.75, relatively unchanged versus year-end.\nIn the third quarter thus far, MBS spreads are wider and as the yield curve has flattened dramatically in July, book value has fluctuated with yields in a range of flat to down about 5% versus quarter end.\nTo put the book value move in context, about half the book value decline in the second quarter was due to MBS spread widening, and the remaining half is attributable to our hedge position that is concentrated in the back end of the yield curve.\nPost quarter end, MBS spreads are modestly wider, but the book value decline is directly attributable to our hedge exposure to the long end of the yield curve.\nWe have chosen to maintain a position with a portfolio structure hedged with the long end of the yield curve because we believe that the risk of a whipsaw in rates is substantial.\nThe catalyst for that whipsaw could be a turn in sentiment, realize fundamental data, or an easing of the technical nature of the recent move.\nAny of which can happen rapidly.\nWe expect the book value to recapture much of the decline in these resteepening scenarios.\nI will cover more on our thinking shortly when discussing the macroeconomic environment.\nLeverage at the end of the quarter stood at 6.7 times, and we have the potential for two more turns from here.\nAt today's higher level of earning assets, which were added at wider spreads, we expect core earnings to continue to exceed the current level of the dividend.\nWe are on track for an 8% dividend yield on beginning book value for the year, with the excess core earnings providing a cushion to capital.\nShifting now to recent market moves, our macro opinion, and outlook.\nThe global economy is still evolving through the health crisis and corresponding economic situation from the pandemic, and the recovery is proceeding in fits and starts.\nIt will take time for the economic picture to become clearer.\nIn the absence of real data, technical factors like short-covering, overseas demand, and central bank activity have dominated recent market action.\nThis is leading many participants to arrive at conclusions on long-term fundamentals like inflation and growth, for which the data has been difficult to parse out and even to predict, but we expect that this will become clearer in the coming months.\nIn such an environment, our discipline, process, and framework play a key role in the management of our position.\nWe expect that front-end rates will remain low, close to 0 through 2022, providing a solid base from which to generate returns.\nThe long end of the yield curve, 10-year, 30-year will move based on the evolving economic situation.\nThe Fed's decision on tapering is a key event in our focus as is the fall reopening of schools as well as the debt ceiling.\nIn the short term, we expect choppy action in the markets to continue, and our current thinking is that 10-year yields will trade in a range between 1% and 1.5%.\nIn the medium term, there is room for 10-year yields to move to a higher range, 1.5% to 1.75%.\nAnd this is as we transition globally to a more fully reopened economy, a higher percentage of vaccinated populations, more effective and available medication to treat Covid, stable or rising inflation, a rising supply of global sovereign bonds, both from tapering as well as deficit spending and fiscal stimulus.\nOnce again, this picture will evolve and become clearer over the summer and into the fall.\nWe are very respectful of a near-term scenario, resulting in yields remaining at the lower end of the 1% to 1.5% in the 10-year rate, as I mentioned earlier.\nAgency RMBS are, of course, very much impacted by these factors.\nIn the near term, the fundamentals for agency RMBS point to greater levels of refinancing.\nMortgage rates are below 3%, originators are fully staffed and government policies favor broader access to refinancing and modifications.\nThis leaves higher coupons vulnerable to increasing prepayments and lower coupons susceptible to supply.\nIn the near term, the supply is balanced by powerful technicals.\nLower coupon MBS are still benefiting from strong demand from the Fed and banks.\nBanks are investing in MBS because of the absence of loan demand.\nAnd as MBS have widened, money managers are finding value there relative to corporates.\nTapering is also a key focus of the MBS market.\nThe recent spread widening, we believe, reflects some of this risk and spreads could widen further at the taper becomes more of a reality.\nFor Dynex, the tighter spreads in April represented a chance to reduce leverage and wider MBS spreads from here will continue to represent an opportunity to add assets at attractive long-term returns.\nThis is where the patience comes in.\nAnd as we've shown, we have managed our leverage and our capital actively.\nUltimately though, we believe the Fed's balance sheet will create a powerful stock effect to limit spread widening.\nDemand from money managers as mortgages become a high-quality alternative to corporate bonds and lower net supply from potentially higher rates will also provide a buffer against much wider spreads.\nBy holding a flexible, liquid, high credit quality position even as spreads widen, we can manage both sides of our balance sheet to position for solid long-term return generation.\nAs the markets are still seeking a direction and level, the most important principle for what we are in right now is patients.\nWhile we continuously assess the environment as it will take time for the economic picture to become clearer.\nOur macroeconomic view supports our current positioning, and we remain flexible and open to adjusting it as we see the facts change.\nWhile booked value is lower due to spread widening and the curve positioning of our hedges, it is cushioned with our ability to continue to outearn the dividend at current levels of the balance sheet.\nThe investment environment is favorable.\nFinancing costs are fixed at low levels, providing us a strong foundation for returns and the TBA market continues to offer attractive returns.\nWe're entering a period where we anticipate having more opportunities to invest capital at wider spreads.\nWe're well-positioned for this.\nWe have relatively low starting leverage, over $400 million in liquidity and dry powder of two turns of leverage to drive future earnings power and total economic return generation well in excess of our cost of capital.\nI want to leave you with three words: opportunities, patience and trust.\nFirst, we continue to be in an evolving global environment that will give us opportunities to invest our capital at attractive long-term returns.\nOur portfolio continues to be structured for a steeper curve and wider spreads.\nWe continue to operate with lower leverage and higher levels of liquidity, which will allow us to take advantage of these opportunities as they develop.\nSecond, our decades of experience in the business leads us to be very patient as the world and the capital markets continues to adjust to this evolving global environment.\nSince this new era in history began in January of 2020, we have maintained patience in managing our balance sheet, effectively increasing our capital base and methodically investing money into wider mortgage spreads and higher yields.\nWe will continue with this mindset.\nAt Dynex Capital, we offer you two products to gain access to above-average dividend yield.\nOur common stock offers a great monthly dividend yield with a book value that will fluctuate as the market environment continues to evolve.\nOn the other hand, our preferred stock offers less price fluctuations with a lower dividend yield than the common.\nFinally, we want you to continue to trust us with your money.\nDynex Capital, our number 1 purpose is to make lives better by being good stewards of individual savings.\nOver the past 14 years, since I joined Dynex, we have earned your trust as we have managed our business with an ethical focus, remained patient and looking for the right opportunities to invest your savings at attractive long-term returns.\nWe are consistent, and we will remain patient as we let the global environment evolve.\nAnd we will continue to make wise decisions on behalf of our shareholders.\nPlease take a note, look at our long-term chart on Slide 13.\nI love this chart.\nDynex continues to offer a great alternative to many larger financial institutions.\n", "role": "user" }, { "content": "compname reports q2 loss per share of $0.98.\nq2 non-gaap core operating earnings per share $0.51.\nq2 loss per share $0.98.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Going to Slide 2.\nToday, we have on the call, Drew DeFerrari, our Chief Financial Officer; and Ryan Urness, our General Counsel.\nNow moving to Slide 4, and a review of our first quarter results.\nAs we review our results, please note that in our comments today and in the accompanying slides, we reference certain non-GAAP measures.\nWe refer you to the quarterly report section of our website for a reconciliation of these non-GAAP measures to their corresponding GAAP measures.\nNow, for the quarter.\nRevenue was $727.5 million, a decrease of 10.7%.\nOrganic revenue excluding $3.9 million of storm restoration services in the quarter declined 11.1%.\nAs we deployed 1 gigabit wireline networks, wireless/wireline converged networks and wireless networks this quarter reflected an increase in demand from two of our top five customers.\nGross margins were 14.8% of revenue, reflecting the continued impacts of the complexity of a large customer program.\nRevenue declined year-over-year with other large customers and the effects of winter weather in the first half of the quarter.\nGeneral and administrative expenses were 9.2% and all of these factors produced adjusted EBITDA of $44.1 million or 6.1% of revenue.\nAnd adjusted loss per share of $0.04 compared to earnings per share of $0.36 in the year ago quarter.\nLiquidity was strong at $477.4 million and operating cash flow was $41.5 million.\nFinally, during the quarter we issued $500 million in 4.5% senior notes due in April 2029, and resized and extended our credit facility through April of 2026.\nThese two transactions leave the company solidly financed as we look forward to better performance.\nNow going to Slide 5.\nToday, major industry participants are constructing or upgrading significant wireline networks across broad sections of the country.\nThese wireline networks are generally designed to provision 1 gigabit network speeds to individual consumers and businesses, either directly or wirelessly using 5G technologies.\nIndustry participants have stated their belief that a single high capacity fiber network can most cost-effectively deliver services to both consumers and businesses, enabling multiple revenue streams from a single investment.\nThis view is increasing the appetite for fiber deployments and we believe that the industry effort to deploy high capacity fiber networks continues to meaningfully broaden our set of opportunities.\nIncreasing access to high capacity telecommunications continues to be crucial to society, especially in rural America.\nThe wide and active participation in the completed FCC RDOF auction augurs well for dramatically increased rural network investment, supported by private capital that in the case of at least some of the participants is expected to be significantly more than the FCC subsidy.\nWe are providing program management planning, engineering and design, aerial and underground and wireless construction and fulfillment services for 1 gigabit deployments.\nThese services are being provided across the country in numerous geographic areas to multiple customers, including customers who have initiated broad fiber deployments, as well as customers who have resumed broad deployments.\nThese deployments include networks consisting entirely of wired network elements as well as converged wireless/wireline multi-use networks.\nFiber network deployment opportunities are increasing in rural America, as new industry participants respond to emerging societal incentives.\nWe continue to provide integrated planning, engineering and design, procurement and construction and maintenance services to several industry participants.\nMacroeconomic effects and potential supply constraints may influence the near-term execution of some customer plans.\nBroad increases in demand for fiber optic cable and related equipment may impact delivery lead times in the short-to-intermediate term.\nIn addition, the market for labor is tightening in some regions of the country, particularly for unskilled, semi-skilled new hires.\nIt remains to be seen how geographically broad these conditions will be and how long they will persist.\nDespite these factors, we remain confident that our scale and financial strength position us well to deliver valuable service to our customers.\nMoving to Slide 6.\nDuring the quarter, organic revenue decreased 11.1%.\nOur top five customers combined produced 68.2% of revenue, decreasing 23% organically.\nDemand increased for two of our top five customers.\nAll other customers increased 31.9% organically.\nAT&T was our largest customer at 21.4% of total revenue or $155.6 million.\nAT&T grew 0.9% organically.\nThis was our first quarterly organic growth with AT&T since our July of 2019 quarter.\nRevenue from Comcast was $131.1 million or 18% of revenue.\nComcast was Dycom's second largest customer and grew organically 10.7%.\nVerizon was our third largest customer at 12.6% of revenue or $91.5 million.\nLumen was our fourth largest customer at 485.8 million or 11.8% of revenue.\nAnd finally, revenue from Windstream was $32.1 million or 4.4% of revenue.\nWindstream was our fifth largest customer.\nThis is the ninth consecutive quarter where all of our other customers in aggregate, excluding the top five customers, have grown organically.\nIn fact, the 31.9% organic growth rate with these customers is the highest growth rate in at least nine years.\nOf note, fiber construction revenue from electric utilities was $47 million in the quarter or 6.5% of total revenue.\nThis activity increased organically 92.1% year-over-year.\nWe have extended our geographic reach and expanded our program management network planning services.\nIn fact, over the last several years, we have meaningfully increased the long-term value of our maintenance and operations business, a trend which we believe will parallel our deployment of 1 gigabit wireline direct and wireless/wireline converged networks, as those deployments dramatically increase the amount of outside plant network that must be extended and maintained.\nDespite this overall industry trend, we were recently notified by customer representing less than 5% of our revenue that it had decided to in-source a portion of the construction and maintenance services that are currently provided for them by us as well as a number of other suppliers.\nThey expect to implement this decision during the fourth calendar quarter of 2021.\nAfter this initiative is fully implemented, we expect to continue working for this customer in several markets under new contracts and perform other work on an ongoing basis.\nAlthough it currently appears at lower levels of activity.\nNow, going to Slide 7.\nBacklog at the end of the first quarter was $6.528 billion versus $6.81 billion at the end of the January 2021 quarter, decreasing approximately $282 million.\nOf this backlog, approximately $2.746 billion is expected to be completed in the next 12 months.\nBacklog activity during the first quarter reflects solid performance as we booked new work and renewed existing work.\nWe continue to anticipate substantial future opportunities across a broad array of our customers.\nFrom various electric utilities, fiber construction agreements in Arizona, Oklahoma, Missouri, Arkansas, Mississippi, Indiana, Kentucky, Tennessee, Georgia, and North Carolina.\nFor Ziply fiber, construction and maintenance agreements in Washington, Oregon, and Idaho.\nFor Charter, a fulfillment agreement covering Washington, Nevada, Montana, Wisconsin, Massachusetts, Connecticut, New York, North Carolina, South Carolina, Alabama, and Georgia.\nFrom Frontier, locating services agreement in California.\nAnd for Consolidated Communications, a construction services agreement in New Hampshire.\nheadcount increased during the quarter to 14,331.\nGoing to Slide 8.\nContract revenues for Q1 were $727.5 million and organic revenue declined 11.1%.\nAdjusted EBITDA was $44.1 million or 6.1% of revenue.\nGross margins were 14.8% in Q1 and decreased 169 basis points from Q1 '21.\nThis decrease resulted from the impact of a large customer program as well as margin pressure from revenue declines for other large customers compared to Q1 '21.\nMargins were also impacted by the adverse winter weather conditions experienced in many regions of the country during the first half of the quarter.\nG&A expense increased 112 basis points, reflecting higher stock-based compensation and administrative and other costs.\nNon-GAAP adjusted net loss was $0.04 per share in Q1 '22, compared to net income of $0.36 per share in Q1 '21.\nThe variance resulted from the after-tax decline in adjusted EBITDA, offset by lower depreciation, lower interest expense, and higher gains on asset sales.\nNow going to Slide 9.\nOur financial position remains strong.\nOver the past four quarters, we have reduced notional net debt by $185.2 million.\nDuring Q1, we issued $500 million of 4.5% senior unsecured eight-year notes due April 2029.\nWe repaid $105 million of revolver borrowings and $71.9 million of term loan borrowings, and we resized and extended our senior credit facility through April 2026.\nCash and equivalents were $330.6 million at the end of Q1.\n$58.3 million is expected to be used to repay our convertible notes due September 2021.\nWe ended the quarter with $500 million of senior unsecured notes, $350 million of term loan, no revolver borrowings, and $58.3 million principal amount of convertible notes.\nOur capital allocation prioritizes organic growth followed by opportunistic share repurchases and M&A within the context of our historical range of net leverage.\nAs of Q1, our liquidity was strong at $477.4 million, and we continue to maintain a strong balance sheet.\nGoing to Slide 10.\nOperating cash flows have remained strong and totaled $41.5 million in the quarter.\nThe combined DSOs of accounts receivable and net contract assets were at 128 days, an improvement of eight days sequentially from Q4 '21.\nCapital expenditures were $28.6 million during Q1 net of disposal proceeds, and gross capex was $31.6 million.\nCapital expenditures net of disposals for fiscal 2022 are expected to range from $105 to million to $125 million, a reduction of $40 million when the midpoint as compared to the midpoint of the prior outlook.\nThis deferral reflect short-to-medium term manufacturer supply constraints.\nGoing to Slide 11.\nFor Q2 2022, the company expects contract revenues to range from in-line to modestly lower as compared to Q2 2021, and expects non-GAAP adjusted EBITDA as a percentage of contract revenues to decrease compared to Q2 2021.\nWe expect the year-over-year gross margin pressure of approximately 200 basis points from the impact of a large customer program and from revenue declines for other large customers that are expected to have lower spending in the first half of this calendar year.\nWe expect approximately $8.7 million of non-GAAP adjusted interest expense for the components listed as well as $0.7 million for the amortization of the debt discount on convertible notes for total interest expense of approximately $9.4 million during Q2.\nWe expect the non-GAAP effective income tax rate of approximately 27% and diluted shares of $31.3 million.\nMoving to Slide 12.\nWithin a recovering economy, we experienced solid activity and capitalized on our significant strengths.\nFirst and foremost, we maintained significant customer presence throughout our markets.\nWe are encouraged with the emerging breadth in our business.\nOur extensive market presence has allowed us to be at the forefront of evolving industry opportunities.\nTelephone companies are deploying fiber to the home to enable 1 gigabit high speed connections, increasingly rural electric utilities are doing the same.\nCable operators are deploying fiber to small and medium businesses and enterprises.\nA portion of these deployments are in anticipation of the customer sales process.\nDeployments to expand capacity as well as new build opportunities are under way.\nDramatically increased speeds to consumers are being provisioned and consumer data usage is growing, particularly upstream.\nFiber deployments enabling new wireless technologies are under way in many regions of the country.\nCustomers are consolidating supply chains, creating opportunities for market share growth and increasing the long-term value of our maintenance and operations business.\nAs our nation and industry recover from the COVID-19 pandemic, we remain encouraged that a growing number of our customers are committed to multi-year capital spending initiatives.\nWe are confident in our strategies, the prospects for our company, the capabilities of our dedicated employees and the experience of our management team.\n", "role": "user" }, { "content": "q1 adjusted non-gaap loss per share $0.04.\nfor quarter ending july 31, 2021, expects contract revenues to range from in-line to modestly lower versus last year.\nfor quarter ending july 31, sees non-gaap adjusted ebitda as a percentage of contract revenues to decrease versus 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: Going to Slide two.\nToday we have on the call, Drew DeFerrari, our Chief Financial Officer and Ryan Urness, our General Counsel.\nNow moving to Slide four, and a review of our third quarter results.\nAs we review our results, please note that in our comments today and in the accompanying slides we reference certain non-GAAP measures, we refer you to the quarterly report section of our website for a reconciliation of these non-GAAP measures to their corresponding GAAP measures.\nNow for the quarter, revenue was $854 million, an organic increase of 6.6%.\nAs we deployed 1-gigabit wireline networks wireless/wireline converged networks and wireless networks, this quarter reflected an increase in demand from two of our top five customers.\nGross margins were 17.34% of revenue, reflecting the continued impacts of the complexity of a large customer program.\nRevenue declined year-over-year with other large customers and fuel costs.\nGeneral and administrative expenses were 7.8% of revenue and all of these factors produced adjusted EBITDA of $83.1 million or 9.7% of revenue and adjusted earnings per share of $0.95, compared to earnings per share of $1.6 in the year ago quarter, included in adjusted earnings per share our incremental tax benefits of $0.10 per share for credits related to tax filings for prior periods.\nLiquidity was solid at $314.7 million and operating cash flow was strong at $104.3 million, reflecting a sequential DSO decline of 12 days.\nDuring the quarter we repaid our remaining 2021 convertible notes in full and subsequent to the end of the third quarter, we received three-year awards for construction services in a number of states valued in excess of $500 million in total.\nNow going to Slide five.\nToday, major industry participants are constructing or upgrading significant wireline networks across broad sections of the country.\nThese wireline networks are generally designed to provision 1-gigabit network speeds to individual consumers and businesses, either directly or wirelessly using 5G technologies.\nIndustry participants have stated their belief that a single high capacity fiber network can most cost-effectively deliver services to vote consumers and businesses, enabling multiple revenue streams from a single investment.\nThis view is increasing the appetite for fiber deployments and we believe that the industry effort to deploy high capacity fiber networks continues to meaningfully broaden our industry set of opportunities.\nIncreasing access to high capacity telecommunications continues to be crucial to society, especially in rural America.\nThe recently enacted infrastructure investment and Jobs Act includes over $40 billion for the construction of rural communications networks in unserved and underserved areas across the country.\nThis represents an unprecedented level of support.\nIn addition, an increasing number of states are commencing initiatives that will provide funding for telecommunications networks even prior to the initiation of funding under the Infrastructure Act.\nWe are providing program management, planning, engineering and design, aerial underground, and wireless construction and fulfillment services for 1-gigabit deployments.\nThese services are being provided across the country in numerous geographic areas to multiple customers.\nThese deployments include networks consisting entirely of wired network elements, as well as converged wireless/wireline multi-use networks.\nFiber network deployment opportunities are increasing in rural America as new industry participants respond to emerging societal initiatives.\nWe continue to provide integrated planning, engineering and design, procurement and construction and maintenance services to several industry participants.\nMacroeconomic effects and potential supply constraints may influence the near-term execution of some customer plans.\nBroad increases in demand for fiber optic cable and related equipment may impact delivery lead times in the short to intermediate term.\nIn addition, the market for labor continues to tighten and regions around the country.\nIt remains to be seen how extensive these conditions will be and how long they may persist.\nFurthermore, the automotive supply chain is currently challenge, particularly for the large truck chassis required for specialty equipment.\nAs we contend with these factors, we remain confident that our scale and financial strength position us well to deliver valuable service to our customers.\nMoving to Slide six.\nDuring the quarter, organic revenue increased 6.6%, our top five customers combined produced 65.4% of revenue, decreasing 3.5% organically, demand increased for two of our top five customers all other customers increased 32.5% organically.\nAT&T was our largest customer at 23.4% of total revenue or $199.5 million.\nAT&T grew 68% organically this was our third consecutive quarter of organic growth with AT&T.\nRevenue from Comcast was $121 million or 14.2% of revenue, Comcast was Dycom's second largest customer.\nLumen was our third largest customer at 12.1% of revenue or $103 million.\nVerizon was our fourth largest customer at $93.4 million or 10.9% of revenue.\nAnd finally revenue from Frontier was $41.3 million or 4.8% of revenue.\nFrontier grew 118.6% organically.\nThis is the 11th consecutive quarter where all of our other customers in aggregate, excluding the top five customers have grown organically.\nOf note, fiber construction revenue from electric utilities was $53.7 million in the quarter and increased organically 75.3% year-over-year.\nWe have extended our geographic reach and expanded our program management network planning services.\nIn fact, over the last several years, we believe we have meaningfully increased the long-term value of our maintenance and operations business a trend, which we believe will parallel our deployment of 1-gigabit wireline direct and wireless/wireline converged networks.\nAs those deployments dramatically increase the amount of outside plant network that must be extended and maintained.\nNow going to Slide seven.\nBacklog at the end of the third quarter was $5.896 billion versus $5.895 billion at the end of the July '21 quarter, essentially flat.\nOf this backlog approximately $2.938 billion is expected to be completed in the next 12 months.\nWe continue to anticipate substantial future opportunities across a broad array of our customers.\nDuring the quarter, we received from Frontier fiber construction agreements in California, Texas, Indiana, New York, Connecticut and Florida, for Consolidated Communications, a construction and maintenance agreement for New Hampshire.\nFrom Windstream construction agreements for Ohio, Pennsylvania and New York, Kentucky and Alabama.\nFrom Lumen construction and maintenance agreements in Oregon, Minnesota and Iowa and various rural fiber deployments in Arizona, Colorado, Missouri, Indiana, Arkansas, Mississippi, Tennessee and Georgia.\nHeadcount increased during the quarter to 14,905.\nGoing to Slide eight.\nContract revenues were $854 million and organic revenue increased 6.6% for the quarter.\nStorm work performed in Q3 of last year was $8.9 million, compared to none in Q3 '22.\nAdjusted EBITDA was $83.1 million or 9.7% of revenue, gross margins of 17.3%, decreased 140 basis points from the year ago period.\nAs expected this decrease reflected higher fuel costs of approximately 50 basis points, as well as the impact from revenue declines from several large customers.\nG&A expense was at 7.8% of revenue and came in approximately 40 basis points better than our expectations from improved operating leverage.\nNon-GAAP adjusted net income was $0.95 per share, compared to $1.6 per share in the year ago period.\nQ3 '22, included approximately $3 million or $0.10 per share of incremental tax benefits for credits related to tax filings for prior periods.\nThe total variance in net income resulted from the after-tax decline in adjusted EBITDA, higher interest expense and lower gains on asset sales, offset by lower stock-based compensation, depreciation and amortization and income taxes.\nNow going to Slide nine.\nOur financial position and balance sheet remain strong.\nIn September, we repaid the final balance of $58.3 million of the convertible notes at maturity.\nWe ended the quarter with $500 million of senior notes, $350 million of term loan and no revolver borrowings.\nCash and equivalents were $263.7 million and liquidity was solid at $314.7 million.\nOur capital allocation prioritizes organic growth followed by opportunistic share repurchases and M&A within the context of our historical range of net leverage.\nGoing to Slide 10.\nOperating cash flows were strong at $104.3 million in the quarter, capital expenditures were $44.1 million net of disposal proceeds and gross capex was $45.1 million.\nFor the full-year of fiscal 2022, capital expenditures, net of disposals are now expected to range from $135 million to $150 million, an increase of $10 million to $25 million, compared to the high end of approximately $125 million in the prior outlook provided in Q2 '22.\nThe combined DSOs of accounts receivable and net contract assets were at 113 days, an improvement of 12 days sequentially from Q2 '22, as we made substantial progress on a large customer program.\nNow going to Slide 11.\nEach year our January quarterly results are impacted by seasonality, including inclement weather, fewer available work days due to the holidays, reduced daylight work hours and the restart of calendar payroll taxes.\nThese and other factors may have a pronounced impact on our actual results for the January quarter, compared to our expectations.\nQ4 of last fiscal year included 14-weeks of operations, due to the company's 52, 53-week fiscal year and also included $5.7 million of revenues from storm restoration services.\nNon-GAAP contract revenues adjusted for these amounts in Q4 '21 was $691.8 million.\nFor Q4 of fiscal '22, there will be 13-weeks of operations and the Company expects contract revenues to increase modestly, as compared to the non-GAAP organic contract revenues of $691.8 million in Q4 '21.\nThe Company expects non-GAAP adjusted EBITDA to range from in-line to modestly higher, as a percentage of contract revenues, as compared to Q4 '21.\nTotal interest expense is expected at approximately $8.8 million during Q4, and we expect a non-GAAP effective income tax rate of approximately 27%.\nMoving to Slide 12.\nWithin a recovering economy, we experienced solid activity and capitalized on our significant strengths.\nFirst and foremost, we maintained significant customer presence throughout our markets.\nWe are encouraged by the breadth in our business.\nOur extensive market presence has allowed us to be at the forefront of the evolving industry opportunities.\nTelephone companies are deploying fiber-to-the-home to enable 1-gigabit high speed connections, increasingly rural electric utilities are doing the same, dramatically increased speeds to consumers are being provisioned and consumer data usage is growing particularly upstream.\nWireless construction activity in support of newly available spectrum bands is beginning and expected to increase next year.\nFederal and state support for rural deployments of communications networks is dramatically increasing in scale and duration.\nCable operators are deploying fiber to small and medium businesses and enterprises, a portion of these deployments are in anticipation of the customer sales process.\nDeployments to expand capacity, as well as new build opportunities are underway.\nCustomers are consolidating supply chains, creating opportunities for market share growth and increasing the long-term value of our maintenance and operations business.\nAs our nation and industry continue to contend with the COVID-19 pandemic, we remain encouraged that a growing number of our customers are committed to multi-year capital spending initiatives.\nWe are confident in our strategies, the prospects for our company, the capabilities of our dedicated employees and the experience of our management team.\n", "role": "user" }, { "content": "qtrly adjusted earnings per share $0.95.\nexpects contract revenues for quarter ending in jan to increase modestly from non-gaap organic contract revenues of $691.8 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: Going to Slide two.\nToday we have on the call, Drew DeFerrari, our Chief Financial Officer and Ryan Urness, our General Counsel.\nNow moving to Slide four, and a review of our fourth quarter results.\nAs we review our results, please note that in our comments today and in the accompanying slides, we reference a certain non-GAAP measures, specifically in accordance with our 52/53 week calendar.\nThis quarter included a 14th week.\nAll references to organic revenue and organic growth, exclude the effect of this additional week.\nWe refer you to the quarterly report section of our website for a reconciliation of these non-GAAP measures to their corresponding GAAP measures.\nWe are living in truly unprecedented and trying times for our country.\nI could not be prouder of our employees as they continue to serve our customers with real fortitude in difficult times.\nNow, for the quarter.\nRevenue was $750.7 million, an increase of 1.8%.\nOrganic revenue excluding $5.7 million of storm restoration services in the quarter declined 6.2%.\nAs we deployed 1 gigabit wireline networks, wireless/wireline converged networks and wireless networks, this quarter reflected an increase in demand from one of our top five customers.\nAdjusted gross margins were 14.3% of revenue, reflecting the continued impacts of the complexity of a large customer program.\nAdjusted general and administrative expenses were 8.5%, and all of these factors produced adjusted EBITDA of $45.7 million or 6.1% of revenue, an adjusted diluted loss per share of $0.07, compared to a loss of $0.23 in the year ago quarter.\nLiquidity was strong as cash and availability under our credit facility was $570.5 million.\nFinally, during the quarter, we repurchased 1.32 million shares of our common stock for $100 million, representing just over 4.15% of common stock outstanding.\nEven after the substantial repurchase, notional net debt only increased by $14.6 million during the quarter.\nIn sum, over the last four quarters, we have reduced notional net debt by over $275 million, increased availability under our credit facility by a similar amount and meaningfully reduced shares outstanding.\nAs our most recent share repurchase authorization has been exhausted, our Board has newly authorized $150 million in share repurchases.\nNow going to Slide five.\nToday, major industry participants are constructing or upgrading significant wireline networks across broad sections of the country.\nThese wireline networks are generally designed to provision 1 gigabit network speeds to individual consumers and businesses, either directly or wirelessly using 5G technologies.\nIndustry participants have stated their belief that a single, high capacity fiber network can most cost-effectively deliver services to both consumers and businesses, enabling multiple revenue streams from a single investment.\nThis view appears to be increasingly appetite for fiber deployments and we believe that the industry effort to deploy high capacity fiber networks continues to meaningfully broaden our set of opportunities.\nAccess to high capacity telecommunications has become increasingly crucial to society in the time of the COVID-19 pandemic, especially in rural America.\nThe wide and active participation in the recently completed FCC RDOF auction augurs well for dramatically increased rural network investment supported by private capital that in case -- that in the case of at least some of the participants is expected to be significantly more than the FCC subsidy.\nWe are providing program management, planning, engineering and design, aerial, underground and wireless construction, and fulfillment services for 1 gigabit deployments.\nThese services are being deployed -- being provided across the country in numerous geographical areas to multiple customers, including customers who have initiated broad fiber deployments, as well as customers who will shortly resume broad deployments and with whom order flow has recently increased markedly.\nThese deployments include networks consisting entirely of wired network elements, as well as converged wireless/wireline multiuse networks.\nFiber network deployment opportunities are increasing in rural America as new industry participants respond to emerging societal incentives.\nWe continue to provide integrated planning, engineering and design, procurement and construction and maintenance services to several industry participants.\nNear-term, macroeconomic effects and uncertainty may influence the execution of some customer plans.\nCustomers continue to be focused on the possible macroeconomic effects of the pandemic on their business with particular focus on SMB dislocations and overall consumer confidence and creditworthiness.\nWe see some uncertainty in the overall municipal environment as authorities continue to manage the general effects of the pandemic on permitting and inspection processes.\nOverall, we remain confident that our scale and financial strength position us well to deliver valuable service to our customers.\nMoving to Slide six.\nDuring the quarter, we experienced increased demand from one of our top five customers, organic revenue decreased 6.2%.\nOur top five customers combined produced 69.4% of revenue, decreasing 15.5% organically, while all other customers increased 25.3% organically.\nComcast was our largest customer at 18.8% of total revenue or $140.9 million.\nComcast grew 28.8% organically.\nRevenue from AT&T was $126.2 million or 16.8% of revenue.\nAT&T was Dycom's second largest customer.\nVerizon was our third largest customer at 15.7% of revenue or $117.8 million.\nLumen was our fourth largest customer at $100.5 million or 13.4% of revenue.\nAnd finally revenue from Windstream was $36 million or 4.8% of revenue.\nWindstream was our fifth largest customer.\nThis is the eighth consecutive quarter where all of our other customers in aggregate, excluding the top five customers have grown organically.\nIn fact, our business with these customers has grown organically by double digits each of the last two quarters.\nOf note, fiber construction revenue from electrical utilities was $44.1 million in the quarter or 5.9% of total revenue.\nThis activity increased organically 125% year-over-year.\nWe have extended our geographic reach and expanded our program management and network planning services.\nIn fact, over the last several years, we have meaningfully increased the long-term value of our maintenance and operations business, a trend which we believe will parallel our deployment of 1 gigabit wireline direct and wireless/wireline converged networks as those deployments dramatically increase the amount of outside plant network that must be extended and maintained.\nNow going to Slide seven.\nBacklog at the end of the fourth quarter was $6.81 billion versus $5.412 billion at the end of the October 2020 quarter, increasing approximately $1.4 billion.\nOf this backlog, approximately $2.787 billion is expected to be completed in the next 12 months.\nThe increase in backlog reflects renewals and new awards across a significant number of customers, offset in part by adjustments resulting from further communications regarding the reprioritization and rescoping of the components of a large program and our assessment of the expected pace of another component of the same program.\nFrom AT&T, we received extensions as well as awards, expanding our covered services across a significant majority of our business.\nFirst, construction expansions in Kentucky, Tennessee, North Carolina, South Carolina, Alabama, Georgia and Florida.\nSecond, extensions for construction and maintenance services agreements in Kentucky, Tennessee, North Carolina, South Carolina, Alabama, Georgia and Florida.\nThird, an extension and scope expansion for wireless services in Kentucky, South Carolina, Alabama and Georgia.\nAnd finally, a five-year extension for locating services in California.\nFor Comcast, Engineering agreements in Michigan, Massachusetts, Pennsylvania, Maryland, Delaware and Georgia.\nFor Charter, Construction & Maintenance agreements in New York and Ohio.\nFrom Frontier, Construction agreements in Connecticut and Florida, and a Construction & Maintenance agreement in Florida.\nFor Verizon, a construction agreement in Texas and renewal in Maryland and Virginia.\nAnd locating agreements for various customers in Maryland and New Jersey.\nHeadcount increased during the quarter to 14,276.\nGoing to Slide eight.\nContract revenues for Q4 were $750.7 million and organic revenue declined 6.2%.\nQ4 '21 included an additional week of operations due to the company's 52/53 week fiscal year.\nAdjusted EBITDA was $45.7 million or 6.1% of revenue compared to $44.5 million or 6% of revenue in Q4 '20.\nNon-GAAP adjusted gross margins were at 14.3% in Q4 and increased 10 basis points from Q4 '20.\nGross margins were within our range of expectations for the quarter, but approximately 80 basis points below the midpoint of our expectations.\nThis variance reflected approximately 100 basis points of pressure from a large customer program offset in part by approximately 20 basis points of improved performance for several other customers.\nG&A expense increased 25 basis points, reflecting higher performance-based compensation offset in part by lower administrative costs, compared to Q4 '20.\nThe Q4 '21 non-GAAP effective income tax rate was 30%, including incremental tax benefits related to recent tax filings.\nFor planning purposes for fiscal 2022, we estimate the non-GAAP effective income tax rate will be approximately 27%.\nNon-GAAP adjusted net loss was $0.07 per share in Q4 '21, compared to a net loss of $0.23 per share in Q4 '20.\nThe improvement resulted from the after-tax benefits of higher adjusted EBITDA, lower depreciation and lower interest expense.\nNow going to Slide nine, our balance sheet and financial position remains strong.\nDuring Q4, we repurchased 1,324,381 shares of our common stock at an average price per share of $75.51 in the open market for $100 million.\nOur Board of Directors has approved a new authorization of $150 million for share repurchases through August 2022.\nOver the past four quarters, we have reduced notional net debt by $276.4 million.\nWe ended the quarter with $11.8 million of cash and equivalents, $105 million of revolver borrowings, $421.9 million of term loans and $58.3 million principal amount of convertible notes outstanding.\nAs of Q4, our liquidity was strong at $570.5 million, cash flows from operations were robust at $102.4 million, bringing our year-to-date operating cash flow to $381.8 million from strong conversion of earnings to cash and prudent working capital management.\nThe combined DSOs of accounts receivable and net contract assets was at 136 days, reflecting the impact of a large customer program.\nWe expect improvement in the DSO metric in fiscal 2022 as the impact of this large customer program declines.\nCapital expenditures were $20.4 million during Q4 net of disposal proceeds, and gross capex was $21.9 million.\nLooking ahead to fiscal year 2022, we expect net capex to range from $150 million to $160 million.\nIn summary, we continue to maintain a strong balance sheet and strong liquidity.\nGoing to Slide 10.\nAs we look ahead to the first quarter of fiscal 2022, we expect our results to be impacted by the adverse winter weather conditions experienced in many regions of the country.\nFor the quarter ending May 1st, 2021, as compared sequentially to the quarter ended January 30th, 2021, the company expects contract revenues to range from in-line to modestly lower and non-GAAP adjusted EBITDA as a percentage of contract revenues to range from in-line to modestly higher.\nThe company believes the impact of the COVID-19 pandemic on its operating results, cash flows and financial condition is uncertain, unpredictable and could affect its ability to achieve these expected financial results.\nMoving to Slide 11.\nWithin a challenged economy, we experienced strong award activity and capitalized on our significant strengths.\nFirst and foremost, we maintained significant customer presence throughout our markets.\nWe are encouraged with the emerging breadth in our business.\nOur extensive market presence has allowed us to be at the forefront of evolving industry opportunities.\nFiber deployments enabling new wireless technologies are under way in many regions of the country.\nTelephone companies are deploying fiber-to-the-home to enable 1 gigabit high speed connections, increasingly, rural electric utilities are doing the same.\nCable operators are deploying fiber to small and medium businesses and enterprises, a portion of these deployments are in anticipation of the customer sales process.\nDeployments to expand capacity, as well as new build opportunities are under way.\nDramatically increased speeds to consumers are being provisioned and consumer data usage is growing, particularly upstream.\nCustomers are consolidating supply chains creating opportunities for market share growth and increasing the long-term value of our maintenance and operations business.\nAs our nation and industry continues to contend with the COVID-19 pandemic, we remain encouraged that our major customers are committed to multiyear capital spending initiatives.\nWe are confident in our strategies, the prospects for our company, the capabilities of our dedicated employees and the experience of our management team as we navigate challenging times.\n", "role": "user" }, { "content": "compname reports q4 adjusted non-gaap loss per share $0.07.\nq4 adjusted non-gaap loss per share $0.07.\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: Joining today's call are Bob Blue, chairman, president, and chief executive officer; Jim Chapman, executive vice president, chief financial officer, and treasurer; and other members of the executive management team.\nBefore we provide our business update, I'd like to take a moment to remember our friend, Tom Farrell.\nTom's passing on April 2 was heartbreaking to those of us who loved, admired, and respected him.\nWe've heard from so many people, including many of you, about Tom's impact on the industry and the people who work in and around it.\nIt's quite clear that while Tom's list of professional accomplishments was long, the list of people whose lives he touched was much, much longer.\nBut much more often, we experienced his generosity, his loyalty, his dry sense of humor, and his focus on improving our company, our community, and our industry.\nWe should all seek to emulate his example, a consistent commitment to ethics and integrity, to excellence, and perhaps most of all, to the safety of our colleagues.\nHe cherished his friends and family, most of all.\nWe can't think of a better example of a leader, and we will miss him dearly.\nAs Bob said, we will very much miss Tom.\nLet me now turn to our business update.\nWe are very focused on overall execution, including extending our track record of meeting or exceeding our quarterly guidance midpoints as we did again this quarter.\nI'll start my review on Slide 4, with a reminder of Dominion Energy's compelling total shareholder return proposition.\nWe expect to grow our earnings per share by 6.5% per year through at least 2025, supported by our updated $32 billion five-year growth capital plan.\nKeep in mind that over 80% of that capital investment is emissions reduction enabling and that over 70% is rider eligible.\nWe offer an attractive dividend yield of approximately 3.2%, reflecting a target payout ratio of 65% and an expected long-term dividend per share growth rate of 6%.\nThis resulting approximately 10% total shareholder return proposition is combined with an attractive pure-play, state-regulated utility profile characterized by industry-leading ESG credentials and the largest regulated decarbonization investment opportunity in the country, as shown on the next slide.\nOur 15-year opportunity is estimated to be over $70 billion, with multiple programs that extend well beyond our five-year plan and skew meaningfully toward rider-style regulated cost of service recovery.\nWe believe we offer the largest, the broadest in scope, the longest in duration, and the most visible regulated decarbonization opportunity among U.S. utilities.\nThe successful execution of this plan will benefit our customers, communities, employees, and the environment.\nTurning now to earnings.\nOur first-quarter 2021 operating earnings, as shown on Slide 6, were $1.09 per share, which included a $0.01 hurt from worse than normal weather in our utility service territories.\nThis represents our 21st consecutive quarter, so over five years now, of delivering weather-normal quarterly results that meet or exceed the midpoint of our quarterly guidance range.\nGAAP earnings for the quarter were $1.23 per share.\nThe difference between GAAP and operating earnings for the three months ended March 31 was primarily attributable to a net benefit associated with nuclear decommissioning trusts and economic hedging activities, partially offset by other charges.\nTurning on to guidance on Slide 7.\nAs usual, we're providing a quarterly guidance range, which is designed primarily to account for variations from normal weather.\nFor the second quarter of 2021, we expect operating earnings to be between $0.70 and $0.80 per share.\nWe are affirming our existing full-year and long-term operating earnings and dividend guidance, as well.\nNo changes here from prior guidance.\nTurning to Slide 8 and briefly on financing.\nSince January, we've issued $1.3 billion of long-term debt, consistent with our 2021 financing plan guidance at a weighted average cost of 2.4%.\nFor avoiding some doubt, there's no change to our prior common equity issuance guidance.\nWrapping up my remarks, let me touch briefly on potential changes to the Federal Tax Code.\nObviously, it's still early days with a lot of unknowns.\nBut at a high level, we see an increase in the corporate tax rate as being close to neutral on operating earnings based on, as is the case for all regulated entities, the assumed pass-through for cost of service operations, an increase in parent level interest tax shield and the extension and expansion of clean or green tax credits, all of which will be offset by higher taxes on our contracted assets segment earnings.\nWe also expect modest improvement in credit metrics.\nWe're monitoring the contemplated minimum tax rules closely and we'd note the administration's support for renewable development suggests the ability to use renewable credits to offset any such minimum tax rule.\nMore to come over time on that front.\nI'll begin with safety.\nAs shown on Slide 9, through the first three months of 2021, we're tracking closely to the record-setting OSHA rate that we achieved in 2020.\nIn addition, we're seeing record low levels of lost time and restricted duty cases, which measure more severe incidents.\nOf course, the only acceptable number of safety incidents is zero, and we will continue to work toward that critical goal.\nLet me provide a few updates around our execution across the strategy.\nWe're pleased that the 2.6-gigawatt Coastal Virginia offshore wind project has been declared a covered project under Title 41 of the Fixing America's Surface Transportation Act program, also known as FAST 41.\nThe federal permitting targets now published under that program are consistent with the project schedule that we shared on the fourth-quarter call in February.\nKey schedule milestones are shown side by side on Slide 10.\nWe continue to be encouraged by the current administration's efforts to provide a pathway to timely processing of offshore wind projects.\nIn the meantime, we're advancing the project as follows: we're processing competitive solicitations for equipment and services to achieve the best possible value for customers and in accordance with the prudency requirements of the VCEA.\nInterest in those RFPs has been robust.\nWe're analyzing performance data from our test turbines, which have been operational for several months now and are, to date, generating at capacity factors that are higher than our initial expectations.\nRecall, we had assumed a lifetime capacity factor of around 41% for the full-scale deployment.\nFurther evaluation of turbine design and wind resource, in addition to the data we're gathering in real time, suggest that our original assumption is too low.\nHigher generation would result in lower energy costs for customers.\nWe're monitoring raw material costs, and it seems to be the case across a number of industries right now, we're observing higher prices.\nIn the case of steel, for example, the return of pandemic-idled steelmaking capacity hasn't yet caught up to global demand.\nWe'll continue to monitor raw material cost trends as we move toward procurement later in the project timeline.\nWe're moving into the detailed design phase for onshore transmission.\nAs we observed within the industry recently, utility systems are only as good as they are resilient, which is one of the reasons that we made the decision in 2019 to go the extra distance to connect to our 500 kV transmission system to ensure that the project's power will be available when our customers need it most.\nWe believe that decisions we're making around the onshore engineering configurations will ultimately result in the best value for customers.\nAnd finally, our Jones Act-compliant wind turbine installation vessel is being constructed and is on track for delivery in late 2023.\nWe expect to announce further details on nonaffiliate vessel charters in the near term.\nIn summary, lots of very exciting progress, which will continue through the summer, including our expected notice of intent from BOEM in June.\nAs is typical for a project of this size at this phase of development, there will be some puts and takes as work continues.\nTaken as a whole, there's no change to our confidence around the project's expected LCOE range of $80 to $90 per megawatt-hour.\nNear the end of the year, we'll file our CPCN and rider applications with the Virginia State Corporation Commission and we'll be in a position at that time to provide additional details around contractor selection and terms, project components, transmission routing, project costs, capacity factors and permitting.\nTurning to updates around other select emissions reduction programs.\nOn solar, on Friday, the Virginia State Corporation Commission approved our most recent clean energy filing, which included 500 megawatts of solar capacity across nine projects, including over 80 megawatts of utility-owned solar, the fourth consecutive such approval.\nWe also recently issued an RFP for an additional 1,000 megawatts of solar and onshore wind, as well as 100 megawatts of energy storage and 100 megawatts of small-scale solar projects, and eight megawatts of solar to support our community solar program.\nOur next clean energy filing, which we expect to include solar and battery storage projects, will take place later this year.\nSince our last call, we've continued to derisk our plan to meet the VCEA solar milestone by putting another 30,000 acres of land under option, bringing the total to nearly 100,000 acres of options or exclusive land agreements, which is enough to support the approximately 10 gigawatts of utility-owned solar as called for by the Virginia Clean Economy Act.\nThe Surry station provides around 15% of the state's total electricity and around 45% of the state's zero-carbon generation.\nThis authorization is a critical step in ensuring the plant will continue to provide significant environmental and economic benefits for many years to come.\nWe expect to file with the SEC for rider recovery of relicensing spend late this year for both Surry and North Anna stations.\nOur gas distribution business, as we've discussed in the past, our gas utility operations are enhancing sustainability and working to reduce scope on and three emissions, with focused efforts around energy efficiency, renewable natural gas and hydrogen blending, operational modifications, and potential changes around procurement practices.\nFor example, as part of our recently filed natural gas rate case in North Carolina, we asked the North Carolina Utilities Commission to approve five new sustainability-oriented programs: hydrogen blending pilot, that's part of our goal to be able to blend hydrogen across our entire gas utility footprint by 2030; a new option to allow our customers to purchase RNG attributes; and three new energy efficiency programs.\nFinally, in South Carolina.\nThe South Carolina Office of Regulatory Staff recently filed a report finding that our revised IRP met the requirements of the law and the Public Service Commission's order requiring the modified filing.\nAs a reminder, the preferred plan and the revised filing calls for the retirement of all coal-fired generation in our South Carolina system by the end of the decade, which helps to drive a projected carbon reduction of nearly 60% by 2030 as compared to 2005.\nWhile the IRP is an informational filing, it does not provide approval or disapproval for any specific capital project.\nWe look forward to continuing to talk with stakeholders, including the commission, about an increasingly low-carbon future.\nAn order is expected from the Public Service Commission by June 18.\nTurning to the regulatory landscape, let me provide a brief update on our Virginia triennial review filing, which we submitted at the end of March.\nAs shown on Slide 12, the filing highlights Dominion Energy Virginia's exceptionally reliable and affordable service.\nThe state's careful and thoughtful approach to utility regulation has resulted in a model that prioritizes long-term planning that protects customers from service disruptions and bill shocks.\nConsider these facts, 99.9% average reliability delivered at rates that are between 8% and 35% lower than comparable peer groups.\nWe're proud of our record and the work we do to serve customers every single day.\nOur filing also reflects over $200 million of customer arrears forgiveness as directed by the general assembly, relief that is helping our most vulnerable customers address the financial impacts of COVID-19.\nThe filing also identifies nearly $5 billion of investment in rate base on behalf of our customers over the four-year review period, including $300 million of capital investment in renewable energy and grid transformation projects that we believe meet the eligibility criteria for reinvestment credits for customers.\nThe commission's procedural schedule is shown here.\nWe've included additional details regarding the case as filed in the appendix for your review and look forward to engaging with stakeholders in coming months.\nIt's clear to us that the existing regulatory model is working exceptionally well for customers, communities, and the environment in Virginia.\nWe're delivering increasingly clean energy while protecting reliability and safeguarding affordability.\nIn South Carolina, we continue to engage in settlement discussions with the other parties as highlighted in our monthly filings before the commission.\nWe aren't able to discuss specifics of that process but can report that all parties appear committed to working toward a mutually agreeable resolution.\nFinally, let me highlight noteworthy developments in the legislative landscape for our company.\nIn Virginia, during the now adjourned session, the Virginia General Assembly passed House Bill 1965, which adopts low and zero-emissions vehicle programs that mirror vehicle emission standards in California.\nThe law, which has been signed by the governor, ensures that more electric vehicles are manufactured and sold in Virginia.\nIt will likely take a few years before we see the significant and inevitable ramp-up in electric vehicle adoption in our service territory, but we're taking steps today to be prepared for the incremental electric demand and associated infrastructure.\nThat includes regional coordination with other utilities to ensure highway corridors that ensure seamless charging networks, support for in-territory EV charging infrastructure, which includes a significant investment in a variety of grid transformation projects, as well as the rollout of time-of-use programs.\nAt the federal level, we're encouraged by the support we're seeing for our offshore wind project.\nWe applaud efforts to increase funding for the research and development of technologies that will allow the utility industry to drive further carbon emissions reductions.\nWe're philosophically aligned with the current administration in wanting to accelerate decarbonization across the utility value chain, while also recognizing that the energy we deliver must remain reliable and affordable.\nIt's still early, but we're engaging in the process of policy formation and monitoring developments closely and continue to believe we are well-positioned to succeed in an increasingly decarbonized world.\nI'll conclude the call with the summary on Slide 13.\nOur safety performance year to date is tracking closely to our record-setting achievement from last year.\nWe reported our 21st consecutive quarterly result that normalized for weather, meets or exceeds the midpoint of our guidance range.\nWe affirmed our existing long-term earnings and dividend guidance.\nWe're focused on executing across the largest regulated decarbonization investment opportunity in the nation for the benefit of our customers.\nAnd we're aggressively pursuing our vision to be the most sustainable energy company in America.\n", "role": "user" }, { "content": "compname announces q1 earnings per share of $1.23.\nsees q2 operating earnings per share $0.70 to $0.80.\nq1 operating earnings per share $1.09.\nq1 gaap earnings per share $1.23.\nalso affirms its long-term earnings and dividend growth 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: Joining today's call are Bob Blue, chair, president, and chief executive officer; Jim Chapman, executive vice president, chief financial officer, and treasurer; and other members of the executive management team.\nBefore I report on our strong quarterly financial results, I'm going to start with a recap of our compelling investment proposition and highlight our focus on the consistent execution of our repositioned strategy.\nWe expect to grow earnings per share 6.5% per year through at least 2025 supported by a $32 billion five-year growth capital plan.\nAs outlined on our fourth-quarter call in February, over 80% of that capital investment is emissions reduction enabling and over 70% is rider recovery eligible.\nWe offer a nearly 3.5% yield and expect dividends per share to grow 6% per year based on a target payout ratio of 65%.\nTaken together, Dominion Energy offers an approximately 10% total return premised on a pure-play, state-regulated utility profile, operating in premier regions of the country.\nMore on that lasting in a minute.\nTurning now to earnings.\nOur second-quarter 2021 operating earnings, as shown on Slide 4, were $0.76 per share, which included $0.01 hurt from worse than normal weather in our utility service territories.\nBoth actual results and weather-normalized results of $0.77 were above the midpoint of our quarterly guidance range.\nSo this is our 22nd consecutive quarter, so 5.5 years now, of delivering weather-normal quarterly results that meet or exceed the midpoint of our quarterly guidance range.\nNote that our second quarter and year-to-date GAAP and operating earnings, together with comparative periods, are adjusted to account for discontinued operations, including those associated with our gas transmission and storage assets.\nSecond-quarter GAAP earnings were $0.33 per share and reflect the mark-to-market impact of economic hedging activities, unrealized changes in the value of our nuclear decommissioning trust funds, the contribution from Questar pipeline, which will continue to be accounted for as discontinued operations until divested and other adjustments.\nA summary of all adjustments between operating and reported results is, as usual, included in Schedule 2 of our earnings-release kit.\nTurning now to guidance on Slide 5.\nAs usual, we're providing a quarterly guidance range which is designed primarily to account for variations from normal weather.\nFor the third quarter of 2021, we expect operating earnings to be between $0.95 and $1.10 per share.\nWe are affirming our existing full-year and long-term operating earnings and dividend-growth guidance as well.\nNo changes here from prior communications.\nFor the first half of the year, weather-normal operating earnings per share of $1.86 represents approximately half of our full-year guidance midpoint.\nSo we are tracking nicely in line with our expectations.\nWe'll provide our formal fourth-quarter earnings guidance, as is typical, on our next earnings call, but let me provide some commentary on the implied cadence of our earnings over the second half of the year.\nWhile Q3 guidance is roughly in line with weather-normal results from a year ago, we will see a multitude of small year over year helps in Q4, such as normal course regulated rider growth, the impact of the South Carolina electric rate settlement, strengthening sales, modest margin help, including -- from Millstone, continued expense management and tax timing that combined will help us to deliver solid second-half results.\nWe continue to be very focused on extending our track record of achieving weather-normal results, at least equal to the midpoint of our guidance on both a quarterly and annual basis.\nTurning now to our couple of macro items.\nFirst, overall electric sales trends.\nIn Virginia, weather-normalized sales increased 1.2% year over year in the second quarter and 3.2% in South Carolina.\nIn both states, increased usage from commercial and industrial segments overcame declines among residential users, as the stay-at-home impact of COVID waned, some context on that.\nYou'll recall that demand in DOM zone last year was despite the pandemic pretty resilient due to robust residential and data center demand.\nSo it's not surprising to see South Carolina's relatively higher growth in Q2, given the larger toll COVID had on sales there last year.\nWe're encouraged by the strong return of commercial and industrial volumes in South Carolina in the second quarter.\nAnd looking ahead, we expect electric sales growth in our Virginia and South Carolina service territories to continue to a run rate of 1% to 1.5% per year, so similar to what we were observing pre pandemic.\nNext, let me discuss what we're seeing around input prices.\nAs discussed on last quarter's call, we're continuing to monitor raw material costs.\nAnd it seems to be the case across a number of industries right now, we're observing higher prices, although we have seen a moderation in the upward pressure over the last few months, especially in steel.\nDespite these cost pressures, as it relates to offshore wind, in particular, we remain confident in our ability to deliver that project in line with our previously guided levelized cost of energy range of $80 to $90 per megawatt hour.\nOn the solar side, we're seeing, again, what others seem to be seeing, supply is tight, and prices for steel, poly and glass are up, but our 2021 projects remain on track with most material now already on site.\nWe're beginning to see moderation in pricing and relief from modest shipping constraints, which bodes well, we expect, for our post-2021 projects.\nSo again, we're watching but no material financial impacts at this time.\nLet me address a few additional topics on Slide 6.\nLast month, Dominion Energy and Berkshire Hathaway Energy mutually agreed to terminate our planned sale of Questar pipeline as a result of ongoing uncertainty associated with the timing and the likelihood of ultimately achieving Hart-Scott-Rodino clearance.\nA few thoughts here.\nFirst, though we obviously felt that a timely clearance of closing was the logical outcome given the facts and circumstances surrounding that transaction, we did build into the original Berkshire sale contract, the flexibility to easily accommodate a termination if needed.\nSecond, we are already at a reasonably advanced stage of an alternate competitive sale process for Questar Pipeline with expected closing by the end of this year.\nThird, its termination has no impact on the sale of the gas transmission storage assets to Berkshire, which we successfully completed back in November of last year and which represented approximately 80% of the originally announced transaction value.\nAnd finally, this termination nor the outcome of the ongoing sale process impacts Dominion Energy's existing financial guidance.\nAs mentioned, Questar pipeline will continue to be accounted for as discontinued operations excluded from the company's calculation of operating earnings.\nBriefly, on credit, we've continued to deliberately enhance our qualitative and quantitative credit measures.\nLast month, we were pleased to see Fitch upgrade Dominion Energy South Carolina's credit rating from BBB+ to A-.\nFitch cited both improved regulatory relationships, including the unanimous approval of the General Electric rate settlement, which Bob will discuss in some more detail, as well as good balance sheet management.\nSo let me turn now to a couple of ESG-related topics.\nIn June, we announced the successful syndication of sustainability-linked credit facilities totaling $6.9 billion, and we very much appreciate the efforts and support of all the banks who work with us on what we view as a very interesting new type of financing.\nThe $6 billion master credit facility links pricing to achievement of annual renewable electric generation and diversity and inclusion milestones.\nAnd the $900 million supplemental facility presents a first-of-its-kind structure where pricing benefits accrue for draws related to qualified environmental and social spending programs.\nSo in other words, going forward, if we meet or exceed our quantifiable goals in these areas, our borrowing costs decline.\nAnd of course, the opposite is also true.\nIf we fail to meet our goals, we pay more.\nBut through this financing, we're very much putting our money where our mouth is when it comes to ESG performance.\nAnd we're looking for more ways to deploy green capital raises as we execute on our fixed income financing plan during the balance of the year.\nIn July, we issued an updated and comprehensive climate report, which reflects the task force on climate-related financial disclosures, or TCFD, methodology.\nWe are just one of six U.S. electric utilities that have pledged formal support for TCFD.\nAs described in the report, which is available on our website, we have modeled several potential pathways to achieve net zero emissions across our electric and gas business that reflect 1.5-degree scenario and are consistent with the Paris Agreement on climate change.\nThe climate report shows we are a leader in both greenhouse gas emission reductions over the last 15 years and in our commitment to transparent progress toward our goal of net zero emissions.\nAs shown on Slide 7, I'm very pleased that our results over the first two quarters of this year surpassed even our record-setting results from last year.\nOur safety performance matters immensely to our more than 17,000 employees, to their families and to the communities we serve, which is why it matters so much to us and why it's our first core value.\nTurning to Slide 8.\nI often describe our pure-play state-regulated strategy as centering around five premier states, all of which share the philosophy that a common sense approach to energy policy and regulation puts a priority on safety, reliability, affordability and, increasingly, sustainability.\nWe were pleased that CNBC's list of America's Top States for Business ranked Virginia, North Carolina and Utah as 1, 2 and 3, respectively, a podium sweep for three of our five primary jurisdictions with a fourth major service territory, Ohio, also ranking in the top 10.\nThis is the second consecutive No.\n1 ranking for Virginia.\nObviously, an assessment of this variety is just one of several possible ways to evaluate state-specific business environments, but we're pleased with the independent confirmation of what we observe every day working on the ground in all of our regions.\nWe've strategically repositioned our business around the state-regulated utility model in order to offer investors increased stability, which is further enhanced by our concentration in these fast-growing, constructive and business-friendly states.\nNext, I'd like to highlight the outstanding work done across our operating segments by the women and men of Dominion Energy, who exemplify our core values of safety, ethics, excellence, embracing change and One Dominion Energy.\nAt Gas Distribution, our colleagues have collaborated across our national footprint to share best practices, resulting in a nearly 20% reduction of third-party excavation damage to our underground infrastructure as compared to 2019.\nEach instance of damage prevention enhances the safety and reliability of our system while also reducing the emissions profile of our operations.\nAt Dominion Energy South Carolina, our ability to work in close partnership with state and local officials, combined with our commitment to meet an aggressive time line for electric and gas service delivery, were key to attracting a new $400 million brewery to the state last year.\nThe facility is expected to create 300 local jobs and is one of the largest breweries built in the United States in the last 25 years.\nBeing on time, however, wasn't good enough for our South Carolina colleagues, who safely completed the infrastructure upgrades and installation ahead of an already ambitious schedule.\nWe take pride in examples like this that demonstrate how DESC plays a key role in supporting South Carolina's economic and job growth.\nAnd in Virginia, despite several days of near-record peak demand in June, our generation colleagues delivered exceptional performance as evidenced by the absence during those periods of any forced outages across our fleet.\nOur transmission and distribution team members kept the grid operating flawlessly under demanding load conditions while also keeping pace with robust residential connects and remarkable data center demand growth, which continues the trend of robust growth over the last several years with no end in sight.\nI'll now turn to updates around the execution of our growth plan.\nThe 2.6 gigawatt Coastal Virginia offshore wind project received its notice of intent, or NOI, from the Bureau of Ocean Energy Management in early July, consistent with the time line we had previously communicated.\nThe issuance of an NOI formally commenced the federal permitting review, which, based on our previously disclosed time line, is expected to take about two years.\nKey schedule milestones are shown on Slide 10.\nLater this year, we'll file our CPCN and rider applications with the Virginia State Corporation Commission.\nIn June, we announced an agreement with Orsted and Eversource, under which they will charter our Jones Act-compliant wind turbine installation vessel for the construction of two offshore wind farms in the Northeast.\nTurning to Slide 11.\nThe Virginia triennial review is currently in discovery phase, and the company is providing timely responses to requests for information, all of which generally conform with what we would reasonably expect during a rate proceeding of this size and complexity.\nAs a reminder, the earnings review applies only to the Virginia base portion of our rate base, which becomes smaller as a percentage of DEV and Dominion Energy during our forecast period.\nVirginia rider investments like offshore wind, solar, battery storage, nuclear life extension and electric transmission, which are outside the scope of the proceeding, represent the vast majority of the growth at DEV.\nWe've provided a summary of our filing position, as well as key milestones in the procedural schedule.\nA few items to reiterate here.\nFirst, our filing highlights the compelling value we've provided to customers during the review period of 2017 through 2020.\nWe've delivered safe and reliable service at affordable rates that are well below regional, RGGI and national averages, all while taking aggressive steps to accelerate decarbonization by pursuing early retirement of fossil fuel and power generation units.\nSecond, at the direction of the general assembly, we've provided over $200 million of customer arrears forgiveness to assist families and businesses in overcoming financial difficulties caused by the pandemic.\nThird, we've invested over $300 million in CCRO-eligible projects, including our offshore wind test project, which is the first operational wind turbines built in federal waters in the United States.\nFinally, our filing reports a regulatory return that aligns closely to our authorized ROE plus the 70-basis-point collar.\nInclusive of arrears forgiveness, this financial result warrants neither refund nor a change to revenues.\nWhile offshore wind and the triennial review are understandably areas of focus, we'd be remiss if we didn't also highlight the blocking and tackling we're doing to advance other very material growth investments and their associated regulatory processes for the benefit of our customers, communities and the environment.\nSince our last update, we received our fourth consecutive regulatory approval for investments in utility-owned rider recoverable solar projects.\nWe've now surpassed 1,000 megawatts of Dominion Energy-owned solar generation in service in Virginia, and there is a lot more to come.\nIn fact, our pipeline of company-owned solar projects in Virginia under various stages of development currently totals nearly 4,000 megawatts, which gives us great confidence in our ability to achieve the solar capacity targets set forth in Virginia law and which support our long-term growth capital plans.\nIn the very near term, about 25 days to be specific, we'll make our next and largest to date clean energy submission.\nWe expect the filing to include as many as 1,100 megawatts of utility-owned and PPA solar, roughly consistent with the 65-35 split identified in the Virginia Clean Economy Act.\nIt will also include around 100 megawatts of battery storage, including 70 megawatts of utility-owned projects.\nTaken together, the filing will represent as much as $1.5 billion of utility-owned and rider-eligible investment, further derisking our growth capital guidance provided on our fourth-quarter 2020 earnings call.\nNext, the State Corporation Commission approved our inaugural renewable portfolio standard development plan and rider filings.\nThis annual accounting is mandated under the VCEA and provide a status update on the company's progress toward meeting both near- and long-term requirements under the state's RPS targets.\nWe received commission approval for our Regional Greenhouse Gas Initiative, or RGGI, rider filing.\nUnder state law, Virginia has joined with other RGGI states to promote a marketplace for emissions credits with the goal of significantly reducing greenhouse gases over time, and this approval allows for timely recovery of our cost of compliance.\nNext, we received authorization from the Nuclear Regulatory Commission to extend the life of our two nuclear units at the Surry power station for an additional 20 years.\nThese units currently provide around 45% of the state's zero carbon generation and under this authorization will be upgraded to continue providing significant environmental and economic benefits for many years to come.\nWe expect to file for rider cost recovery associated with license renewal capital investment later this year.\nAnd last but not least, progress on our grid's transformation plans.\nOur first phase covering 2019 through 2021 is well underway, and we recently filed our phase 2 plan with Virginia regulators covering the years 2022 and '23.\nThe second phase includes approximately $669 million in capital investment, which is needed to facilitate and optimize the integration of distributed energy resources while continuing to address the reality that reliability and security are vital to our company and its customers.\nWe expect the final CPCN order around the end of the year.\nOur customers and our policymakers have made it abundantly clear.\nThey want cleaner energy, and they want it delivered safely, reliably and affordably.\nWe're therefore very pleased to be executing on that vision on multiple fronts while extending the track record of constructive regulatory outcomes to the benefit of all stakeholders.\nTurning now to our gas distribution business.\nWe're leading the industry in initiatives to reduce the carbon footprint of our essential natural gas distribution services.\nOur efforts include modifications to our operating and maintenance procedures, systemic pipeline and other aging infrastructure replacement, third-party damage prevention, piloting applications for hydrogen blending, producing and promoting the use of carbon-beneficial renewable natural gas and offering innovative customer programs.\nFor example, in Utah, we're seeking approval for a program that would enable customers to purchase voluntary carbon offsets.\nFor around $5 per month on a typical residential bill, customers that opt into the program will offset the carbon impact of their gas distribution use.\nThis program, which like our existing GreenTherm program, allows customers to make choices about how to manage and lower their individual carbon profiles is just one way we're reimagining how gas distribution service intersects with an increasingly sustainable energy future.\nAlong those lines, our hydrogen blending pilot in Utah is performing in line with expectations, and we're in the planning stages of expanding the pilot to test communities.\nWe filed for a similar blending pilot in North Carolina and are evaluating appropriate next steps for blending in our Ohio system.\nAnd as it relates to our already industry-leading renewable natural gas platform, we're pleased to announce an expansion of our strategic alliance with Vanguard Renewables.\nAs a result, we expect to grow our dairy RNG portfolio from six projects in five states to 22 projects in seven states through the second half of the decade and enhance our development pipeline with specific projects toward our aspirational goal of investing up to $2 billion by 2035.\nOur current pipeline of projects will result in an estimated annual reduction of 5.5 million metric tons of CO2e, which is the equivalent to removing 1.2 million cars from the road.\nTurning now to South Carolina.\nOn July 21, the South Carolina Public Service Commission with the support of all parties unanimously approved the proposed comprehensive settlement in the pending General Electric rate case.\nWe appreciate the collaborative approach among the parties over the last six months, which allowed us to produce this agreement that provides significant customer benefits, as shown on Slide 14; supports our ability to continue providing safe, reliable, affordable and increasingly sustainable energy; and aligns with our existing consolidated financial earnings guidance.\nFurther, the approval allows all parties to turn the page and focus on South Carolina's bright energy future.\nIt's also worth noting that the commission also recently approved our modified IRP, which favors a plan that would result in the retirement of all coal-fired generation in our South Carolina system by the end of the decade.\nWhile the IRP is an informational filing and does not provide approval or disapproval for any specific capital project, we look forward to continuing to work with stakeholders, including the commission, to drive toward an increasingly low carbon future.\nFirst, Senior Vice President, Craig Wagstaff, who's provided over 10 years of exemplary leadership for our gas utility operations in Utah, Idaho and Wyoming, will be retiring early next year.\nAnd I can say definitively on behalf of all of our colleagues, he will be sorely missed.\nCraig joined Questar Corp.\nin 1984, and we have benefited greatly from his contributions since the Dominion Energy-Questar merger in 2016.\nBest wishes to Craig and his family on his retirement.\nWe ask Steven Ridge, our current vice president of investor relations, to relocate to Salt Lake City and, effective October 1, assume the role of vice president and general manager for our Western natural gas distribution operations.\nSteven has been a valuable member of our IR efforts over the last nearly four years.\nAnd I think he's got to know most of you pretty well.\nWe have every confidence in his ability to follow Craig's long-standing example of serving our Utah, Wyoming and Idaho customers and communities well.\nAnd finally, David McFarland, who's been working on our investor relations team since October of last year, will assume responsibility for our IR efforts as Steven transitions into his new role later this year.\nWe congratulate David on this new opportunity.\nOur investors should expect no change to our aim to provide consistently a high level of responsiveness and accuracy they've grown to expect from our current IR team.\nWith that, let me summarize our remarks on Slide 15.\nOur safety performance year to date is on track to improve upon last year's record-setting achievement.\nWe reported our 22nd consecutive quarterly result, normalized for weather, meets or exceeds the midpoint of our guidance range.\nWe affirmed our existing annual and long-term earnings guidance and our dividend-growth guidance.\nWe're focused on executing across project construction and achieving regulatory outcomes that serve our customers well, and we're aggressively pursuing our vision to become the most sustainable regulated energy company in America.\n", "role": "user" }, { "content": "compname posts q2 gaap earnings per share $0.33.\nsees q3 operating earnings per share $0.95 to $1.10.\nq2 operating earnings per share $0.76.\nq2 gaap earnings per share $0.33.\naffirms its long-term earnings and dividend growth 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: Joining today's call, our Bob Blue, chair, president, and chief executive officer; Jim Chapman, executive vice president, chief financial officer, and treasurer; and other members of the executive management team.\nI'll start by outlining Dominion Energy's compelling shareholder return proposition.\nWe expect to grow our earnings per share by 6.5% per year through at least 2026, supported by our updated $37 billion five-year growth capital program, resulting in an approximately 10% total return.\nOur strategy is anchored on a pure play, state-regulated utility operating profile that centers around five premier states, as shown on Slide 4.\nAll share the philosophy that a common sense approach to energy policy and regulation puts a priority on safety, reliability, affordability, and sustainability.\nNext, I want to highlight what a successful year 2021 was in the continuing execution of our strategy.\nFor example, we continue to provide safe, reliable service to our customers, ensuring that safety remains our top priority when it comes to our employees, our customers, and our communities.\nWe reported our 24th consecutive quarterly financial result that normalized for weather meets or exceeds the midpoint of our guidance range, a reflection of our focus on continuing to provide consistent and predictable financial results.\nWe successfully concluded substantial rate cases in Virginia, South Carolina, and North Carolina, in each case, demonstrating our ability to deliver constructive regulatory results for both our customers and our shareholders in these fast-growing premiere and business friendly states.\nAnd we significantly advanced our clean energy growth plans on a number of fronts.\nFor instance, we received our Notice of Intent from BOEM for our regulated offshore wind project in July as planned and filed our rider application with the Virginia State Corporation Commission on schedule in November.\nAnd we propose new solar and energy storage projects in our second annual clean energy filing in Virginia, the largest such group ever proposed.\nLooking ahead, we've rolled forward our five-year growth capital plan to capture the years 2022 through 2026.\nWe now expect to invest $37 billion on behalf of our customers.\nThe investment programs are highlighted on Slide 5, with over 85% focus on decarbonization.\nAs meaningful as these near-term plans are, consider, on Slide 6, how they compare to the long-term scope and duration of our overall decarbonization opportunity.\nOur initiatives extend well beyond our five-year plan.\nWe now project $73 billion of green investment opportunity through 2035, nearly all of which will qualify for regulated cost of service recovery.\nThis is as far as we can tell, the largest regulated decarbonization investment opportunity in the industry.\nOur fourth quarter 2021 operating earnings, as shown on Slide 7, were $0.90 per share, which included a $0.03 hurt from worse-than-normal weather in our utility service territories for the quarter.\nWeather-normalized results were again above the midpoint of our quarterly guidance range.\nPositive factors as compared to last year include growth from regulated investment across electric and gas utility programs, higher electric sales due to increased usage from commercial and industrial segments, and higher margins that contracted assets.\nOther factors as compared to the prior year include a slight catch-up in COVID-deferred O&M and weather.\nAs Bob mentioned, this is our 24th consecutive quarter.\nSo six years now of delivering weather-normal quarterly results that meet or exceed the midpoint of our guidance ranges.\nWe believe this historic consistency across our results is worth highlighting and is a track record we're proud of and one which we're absolutely focused on extending.\nFull year 2021 operating earnings per share were $3.86 above the midpoint of our guidance range even in the face of a $0.05 from weather for the year.\nTurning now to guidance on Slide 9.\nAs usual, we're providing an annual guidance range, which is designed primarily to account for variations from normal weather.\nWe're initiating 2022 operating earnings per share guidance of $3.95 to $4.25 per share.\nThe midpoint of this range is in line with prior annual earnings per share growth guidance of 6.5% in 2022, when measured midpoint to midpoint.\nAs I think it's been expected as part of our roll forward to a new five-year forecast period, we are once again extending our long-term growth rate by one more year.\nWe now expect operating earnings per share to grow at 6.5% per year through at least 2026.\nFinally, we expect first quarter 2022 operating earnings per share to be between $1.10 and $1.25.\nPositive drivers for the quarter as compared to last year are expected to be normal course regulated rider growth continued, modest strengthening of sales, and return to normal weather.\nOther drivers, as compared to last year, are expected to be O&M and tax timing.\nWe expect our 2020 full year dividend to be $2.67, reflecting our target payout ratio of approximately 65%.\nWe're also extending the long-term dividend per share growth rate of 6% per year through 2026.\nSlide 10 provides a breakdown of five-year growth capital plan, which Bob introduced.\nFor more detail on all of this, I would point to the very comprehensive appendix materials, but just a couple of items I'll note here.\nWe continue to forecast a total five-year rate base CAGR 9% broken out here by segment, a major driver; and over 75% of its planned growth capex is eligible for rider recovery.\nOf course, capital invested in underwriters allows for timely recovery of prudently incurred investment and costs.\nTurning to Slide 11, we've updated our financing plan, which reflects a combination of internally generated cash flow and debt issuances to fund the majority of our growth and maintenance capex.\nOur plan assumes we issue programmatic equity of just 1% to 1.5% of our current market cap annually through our existing DRIP and ATM equity programs in line with prior guidance.\nNo change to our 2022 equity issuance plans and no block or marketed equity is contemplated.\nWe view this level of steady equity issuance under existing programs as prudent, earnings per share accretive, and in the context of our sizable growth capital spending program, appropriate to keep our consolidated credit metrics within the guidelines for our strong credit ratings category.\nTo that point, as shown on Slide 12, our consolidated credit metrics have remained steady and our pension plans have increased their funded status.\nWe're very proud of these results.\nWe continue to target high BBB range credit ratings for our parent company and A range ratings for our regulated operating company.\nOur long-standing focus on achieving and maintaining these ratings is important for our ability to continue to secure low-cost capital for our customers.\nAs is the norm, our financing plan reflects our ongoing efforts to efficiently redeploy capital toward our robust, regulated growth programs.\nAs I've mentioned in the past, as part of our capital allocation process, we undertake constant analysis to find the most efficient sources of capital to fund our attractive utility growth programs in our key states, all while maintaining our operating earnings per share growth and credit profiles.\nThe transaction is expected to close late this year, subject to customary closing conditions, including clearance under HSR, and approval from the West Virginia Public Service Commission.\nProceeds will be used to reduce parent-level debt.\nThe transaction value achieved through a competitive sale process represents approximately 26 times 2021 net income and two times rate based.\nAs a reminder, Hope Gas operates only in West Virginia and serves about 110,000 customers.\nBob will address this transaction a bit more in a moment.\nTurning now to electric sales trends, fourth quarter weather-normalized sales increased 1.4% year over year in Virginia and 2.3% in South Carolina.\nIn both states, consistent with the trends seen last quarter, we've observed increased usage from commercial and industrial segments, overcoming declines among residential users as the stay-at-home impact of COVID wanes.\nFull year 2021 weather-normalized sales increased 1.4% year over year in Virginia and 1.6% year over year in South Carolina.\nLooking ahead, we expect electric sales growth in our Virginia and South Carolina service territories to continue at a run rate of 1% to 1.5% per year.\nNo changes from our prior communications.\nNext, let me discuss what we're seeing around input prices.\nAs discussed on prior calls, we're continuing to monitor raw material costs, and it seems to be the case across a number of industries right now.\nWe're observing higher prices, although we've seen a moderation in the upward pressure over the last few quarters.\nAs it relates to our regulated offshore wind project, we remain confident in our ability to deliver the project in line with our budget, as outlined in our filing to the SEC in November.\nAlso, no changes here from prior communications.\nAs was disclosed at that time in November, we've entered into five major fixed cost agreements, which collectively represent around $7 billion of the total capital budget.\nWithin those contracts, only about $800 million remain subject to commodity indexing, most of it steel.\nAnd this component of the budget already reflects commodity cost increases we all observed in 2021 leading up to our filing date in November.\nAnd our capital budget, of course, includes contingency.\nOn the solar side, we're seeing what others seem to be seeing.\nSupplies tight, prices for certain components are up, but our 2021 projects were completed with no material impacts to cost or schedule, and our '22 projects remain on track.\nBeyond '22, we've been generally successful in contracting, etc.\n, but it's still early.\nSo again, we're watching but no material financial impacts to share at this time.\nSo to summarize, we reported fourth quarter and full year 2021 operating EPS, which is above the midpoint of our guidance ranges, extending our track record to six years of meeting or exceeding the quarterly midpoint on a weather-normal basis.\nWe initiated 2022 full year operating earnings per share guidance that represents a 6.5% annual increase midpoint to midpoint.\nWe affirmed the same 6.5% operating earnings per share growth guidance through 2026.\nWe introduced a $37 billion high quality decarbonization-focused, five-year growth capex plan that drives an approximately 9% rate based growth.\nWe continue to expect the vast majority of our spending across our segments to be in rider form.\nAnd finally, our balance sheet and credit profile remain in very good health.\nStarting with safety, Dominion Energy finished 2021 with its second best performance ever.\nAdditionally, the company was the top performer in the 2021 Southeastern Electric Exchange ranking.\nWe take pride in our relentless focus on safety, and it's the first of our company's core values.\nWhile our safety performance relative to industry is very good, our goal has been and continues to be that none of our colleagues get hurt ever.\nOur customers highest priority is reliability.\nThey expect their power will come on when they need it, period.\nIn the past year, our customers in our electric service areas in Virginia, South Carolina, and North Carolina had power 99.9% of the time, excluding major storms.\nWhere major storms approach, we stage equipment and people to be ready so crews can spring into action as soon as it is safe to do so.\nAs we did for the first winter storm of 2022, the damp, wet, heavy snow on most of the northern, central and western regions of Virginia, interrupting service to over 400,000 customers.\nOver 87% of those customers had service restored after two days of restoration and 96% within four days.\nOur crews worked around the clock in frigid temperatures and treacherous icy travel conditions to safely restore service to our communities.\nOur gas distribution business knows that safe and reliable service is the priority, especially when exigent circumstances exist.\nWhen an emergency notification is received, we typically have a crew on site twice as quickly as the industry expected response time.\nLast month, we had the highest ever flow of gas at our Utah system and the highest ever daily throughput across our Ohio system, higher even than the polar vortex in 2019.\nAnd in both cases, our service never missed a beat and our customers would never have known we were setting all time records.\nI'm proud they're not surprised at the way in which our Dominion Energy team members have responded on behalf of our customers.\nNow, I'll turn to updates around the execution of our growth plan.\nIn Virginia, the SEC approved the Comprehensive Settlement Agreement for our first triennial review in November.\nWe're very pleased to be extending our track record of constructive regulatory outcomes.\nOn top of that, we are incredibly excited about what Dominion Energy is working to accomplish, specifically our green capital investment programs on behalf of our customers in Virginia, which I will touch on in a few minutes, nearly all of which will grow earnings under regulated rider mechanisms.\nSince the Virginia rider investment programs are reviewed and trued up annually, they are not included in the Virginia Triennial review process.\nBased on these trends, the Virginia-based investment balance as a percentage of total Dominion Energy declined to about 13% by 2026 and is expected to continue to decline as a percentage in the future.\nTurning to offshore wind, the country's only fully regulated offshore wind project is very much on track.\nAs it relates to the SEC rider application, we're currently in the discovery phase.\nAnd to date, this process very much conforms with what we typically expect during a rider proceeding of this type.\nMajor project milestones are listed on Slide 15.\nWe expect to receive a final order from the SEC in August this year.\nA few items to reiterate here.\nFirst, this project will provide a boost to Virginia's growing green economy by creating hundreds of jobs, hundreds of millions of dollars of economic output, and millions of dollars of tax revenue for the state and localities.\nIt will also propel Virginia closer to achieving its goal to become a major hub for the burgeoning offshore wind value chain up and down the country's East Coast.\nSecond, unlike any other such project in North America, this investment is 100% regulated and eligible for rider recovery in Virginia.\nFinally, the VCA provides very specific requirements on the presumption of prudency for investment in the project, which we are confident that we have already met.\nOur Jones Act compliant wind turbine installation vessel is being constructed and is on track for delivery in late 2023 as originally scheduled.\nThe project is currently about 43% complete.\nWe expect the vessel will be in a central resource city EV, as well as to the overall domestic offshore wind industry, and will be entering service with plenty of time to support the 2024 turbine installation season.\nOur other clean energy filings in Virginia are also progressing well.\nLast month, we were very pleased to see the SEC approve phase two of our grid transformation plan for projects that we plan to deploy in 2022 and 2023.\nThese projects will facilitate the expected increase in distributed energy resources like small scale solar and expand electric vehicle infrastructure, as well as enhance grid resiliency and security.\nOur clean energy and nuclear or rider filings remain on track.\nFinal orders are expected later this year, as outlined on Page 18.\nThrough 2020, we have successfully reduced our enterprisewide CO2 equivalent emissions by 42%.\nThat's great progress, but it's not enough.\nBy 2035, we expect to improve that reduction to between 70% and 80% versus baseline on our way to meet net zero by 2050.\nAs shown on the right side of Slide 19, the transition to a clean energy future means reduced reliance on coal-fired generation.\nBack in 2005, more than half of our company's power production was from coal-fired generation.\nBy 2035, we project that to be less than 1%.\nWe show our timeline for transitioning out of coal on Slide 20.\nBy the end of the decade as part of our ongoing resource planning, we expect to be coal free in South Carolina and have only two remaining facilities at Dominion Energy Virginia for reliability and energy security considerations.\nWhile our IRP is our informational filings and do not provide approval or disapproval for any specific capital project, we look forward to continuing to work with stakeholders, including the Commission, to drive toward an increasingly low-carbon future.\nFrom an investment from an investment-based perspective, which is a rough approximation of earnings contribution, you can see on Slide 21 the diminished role coal-fired generation plays in our financial performance, driven by facility retirements and non-coal investment.\nWe're mindful that this shift has the potential to be disruptive to employees and communities, and we were being purposeful in our efforts to ameliorate any such negative consequences.\nWe believe in a just transition.\nWe have and will continue to consider the needs of impacted communities and our entire workforce during this clean energy transition.\nYou'll also note that zero carbon generation grows significantly, such that by 2026, over 65% of our investment base will consist of electric wires and zero carbon generation.\nMoving on to South Carolina.\nAs part of our ongoing resource planning, Dominion Energy South Carolina is planning to replace several of our older generation peaking turbines with modern, more efficient units.\nThese peaking units, which often operate seasonally during certain times of day when the demand for energy is at its highest, play an important role in our generation fleet with their ability to go from idle to producing energy quickly.\nModernizing this equipment will lower fuel cost to customers, improve environmental performance, and provide reliability and efficiency benefits.\nThese will become even more important as additional intermittent fluctuating resources, such as solar, are added to our system.\nLast quarter, the Public Service Commission of South Carolina approved a settlement, allowing the company to move forward with two of the proposed sites, and we'll hold an RFP for a third.\nTurning to gas distribution.\nIn North Carolina, the commission approved a comprehensive settlement last month for our gas operations with rates based on a 9.6% ROE.\nAs a reminder, the agreement included three new clean energy programs, a new hydrogen blending pilot, a new option to allow our customers to purchase RNG attributes, and a new and expanded energy efficiency programs.\nThis is a prime example of the role that supportive regulation can play in meeting our decarbonization objectives.\nHope Gas is a valuable business with tremendous people.\nAt the same time, compared to the other larger state-regulated utilities across our five premier states, Hope Gas is relatively a small stand-alone operation.\nOur talented employees have consistently delivered safe, reliable, and affordable energy to Hope's customers.\nWe're pleased that these best-in-class employees are now joining another excellent organization in the form of Ullico, who has agreed to provide significant protections for employees and honor existing union commitments.\nUllico is operating expertise and financial resources will also ensure that Hope's customers will continue to receive the high level of service to which they have grown accustomed.\nSlide 24 provides a summary of several important steps we took in 2021 that enhanced our industry leading ESG profile.\nJust a couple of items I'll highlight here.\nIn July, we published our updated climate report, which included disclosure of scope one, two, and three emissions, an important step as it relates to our net zero commitment as I will expand on in a minute.\nIn November, we issued our inaugural Diversity Equity and Inclusion Report, which highlights our progress toward building a more diverse and inclusive workforce.\nAs part of that report, we also published our EEO 1 data.\nThis enhanced external reporting builds upon our commitment to increase our total workforce diversity by 1% each year with the goal of reaching at least 40% by year end 2026.\nWe're very much on track to meet that goal.\nThese and other ESG-oriented efforts have been recognized by leading third-party assessment services, as shown on Slide 25.\nBy each measure, our performance exceeds the sector average.\nWe've been recognized as part of the leadership band by CDP for our climate and water disclosure for the second year in a row as Trendsetters, the highest categorization for the fourth consecutive year by the CPA-Zicklin report on political accountability and transparency.\nAnd most recently, MSCI increased our rating from A to AA, which designates us a leader in the field.\nTurning to Slide 26, I'm pleased to announce an expansion of our net zero commitments.\nIn addition to our current commitment to achieve enterprisewide net zero scope one carbon and methane emissions by 2050, we now aim to achieve net zero by 2050 for all Scope 2 emissions and for Scope 3 emissions associated with three major sources, LDC customer end-use emissions, upstream fuel, and purchase power.\nThese new commitments formalize our continued focus on helping our customers and suppliers decarbonize.\nReducing emissions as fast as possible and achieving net zero emissions companywide requires immediate and direct action.\nThat's why the company continues to take meaningful steps to address Scope 3 emissions.\nWe formalized our support for federal methane regulation, and we're working toward procurement practices that encourage enhanced disclosures by upstream counterparties on their emissions and methane reduction programs.\nFurther, we encourage suppliers to adopt a net zero commitment, and we were started to receive quotes for responsibly sourced gas, which are evaluated consistent with our reliability, service, and cost criteria for natural gas supply.\nFor downstream emissions, we expect to increase our annual spend on energy efficiency over the next five years at our LDCs by nearly 50%, and to provide our customers with access to a carbon calculator and carbon offsets.\nFor example, in both Utah and North Carolina, we offer GreenTherm, a voluntary program that provides customers with access to renewable natural gas.\nWhile initially being offered on a voluntary basis, we are working with policymakers and regulators to increase access to RNG for our customers.\nAnd finally, we continue to pursue innovative hydrogen use cases, including our blending pilot in Utah, which based on early assessment, confirms the ability to blend at least 5% and potentially up to 10% without adverse impacts to appliance performance, leak survey, system safety, or secondary emissions.\nOver the long term, achieving these goals will require supportive legislative and regulatory policies and broader investments across the economy.\nThis includes support for the testing and deployment of technologies.\nFor example, we support efforts to research and develop new technologies through collaborations such as the Low Carbon Resource Initiative, of which we're a founding sponsor.\nAnd we will never lose sight of our fundamental responsibility to the customers providing safe, reliable, affordable, and sustainable energy.\nWith that, let me summarize our remarks on Slide 27.\nOur safety performance was our second best ever.\nWe reported our 24th consecutive quarterly result that normalized for weather meets or exceeds the midpoint of our guidance range.\nWe affirm the same 6.5% operating earnings per share growth guidance through 2026 and affirmed our existing dividend growth guidance through 2026.\nWe're focused on executing project construction and achieving regulatory outcomes that serve our customers well, and we're aggressively pursuing our vision to be the most sustainable, regulated energy company in the country.\n", "role": "user" }, { "content": "sees q1 operating earnings per share $1.10 to $1.25.\nq4 operating earnings per share $0.90.\ninitiates 2022 operating earnings guidance of $3.95 to $4.25 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: As usual, Wyman and Joe will first make prepared comments related to our operating performance and strategic initiatives.\nDuring our call, management may discuss certain items, which are not based entirely on historical facts.\nAnd of course, on the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business, and believes will provide insight into the company's ongoing operations.\nLooking broadly at the quarter, we're encouraged by the continued improvement in the environment, the consumers increasing engagement with the category, and we hope to see those trends continue.\nWe know there are still challenges out there, especially with independents, yet Brinker continues its strong recovery, posting a better-than-expected first quarter and also delivering earnings of $0.28 a share.\nBoth brands increased their progression from last quarter with Chili's reporting comp sales of negative 7.2% and Maggiano's negative 38.6%.\nAnd both brands delivered solid sequential improvement throughout the quarter, with Chili's ending September down just 1.4% and Maggiano's down 32.5%.\nPlus casual is obviously a more challenged segment that's facing greater headwinds, but the Maggiano's team is doing a great job managing their cost structure and flow through.\nWe feel good about where Maggiano's is from a very relative perspective, and we're excited about the bold strategy Steve Provost and the team are putting in place to build the business.\nThe Chili's brand continues to exceed expectations from both a relative and an absolute perspective.\nThe month of September marked our return to positive traffic, and that's pretty impressive given there are still major states like California and New Jersey, not yet near full dining room capacity.\nThis brand continued its nearly three-year streak of outperforming other casual dining chains in KNAPP-TRACK, driving a 16-point gap in sales and 23 points in traffic this quarter.\nWhen we broaden our view of the category to include independents, our GAAP widened significantly.\nCurrent credit card data shows a whole category down 30%, which reflects our ongoing impact of this pandemic and the reality of what is likely to be a meaningful shift in the competitive landscape.\nIn this tough environment, I couldn't be prouder of the resilience and agility of our operations team.\nFor the quarter, they improved restaurant operating margin 60 basis points year over year.\nWhen the pandemic hit back in March, the market really drove us all to dramatically cut costs.\nSince then, we've judiciously evaluated every cost within our P&L, and we've been diligent about reestablishing our media -- our spending levels.\nIn many cases, we're comfortable maintaining a level of spend below pre-pandemic levels.\nOne of the biggest changes we made was to rethink our marketing spend.\nWe significantly reduced traditional television advertising so we could invest more aggressively in digital and direct channels that work harder for us, like My Chili's Rewards.\nAnd with the increased desire for convenience, we're shifting to support all our brands more aggressively with delivery resulting in higher third-party delivery fees and promotional expenses.\nBased on where we're tracking with sales and the efficiency of our P&L, we feel really good about these decisions.\nOur top priority has been and remains the safety of our team members and guests.\nWe're committed to supporting our team that's working so hard to take care of our guests.\nWe've now brought back most of our hourly team members, and that we've been able to help them maintain their hourly wage levels.\nWe've also kept our management structure intact.\nWe know how critical their leadership is to our guests and our business and we're proud that we've been able to bonus our managers close to target.\nInstead, we leaned into the same strategies that have been helping us take share from the last three years, and they've been even more effective since the pandemic.\nBut even before that, our challenge was to prove to ourselves and to you that we could create a growth model out of a legacy business in a category that's seen meaningful declines in traffic over the years.\nWe have always believed growth is available in this category if you do the right things.\nBy delivering a better guest experience, a strong value proposition and more effective marketing, we unlocked sustainable organic growth within our base business.\nOur results demonstrate we're doing the right things.\nOur improvements to the base enables us to introduce our first virtual brand, It's Just Wings, an incremental growth vehicle that offers convenience and value in a way no one else is positioned to do.\nNow there's been a lot of discussion about what a virtual brand is.\nIt's Just Wings is not a disposable vehicle.\nWe're committed to this brand for the long haul.\nThere are barriers to entry in doing virtual brands well, and Brinker is uniquely positioned to do it right.\nWe have the scale, the asset ownership that's available capacity in our well-equipped kitchens, the right technology and unbelievably strong operators who can focus and deliver consistently.\nWhen we rolled out It's Just Wings overnight to more than 1,000 restaurants.\nNow that's easy to say, but tremendously hard to do.\nSo I know everyone is curious about how it's going so far.\nWe're excited with how the brand is already performing, and we're well on track to meet our first year target of more than $150 million in sales.\nWe're encouraged by what DoorDash sees with regard to our consumer data.\nThe brand is really generating high satisfaction scores and strong repeat usage.\nIt's really resonating with consumers, which we know is critical to the health and long-term success of any brand.\nGoing forward, our focus is to ensure we're executing at the highest level possible, and we're maximizing the brand's growth potential.\nIt's Just Wings started as a virtual brand, but as we wire in the execution and accelerate growth, it may take different trajectories.\nWe're evaluating internal and external opportunities to increase awareness levels and expand access to consumers.\nThis is just phase I for It's Just Wings.\nWe also believe we have capacity to expand our virtual brand portfolio.\nWe're testing a few ideas to better understand consumer demand and ensure that we can execute at a high level.\nWe'll have more to say on that in the not-too-distant future.\nObviously, we see a lot of upside for virtual brands.\nListen, with the uncertainty surrounding COVID and the economy, we anticipate some volatility ahead.\nAnd like the rest of our country and the world, we are hoping and planning for a vaccine and an end to the sickness and deaths from this virus.\nWe are hoping and planning for economic stability and continued recovery in the post-election environment.\nBut despite the things no one can know, here's what we do know.\nWe will keep running our own race and working our strategy.\nWe will stay flexible and agile, and we'll take care of each other and our guests.\nWe will also continue to manage our P&L and our balance sheet with discipline to create an even more stable model for our shareholders.\nAnd we will boldly grow these brands so we can continue to be a great place for our team members to work and our shareholders to invest.\nAnd with that, I'll turn now it over to Joe.\nAs you just heard, we begin our fiscal year 2021 with momentum on the top and bottom line.\nWe continued our recovery by delivering adjusted diluted earnings per share of positive $0.28, marking the return to profitability after just a one quarter hiatus.\nNow for the quarter, Brinker's total revenues were $740 million and consolidated reported net comp sales were negative 10.9%.\nImportantly, comp sales materially improved as the quarter progressed, with September consolidated comp sales down only 5.2%.\nChili's has continued to lead the casual dining sector, ranking as the #1 brand in the KNAPP-TRACK index each month in this quarter.\nAnd as Wyman indicated, beat by significant margins in both sales and traffic.\nIn September, Chili's achieved another important milestone in its recovery, posting positive traffic for the brand of 2.2%.\nAnother way to see Chili's impressive progression is to look at our net comp sales results, excluding those restaurants and markets not fully open for our indoor dining during the quarter, such as California and New Jersey.\nThese restaurants represent approximately 86% of the Chili's system, and they were only negative 1.3% for the quarter and positive 3.6% for September.\nNow turning to margins.\nRestaurant operating margin for the first quarter was 11.6%, a noteworthy 60 basis points improvement versus prior year.\nFood and beverage expenses were favorable 10 basis points versus prior year due to the favorable menu mix, offset by low level of commodity inflation.\nLabor was also favorable 120 basis points versus prior year.\nNow several items contributed to this improved performance.\nFirst, labor expense relative to prior year benefited from the shift in sales from dine-in to off-premise in the quarter.\nSecond, favorability was also buoyed by the fact some of our higher labor cost states reopened at a slower pace during the recovery, a benefit that will diminish as we move forward.\nOf course, naturally, we'll take the sales that go with adding that labor back into the equation.\nAnd finally, labor expense benefited from the ability to seamlessly integrate our It's Just Wings brand into the existing labor model, a point of leverage and we plan to sustain.\nThe labor favorability was partially offset by the increase in restaurant expenses, which was up 70 basis points for the first quarter versus prior year.\nSales to leverage, higher delivery related fees and packaging expense were the primary increases, while lower advertising and repairs and maintenance expenses helped mitigate the overall increase.\nGenerating positive cash flow is an important part of our recovery process.\nWith the business improving, we generated operating cash flow of $83 million.\nAfter capital expenditures of the approximately $14 million, our free cash flow for the quarter totaled more than $69 million.\nOur first priority for cash generation is to invest back in the business.\nAnd as such, we have resumed both restaurant reimages and new restaurant development.\nWe have increased our capex budget for the year and now expect to spend approximately $100 million during this fiscal year.\nAs Wyman reiterated, strengthening the balance sheet is also a key area of focus for us.\nAs such, our second cash priority is to pay down debt, and we executed against this strategy during the quarter, reducing our long-term debt by approximately $50 million.\nWe will continue to lower leverage as we move forward from here targeting an adjusted debt level of about 3.5 times EBITDAR.\nNow turning to our current second quarter.\nLet me provide some color as to our expectations for the quarter and then some specific guidance metrics for the quarter.\nToday marks the end of our October period, and it appears we will continue the positive progression of comp sales established during the first quarter.\nWe expect Chili's to further build its positive traffic performance this period, getting the second quarter off to a very fine start.\nWhile we anticipate year over year improvements in Chile's operating performance in the second quarter, our consolidated performance will likely reflect a more difficult holiday environment for the Maggiano's brand.\nWith that being said, let me provide some specifics for Brinker's performance in the second quarter.\nWe expect consolidated comp store sales to be down in the mid single-digit range.\nWe believe Brinker's restaurant operating margins will be relatively similar to prior year.\nAdjusted earnings per diluted share are estimated to be in the range of $0.40 to $0.60 and weighted average diluted shares are estimated to be in the 45 million to 46 million share range.\nI would also note we have the holiday flip in the second quarter with Christmas Eve and Christmas Day moving into the third quarter.\nThis holiday shift will have a positive impact to second quarter comp sales that will be offset in the first period of Q3.\nDespite the ongoing challenges in our operating environment, we continue to demonstrate strength and resilience.\nSo, our first quarter performance is a testament to our ability to deliver results.\nWhile operating in a pandemic environment comes with some uncertainties, there is no doubt we will continue to execute our share gaining strategy, take care of our guests and team members and be a leader in the restaurant industry for the short and long term.\n", "role": "user" }, { "content": "brinker international inc - qtrly net income per diluted share, excluding special items $0.28.\nbrinker international inc - chilis total comparable restaurant sales decreased 7.2% in q1 21.\nbrinker international inc - maggiano's total comparable restaurant sales decreased 38.6% in q1 21.\nbrinker international inc - for q2 21 net income per diluted share, excluding special items, expected to be $0.40 to $0.60.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As many of you know, we pre-released limited results for the first quarter, ahead of our investor day hosted here in Dallas on October 20.\nDuring our call, management may discuss certain items which are not based entirely on historical facts.\nAnd of course, on the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business and believes will provide insight into the company's ongoing operations.\nIt's good to be back with you all again.\nIt was great seeing some of you in Dallas and many of you virtually during our investor day a couple of weeks ago.\nWhat you should have taken away from that was this, we're very optimistic about where the business is going.\nWe're managing for long-term success and we're confident in the strength of our brands and the levers we have yet to pull to continue to grow the business.\nFrom a top-line perspective, we're sitting in a good spot.\nSales numbers are solid and traffic numbers are extremely good.\nOur near-term challenge is not creating demand but rather it's working through the latest pandemic-driven staffing and supply chain issues that are impacting our cost structure.\nAs you know, there are -- these are the same challenges impacting the industry as well as much as the economy.\nBut after 40 years in this business, I'll take managing costs over searching for sales and traffic any day.\nThose are good problems to solve because they're largely within our control.\nOur operators are working extremely hard every day to train our new team members, deliver great guest experiences and tying up the middle of the P&L.\nWe've taken some additional price during the quarter to help offset our structural labor and cost of sales increases.\nAs I mentioned during investor day, we're not going to price to buy a quarter.\nBut as we closely monitor the issues, we've layered in incremental pricing to offset what we believe are the structural labor and cost of sales increases.\nAnd Joe will give you more detail on that.\nMoving forward, if we discover that what we thought was transitory, it turns out to be more structural, we'll deal with that from a pricing perspective with a disciplined approach that protects our traffic performance and keeps our brands strong.\nWe know we have pricing power if we need it, particularly in the delivery in virtual brand channels and we're committed to maintaining our margins and our business model.\nAnd that's what we wanted you to hear.\nWe're also working hard to remove transitory costs from the system with full recognition that the headwinds are notable and persistent, especially around labor.\nAnd while it takes some time, we're confident with the progress we're making and we will significantly reduce these costs by the back half of the year.\nThe spike in turnover we experienced during the quarter created short-term pressure on the business as we trained our new team members to run our systems.\nThe good news is we are quickly building staff and have as many team members now as we did pre-COVID, though there are markets that are still not fully staffed, which is limiting their capacity.\nThis is particularly true in the Midwest, where it's taking longer to reach these optimum levels.\nThe impact of these staffing challenges cost us 3% to 4% in first quarter in sales, which we view as upside as we -- as we get those restaurants staffed and trained over the coming months.\nOur top talent is engaged in these markets to solve these issues as quickly as possible.\nMeanwhile, the base business is strong, especially where dining rooms are fully open.\nWhen we look at the totality of the business, Chili's is running positive sales and traffic and maintaining a sizable traffic gap to the industry, most recently at 9% on a two-year look as measured by NAFTrack.\nAnd we've got sales leverage around virtual brands and deliveries that we're holding in reserve until our operations teams are stabilized and fully trained.\nAnd while the last quarter was more challenging than we expected, we're making great progress and my expectation is we will end the year strong.\nAnd as we shared with you during investor day, we've got exciting initiatives and innovation we're working on and we're confident in our future growth opportunities.\nLet me continue our prepared comments by providing some additional insight to the first quarter results and then share some guidance on our current expectations for the balance of fiscal year 2022.\nDuring first quarter, top-line sales performed well and outpaced pre-COVID levels by a very respectable amount despite COVID-related constraints.\nFor the first quarter, Brinker reported total revenues of $860 million with consolidated comp sales of 17%.\nKeeping with our ongoing strategy, the majority of these sales were driven by traffic up 11% for the quarter, a 9% beat versus the industry on a two year look.\nThe top-line increase resulted in an adjusted earnings per share of $0.34, up from $0.28 in the previous fiscal year.\nIt will come as no surprise, our most significant challenge during the quarter came in the form of industrywide headwinds from both commodity costs and labor-related spend, which negatively impacted our margins and bottom-line flow through.\nWe experienced commodity inflation in the mid-single-digit range, with significant price from pork and chicken driving the increase.\nAs Wyman mentioned, with a greater-than-normal influx of new team members, we experienced outsized costs in training and overtime.\nWe do consider the portion of these costs above our normal operating levels to be transitory, approximately 130 basis points in the quarter, 60 of which are incremental training and overtime costs.\nI Anticipate these costs working their way out of the system over the course of the next couple of quarters.\nIn the near term, I expect a significant portion of these transitory costs to remain in the system for the second quarter.\nWe are taking thoughtful incremental price increases to help offset these higher costs.\nOur third price action of this fiscal year is scheduled with our next Chili's menu update in two weeks.\nFollowing this increase, Chili's will be carrying a total of 3% of incremental price compared to last year.\nOf course, the mid-quarter price action will not fully impact the total price reported for the quarter.\nDue to the timing of price actions and the fact that Maggiano's will evaluate its menu pricing after the holiday season, we expect the second quarter blended Brinker price to be closer to 2%.\nOur cash flow for the first quarter remained strong, with cash from operating activities of $40 million and EBITDA of $69 million.\nWhen compared to first quarter last year, our strength in operating performance and lower level of outstanding debt have combined to improve our balance sheet and leverage position.\nOur total funded debt leverage was 2.6 times and our lease-adjusted leverage ended the quarter at 3.7 times.\nAs indicated during our recent investor day, we are targeting to move these leverage ratios below two times and three times respectively over the course of the next two years.\nNow, turning to our outlook for fiscal year '22.\nWe provided some guidance metrics for certain items during our last call and we are reiterating those levels as of this report.\nSpecifically, annual revenues between $3.75 billion and $3.85 billion and annual adjusted earnings per share between $3.50 and $3.80.\nThis incorporates our current view of the casual dining operating environment, which assumes continuing challenges in the near term, especially related to supply chain and labor issues.\nThis guidance, both reiterated and new, assumes no additional meaningful top-line COVID-related disruptions.\nWhile guidance is for our fiscal year performance, I can provide some directional thoughts related to the second quarter.\nWith the exception of banquet sales at Maggiano's, we expect sales to exhibit closer to normal holiday seasonality, although impacted by labor shortage constraints in certain markets.\nAs mentioned earlier in my comments, restaurant operating margins for the second quarter will again be impacted by higher food and beverage and labor costs.\nWe do expect restaurant operating margin to improve when compared to both the recently completed first quarter as well as the second quarter of last year, ending the quarter at a level comparable to the pre-COVID second quarter of fiscal year '20.\nClearly, these are unique times for our industry, creating a variety of short-term challenges to work through.\nChallenges we can and will solve.\nWe firmly believe our strategic initiatives focused on driving traffic in organic top-line growth will differentiate our performance over time with the overall benefit to our team members, our guests, and importantly, our shareholders.\n", "role": "user" }, { "content": "sees fy earnings per share $3.50 to $3.80 excluding items.\nq1 earnings per share $0.34 excluding items.\nq1 gaap earnings per share $0.28.\nsees fy revenue about $3.75 billion to $3.85 billion.\nsees fy total revenues approximately $3.75 billion to $3.85 billion.\nsees fy net income per diluted share excluding special items, in range of $3.50 and $3.80.\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: As usual, Wyman and Joe will first make prepared comments related to our operating performance and strategic initiatives.\nDuring our call, management may discuss certain items which are not based entirely on historical facts.\nAnd of course, on the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business and believes will provide insight into the company's ongoing operations.\nQ2 was a dynamic quarter, and Joe is going to walk you through the details.\nYou know, as we think about all the craziness 2020 brought across our industry and our world, we're also appreciative of the invaluable lessons we gained.\nWe learned we have the right team in the field and here at the restaurant support center.\nOur operators are working tirelessly every day to deliver great experiences for our guests and team members as we aggressively pursue opportunities to grow our business organically.\nWe learned that we can drive our business and increase market share despite the hurdles brought on by a global pandemic and widespread civil and political interest.\nIn the second quarter, Chili's increased its two-year trend of taking share and leading the category with an 18% beat in sales and a 25% beat in traffic according to KNAPP-TRACK.\nWe learned that our strategies work.\nThe ways we leveraged our scale and our ownership model and the investments we continue to make in technology and improving our operational systems, they were working well for us prior to the pandemic and continued to work even more effectively throughout the year.\nLeveraging those competitive advantages, open up opportunities for us to grow our business in unique and innovative ways, like elevating our digital guest experience at both brands and leaning into virtual brands.\nThose things are hard to execute and even harder to replicate.\nSo we're taking those lessons into 2021 as we prepare to accelerate organic growth in a post-vaccine environment.\nWe believe like most others that a widespread vaccine will indeed release pent-up dining room demand, and our operators are excited to return to full capacity and deliver more great guest experiences in person.\nBut we don't expect a return to the old normal.\n2020 fundamentally changed us as consumers.\nWe were forced to use technology to enjoy our favorite restaurants in new ways like third-party delivery.\nCrop side takeout, QR code menus, and mobile payment.\nAnd now that we've experienced greater convenience and control over our experience, we're not likely to give it all back.\nThe Brinker team knew that convenience was a big opportunity even before the pandemic.\n2020 just accelerated our commitment to embrace consumers' gravitation toward digital interaction and meet them where they are.\nWe believe digital sales and traffic will continue to be a strategic driver of our results in both the near and long term.\nSo in preparation for fiscal '22, we're dedicating even more time, effort, and capital to accelerate in our competitive advantage as a digital leader in the category and aggressively pursuing opportunities to drive our top and bottom line.\nAt Chili's, we're testing a fully integrated digital experience that gives our guests control over the pace of their experience and level of interaction with our team, whether they're dining in or off-premise.\nIt's still early, but the team is making tremendous progress, and the guests and our test restaurants are responding really well.\nWe anticipate a rollout beginning fourth quarter.\nWe've also spent a great deal of time and effort systematizing what goes out the side door at both our brands.\nWe got really good at takeout and delivery during the height of quarantine.\nSo while our dining rooms are still at limited capacity, we're ensuring we have strong systems in place to support our operators and execute a robust off-premise business even as our dining rooms returned to full capacity.\nDelivering a best-in-class off-premise experience also supports virtual brands, which is a key component of our growth strategy.\nOur scale and our ownership model, coupled with our ability to mine data and develop systems, is proving very effective in this new world of virtual brands.\nIt's Just Wings is on track and performing well.\nWe believe there's significant upside.\nSo we're focused on building it into a strong, sustainable brand.\nSome of the biggest brands in the world right now are virtual.\nSo we know the model resonates with consumers as long as you deliver a great product.\nRight now, we have a one-channel solution.\nWe're working to optimize that channel through incremental marketing opportunities and expanded consumer touchpoints.\nWe're also going to grow the brand through additional channels like takeout.\nWe're ensuring we have the right systems in place that will best support our operator's ability to execute at a high level, especially as dining rooms reopen.\nOnce we know we're consistently delivering a great guest experience and our operator at -- from our operators at full volumes, we'll move strategically to launch another virtual brand.\nI anticipate that by the end of this fiscal year, we'll have a clear line of sight and be able to share more details with you.\nListing 2020 was a crazy year, but through it, we confirm that our strategies are working and that we have an outstanding team in the field and at the restaurant support center.\nEvery day, they demonstrate their ability to adapt for severe and win.\nAs vaccines roll out and our country begins to leave their homes once again, I firmly believe we'll continue to win.\nLet me finish our prepared comments by providing some detail and context to our second-quarter results, as well as offer a few insights for our January's period's sales performance.\nThe second-quarter fiscal 2021, Brinker delivered adjusted diluted earnings per share of $0.35.\nBrinker's total revenues were $761 million, and consolidated reported net comp sales were negative 12.1%.\nA couple of items to note for the quarter.\nFirst, let me highlight impacts to the consolidated quarter resulting from Maggiano's performance, which was highly constrained by COVID restrictions and appropriate consumer reactions to the pandemic.\nAs a reminder, the second quarter is traditionally their highest performing quarter.\nHowever, this year, COVID eliminated most of their typically robust banquet and corporate catering channels, both of which tend to overdeliver to results for their second quarter.\nThe brand's operating profit was $22 million below last year, constituting virtually all of the reduction in consolidated operating profit for Brinker.\nThe impact on consolidated comp sales and restaurant operating margin were also outsized with the brand reporting net comp sales of negative 47% and a restaurant operating margin of 5.5%, down more than 11% from prior year.\nWith the second quarter now behind us, we expect the impact from Maggiano's to the consolidated performance of Brinker to be more muted as we head into the rest of the fiscal year, particularly as the brand recovers from both an improved operating environment and the implementation of performance driving initiatives.\nNow, moving on to Chili's.\nThe brand continued its relative strong performance, although also impacted by COVID restrictions during the latter half of the quarter.\nOperating income for the brand was relatively close to last year and only $1.6 million.\nChili's reported net comp sales for the second quarter of negative 6.3%.\nThis result does contain a holiday flip, which benefited the brand by approximately 100 basis points as Christmas moved out of Q2 and into Q3.\nThe brand continues to meaningfully outperform the Casual-Dining sector with our gap strengthening in both sales and traffic through the second quarter.\nTraffic gaps in the KNAPP index exceeded 20% throughout the quarter.\nPerformance relative to the competition was strong throughout the country, with double-digit sales gaps recorded in regions from East to West Coast.\nIncluded in the consolidated adjusted net income for the quarter with a tax benefit of approximately $2.4 million, primarily driven by employment tax credits.\nPart of this benefit is a $1.8 million catch-up related to Q1, which was over accrued relative to our current expectations for our annual tax liability.\nThe consolidated restaurant operating margin for the second quarter was 10.7%.\nMost of the variance to prior year is the result of the lower-than-normal contribution from Maggiano's, which impacted the consolidated margin by 130 basis points.\nThe leverage due to top-line softening in November and December was the secondary influence.\nA food and beverage expense was unfavorable year over year by 40 basis points primarily a result of menu mix, some higher costs from items such as cheese and produce.\nLabor costs were favorable 10 basis points with savings in hourly expenses, offset by deleverage.\nIncluded in this performance is a consistent level of manager bonus compared to last year's second quarter.\nWe remain committed to retaining our restaurant leadership teams as they are critical to our success, both in the short term and as the operating environment returns to more normal conditions.\nRestaurant expense was unfavorable year over year by 170 basis points, driven by top-line deleverage, increased delivery, and packaging, partially offset by lower advertising and restaurant maintenance expenses.\nEven with the volatile operating environment, Brinker has delivered solid cash flow, generating $130 million of operating cash flow year to date.\nAfter capital expenditures of $37 million, our free cash flow for the first six months totaled nearly $93 million.\nAs I mentioned last quarter, we first used our cash to invest in the business.\nUnit expansion is progressing with six new or relocated restaurants opened year to date.\nWe also continue to invest in restaurant reimages, technology, and equipment to further enhance our guest experience and allow for better execution as our sales volumes, both on and off-premise grow.\nOur second priority is to pay down debt.\nSo far, during this fiscal year, we have retired over $66 million of revolving credit borrowings, and plan for further meaningful reductions as we progress through the second half of the year.\nAs I've indicated during prior earnings calls, we are strengthening our balance sheet by deleveraging to below 3.5 times lease-adjusted debt, which we anticipate achieving next fiscal year.\nFrom a total liquidity perspective, we ended the quarter with $64 million of cash and total liquidity of just under $658 million.\nWhile we are not providing specific guidance for the third quarter due to the ongoing operational environment, I do want to offer some perspective on January.\nWhile the first week of January was negatively impacted by the holiday flip of Christmas moving to our third quarter, top-line results for Chile's strengthened as we move through the remaining four weeks of the period.\nUnderlying this performance is improvement in the net comp sales to a range of negative 5% to negative 6% for the last four weeks combined.\nThese results obviously included the impact of ongoing COVID-related restrictions, particularly dining room closures in our No.\n3 and 4 markets of California and Illinois.\nFactoring out these two markets, the rest of the brand during the last four weeks of the January period should record net comp sales of approximately positive 2%, again, clearly indicating the brand's ability to perform in a strong positive sales manner with dining rooms open.\nAlso supporting the January results is the performance of It's Just Wings.\nAs you might expect, the brand does well in conjunction with sports, and our ability to market on the delivery platform around major events allowed highly incremental sales and set a number of sales records during the period.\nOverall, we are hopeful for an improved operating environment as we move through the quarter with the opportunity to return to recovery level performance we delivered in the early fall.\nIn March, we start to lap at the initial pandemic outbreak, which we anticipate will create meaningful year-over-year positive net comp sales comparisons.\nLooking beyond the short-term volatility caused by the ways of COVID restrictions to the solid long-term strategy being executed by our operators, I'm confident as to what this company can deliver for our shareholders.\nOur focus and execution will enable our continued performance as a leader for the Casual-Dining sector for the rest of this fiscal year and the years ahead.\n", "role": "user" }, { "content": "qtrly adjusted earnings per share $0.35.\nqtrly brinker company owned comparable restaurant sales down 12.1%.\nbrinker international qtrly total revenue declined due to capacity limitations,personal safety preferences,partially offset by increased off-premise sales.\nqtrly chili's company-owned comparable restaurant sales decreased 6.3%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During our call, management may discuss certain items which are not based entirely on historical facts.\nAnd of course, on the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business and believes will provide insight into the company's ongoing operations.\nI'm pleased with Brinker second quarter performance in the progression throughout the quarter.\nIt was great to see the effects of the delta spike dissipate.\nOur momentum come back and flow through improve.\nTake-out and delivery remain strong in the mid-thirties, while dining room demand was on the rise.\nAll our brands had impressive holiday results as guests got more comfortable coming together in groups, which helped us deliver a better than expected quarter with positive sales of 17.7% and adjusted earnings per share of $0.71 cents.\nThese results demonstrate that would diminish COVID interference our business model continues to perform well, particularly at volume.\nNow we, along with the restaurant, the rest of the restaurant industry are not without our headwinds.\nObviously, there are cost pressures, with inflation at the highest levels we've seen in years.\nWe've responded with appropriate pricing actions and with our most recent price increase, our menu price is now up over 4%.\nWe've been deliberate about taking incremental price increases throughout the year to ensure that with every step, we protect our traffic advantage, and we've done exactly that.\nChili's continued its trend of beating the industry, marking the 16th consecutive quarter of traffic outperformance.\nThis trend has continued into January, despite being on the current spike.\nOur fundamental belief is that the key to healthy, sustainable growth is to have an increasing number of guests choosing us, so we will maintain a disciplined approach to determining the timing and amount of future pricing actions.\nTo ensure we deliver a great guest experience, and continue to grow the base business, we're focused on making sure Chili's is staffed with stable, well-trained teams and smooth operational systems.\nThe staffing situation across the country has been the most unique I've seen in my career, but we're pleased with the hiring progress we've made.\nWe have more team members on a per restaurant basis today than we did pre-COVID.\nJust last week, when I was out in restaurants, managers were saying that they're where they used to see only two or three applicants for a job and now getting 10 or more.\nSo we're devoting increased time and attention on providing high quality training and improving retention for our new hourly team members and managers.\nAnd with the added pressure that COVID has put on our operations team, retention today is about more than just a paycheck.\nIt's also about improving quality of life and creating a sense of belonging.\nWe found new ways to leverage our technology to accomplish these goals.\nWe're implementing a virtual learning platform that allows us to train both hourly team members and managers from the Restaurant Support Center.\nThis is a live, interactive experience that improves the speed, quality and consistency of our training while reducing costs and the burden on our restaurant managers.\nWith this system, we're experiencing a 20 percent retention improvement for new hourly team members.\nFor managers, we're also focused on increasing career progression and diversity that's so important to our business.\nWe're doubling down on leadership development programs for both new and tenured managers like our highly successful women, Take the Lead program.\nWe see much higher retention levels among those who've engaged in these programs.\nOur rehire rates also demonstrate further evidence of the positive impact of these efforts.\nHistorically, the rehire rate for managers who, for whatever reason, chose to leave Chili's and then come back to us has been in the low to mid-single digit range.\nToday, that rate is more than double, and it's even higher at the hourly level, which speaks to the power of our culture and the strength of our business.\nWe know how crucial it is to support our teams with efficient, effective systems that enable smooth operational execution, improve the guest experience, and strengthen our base business.\nThis is another area where our technology, expertise gives us a big advantage.\nAt Chili's, we recently completed the implementation of two major technology systems.\nThe first, is our handheld system, which redefines how we serve our guests.\nWith this system, our servers cover more tables and earn more money.\nWe're already seeing an average of 15% higher server earnings and significant improvements in guest metrics.\nWe've been testing this in restaurants for years now so we know the potential once it's fully up and running.\nWe're also capitalizing on the consumer's increased demand to dine off premise with a new curbside system that provides a more seamless guest experience.\nThe operators are getting comfortable with it now, and restaurants that have fully adopted are generating 15 to 20 point improvements in guest metrics.\nThese efforts to strengthen our base set us up to accelerate additional growth vehicles.\nWe've ramped up Chili's development plans and currently have in excess of 20 new full size restaurants in the pipeline.\nWe're also testing small footprint off premise centric designs for densely populated markets that don't make sense for a full size prototype.\nWe've opened our first Urban kitchen in Manhattan, offering both Chili's and It's Just Wings.\nAnd I never thought I'd see the day when I'd see a Chili's in Manhattan, but it's been up and running for a month, and we're encouraged by its early performance.\nWe plan to open two small footprint locations and trade areas adjacent to college campuses in the near future, and virtual brands continue to be an important growth vehicle for us.\nWe remain fully committed to this strategy.\nOur size and scale are uniquely suited to enable growth through this vehicle.\nIt's Just Wings continues to perform well, and as of this week, Maggiano's Italian Classics is up and running in over 700 restaurants.\nWe're actively working to expand sales channels, build brand awareness and accelerate this part of our business.\nSecond quarter proved that when our business operates with minimal COVID impact, guest demand is high and the model is strong.\nWe generated solid cash flow and good earnings.\nAs we continue to navigate the inflationary pressures and respond prudently for the long term health of our business, we want you to know we're committed to keeping our business model strong and we still have growth ahead of us.\nWe see a lot of opportunity to leverage our scale, our ownership model, to grow the brands in our portfolio and move the business forward and deliver a great return for our shareholders.\nAnd this is only possible because of our amazing teams working tirelessly in the restaurants, and in the support center.\nLet me continue the overview of our second quarter by providing additional insight into our operating results, as well as briefly touching on the initial post-holiday operating environment as we move into the back half of our fiscal year.\nFor the second quarter of fiscal 2022, Brinker reported $0.71 of adjusted diluted earnings per share, up from $0.35 in last year's second quarter.\nBrinker's total revenues were $926 million for the quarter, and our comparable restaurant sales were positive 17.7%.\nFor some context around this performance, our sales trends improved steadily as we move through the quarter as guests resume their routines with the waning of the delta wave of COVID.\nOur restaurant staffing improve through the quarter, and by the holidays, we experienced some of the highest level of dining room capacity recovery since the beginning of the fiscal year in July.\nWe ended the quarter on a high note with a strong December, driven by the several weeks leading up to Christmas.\nChili's comparable restaurant sales were 12.1% for the second quarter.\nTheir comp sales were negatively impacted approximately 1.5% by Christmas, shifting back into the quarter from Q3 prior year, and close to 0.5% from closing early on Christmas Eve.\nWe chose this year to invest back into the well-being of our teammates in the restaurants and sent them home at four o'clock to spend time with family and friends.\nThis reaction reduced company sales by approximately $4 million.\nMaggiano's reported net comp sales for the quarter of a positive 78.1%.\nThe much improved performance resulted from a higher pace of dining room recovery and importantly, improved banquet sales.\nThe team has also done a nice job maintaining their elevated carry-out business, which appears to have stickiness in the mid 20% range, even as the other business channels improve.\nStill recovery to go but the top line performance coupled with an improved business model, allowed Maggiano's to deliver an above expectations quarter.\nA nice step forward for the brand.\nDuring the quarter, Chili's inclusive of the virtual brands took several incremental price increases and exited the quarter carrying approximately 3% menu price compared to the prior year.\nIn addition, as Wyman mentioned, we have taken further pricing actions in January, resulting in Chili's now carrying price of over 4% and Maggiano's adding 5% price with their latest menu rollout.\nWe do anticipate maintaining price at these historically higher levels for the foreseeable future.\nBrinker increased its consolidated restaurant operating margin to 11% in the second quarter versus 10.7% a year ago.\nWe continue to be very encouraged in periods of low COVID impact, as it allows us to realize the power of the business model and the ability to leverage margins with more normalized top line performance.\nFood and beverage costs were unfavorable, 120 basis points driven by commodity inflation, partially offset by price.\nWe are seeing stabilization in our supply chain and have a good line of sight into the balance of the fiscal year, with a large majority of our contracts locked for the next six months.\nWe are expecting high single digit inflation for the third and fourth quarter.\nLabor for the quarter was then favorable 60 basis points versus prior year.\nOur recruiting and training efforts a good progress throughout the quarter, and the higher sales volumes in the latter part of the quarter work to effectively leverage the six components of these costs.\nWage rates at the manager, an hourly level remained elevated in the high single digits, and we expect to see this trend continue as we work through the remainder of the fiscal year.\nAs the teams continue to stabilize outside of COVID spikes, we should make incremental progress in reducing costs such as training and overtime utilization.\nThe crept into the system during times of higher turnover and lack of labor availability.\nRestaurant expense was favorable 210 basis points year-over-year, as the improved sales performance effectively leverage the fixed cost included in this category.\nAs we work to further build our sales channels, we should see this leverage dynamic continue, and how balanced the inflationary aspects, and other parts of [Inaudible] Our cash flow for the second quarter remain strong with cash from operating activities of $67 million and EBITDA of $88 million.\nOur total funded debt leverage was 2.6 times and our lease adjusted leverage was 3.6 times.\nBoth down slightly from the first quarter, but down significantly from prior year.\nLet me finish my prepared comments with some perspective related to our January periods operating performance that closes today.\nThis has been widely reported.\nThe Omicron variant spiked rapidly just after the Christmas holiday, and played havoc throughout the industry with staffing and sales capacity, particularly with dining rooms.\nWe have not been immune to that impact.\nAfter a challenging first couple of weeks, we have seen the spike dissipate in many markets and are seeing improvements in our sales week-to-week as team member exclusions come down almost as fast as they rose.\nWhile it's good to see what appears to be a much quicker resolution of this COVID wave, the January period will be a setback to our overall operating results.\nIt's important that we quickly move back to a more normalized operating environment in order to meet our expectations for the fiscal year.\nTaking a step back from the volatility in the current environment, and looking past the veil of COVID, we remain confident in our ability to drive improved business results across our brands.\nWe see good growth ahead as we invest in our strategic initiatives, open an increasing number of restaurants, and leverage our technological advantages.\nWe also remain very appreciative of our restaurant leaders and teams, and the efforts they are making each and every day to deliver the results, we simply report.\n", "role": "user" }, { "content": "q2 earnings per share $0.71 excluding items.\nqtrly brinker comp sales up 17.7 %.\nqtrly chili's comp sales up 12.1 %.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During our call, management may discuss certain items which are not based entirely on historical facts.\nAnd of course, on the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business and believes will provide insight into the company's ongoing operations.\nWith the rollout of vaccines in full swing and restrictions lifting across the country, our guests' pent-up demand for a dine-in experience is being released as well.\nPeople are finally starting to feel safer to venture out and spend more -- spend some of the money they've been saving over the past year.\nWe're excited about the positive momentum in our economy and the resurgence in our dining rooms.\nWhen we last talked at the end of January, we were already seeing progress in the business, even as we were navigating a COVID spike that drove another wave of capacity restrictions in our dining rooms.\nJust as we started to see numbers of cases come back down, we were hit with the winter storm of the century that impacted our restaurants across Texas and the southeast at levels we haven't experienced before.\nBut despite the challenges at the start of the third quarter, we ended strong, delivering an adjusted earnings per share of $0.78 with Chili's sales returning to positive territory from an absolute perspective.\nAnd we've seen those sales trends continue into April.\nWhen we look at our more normalized performance of fiscal '19, Chili's sales are up 10%, and nearly three-quarters of our restaurants are generating meaningful positive results, even though we're still social distancing and wearing masks in all of our restaurants and we're still operating under capacity restraints across the country.\nWe believe, all along, the consumers' increased demand for convenience would continue post-pandemic, and it's playing out that way.\nAs our dining room traffic increases, our off-premise business continues to hold strong.\nWe expect that when things normalize, we'll see stronger dining rooms and a takeout and delivery business stronger than it was pre-pandemic.\nAs you think about Maggiano's in the context of this recovery, upscale casual is playing itself out a little differently.\nWe're pleased with the significant improvements in the Maggiano's business, especially in their dining rooms.\nNow, it's just a matter of how quickly banquets come back.\nWe know there's significant pent-up demand and we're well-positioned to meet it.\nWe're already seeing signs of social occasions returning, and we feel good about building our corporate business back in time for the important holiday season.\nStaying focused on our strategy throughout the extraordinary events of the past year has served us well as we consistently outperformed the industry.\nWe have good line of sight to hit the targets we were expecting post-pandemic at both Chili's and Maggiano's.\nNavigating the past year taught us we can run this business even more efficiently than in the past, and we're committed to keeping our cost structure in line.\nWe think our category leadership -- driven by the multiyear investments in our infrastructure and digital capabilities will help us continue to outpace the industry.\nWe still have a lot of heart for our restructured marketing approach, and we'll continue to leverage our digital expertise to connect with consumers and drive traffic.\nThe subject of labor is clearly top of mind across our industry.\nToday's labor market is one of the toughest ones we've experienced, but we have the tools to navigate through it successfully.\nWhile our performance throughout the pandemic enabled us to keep higher levels of staffing in our restaurants, we are hiring more team members than usual to support our increased volumes.\nWe're also benefiting from our decision to keep our managers on board throughout the pandemic as they provide the operational leadership to staff our teams and take care of our guests.\nWe're fortunate to be able to leverage our scale, the digital expertise we built, and our PeopleWorks team to recruit talent in creative ways to keep our cost structure intact and our guests coming back.\nWe know the best way to maintain profit margins in this business is through volume, so we leaned into virtual brands as a way to leverage our assets and tap unused capacity.\nIt's Just Wings continues to perform well, and we're on track to hit that $150 million target we set at the beginning of the year.\nAlmost all of our domestic franchise partners jumped on the opportunity and globally, several of our partners have already picked it up.\nWings is now in nine countries and 160 locations outside the U.S., making it a formidable brand in just its first year.\nIt's a real testament to our methodical and disciplined virtual brand strategy, how we've executed it and the leverage it brings to our P&L and to our franchise partners' business.\nWe have the system up and running and we're executing it well, especially during high volumes.\nNow, we're focused on building the brand and leveraging the growth opportunities ahead.\nWe believe takeout holds a lot of potential for us.\nAnd now that we've invested in the technology and infrastructure to support it, we're working to increase awareness levels outside the delivery channel.\nWe've learned a lot this year with the launch of It's Just Wings that will leverage when we're ready for our next virtual brand.\nWe're pleased with the current results from the expanded test of Maggiano's classics, and we're working through the timing to ensure we're able to support our operators and deliver a great guest experience.\nSo this has been an exceptional year of learning for us, not just with virtual brands but in many ways.\nWe've learned the restaurant industry in general, and specifically, our team is full of unbelievably resilient amazing human beings.\nI'm so impressed by how this team has risen to every challenge that's come our way.\nWe're stronger for it, and we're prepared for the growth opportunities ahead as vaccinations spread across the country and dining rooms fill up.\nAs we look forward, our ability to navigate through any short-term cost headwinds is solid.\nOur scale affords us advantages in terms of forward contracting, keeping our employment base intact, and delivering one of the strongest value propositions in the industry.\nLonger term, we see a lot of organic growth potential for Brinker.\nObviously, we'll continue to execute our multiyear virtual brand strategy and protect our improved business model.\nAnd with higher volumes, we'll capture new development opportunities and keep the brand fresh through our remodel program.\nI'm proud of our progress on our results, the strength of our brands, and our line of sight to future earnings performance.\nWhile the quarter definitely had its unique issues, I'm most pleased with the momentum we are generating as we move closer to a more normal operating environment, setting up further success both this quarter and next fiscal year.\nFor the third quarter of fiscal 2021, Brinker reported total revenues of $820 million with consolidated comp sales of negative 3.3%.\nOur adjusted diluted earnings per share for the quarter was $0.78.\nChili's recorded flat comp sales and positive 4% traffic for the quarter, with the year-over-year performance improving throughout the quarter.\nRegional performance is strong nationwide with a broad range of state markets rebuilding their dining room sales back to higher levels, above 75%, let's say when compared to pre-COVID performance.\nWe do still have a smaller set of state markets such as California and Illinois, which are important markets for us, that are earlier in their dining room reopening process.\nWe anticipate they will follow similar growth patterns as we move through the next several months.\nA couple of items to note related to the third quarter.\nFirst, we had a holiday flip the first week, with Christmas moving into the quarter, resulting in a negative 1% comp sales impact.\nIn February, we experienced Uri, a most unique winter storm that hit with historic subzero temperatures and power outages for more than a week, affecting approximately 30% of our restaurants.\nThe material impact of the storm resulted in an estimated $10.5 million in lost revenues, a negative impact to consolidated comp sales of 1.2%, and reduced adjusted earnings per share of approximately $0.06.\nOnce things thawed out, our positive progression returned, with average weekly sales volume hitting record highs in March.\nAs we started to lap the beginning of the pandemic in mid-March, as one would expect, comp sales moved significantly positive and are likely to remain elevated for the foreseeable future.\nWhile pleased with this progression, we believe a two-year comp comparison is a more insightful view of our performance.\nIn this regard, the consolidated two-year comp results for Brinker for the first four weeks of April was a positive 6.3%, driven by Chili's results of a positive 10.1% for the same time frame.\nI would note that Chili's is lapping off of a positive 2.9% in the third quarter of F '19.\nIncreasing sales volumes also favorably impacted margins, resulting in a consolidated restaurant operating margin for the third quarter of 13.9% compared to 12.8% for the third quarter of fiscal '20.\nAgain, the winter storms had a negative impact on ROM, reducing the margin by an estimated 30 basis points.\nFood and beverage expense as a percent of company sales was 70 basis points favorable to prior year, primarily driven by menu mix as we featured steak on three for $10 in the prior year.\nPricing was slightly favorable, and commodities were flat.\nLabor expense, again as a percent of company sales, was favorable 70 basis points as compared to the prior year.\nDuring the quarter, lower dining room capacity year over year resulted in a reduced hourly labor cost.\nWe do anticipate hourly labor to increase, importantly along with sales volumes as capacity restrictions lift in certain states.\nDuring the quarter, we meaningfully increased our manager bonus payout, impacting margins by approximately 60 basis points as we move to reward this critical leadership level for outstanding performance.\nBy leveraging our scale, our well-established people, practices, and benefits and utilizing our digital connectivity know-how, we are confident in our ability to effectively manage through the current labor market environment.\nRestaurant expense was unfavorable year over year by 30 basis points, a reflection of increased off-premise costs such as packaging and fees, driven by our successful off-premise sales channels.\nAdvertising expense continues in a favorable year-over-year position as we lean into our digital and loyalty-driven marketing strategy.\nBrinker continues to deliver strong operating cash flow.\nYear to date, we have generated $268 million in operating cash flow.\nDuring the third quarter, we used a portion of that cash flow to repay $115 million in revolver borrowings, bringing the outstanding balance to under $300 million.\nWe anticipate further borrowing reduction in the fourth quarter.\nAdditionally, we are investing significantly into the growth of our brands.\nCapital expenditures year-to-date totaled approximately $62 million.\nWe opened two new Chili's during the third quarter and two additional locations in April, bringing our total for this fiscal year to 10.\nWe are moving aggressively to further build our development resources and increase the NRO pipeline.\nWe continue to target expanding new restaurant development to a range of 18 to 22 restaurants a year.\nWe also are investing in reimages of our existing fleet, with a particular focus on the Midwest restaurants acquired in early fiscal '20.\nBrinker has continually proven to be a leader in utilizing technology to enhance the guest experience and improve operational performance.\nIn fiscal 2021, we will invest approximately $20 million of capital and technology that enhances our digital guest connectivity, supports our virtual brand growth, and improves our in-restaurant dining experience.\nNow, turning to our expectations for the final quarter of this fiscal year.\nWe expect both Chili's and Maggiano's to maintain their current favorable sales trends throughout the quarter, assuming COVID cases continue to decline and state and local restrictions continue to ease.\nLet me provide some additional specifics for the fourth quarter.\nTotal revenue is estimated to be in the $950 million to $1 billion range.\nAdjusted earnings per diluted share are estimated in the $1.55 to $1.70 range.\nWeighted average diluted shares are estimated to be in the 47 million to 48 million share range.\nAlso, as we have previously noted, fiscal 2021 includes a 53rd week at the end of this fourth quarter.\nAs we settle into the last quarter of the fiscal year, we are excited about the momentum we have built from the uncertainty that surrounded the restaurant industry a year ago.\nDuring the past year, the members of our support teams here in Dallas stepped up and provided innovative solutions to any number of issues since the pandemic changed how we all approach our work.\nAnd our frontline team members in the restaurants have continually delivered for our guests in ways none of us would have contemplated not too long ago.\nWe are grateful to both these groups of team members who combined to lead the casual dining sector throughout this past year.\nThey are all committed to finishing strong this fiscal year and then carrying the success forward.\n", "role": "user" }, { "content": "estimated impact of winter storm uri during q3 of fiscal 2021 was a decrease in company sales of $10.5 million.\nestimated impact of winter storm uri during q3 was a decrease comparable restaurant sales of 1.2%.\nbrinker international - estimated impact of winter storm uri during q3 was decrease in net income per diluted share, excluding special items, of $0.06.\nq4 2021 revenues are expected to be in range of $950 million to $1.0 billion.\nq4 2021 net income per diluted share, excluding special items, is expected to be in range of $1.55 to $1.70.\nexcluding special items net income per diluted share in q3 of fiscal 2021 was $0.78.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 is customary, today's call is open to all participants and the call is being recorded and is copyrighted by Emergent BioSolutions.\nTurning to Slides 3 and 4.\nDuring today's call, we may also refer to certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding Emergent's operating performance.\nTurning to Slide 5.\nThe agenda for today's call will include Bob Kramer, President and Chief Executive Officer, who will comment on the current state of the company; and Rich Lindahl, Chief Financial Officer, who will speak to the financials for 2Q 2021 and as well as the forecast for full year 2021, including guidance on 3Q 2021 total revenue.\nThis will be followed by a Q&A session where additional members of the executive leadership team are present and available as needed.\nSince then, Emergent may have made announcements related to topics discussed during today's call.\nToday, I'd like to spend some time talking about the progress we've made at our Bayview and then talk more broadly about the health of the overall business and our continuing dedication and focus on public health threats.\nOur second quarter performance reinforces the strength of our strategy and we are maintaining our overall guidance for 2021.\nRich will go over in more detail those numbers in a few minutes.\nMy comments are summarized across Slide 6 and 7 in the deck accompanying the call.\nTurning first to our efforts to produce COVID 19 vaccines.\nThere's been a great deal of attention paid to Emergent's history as a public health risk company with a leadership role in working with the U.S. government on biodefense.\nWhen the pandemic struck, America turned to Emergent because of our history and unique capabilities, while millions of COVID-19 vaccine doses that we manufactured are currently protecting people around the world.\nWe faced serious challenges along the way.\nWe didn't always live up to expectations, including those that we set for ourselves.\nHowever, we have learned some important lessons which are allowing us to improve our operations and at the same time strengthening America's public health response for the future.\nThe FDA inspection of Bayview earlier this year identified a number of areas for improvement.\nAlong with Johnson & Johnson, we established a comprehensive, robust quality improvement plan, which includes facility improvements, capability building and deployment of enhanced tools and controls.\nWe reviewed this plan with the agency and immediately began its implementation.\nWe also made additional investments during the quarter in quality, compliance and operations.\nAll of this work is in order to satisfy both ourselves as well as J&J and demonstrate to the FDA that we've achieved a level of sustainable compliance that will allow us to resume production.\nWe've made significant progress toward this goal and as we announced earlier today, we received the green light from the FDA to resume production at the site, which will continue to be the subject of routine inspections by the FDA.\nThey know at the end of the day, that's what matters most.\nI also want to recognize our strategic partners and particularly the strong collaboration with our J&J colleagues.\nWe continue to work closely with them and the FDA as previously manufactured batches of COVID-19 drug substance are released and added to J&J's emergency use authorization, helping protect tens of millions of lives around the globe.\nWe're awfully proud of both of these accomplishments.\nThe hard work and investments that we've made in Bayview over the last decade, in particular the last few months are starting to pay off.\nIn addition, we continue to work collaboratively with AstraZeneca to complete all documents related to their drug substance.\nSo they and the U.S. government can make decisions regarding the disposition of this material.\nMoving more broadly to our overall business.\nWe're in year two of our 2020 through 2024 strategic plan and continue to make meaningful progress against that plan.\nSo let's start with our core medical countermeasure business.\nOur work supporting the U.S. government's priorities to protect the American public against smallpox, anthrax and other category aid biologic agents remained stable.\nWith respect to our smallpox franchise, in the second quarter, the U.S. government has exercised and funded the next term extension for ACAM2000 under our tenure contract.\nThis option exercise is valued at approximately $182 million and requires all doses to be delivered by the end of this calendar year.\nThis quarter, we also secured the next option exercise for our smallpox therapeutic VIGIV product valued at approximately $56 million.\nFor our next generation anthrax vaccine candidate, AV7909, we continue to engage with the government regarding exercising the final option under the existing contract to procure additional doses for inclusion into the strategic national stockpile.\nThe current procurement contract for AV7909 was put in place in 2016 and facilitated procurement by the SNS starting in 2019, while we seek full approval by the FDA.\nWe continue to make good progress toward our target of submitting our AV7909 BLA later this year.\nIn addition, we recently secured a procurement contract to supply doses of Anthrasil, our polyclonal antibiotic therapeutic for treating inhalational anthrax to the Canadian government as part of their anthrax preparedness strategy.\nOn the R&D front, in addition to our anticipated BLA filing for AV7909, we advanced the number of our medical countermeasure programs, and I'd like to highlight two of them.\nSpecifically, we continue work on our COVID-HIG candidate, which is being developed in collaboration with NIAID, BARDA and the U.S. Department of Defense as an early treatment option to address at risk COVID-19 populations.\nCOVID-HIG leverages our polyclonal hyperimmune platform and continues to show neutralizing activity against variants of SARS-CoV-2 virus in, in vitro models.\nWe anticipate in the near-term, the initiation of a Phase 3 study led by NIAID assessing the effect of hyperimmunes on patient populations that have not yet progressed to severe disease to determine the progression can be impacted.\nIn addition, we recently obtained approval for our Trobigard auto-injector from the Belgian Regulatory Authority.\nSeveral years ago, through interactions with various governments around the world, we identified their need to have auto-injectors available in case of nerve agent attacks.\nAnd as a result we invested in building that capability.\nAchieving this first approval from our auto-injector platform is a key milestone in the maturity of our auto-injector platform.\nMoving next to our contract development and manufacturing business, or CDMO.\nWhen we first laid out in our last strategic plan, the goal was to leverage further our drug manufacturing network of nine sites to provide development services, drug substance and drug product services, to a diverse customer base.\nWe obviously have seen significant growth related to the pandemic, which was unanticipated at the time, but beyond COVID-19, we continue to see strong interest from current and potential clients and are winning new clients and projects in all three service pillars, those being development services, drug substance and drug product and drug packaging.\nInterest is coming from small, mid and large companies, as well as governments and other organizations.\nRich will provide detailed information on new business, the backlog and our rolling opportunity funnel.\nBut I like to emphasize that even though we expect variation quarter-to-quarter as we grow the business, the growth over the 2019 baseline in our strategic plan is considerable.\nOverall, the key takeaways that our CDMO business unit remains strong as the industry's demand for biologics manufacturing services continues to grow, while we pursue becoming an increasingly important service provider in support of pharma and biotech innovation.\nFinally, a third pillar of our 2024 strategy was to continue our focus on public health threats, while diversifying our customer base beyond the U.S. government.\nAnd I'm pleased to report the continued progress on that front as well.\nAs you know, the opioid crisis has been a public health threat, and it's claimed far too many lives and made even worse by the pandemic.\nAs announced earlier this week, we're very proud to be working with several nonprofits to help raise awareness of the risk of accidental opioid overdose through a month long public awareness campaign called Reverse the Silence.\nIn addition, as we have previously discussed, the U.S. circuit court of appeals has scheduled the oral argument for NARCAN U.S. appeal for August 2 on the ongoing Patent Infringement Litigation.\nBased on this timing, we believe a decision is likely by the end of the year.\nRegardless of the outcome of the appellate court's ruling, we continue to focus on the public health threat and our role as a provider of solutions to address the opioid epidemic.\nContinuing with the diversification theme, while the travel space-travel health space has been understandably challenging, we continue to make good progress with building our development stage vaccine candidates.\nWe still expect to initiate a Phase 3 trial for Chikungunya virus VLP vaccine in 2021.\nIn addition, and then supported this important development program, we recently announced positive two-year persistence data from a Phase 2 clinical study that indicated that our vaccine candidate appears to generate a rapid and durable immune response.\nWe intend to publish the results of this study in the near term.\nWe also plan to initiate a Phase 1 study in late 2021 and early 2022, related to a number of vaccine candidates in the pipeline, including our Shigella, Lassa and universal flu vaccine candidates.\nAs you can see, we expect that the remainder of 2021 will be busy for our product development teams, including clinical regulatory and quality as our pipeline continues to mature.\nThat wraps up my comments regarding the business overall.\nOn the personnel front, we recently issued an 8-K announcing the reorganization of my direct reports, Rich Lindahl, our Chief Financial Officer; Karen Smith, our Chief Medical Officer and Katy Strei, our Chief Human Resources Officer continued to report directly to me.\nIn addition, rounding out my direct reports, Adam Havey's role has been expanded to include overall responsibility for all of our business units, as well as global manufacturing operations.\nMary Oates role has been expanded to include a focus on operational excellence in addition to current responsibility for global quality.\nAnd finally, Nina DeLorenzo role has been expanded to include the management of the Global Communications and Public Affairs function, as well as the Global Government Affairs team.\nAs part of this reorganization, the role of Executive Vice President for Manufacturing and Technical Operations that has been held by Sean Kirk has been eliminated and consequently Sean is leaving the company.\nWe have a deep appreciation for Sean's 18 years of service at Emergent and wish him the very best for him and his family going forward.\nWe believe this organization and reorganization of our management team allows us to best position for the long-term success of the strategic plan.\nTo conclude, as you'll hear from Rich, our second quarter results demonstrate that Emergent's business remains durable, resilient, employees for growth.\nWe're on track with our 2024 strategy and Emergent is well positioned to play a meaningful role in strengthening our national public health threat preparedness.\nAnd I continued to be proud of each member of the Emergent team who come into work every day, focused on a mission to protect and enhance life.\nI'll start on Slide 9.\nDespite recent challenges, we have continued to execute across all aspects of the business, vaccines, therapeutics, devices, and CDMO.\nOur financial condition remained strong with the liquidity and financial flexibility to fund our operations and pursue opportunistic investments.\nAnd we remain steadfast in our unwavering commitment to supporting global preparedness and response to public health threats.\nToday's announcement that we are clear to resume manufacturing at Bayview is a Testament, not only to that commitment, but also to the strong teamwork and organizational discipline that had been hallmarks of this company throughout it's nearly 23-year history.\nA quick run through of key highlights include, total revenues of $398 million, an increase of $3 million versus the prior year and in line with our guidance and adjusted EBITDA $50 million and adjusted net income of $18 million both decreases versus the prior year due to a variety of one time and other expenses, which we will discuss in a moment.\nBreaking down quarterly revenue into its components, anthrax vaccine sales were $52 million lower than the prior year due to timing of deliveries.\nNARCAN nasal spray sales were $106 million, an increase over the prior year, driven by continued strong demand for this critical drug device combination product for opioid overdose reversal across both the retail and public interest channels in the U.S., as well as increased Canadian sales.\nOther products sales were $24 million consistent with the prior year and CDMO services revenue came in at $191 million, an increase over the prior year and reflecting contributions from all three service pillars, primarily for our government and innovator partners response to the COVID-19 pandemic.\nAs Bob noted in his remarks, earlier in July, the U.S. government exercised the next ACAM2000 contract option that is valued at $182 million.\nAccordingly, we now expect sales of ACAM2000 to resume in the third quarter and to complete all related deliveries by the end of 2021.\nLooking beyond revenue, the quarterly results also include cost of goods sold of $228 million, a $98 million increase over the prior year.\nAnd reflecting the increased costs associated with a substantial increase in CDMO services revenues, as well as $42 million of inventory write-offs, which I will return to in a moment.\nGross R&D expense of $49 million consistent with the prior year, reflecting our continued commitment to investing in our pipeline of development programs across our three product focused business units.\nNet R&D expense of $24 million or 6% of adjusted revenue consistent with the prior year, SG&A spend of $91 million or 23% of total revenues, an increase over the primary prior year, and primarily reflecting the impact of higher costs to support and defend our corporate reputation and combined product and CDMO gross margin of $144 million or 39% of adjusted revenue, a decline of $97 million and reflecting the impact of $42 million of inventory write-offs due to raw materials and in-process batches at the Bayview facility that the company plans to discard as they were deemed unusable.\n$43 million associated with the product and service revenue mix, which was weighted more heavily to lower margin products and services and $12 million associated with costs incurred to remediate and strengthen manufacturing processes at our Bayview facility, many of which are temporary in nature.\nTurning to Slide 11, we will now review our key CDMO metrics.\nIn the second quarter, we continue to obtain incremental contract awards resulting in secured new business of $53 million.\nHowever, this outcome was significantly offset by $108 million of negative contract modifications.\nAs of June 30, the backlog is $1.1 billion.\nAnd lastly, as of June 30, the opportunity funnel was $672 million down from $807 million at March 31.\nWhile the CDMO teams ongoing business prospecting and marketing initiatives continue to generate new opportunities.\nFor now, we are removing potential opportunities at Bayview as all manufacturing activities at that facility are currently prioritized to support the J&J COVID 19 vaccine.\nAs a reminder, the opportunity the funnel does not include any value associated with an extension of the commercial supply agreement with Johnson and Johnson into years three to five of the existing contract.\nOn Slide 12, you can see the sequential trends in these metrics over the last four reporting periods.\nWe remain committed to serving our existing customers and continue to execute on our marketing initiatives with pharma/biotech innovators across all three of our service pillars.\nWe look forward to making further progress in this important part of our business as we move forward from here.\nMoving onto Slide 13 for a review of our balance sheet and cash flow, we ended the second quarter in a strong liquidity position with $448 million in cash and $262 million of accounts receivable resulting in aggregate current liquid assets of nearly $710 million.\nThis compares with approximately $732 million of aggregate current liquid assets as of the end of the first quarter.\nWe also still have undrawn revolver capacity of just under $600 million.\nFinally, at the end of the second quarter, our net debt position was $416 million.\nAnd our ratio of net debt to trailing 12 month adjusted EBITDA remained below one times.\nThese considerations include No Raxibacumab revenue until 2022.\nThe Naloxone market remains competitive with at least one new entrant this year, but no generic entrance prior to the resolution of our patent litigation case and the successful manufacturing of J&J's COVID-19 vaccine at Bayview.\nOn that last point, the FDA's green light to restart production at the site, which we confirmed earlier today is a key milestone toward that end.\nOne consideration that has been revised is that our expectation for gross margin for the full year is now approximately 61% to 63% on a GAAP basis, a reduction of 200 basis points from the prior range of 63% to 65%.\nThis change reflects the impact of the Q2 2021 performance as well as expectations for the remainder of the year.\nWe anticipate that this lower margin will be offset by cost savings related to R&D and SG&A.\nLastly, we are providing third quarter total revenue guidance of $400 million to $500 million.\nIn the second quarter 2021, we continue to deliver solid financial results that keep us on track with our full year outlook.\nOn a year-to-date basis, our revenues of $741 million represent approximately 41% of our full year 2021 forecasted total revenues at the midpoint, a similar waiting between first half and second half total revenues as has occurred in each of the last four years.\nWe remain confident in the strength of the business, which continues to be robust and resilient with the capabilities, capacity and financial strength needed to deliver preparedness and response solutions to a wide range of public health threats.\n", "role": "user" }, { "content": "sees q3 revenue $400 million to $500 million.\nreaffirms 2021 full year forecast for revenues and profit.\nemergent biosolutions - in quarter, inventory write-offs related to raw materials, in-process batches manufactured at bayview facility.\nemergent biosolutions - fy other product sales, expected to be impacted on assumption that a new raxibacumab contract to be awarded later than planned.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 Bob Burrows, Investor Relations Officer for the company.\nAs is customary, today's call is open to all participants and the call is being recorded and is copyrighted by Emergent BioSolutions.\nTurning to slides three and four.\nDuring today's call, we may also refer to certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding Emergent's operating performance.\nTurning to slide five.\nThe agenda for today's call will include Bob Kramer, President and Chief Executive Officer, who will comment on the current state of the company and Rich Lindahl, Chief Financial Officer who will speak to the financials for 3Q 2021 as well as the forecast for full year 2021.\nThis will be followed by a Q&A session where additional members of the executive leadership team are present and available as needed.\nSince then, Emergent may have made announcements related to topics discussed during today's call.\nToday, I'll provide an update on the progress that we've made at our Bayview site and then talk a little bit about our recent accomplishments and milestones and further talk about the business enhancements we've implemented to better focus on our customers.\nI'll also discuss our revised full year guidance and our decision to end our involvement in the Center for Innovation in Advanced Development and Manufacturing or CIADM program with the US government.\nMy comments are summarized across slides seven and eight in the deck accompanying the call.\nSo let's get started.\nAs you've seen this year, our Emergent team and our business have shown their strength and resilience as we've made substantial progress in the quarter.\nSome of the recent highlights include the following.\nFirst, we've made significant progress in Bayview resuming operations and production for Johnson & Johnson at the end of July and more recently completing all remaining work on behalf of AstraZeneca.\nAs of the end of the quarter, we've contributed over 100 million dose equivalents of COVID-19 vaccine for global distribution.\nImportantly, we look forward to continuing to support J&J's ongoing vaccine production in the months ahead, while continuing to support their regulatory path for their vaccine.\nNext we secured key ongoing commitments from the US government on two core medical countermeasure products.\nFirst, we received the contract modification exercising and funding the second of nine annual options to supply ACAM2000 to the Strategic National Stockpile valued at approximately $182 million.\nSecondly, we received a contract modification exercising and funding the procurement of additional doses of AV7909 for the SNS valued at approximately $399 million over the next 18 months.\nAlso our NARCAN Nasal Spray team continues to perform well above expectations in the midst of a worsening opioid crisis helping ensure this critical product gets in the hands of the patients and caregivers who need it.\nWe also launched our pivotal Phase III trial for our chikungunya vaccine CHIKV VLP, a key milestone for us because it's the first Phase III drug development program that Emergent has funded on its own.\nMore importantly, it underscores our commitment to progressing our pipeline programs in pursuit of critical public health threats and expanding our travel health vaccines franchise.\nAnd finally, we continue to grow our CDMO operations securing a new multiyear contract to produce Providence Therapeutics' mRNA COVID-19 vaccine candidate at our site in Winnipeg.\nAs these highlights demonstrate, our core strategy and diversified business model remains strong.\nIn addition, today we're announcing that the Department of Health and Human Services and Emergent have mutually agreed to end our partnership in the CIADM program.\nThe agreement will close out all open obligations and task orders issued under CIADM base contract including the task order related to COVID-19 response.\nWe're proud of the work all of our employees have done over the last nine years to honor our CIADM commitments.\nAnd you'll recall that the program was initiated in 2012 in recognition of the shortage of domestic manufacturing capability needed to respond to an unforeseen widespread public health threat following the H1N1 influenza pandemic.\nWhile an innovative idea execution of the CIADM program and the necessary operational investments by all administrations fell short of what was needed to maintain capability in case of an emergency.\nIn fact, when the COVID pandemic struck, Emergent was just one of two original partners remaining in the program.\nDespite the issues, we responded swiftly engaging several of our facilities to meet the government's needs and made incredible progress in a time frame never before attempted under very challenging conditions.\nOur COVID-19 work with BARDA under the CIADM program included a number of activities.\nThese included: a reservation of capacity at our Bayview, Camden and Rockville sites; a direct capital investment by the government in additional fill/finish capacity at our Camden and Rockville sites; both drug substance manufacturing for AstraZeneca in the reserved space at Bayview; and finally, drug product manufacturing for various COVID-19 therapeutic candidates in the reserved space in Camden.\nAs a reminder, the COVID-19 work under the CIADM program was always expected to end this year and importantly our decision does not affect our work with Johnson & Johnson as it was never part of our CIADM contracting.\nWe will continue to produce their COVID-19 vaccine drug substance at our Bayview facility.\nAnd as I mentioned at the top of the call, we're extremely proud that our collaboration with J&J and in addition to AstraZeneca has contributed over 100 million dose equivalents of COVID-19 vaccine for global distribution.\nSo while we conclude our involvement in the CIADM program and bring to closure this important chapter in our business, it needs to be said that the work we accomplished under the program and related task order contracts with the US government served a critically important purpose one that our entire organization is immensely proud of.\nDespite the setbacks we had earlier in the year the team's been committed to our mission of protecting and enhancing life and steadfast in learning from our past to be even better.\nI'm proud of the team's resilience and the positive impact on millions of lives across the globe and importantly we're not done yet.\nAs we look forward, we're encouraged and optimistic about the opportunities we see ahead across our entire business.\nLet me now pivot to recent business changes we've implemented in support of our strategy.\nDuring the quarter we've shifted our operating structure to now have three business lines each focused on distinct customer or market types.\nThey are: the newly created government or medical countermeasure business; the commercial business; as well as the services or CDMO business, which remains essentially unchanged.\nTo be clear, all three of these report to our Chief Operating Officer, Adam Havey.\nThe government or MCM business will be led by Paul Williams who was previously running the vaccines business unit.\nThis new structure will better serve our customers by sharing their breadth and depth of experience as one team and reduces the complexity with multiple touch points going into the government on different business units.\nThe commercial business will be led by Doug White, who previously ran the devices business unit.\nHe will now drive our core commercial capabilities and seek new investment opportunities.\nDoug's portfolio includes NARCAN Nasal Spray, travel vaccines and other similar customer facing products.\nThis organizational change provides an opportunity to put the strategic and operational pieces of this business under one umbrella that were previously across multiple business units, positioning us to expand into new markets and efficiently integrate newly acquired products in the future.\nThe services or CDMO business, the head of which we're continuing to accurately recruit for will continue to service our pharma and biotech innovator customers providing development, drug substance, and drug product manufacturing services that capitalize on our core skills and capabilities.\nAs for our R&D programs, we established a centralized and cross-functional product development committee that will govern the R&D portfolio.\nWe're also creating a science and innovation team led by Dr. Laura Saward, who previously ran the therapeutics business unit.\nOverall this new structure positions us to execute effectively on our strategic plan and deliver long-term success, strengthening our foundation and providing new opportunities for growth.\nSo getting back to the operational highlights.\nAs I mentioned we resumed production of J&J's COVID-19 vaccine at our Bayview facility in late July, following the implementation of rigorous and comprehensive quality enhancements and the FDA's permission to restart.\nOver the last five months, we've invested millions of dollars to overhaul cleaning procedures, upgrade our facilities, implement additional quality control and oversight practices, and make significant improvements to the processes for batch record keeping, personnel training, data integrity and lab testing.\nEmergent teams along with support from our J&J colleagues oversee all operations and materials transfer.\nWe took the added step to bring in a recognized independent consultancy, who is expert in quality control and who are now reviewing and performing certifications prior to release of any batches.\nWe continue to work closely with the FDA and J&J toward increasing our production level consistent with these new procedures.\nFinally, I want to commend our team whose around the work efforts over the last 18 months that accelerated the transformation of our Bayview facility from a clinical stage facility to one that is poised to support much larger scale production.\nNow moving to our core government or medical countermeasures business.\nOur work helping the US government protect Americans against smallpox, anthrax and other Category A biologic agents remains a top priority for the company.\nRecall that we previously announced the US government exercised and funded, the next term extension for ACAM2000 under our 10-year contract and we also secured the next option exercise for our smallpox therapeutic, VIGIV.\nWe recently filed that up with the US government exercising the final option under the existing contract to supply doses of our next-generation anthrax vaccine candidate, AV7909 to the Strategic National Stockpile valued at approximately $399 million over the next 18 months.\nAs a reminder, the current contract for AV7909 facilitates procurement by the SNS, while we seek full FDA approval.\nAnd to that end I'm pleased to announce two important updates today on the ongoing regulatory path for AV7909.\nFirst, the FDA has agreed to our request for a rolling review of the AV7909 BLA.\nThe rolling review allows us to submit sections of the application to the FDA as they're completed rather than waiting until the entire BLA package is compiled.\nWe anticipate initiating the BLA submission in mid-December.\nBased on this timing, we anticipate BLA approval by the FDA in late 2022 or early 2023.\nSecond, the FDA has granted orphan drug designation for AV7909.\nThis designation provides development incentives including a waiver of the BLA filing fee as well as potential seven-year marketing exclusivity upon regulatory approval.\nOn the R&D front we recently initiated our pivotal Phase three safety and immunogenicity study for our single dose chikungunya vaccine candidate.\nCHIKV VLP is the only virus-like particle based vaccine candidate currently in development for active immunization against chikungunya disease.\nThe study expects to enroll 3,150 participants in 50 US sites in the coming months.\nI'd like to congratulate the teams across our organization, who've made this significant milestone possible and who are advancing the development pipeline that will help fuel the long-term growth of the company.\nWe look forward to updating you on this program as we make progress.\nFinally, with the launch -- the potential launch of a few other Phase I studies anticipated over the next year, as well as continued progress across our auto-injector platform programs focused on chemical threats, I remain encouraged by the contribution of our R&D programs and the effect they could have on our growth in the coming years.\nMoving next to our CDMO business.\nI want to highlight that we continue to see growth in this area both related to the pandemic and beyond.\nWe continue to receive interest from both existing clients, and new prospects from small, mid and large-sized companies as well as governments and other organizations.\nImportantly, we're winning new business across all three service pillars of development services, drug substance and drug product including drug packaging.\nFor example, during the quarter we signed a new five-year agreement with Providence Therapeutics to support its mRNA vaccine development out of our Gaithersburg and Winnipeg facilities.\nBuilding off an existing agreement this new baseline agreement is valued at $90 million and uses portions of all three of our integrated service capabilities, demonstrating the value of our integrated molecule-to-market model for customers.\nWe will continue to cultivate growth, expansion and maturation of this core business.\nWith respect to NARCAN Nasal Spray, our focus on the public health threat posed by the opioid epidemic is as strong as ever.\nOur NARCAN team has worked tirelessly to ensure that NARCAN Nasal Spray is available and affordable as overdoses continue to devastate families and communities nationwide.\nWe remain committed to combating this crisis, not only through our work on NARCAN, but also through outreach efforts and public campaigns to elevate awareness of the dangers of opioids.\nOn the ongoing patent infringement litigation front, recall that the US Circuit Court of Appeals held final oral arguments on August two of this year.\nWhile timing is up to the appellate court we continue to believe a decision could come by the end of this year.\nImportantly, in the event of a generic entry we are prepared to launch an authorized generic product in partnership with a large generics company, and are confident in our ability to maintain significant market share.\nLonger term we see Narcan and more broadly our opioid-related portfolio a core component of our portfolio of solutions impacting public health.\nFinally, let me update two important corporate updates.\nFirst, I'm pleased to announce that we intend to publish our inaugural ESG or sustainability report later this month.\nThe report will provide insight into our environmental, social and governance practices.\nThese include: product quality and patient safety standards; our human capital and employee-focused programs; our existing charitable and volunteer programs; our work to safeguard the environment and health of our communities and employees; as well as our corporate governance and business ethics principles and practices.\nI also wanted to note that on a personnel front Mary Oates, previously our Head of Global Quality has decided to pursue a new career opportunity and has left Emergent.\nWe're conducting an external search for a new Head of Global Quality.\nIn the meantime, I'm confident, that our team of talented dedicated professionals will continue the important quality advancements made in the last several months.\nTo conclude our third quarter operational results demonstrate, that our business remains resilient and poised for growth, in line with our strategy.\nWe continue on our path of both organic opportunities and potential M&A informed by prudent capital deployment all aimed at generating enhanced shareholder value.\nI'll start on slide 10 and open my remarks with some summary thoughts to put today's earnings report into context.\nAs you just heard from Bob, solid execution in the third quarter continues to illustrate the strength and durability of our differentiated business.\nOur medical countermeasures platform was further reinforced by the ACAM2000 option exercise in July and the AV7909 contract modification on September 30.\nWe have restarted operations at Bayview and are helping J&J deliver on commitments related to their COVID-19 vaccine candidate.\nThe NARCAN Nasal Spray franchise is gaining momentum as we support the battle against the continuing public health crisis in opioids.\nWe are making steady progress building our CDMO business as evidenced by recent contract awards.\nAnd we are advancing our R&D programs, most notably with the recent launch of the chikungunya Phase III trial.\nHaving said that, there are clearly several topics that merit further explanation, starting with the primary drivers of our revised 2021 financial guidance as laid out on slide 11.\nThe biggest influence relates to our mutual agreement with the US government to terminate the CIADM contract and associated task orders.\nThis change will be partially offset by the recognition of $60 million in deferred revenue and other final payments related to the CIADM base agreement.\nYou'll also note that given continued strong momentum in NARCAN Nasal Spray, we increased the full year forecast range of that product by $95 million.\nAfter taking into account various other puts and takes, we have tightened the range of our total revenues which lowered the midpoint by $50 million.\nDuring the third quarter, following a review of our revenue recognition policy, we determined that it was appropriate to reclassify certain suite reservation fees from stand-ready obligations to leases and therefore to apply lease accounting guidance.\nYou will note that our income statement now has separate line items for CDMO services and CDMO leases.\nThis change should also allow you to better understand the underlying fundamentals of our CDMO service-related revenue.\nUnder the lease accounting guidance, based on uncertainty regarding collectability of the full contracted amount, we converted to a cash basis of accounting for the BARDA task order.\nAccordingly, in the third quarter we adjusted our revenue to align with the $315 million of cumulative cash collected under the BARDA task order from May 2020 through September 2021.\nLooking ahead to the fourth quarter, pursuant to the termination of the CIADM agreement, we expect to recognize $215 million of revenue, comprised of $155 million of task order closeout payments and the $60 million of deferred revenue and other I just discussed.\nTermination of the CIADM agreement also results in asset write-downs of approximately $38 million.\nSo we expect the net addition to pre-tax income in the fourth quarter related to this event to be approximately $177 million.\nDuring the quarter, our new business wins were $118 million, a very strong performance for the organization, primarily reflecting the impact of the Providence Therapeutics contract for COVID-related work.\nAs for backlog, the sequential change reflects the impact of the termination of the BARDA task order.\nRegarding the opportunity funnel, the period-to-period decrease reflects both the conversion of opportunities into secured business as well as two large contract opportunities that we did not win.\nOne is a company that decided to take the work in-house and the other is one that decided to defer the work to a future time.\nThat said, we continue to identify new leads and secure new business and this period-to-period fluctuation is not surprising as we pursue opportunities.\nLastly, gross margins and profitability.\nAs we have previously discussed, our gross margins are primarily driven by revenue mix across several dimensions: product sales proportion of products versus services and the types of services delivered.\nThe adjusted gross margins on our products continue to remain stable and consistent with historical patterns.\nOn the CDMO services side however, we are currently seeing several trends which are applying pressure to margins.\nThese include: lower capacity utilization for drug substance production at Bayview while it is solely dedicated to J&J's COVID-19 vaccine candidate; the additional investments we are making at Bayview in support of our quality enhancement plan; and higher raw material costs than originally anticipated.\nWhile these factors are currently producing CDMO gross margins below our expectations over time we anticipate that CDMO profitability will improve as we continue to grow our CDMO revenue base, increase network utilization drive a higher mix of drug substance manufacturing, realize scale efficiencies and improve productivity.\nWith that let's turn to the third quarter numbers.\nAs indicated on slide 12 highlights include total revenues of $329 million below the prior year period and our guidance principally due to the $86 million reversal of revenue for the BARDA task order I mentioned earlier.\nAnd adjusted negative -- adjusted EBITDA of negative $3 million and adjusted net loss of $19 million both significantly below the prior year period and due to a variety of factors which we will discuss in a moment.\nOther key items in the quarter include: NARCAN Nasal Spray sales were $133 million an increase over the prior year reflecting a clear continuation of this franchise's robust performance and driven by continued strong demand for this critical drug device combination product for opioid overdose reversal across both the retail and public interest channels in the United States as well as increased Canadian sales.\nACAM2000 sales were $81 million higher than the prior year due to timing of deliveries following our announcement in July of the US government's exercise of the second option under the existing 10-year procurement contract.\nAs we have stated previously we expect to complete all related deliveries under this option exercise by the end of 2021.\nAnthrax vaccine sales were $16 million lower than the prior year due to timing of deliveries as the modifications of the BARDA contract for AV7909 was not made until the last day of the quarter.\nOther product sales were $41 million consistent with the prior year.\nAnd CDMO revenues came in at $42 million lower than the prior year period due primarily to our move to cash basis revenue accounting for the BARDA task order and partially offset by $38 million in out-of-period adjustments related to our change in CDMO services revenue recognition policy which will be detailed in our 10-Q filing.\nLooking beyond revenue we are now breaking out cost of goods sold between product and CDMO services.\nProduct cost of goods sold in the quarter were $103 million a $17 million decrease from the prior year largely due to one-time charges in the prior year offset by increases in the current year due to higher product sales.\nCDMO cost of goods sold were $114 million an $86 million increase over the prior year reflecting the impact of out-of-period adjustments of $37 million as well as incremental costs at our Bayview facility as mentioned previously.\nGross R&D expense of $50 million lower than the prior year primarily reflecting a non-recurring $29 million impairment charge in the prior year.\nNet R&D expense of $33 million or 10% of adjusted revenue in line with the prior year.\nSG&A spend of $82 million or 25% of total revenues an increase over the prior year reflecting growth in headcount and professional services.\nAnd gross margin was 30% in the quarter.\nAs I mentioned earlier we are now providing two additional gross margin metrics.\nAdjusted product gross margin was 62% of product sales consistent with the prior period.\nAnd adjusted CDMO services gross margin was 10% lower than the prior period primarily reflecting the impact of increased operating costs at our Bayview facility and the implementation of our quality enhancement plan.\nTurning to slide 13 we will now review our key CDMO metrics.\nIn the third quarter we secured new business of $118 million reflecting robust demand for our services.\nAs of September 30 the rolling backlog was just over $1 billion a 9% decline from the second quarter reflecting the impact of the BARDA task order termination.\nAnd lastly as of September 30 the opportunity funnel was $284 million down from $672 million at June 30 as I said before primarily reflecting a significant new business win in the current quarter as well as the loss of two large opportunities.\nOn slide 14 you can see the sequential trends in these metrics over the last five reporting periods.\nWe look forward to making further progress in this important part of our business as we move forward from here.\nMoving on to slide 15, I'll touch on select balance sheet and cash flow highlights.\nWe ended the third quarter in a strong liquidity position, with $404 million in cash and undrawn revolver capacity of just under $600 million.\nOur net debt position was $454 million, and our ratio of net debt to trailing 12 month adjusted EBITDA was one times.\nOur year-to-date operating cash flow was negative $8 million, primarily reflecting timing of cash collections and increases in inventory balances.\nAdditionally, we reported cumulative year-to-date capital expenditures of $178 million.\nTotal revenue of $1.70 billion to $1.8 billion; NARCAN Nasal Spray sales of $400 million to $420 million; anthrax vaccine sales of $250 million to $260 million; ACAM2000 sales of $200 million to $220 million; and for the CDMO business we now anticipate a range of $600 million to $650 million.\nOur profitability guidance includes adjusted EBITDA of $500 million to $550 million and adjusted net income of $315 million to $350 million.\nThese include: no raxibacumab revenue this year; the naloxone market remains competitive with at least one new entrant this year, which we actually saw with a branded competitor coming on market in Q3; no generic entrant prior to the resolution of our patent litigation case, and the continued manufacturing of J&J's COVID-19 vaccine at Bayview.\nThe considerations that have been revised are as follows.\nWe have incorporated the financial implications of our mutual agreement to terminate the CIADM agreement and related task orders, including the expected payment in Q4 of the relevant agreed upon amounts.\nAnd the expected range of adjusted gross margin is now 54% to 56% taking into account both year-to-date performance and anticipated performance in the fourth quarter.\nOn a different note given the changes, we have seen in our business during the pandemic we've received a number of questions about what to expect from the business going forward.\nAs you know, our custom has been to provide a first look at annual guidance at the beginning of each calendar year once our budgeting process is complete.\nWe expect to maintain that practice for 2022, but I would like to offer a few thoughts on directional trends, so you can better understand the shape of the underlying business.\nIn terms of top line revenue, we haven't finished our budgeting process for 2022, but the current analyst consensus for total 2022 revenue directionally seems to be in line with our thinking.\nMore specifically, we anticipate that our medical countermeasures business will remain steady with high visibility provided by the long-term contracts, we currently have in place.\nThe opioid crisis has been worse than we anticipated when we acquired the program and as a result NARCAN Nasal Spray revenue has continued to exceed expectations.\nOf course, the question on everyone's mind is what will happen, if a generic competitor enters the market.\nMore than half of our market is in the public interest space and so not necessarily subject to the usual automatic switch for AB rated products.\nAnd for the remaining product markets as Bob said, we are prepared to launch an authorized generic in partnership with a large generics company.\nAll-in-all, we are confident that, it will continue to be a meaningful contributor to both our top and bottom line going forward.\nOn the travel health front, we are monitoring and calibrating our expenses to international travel conditions and do not anticipate meaningful revenue from our travel vaccines next year, although we are expecting upticks in travel following that.\nFor CDMO, we expect we will continue to support J&J out of our Bayview site, and build on the opportunities we see to serve customers from several of our other revenue-generating sites.\nIn terms of profitability, we are making investments in our manufacturing and quality systems that are putting pressure on our CDMO gross margins, but we expect these will continue to gradually improve over time.\nAnd we are taking a disciplined approach to managing our SG&A expenses, as we prepare for a return to stronger top line growth in 2023 and 2024.\nWith respect to R&D, we continue to invest in long-term value drivers as well as programs with non-dilutive funding, but we are balancing those investments with some anticipated portfolio rationalization.\nAs a result, we currently anticipate that these trends may constrain adjusted EBITDA margins to a level that is at or below, the ranges we saw in 2018 and 2019.\nWe will refine these views, and expect to provide more definitive information early in the New year.\nIn the third quarter of 2021 we continued to deliver solid performance in certain key aspects of our business.\nAnthrax vaccines, ACAM2000 and the rest of the core medical countermeasure products, the Narcan, Nasal Spray franchise as well as the new business wins in CDMO services.\nWe also experienced continued forward progress at scaling up the production capabilities at the Bayview site in support of J&J.\nAnd we realized an important pipeline milestone with the CHIK vaccine Phase three trial launch last month.\nWhile our guidance for this year has been revised a bit to reflect the termination of the CIADM agreement as well as current profitability trends in our CDMO business bringing the CIADM agreement to a conclusion was a clarifying step forward for the company.\nFinally, our conviction in the long-term growth potential of our business is as strong as it has ever been.\n", "role": "user" }, { "content": "qtrly total revenue $329 million versus $385.2 million.\nsees 2021 total adjusted net income of $315 million to $350 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: The fourth quarter showed once again that the global environment remains very dynamic, presenting new challenges that we've learned to turn into long-term opportunities.\nOur top line momentum reached 10% or 9% organic in a constrained environment.\nInstitutional and specialty grew 19%; pest elimination 10%; and industrial remained strong, growing 8% in the quarter, and our new business and innovation pipelines remain really strong.\nAt the same time, COVID came back during the fall, especially in North America and in Europe.\nAs we all know, inflation kept rising substantially and still, top line gain momentum, including pricing, which accelerated to 4% as we exited the quarter.\nThis was required to compensate for significant incremental costs from supply constraints and much high inflation pressure on our raw material and freight costs, discussed by close to 20% in the fourth quarter, nearly double the rate we saw in the third.\nAnd just being close to a total of $1 per share unfavorable impact for the full year with almost half of that in Q4 alone.\nSo once again, our team demonstrated our commitment to protect our customers' operations at all time and in any condition to ensure food, power, water, and healthcare supply are protected while we also keep enhancing our margins for the long run.\nWe now enter 2022 with confidence and well aware that the environment might change, but we will keep doing our very best to stay ahead.\nWe expect the global economy to remain strong even if not as a perfect straight line.\nThe exact timing for the end of COVID impact remains hard to predict, but we expect it to be mostly behind us by the middle of this year.\nWe also expect inflation to remain at a high level, at least for the first half of the year, while we expect it to ease during the second half, and we're getting ready for this, too.\nWe will keep driving growth by fueling the institutional recovery, which is going really well by generating strong new business by investing in our new growth engines like life sciences, data centers, or microelectronics.\nAnd by making sure we remain one of the very best places to work for the most promising and diverse global talent.\nWe'll keep addressing inflation by further enhancing our productivity through digital automation as we've done over the past few years by leveraging high-margin innovation and naturally by accelerating our value pricing.\nFor the full year '22, we expect raw materials and freight costs to further increase with inflation remaining high before it eased during the second half of the year.\nOur full year pricing expectation for '22 is expected to be in the 5 to 6% range, which combined with our steady productivity work is expected to get ahead of inflation dollar in the first half and enhanced margins in the second half of the year and certainly beyond as the Ecolab model has proven many times.\nAll these actions should lead to a strong '22 with strong top line and adjusted earnings growth in the low teens for the full year and a first quarter with very healthy sales growth and a flattish earnings per share as pricing keeps building fast.\nFinally, as we've done throughout the pandemic and against major market disruptions, we will remain focused on the future.\nFor us, it's all about delivering long-term value to our customers and to our shareholders, while managing the short term.\nOur mission of protecting people and the resources better to life is as important as it's ever been.\nOur opportunity has never been larger as we chase a global market that's today greater than $150 billion and growing fast.\nWe have the confidence that we will look back on this period and truly feel we did the right things the right way by protecting our teams and our customers when they needed us the most and by protecting our company in ways that made Ecolab even stronger and more relevant.\nAs the infection prevention company, helping customers protect their customers and their businesses with Ecolab Science Certified.\nAnd as the sustainability company, helping our customers progress on the net zero journey, all of which leading to strong top line and consistent, reliable double-digit earnings per share growth.\nAnd ultimately, getting us back on our pre-COVID earnings trajectory.\nThat concludes our formal remarks.\nAs a final note, before we begin Q&A, we plan to hold our annual tour of our booth at the National Restaurant Association show in Chicago on Monday, May 23.\nIf you have any questions, please contact my office.\nOperator, would you please begin the question-and-answer period?\n", "role": "user" }, { "content": "expect covid impacts to remain significant during first half of year.\nqtrly net sales $3,364.6 million versus $3,065.3 million.\nexpect inflation to remain high before it progressively eases during second half of year.\nexpect these cost impacts to remain especially strong in q1 of 2022, even slightly higher than those experienced in q4.\necolab - look for q1 to show healthy sales growth and flattish yoy earnings per share comparison impacted by continued high raw material and freight costs.\necolab - for 2022, believe cost efficiency actions will enable to deliver continued strong sales gains with adjusted earnings per share growth reaching low-teens levels.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 purpose of the call is to provide you with information regarding our third quarter 2021 performance in addition to our financial outlook for the balance of the year.\nOur commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends.\nThese measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.\nWith that, I'll hand it over to Ari.\nContinuing our positive momentum from last quarter, we once again surpassed our quarterly revenue and adjusted EBITDA targets.\nGiven the outperformance and our positive outlook for the balance of the year, we have also raised our full year outlook, which Jason will discuss in more detail shortly.\nBefore he does, I want to discuss three important things; UFC record performance year to date, the continuation of pent-up demand for entertainment, and the attractive prospects of sports betting.\nUFC posted its best nine-month year-to-date period in the 28-year history in terms of revenue and adjusted EBITDA, and this despite lower event output in the third quarter versus third quarter 2020.\nDuring the third quarter, UFC sold out all three Pay-Per-View events and UFC 264 became the third highest-grossing event in UFC history.\nGate revenues at all events were enhanced by our own VIP experience offering from our location that puts fans in the center of the action.\nMeanwhile, commercial Pay-Per-View saw the highest worldwide grossing revenue quarter since the pandemic began, driven in large part by the many US restaurants and bars starting to open in full capacity.\nWe also saw strong performances across our consumer products and licensing and sponsorship categories.\nUFC's sponsorship revenue is up 59% compared to third quarter 2019, the last non-COVID impacted year.\nWe're seeing similar sponsorship increases across the balance of our owned and operated sports and events portfolio.\nIn terms of international media rights, we've closed nine new deals throughout Asia Pacific during the period.\nIf you combine these nine with the prior five international rights deals we discussed last quarter, the aggregate average annual value is more than 80% over the prior deals.\nBeyond UFC, our businesses continue to benefit from the pent-up demand for entertainment created by the pandemic.\nWhile reopening rates continue to vary geographically, we are seeing increased activity across all lines of our business.\nLinear and digital platforms are in a race for more content, creating an uptick in television and film productions.\nAnd we have room for more optimism as Broadway recently reopened and music artists commencing multi-year tours in large venues.\nOn the sports side, fans are filling stadiums and sponsors are eager to spend dollars to reach those fans and make up for lost time.\nIf you look at Super Bowl 56, ticket sales from our location, they are pacing meaningfully ahead of 2019 sales for Super Bowl 54.\nThe average ticket price is up over 50% on a like-for-like basis.\nNow turning to sports betting, a fast-growing complement to sports media rights and live events.\nThe combination of the pandemic's role as a catalyst for online sports betting, the increased betting legalization among US states, and the opening of new territories globally has laid the foundation for further growth of our IMG Arena and soon to include OpenBet sports betting business.\nAs it currently stands, IMG Arena is part of our events, experiences, and rights segment, upon closing of our OpenBet acquisition, which we announced at the end of the third quarter, and which is expected to close in the first half of '22.\nIMG Arena and OpenBet will combine to form a fourth operating segment.\nThis will create greater transparency and enable us to better focus on this growing business.\nIMG Arena is already a major global player in the sports betting market, serving more than 470 sportsbook brands by supplying data and video feeds from rights holders including PGA Tour, UFC, ATP, and MLS.\nLayering in OpenBet's betting engine, which processed nearly 3 billion bets in 2020, and its modular suite of content offerings with IMG Arena's feeds and virtual products will create a unique end-to-end solution for sportsbooks and rights holders.\nIt's a fully integrated tech solution combined with a fan-first approach to content, a complete turnkey solution that we can take to existing rights holders within our broader media business is also making us more attractive to prospective clients.\nWe expect this integrated offering will help rights holders drive increased fan engagement and new modernization opportunities in turn increasing the sports betting handle.\nAs I mentioned, while we don't anticipate the acquisition to close until sometime in the first half of 2022, we've already received a high level of interest from sportsbooks and rights holders around the combined entity.\nAnd we are extremely encouraged by the growth opportunity ahead.\nBefore we get to our revised guidance, I'll start by walking you through our financial results for the quarter and providing you with some additional color around what we're seeing in each of our segments.\nAny comparisons I give will be in reference to last year, which was impacted by COVID.\nFor the quarter ended September 30, 2021, we generated approximately 1.4 billion in consolidated revenue, up 526.8 million or 60.9% over the prior-year period.\nAdjusted EBITDA for the quarter was approximately 283.3 million, up 105 million or 58.9%.\nOur own sports property segment generated revenue of 288.5 million in the quarter.\nThe segment is down 10.6 million in revenue in comparison to the prior-year quarter.\nThis is attributable in part to a 25 million contract termination fee recognized in the third quarter of 2020 that did not recur in 2021.\nIt is also due to more events being held in Q3 2020 as a result of events shifting from Q2 due to COVID-19.\nThe revenue decline was partially offset by UFC's continued strong growth across live events, residential and commercial Pay-Per-View, consumer products, licensing, and sponsorship, as well as additional PBR events held in the quarter.\nThe segment's adjusted EBITDA was 134.7 million.\nUFC posted its best nine-month year-to-date period in history in terms of revenue and adjusted EBITDA.\nOutside of its strong live event and Pay-Per-View performance, we signed several new licensing and sponsorship deals.\nThese included a partnership with Icon Meals, a healthy ready-made meals company, and multi-year sponsorships with Battle Motors and ZipRecruiter.\nInternationally, as Ari mentioned, we also secured nine new media rights deals in Asia Pacific, significantly increasing our distribution throughout the region.\nMeanwhile, live events on ESPN and ESPN+ continue to perform well with viewership across platforms.\nThe Return of The Ultimate Fighter also approved the tremendous success.\nViewership on ESPN+ indicates the season performed better than the last three seasons that aired on FOX Sports 1.\nOn the fan engagement front, where UFC continues to have one of the most engaged follower bases among all major US sports, social followers grew over 40% and YouTube subscribers grew over 30% year over year.\nLastly in this segment, PBR also continued its positive momentum, taking us right past streaming service to Pluto TV, bringing its linear and streaming content all under the ViacomCBS umbrella.\nThe company also signed several new national partnerships and licensing deals in the quarter and launched its first NFTs last month.\nNow turning to events, experiences, and rights.\nThis segment recorded revenue of 446.3 3 million, an increase of 62.1 million or 16.2% year over year.\nThe increase was primarily driven by greater events and production revenue attributable to the return of live events in 2021, as well as the addition of the recently acquired NCSA.\nThis was partially offset by a decrease in media rights revenues, primarily due to the return to a normal schedule of European soccer matches in the quarter and the expiration of two European soccer contracts in the second quarter of 2021.\nAdjusted EBITDA improved 94.6 million to 85 million compared to the third quarter of 2020.\nThis was primarily driven by the growth in revenue and a decrease in direct operating costs.\nTo give you a little color on the activity we're seeing in this segment, there were several major sporting events during the quarter in which the Endeavor flywheel was on full display.\nThe first was Wimbledon, a relationship that dates back over 50 years.\nIMG produced the events' official TV and radio channels, showed the tournament in flight on its Sport 24 channel, secured 80% of its official partnerships and brokered a deal to launch a commemorative NFT.\nAt The Open Golf Championship, IMG served as a host broadcaster and the official commercial representative for the event showed the event on Sport 24 and ran hospitality.\nMeanwhile, our experiential marketing agency 160over90 created the tournament's Spectator Village.\nAnd lastly, at September's Ryder Cup, our location handled all consumer travel and ticket exchange program for the event, while 160over90 operated consumer experiences and hospitality programs across the event footprint.\nIMG Arena packaged and delivered all official event data for sportsbook operators via its Golf Event Center and Sport 24 carried the event in flight.\nMeanwhile, dozens of clients competed across all three events including Novak Djokovic, who played the men's single title at Wimbledon, while Patrick Cantlay and Jordan Spieth helped power the US to win at the Ryder Cup.\nAcross the rest of our event portfolio, we held one of the largest New York Fashion Week ever and several of our European festivals hit milestones.\nThe big [Inaudible] celebrated its 10th anniversary with 50,000 attendees.\nAnd Taste of Paris saw record 32,000 guests attend the biggest food festival in France.\nAnd lastly, Frieze London returned with its first in-person event since 2019.\nWe saw most productions and touring events come to a halt due to COVID.\nGrowth in this segment was primarily attributed to a significant increase in Endeavor Content project deliveries, agency-client commissions, and marketing and experiential activations.\nEndeavor Content deliveries included See Season Two to Apple TV, Nine Perfect Strangers to Hulu in the US, and Amazon internationally.\nThe final four episodes each of Truth Be Told to Apple TV and The Wall Season Four to NBC, as well as docuseries McCartney 3,2,1 to Hulu.\nLast quarter, we referenced that Endeavor Content revenues were impacted by a shift in content deliveries into Q3, which subsequently had a positive impact on this quarter.\nAdjusted EBITDA for the quarter was 141.8 million, an increase of 100.1 million, primarily driven by the growth in revenue.\nAs mentioned last quarter, we continue to pace ahead on WME bookings for the second half of the year.\nAs concerts resumed in the quarter, WME have five of the six top tours and seven headliners at the Lollapalooza and Bonnaroo festivals.\nOn the film front, the agency was behind summer blockbusters such as Cruella, Jungle Cruise, A Quiet Place two, and Shang-Chi, the latter of which became the top-grossing film of the pandemic era in North America.\nOn the sports side, more than 50 clients competed in the Tokyo Olympics and nearly 20 broadcast clients covered it, while the men's, women's, and juniors' US Open singles titles were all won by clients.\nOn the brand side, IMG Licensing was named best licensing agency for its work with Goodyear and also launched a number of new product lines on behalf of talent and brands, including Shinola, Dolly Parton, Fortnite, Bugatti, Jeep, and Aston Martin.\nMeanwhile, 160over90 continued gaining steam with its brand clients looking to activate at major sporting events with increased fan capacities.\nAt the summer's Olympic Games, the agency worked with several official partners, including managing the athlete relationships for Team Visa and Team Coca-Cola.\nFinally, in this segment, we shared last quarter that we had initiated the sales process for a portion of Endeavor Content.\nAs a reminder, our plan is to divest the required portion of the WGA restricted business and retain the non-restricted businesses.\nWe continue to have positive conversations and are very bullish.\nWe've narrowed it down to a shortlist of potential buyers and we'll let you know when we have more to share on that front.\nThe updated guidance I'll share shortly assumes Endeavor Content is status quo for the balance of the year.\nNow before I discuss guidance, I do want to briefly touch on our capital structure.\nIn Q2, we paid down a portion of debt under WME, IMG, and UFC credit facilities.\nAnd in October, we raised 600 million of debt under our UFC facility.\nWe remain focused on strengthening our balance sheet and are on track to achieve or sub four times leverage target.\nNow on to our updated guidance for the full year 2021.\nAs we've said before and will continue to say, we believe looking at our business on an annual basis is the best way to view it given the quarterly fluctuations related to timing of events, timing of business transactions on behalf of our clients, and timing of content deliveries.\nAs Ari mentioned earlier, we've been pleased with the pace of reopening, which has led to an uptick in productions and increase in attendance at events.\nWe, of course, continue to monitor vaccination rates and variants globally and plan for any potential impact.\nAs it currently stands, we remain generally positive on our outlook for the remainder of the year and into next.\nWe are, therefore, once again raising our revenue guidance from a prior range of between 4.8 billion and 4.85 billion to now between 4.89 billion and 4.95 billion.\nAnd on adjusted EBITDA, we have raised the range from 765 million to 775 million to between 835 million and 845 million.\nAs a midpoint, this implies an over 17% margin, also in excess of our previous expectations.\nChris, can we take the first question, please?\n", "role": "user" }, { "content": "endeavor releases third quarter 2021 results.\nq3 revenue $1.4 billion.\nincreased 2021 revenue guidance to between $4.89 billion and $4.95 billion.\nincreased 2021 adjusted ebitda guidance to between $835 million and $845 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I am Dorian Hare.\nToday's call is being recorded.\nAn archive of the recording will be available later today in the Investor Relations section in the About Equifax tab on our website at www.\nCertain risk factors that may impact our business are set forth in our filings with the SEC under our 2020 Form 10-K and subsequent filings.\nAlso, we will be referring to certain non-GAAP financial measures, including adjusted earnings per share attributable to Equifax and adjusted EBITDA, which will be adjusted for certain items that affect the comparability of our underlying operational performance.\nWe continue to make the health and safety of our employees a top priority, and I hope that you and those close to you remain safe.\nTurning to Slide 4, and as I will cover in a moment, Equifax delivered an outstanding first quarter with record revenue and strong sequential growth versus fourth quarter.\nThe tremendous progress we have made, executing against our strategic priorities and building out our Equifax Cloud capabilities is allowing us to outperform our underlying markets and deliver outstanding revenue growth and margin expansion.\nIn U.S., where the economy is still recovering from the COVID pandemic more rapidly than we anticipated, we continue to outperform the overall mortgage market, which remains strong in the first quarter.\nWe're also seeing a real recovery and strong growth across our core banking, auto, insurance, government and talent business segments.\nFirst quarter was a great start to 2021.\nWe are energized by our strong momentum in pivoting to our next chapter of growth with the launch of EFX2023, our new strategic growth framework that will serve as our companywide compass over the next three years.\nWith our new Equifax Cloud foundation increasingly in place, we're focused on leveraging our new Equifax Cloud data in technology infrastructure to accelerate innovation, new products and growth.\nInnovation in new products will fuel our growth in 2021 and beyond as we leverage our new EFX cloud capabilities to bring new products and solutions and multidata insights to customers faster, more securely and more reliably.\nAs you know, we ramped our investments in product and innovation resources over the past 12 months to accelerate our new product roll outs, leveraging the new Equifax Cloud.\nOur highly unique and diverse data assets are at the heart of what creates Equifax's differentiation in the marketplace.\nWe have data assets at scale that our competitors do not have, including TWN, NCTUE, DataX, IXI and more, and we are committed to expanding and deepening these differentiated data assets through organic actions, partnerships and M&A.\nWe are also relentlessly focused on a customer first mentality, which moves us closer to our customers, with a focus on delivering solutions to help their -- help solve their problems and drive their growth.\nAnother critical lever of our strategy is to reinvest our accelerating free cash flow in smart, strategic and accretive bolt-on acquisitions, that both, expand and strengthen our capabilities with a goal of increasing our revenue growth by 1% to 2% annually from M&A.\nAnd data security is deeply embedded in our culture.\nWe have clearly established Equifax as an industry leader in data security.\nWorking together as one aligned global Equifax team, where we leverage our commercial strengths, our new products, and our capabilities across our EFX cloud global platform, will allow us to deliver solutions that only Equifax can bring to the marketplace.\nWe're energized around our new EFX2023 strategic priorities that will serve as our guide post over the next three years and support our new long-term growth framework that we plan to put in place later this year.\nTurning now to Slide 5, Equifax performance in the first quarter was very strong.\nRevenue at $1.2 billion was the strongest quarterly revenue in our history.\nIn first quarter, constant currency revenue growth was a very strong 25% with our organic growth at 23%, which was also an Equifax record.\nAs a reminder, we're coming off a solid 13% growth in first quarter last year.\nAll business units performed -- outperformed our expectations and we are seeing positive signs of a COVID recovery beginning to accelerate, particularly in the U.S.\nOur growth was again powered by our two U.S. B2B businesses, Workforce Solutions and USIS, with combined revenue up a very strong 38%.\nMortgage-related revenue remained robust, and importantly, our non-mortgage-related verticals grew organically by a very strong 16%.\nThe adjusted EBITDA margins of our U.S. B2B businesses were 52%, up 400 basis points with EWS delivering close to 60% margins.\nAs a reminder, Workforce Solutions and USIS are over 70% of Equifax revenue and 80% of Equifax business unit EBITDA.\nFirst quarter Equifax adjusted EBITDA totaled $431 million, up 36% with over 250 basis points of expansion in our margins to 35.6%.\nThis margin expansion was delivered while including all cloud technology transformation costs in our adjusted results, which negatively impacted first quarter adjusted EBITDA margins by over 300 basis points.\nExcluding cloud transformation costs, our margins would have been up over 500 basis points.\nWe are clearly getting strong leverage out of our revenue growth.\nAdjusted EBITDA -- adjusted earnings per share at a $1.97 per share was up a very strong 37% from last year, which was also impacted by the inclusion of cloud transformation costs.\nAdjusted earnings per share would have been $2.20 and up 54%, excluding these costs.\nWe continue to accelerate our EFX Cloud data and technology transformation in the quarter, including migrating an additional 2,000 customers to the cloud in the U.S. and approximately 1,000 customers Internationally.\nLeveraging our new EFX cloud infrastructure, we also continue to accelerate new product innovation.\nIn the first quarter, we released 39 new products, which is up from 35 launched a year ago in the first quarter, continuing the momentum from 2020 where we launched a record 134 new products.\nAnd we're seeing increased revenue generation from these new products, leveraging our new EFX Cloud.\nFor 2021, we expect our vitality index defined as revenue from new products introduced in the last three years to exceed 8%.\nThis is a 100 basis point improvement from the 7% guidance we provided on our vitality index back in February.\nAnd in that first quarter, we completed five strategic bolt-on acquisitions with a focus on identity and product capability through our acquisition of Kount and accelerating growth in Workforce Solutions with the acquisitions of HIREtech and i2Verify.\nAcquisitions that will broaden strength in Equifax are a strong lever for continuing to accelerate our growth and a big focus.\nWe're energized by our fast start to '21 and are clearly seeing the momentum of our only Equifax model leveraging our new EFX Cloud capabilities.\nOur first quarter results were substantially stronger than the guidance we provided in February with over 90% of the revenue outperformance delivered in our two U.S. B2B businesses, Workforce Solutions and USIS.\nImportantly, as we'll discuss in more detail shortly, over 60% of this outperformance in the U.S. B2B revenue was in our non-mortgage segments in both USIS and Workforce Solutions.\nNon-mortgage revenue strengthened consistently during the first quarter with March revenue up significantly versus February in both USIS and EWS.\nThis broad-based strength was above our expectations and gives us confidence about further strengthening in the second quarter and second half as the COVID recovery unfolds.\nMortgage revenue was also stronger than we expected despite the growth in U.S. mortgage market at 21% being slightly below our expectations from a slowing -- from slowing mortgage inquiries in late March, which have continued into April.\nOur continued strong mortgage results and outperformance was driven by Workforce Solutions with stronger market penetration, record growth and positive impact from new products.\nUSIS mortgage revenue also exceeded expectations slightly.\nThis stronger revenue delivered strong operating leverage with substantial improvement in our EBITDA margins and adjusted EPS.\nThe strength of our first quarter results in Workforce Solutions and in U.S. non-mortgage revenue across USIS and Workforce Solutions broadly gave us the confidence to substantially raise our 2021 guidance for both revenue and adjusted EPS.\nWe're increasing our revenue guidance by $225 million to a midpoint of $4.625 billion and increasing our adjusted earnings per share guidance by $0.55 a share to a midpoint of $6.90 per share.\nThis includes our expectation that the U.S. mortgage market for 2021 as measured by credit inquiries will decline more in our February guidance of down 5% to a decline of approximately 8%.\nOur framework assumes that the mortgage market slows primarily in the third and fourth quarter, which is consistent with our prior guidance.\nAnd John will discuss our mortgage assumptions in more detail in a few minutes.\nTurning to Slide 6, our outstanding first quarter results were broad-based and reflect better than expected performance from all four business units.\nWorkforce Solutions had another exceptional quarter, delivering 59% revenue growth and almost 60% adjusted EBITDA margins.\nWorkforce Solutions is now our largest business, representing almost 40% of total Equifax revenue in the fourth quarter and is clearly powering our results.\nVerification Services revenue of $385 million was up a strong 75%.\nVerification Service mortgage revenue again more than doubled for the fourth consecutive quarter, growing almost a 100 percentage points faster than the 20% underlying growth we saw in the mortgage market credit inquiries in the first quarter.\nImportantly, Verification Services non-mortgage revenue was up over 25% in the quarter.\nThis segment of Verification Services continues to expand its market coverage and benefit from NPIs, new records, new use cases and is a long-term growth lever for Workforce Solutions.\nTalent Solutions, which represents over 30% of verifier non-mortgage revenue almost doubled, driven by both new products and a recovery in U.S. hiring.\nGovernment solutions, which represents almost 40% of verifier non-mortgage revenue also returned to growth driven by greater usage in multiple states of our differentiated data.\nAs a reminder, we continue to work closely with a social security administration on our new contract that we expect to go live in the second half and ramp to $40 million to $50 million of incremental revenue at run rate in 2022.\nOur non-mortgage consumer business, principally in banking and auto, also showed strong growth in the quarter as well, both from deepening penetration with new lenders and from some recovery in those markets that I'll cover more fully in the discussion of USIS.\nDebt management, which now represents under 10% of verifier non-mortgage revenue was, as we expected, down versus last year, but is stabilized and we expect to see growth in that vertical as we move through 2021.\nEmployer Services revenue of $96 million increased 17% in the quarter, driven again by our unemployment claims business which add revenue of $47 million, up around 47% compared to last year.\nIn the first quarter, Workforce Solution processed about $2.8 million UC claims, which is up from $2.6 million in the fourth quarter.\nEWS processed roughly one in three U.S. initial unemployment claims in the quarter, which was up from one in five that they had been processing in recent periods, reflecting the growth in Workforce Solutions UC market position.\nAs a reminder, we continue to expect UC claims revenue to decline sequentially in the second quarter and throughout the balance of 2021 as the U.S. economy recovers and job losses dissipate.\nWe currently expect a decline in the second quarter UC revenue of about 45% versus last year and a full year 2021 decline in UC claims revenue of just under 30%.\nEmployer Services non-UC businesses had revenue down slightly in the quarter.\nOur I-9 business driven by our new I-9 Anywhere solution continued to show very strong growth with revenue up 15%.\nOur I-9 business is expected to continue to grow substantially to become our largest Employer Services business in 2021 and represent about 40% of non-UC revenue.\nReflecting the growth in I-9 and the return to growth of workforce analytics, we expect Employer Services non-UC businesses to deliver organic growth of over 20% in 2021.\nThe HIREtech and i2Verify acquisitions that we closed in March had a de minimis impact on revenue in the quarter, but will add -- will further add to Workforce Solutions growth during the rest of '21.\nI'll discuss both HIREtech and i2Verify a little bit later.\nReflecting the power and uniqueness of TWN data, strong verifier revenue growth and operating leverage resulted in adjusted EBITDA margins of 59.3% and almost 800 basis point expansion from last year in Workforce Solutions.\nRudy Ploder and the Workforce Solutions team delivered another outstanding quarter and are position to deliver a strong 2021.\nWorkforce Solutions is clearly Equifax' largest and fastest growing business.\nUSIS revenue was up a very strong 19% in the quarter with organic growth also a strong 17%.\nTotal USIS mortgage revenue growth of $177 million was up 25% in the quarter, while mortgage credit inquiry growth up 21%, was slightly below the 24% expectation we shared in February.\nAs I mentioned, John will cover our updated view of the mortgage market for 2021 in a few minutes.\nUSIS mortgage revenue outgrew the market by 500 basis points in the quarter, driven by growth in marketing and new debt monitoring products.\nNon-mortgage revenue performance was very strong with growth of 15% and organic growth of 11%, which is a record for USIS, and off a fairly strong first quarter last year.\nWe view this outperformance by U.S. as meaningful and a reflection of the competitiveness and commercial focus of the USIS team.\nImportantly, non-mortgage online revenue grew a very strong 16% in the quarter with organic growth of almost 11%.\nWe saw non-mortgage revenue growth accelerate in February and March as vaccine rollouts increased and financial institutions gain confidence in the consumer and the economy.\nBanking, auto, ID and fraud, insurance and direct to consumer all showed growth in the quarter which is encouraging as move into second quarter and the rest of 2021.\nCommercial was about flat, while only telco was down in the quarter as we expected.\nFinancial Marketing Services revenue, which is broadly speaking our offline or batch business was $53 million in the quarter, up almost 12%, which is also very positive.\nThe performance was driven by marketing related revenue, which was up over 20% and ID and fraud revenue growth of just under 10% as consumer marketing and originations ramped up.\nIn 2021, marketing-related revenue is expected to represent about 45% of FMS revenue with identity and fraud about 20% and risk decisioning about 30%.\nThis strong growth across our non-mortgage businesses, including strong growth in marketing-specific offline revenue is very encouraging for both the recovery of our underlying markets and our non-mortgage performance as we move into second quarter and the rest of 2021.\nThe USIS team continues to drive growth in their new deal pipeline with first quarter pipeline up 30% over last year, driven by growth in both the volume and the size of new opportunities and NPI roll outs.\nFirst quarter win rates were also higher than levels seen in 2020.\nSid Singh and as USIS team continue to be on offense and are competitive in winning in their marketplace.\nIn addition to driving core business growth in the first quarter, USIS achieved an important strategic milestone in closing the acquisition of Kount, an industry leader in providing AI-driven fraud prevention and digital identity solutions.\nIntegration efforts are now under way with a key focus on technology and product, leveraging the joint Equifax and Kount data and capabilities.\nKount's technology platform will migrate to the Equifax Cloud in the next 12 to 18 months, which will allow for the full integration of Kount and Equifax capabilities for new solutions, new products and market expansion in the fast growing identity and fraud marketplace.\nUSIS adjusted EBITDA margins of 42.9% in the first quarter were down about 180 basis points from last year.\nAbout two-thirds of the decline was due to the inclusion of tech transformation costs in our adjusted EBITDA in 2021.\nThe remainder of the decline was principally driven by the higher mix of mortgage products and redundant system costs from our cloud transformation.\nMoving now to International, their revenue was up 3% on a constant currency basis in the quarter, which is the second consecutive quarter of growth in our global markets, but are still very challenged by COVID lockdowns and slow vaccine roll outs.\nRevenue growth improved significantly in Canada, Asia Pacific, which is our Australian business and Latin America.\nThis was partially offset by revenue declines in the U.K., principally due to continued U.K. lockdowns in response to the COVID pandemic.\nAsia-Pacific, which is principally our Australia business had a very good performance in the first quarter with revenue of $87 million, up 7% in local currency.\nAustralia consumer revenue continues to improve relative to prior quarters and was down only about 2% versus last year compared to down 5% in the fourth quarter.\nOur Commercial business combined online and offline revenue was up a strong 9% in the quarter, a solid improvement from fourth quarter.\nAnd fraud and identity was up 15% in the quarter following strong performance in the fourth quarter.\nEuropean revenues of $69 billion were down 5% in local currency in the first quarter.\nOur European credit business was down about 5% in local currency.\nSpain revenue was down about 1%, while the U.K. was down about 6% in local currency similar to the fourth quarter from continued challenging COVID environments.\nOur European debt management business revenue declined by about 4% in local currency in the quarter.\nBoth, the CRA and debt management businesses were impacted in the quarter by actions taken by the U.K. government to curtail debt placements in response to the pandemic resurgence in the United Kingdom.\nAs the lockdown and other actions lift in April and May, we anticipate improvements in U.K. CRA revenue in the second quarter and improvements in debt management revenue in the second half of 2021 as collection activity restarts in the latter part of the second quarter.\nLatin American revenues of $42 million grew about 1% in the quarter in local currency, which was an improvement from the down 1% we saw in the fourth quarter.\nThese markets also continue to be heavily impacted negatively by continued COVID lockdowns and slow vaccine rollouts.\nWe continue to see the benefit in LatAm of strong new product introductions over the past three years, which is benefiting their top line.\nCanada delivered record revenue of $44 million in the quarter, up about 13% in local currency.\nConsumer online was up about 3% in the quarter, an improvement from the fourth quarter.\nImproving growth in commercial, analytical and decision solutions and ID and fraud also drove growth in Canadian revenue in the first quarter.\nInternational adjusted EBITDA margins at 28.2% were down 30 basis points from last year.\nExcluding the impact of the tech transformation cost that we've included in adjusted EBITDA, margins were up about 200 basis points.\nThis improvement was principally due to revenue growth and operating leverage, partially offset by redundant system costs from our cloud transformation.\nGlobal Consumer Solutions revenue was down 16% on a reported basis and 17% on a local currency basis in the quarter and slightly better than our expectations.\nWe saw better than expected performance in our global consumer direct business, which sells directly to consumers through equifax.com and myEquifax and which represents about half of total GCS revenue.\nDirect-to-consumer revenue was up a strong 11% in the quarter, the third consecutive quarter of growth.\nDecline in overall GC revenue in the quarter was again driven by our U.S. lead generation partner business, which has been significantly impacted from COVID beginning in mid-2020.\nAs we discussed, we expect a decline in total GCS revenue from our partner vertical to moderate substantially as we move into the second quarter and return to growth in the fourth quarter of 2021.\nGCS adjusted EBITDA margins of 24.6% were up about 150 basis points.\nWe expect margins to be pressured to around 20% in the second quarter, reflecting planned cost to complete the migration of our consumer direct business, cloud transformations in the U.S., U.K. and Canada through our new Equifax cloud platform.\nMoving to Slide 7, this chart provides updated view of Equifax core revenue growth.\nAs a reminder, core revenue growth is defined as Equifax revenue growth excluding number one, the extra revenue growth in our UC claims business in '20 and '21, and number two, the impact on revenue from U.S. mortgage market activity as measured by changes in total U.S. mortgage market credit inquiries.\nCore revenue growth is our attempt to provide a more normalized view of Equifax revenue growth excluding these unusual UC and U.S. mortgage market factors.\nIn the first quarter, Equifax core revenue growth, the green section of the bars on Slide 7, was up a very strong 20%, reflecting the broad-based growth across Equifax and this is up significantly from the 11% core revenue growth we delivered in the fourth quarter and well above our historic core growth rates.\nWorkforce Solutions and USIS have continue to strongly outperform the mortgage market.\nThe 16% organic growth in U.S. B2B non-mortgage revenue also drove our core revenue growth.\nImportantly, our core revenue growth has accelerated over the past five quarters from 5% in first quarter of 2020 to 11% in the fourth quarter of last year and to 20% this quarter, reflecting the strength and resiliency of our broad-based business model, power of Workforce Solutions, the market competitiveness of USIS and benefits from our cloud Equifax -- our cloud data and technology investments and our increasing focus on leveraging the cloud for innovation in new products.\nAs you know, the strong growth is in the midst of a global market that is still recovering from the COVID pandemic.\nTurning to Slide 8, Workforce Solutions continues to power Equifax and clearly is our strongest and more valuable and largest business.\nWorkforce Solutions revenue grew a very strong 59% in the first quarter with core revenue growth accelerating to 46%.\nAs a reminder, the 59% growth is of 32% growth in first quarter of 2020.\nThe strong outperformance and sequential improvement reflects the power of the unique TWN database and Workforce Solutions business model.\nAt the end of the first quarter, the TWN database reached 115 million active users and 90 million unique records, an increase of 9% or 10 million active records from a year ago.\nAnd as a reminder, over 60% of our records are contributed directly by employers that Workforce Solution provides employer services like, UC claims, W-2 management, I-9, WOTC, and other solutions too.\nAnd we've built these relationships over -- with these -- with our customers and contributors over the past decade.\nThe Remaining 35% are contributed through partnerships, most of which were exclusive.\nThe major payroll processor agreement that we announced on our February call is still on track to go live later this year, which will add to our TWN database.\nAnd we have a dedicated team, as you know, focused on growing our TWN database, with an active pipeline of record additions to continue to expand our TWN database.\nThe Workforce Solution team continues to focus on expanding the number of mortgage companies and financial institutions with which we have real time, system- to-system integrations, which, as you know, drives increased usage of our TWN data.\nThe team is also focused on extending our offerings into card and auto verticals, as well as across our growing government vertical.\nAnd as I mentioned earlier, we continue to work closely with the SSA, and expect to go live with our new solution in the second half of this year, which will deliver $40 million to $50 million of incremental revenue and run rate in 2022.\nThe Workforce Solutions new product pipeline is also rapidly expanding as our teams leverage the power of our new Equifax Cloud infrastructure.\nWe are anticipating new products in mortgage, talent solutions, government, and I-9 in 2021.\nNew product revenue will increase in '21 and '22, as we begin to reap the benefits of our new products introduced to the market during last year and in 2021.\nRudy Ploder and the Workforce Solutions team have multiple levers for growth in '21, '22 and beyond.\nWorkforce Solutions are most -- Workforce Solutions is our most valuable business and will continue to power our results in the future.\nSlide 9 highlights the ongoing exceptional core growth performance in mortgage for our U.S. B2B business -- mortgage businesses Workforce Solutions and USIS.\nWorkforce and USIS outgrew the underlying U.S. mortgage market again in first quarter, with combined core growth of 48%, up from 37% in 2020, and in line with the 49% growth they delivered in the fourth quarter -- 49% core growth.\nThis outperformance was driven strongly by Workforce Solutions with core mortgage growth of 99%.\nConsistent with past quarters, Workforce Solutions outperformance was driven by new records, increased market penetration, larger fulfillment rates, and new products, proof that lenders are increasingly becoming reliant on the unique TWN income and employment data when making credit decisions.\nUSIS delivered 5% core mortgage revenue growth in the quarter, driven primarily by new debt monitoring solutions with further support from marketing.\nOur ability to substantially outgrow all of our underlying markets is core to our business model and core to our future growth.\nAs Mark referenced earlier, U.S. mortgage market inquiries remained very strong in 1Q '21 and up 21%, but that growth was slightly lower than the 24% we had expected when we provided guidance in early February.\nAs shown in the left side of Slide 10, as mortgage rates increased over the past few months and refinancing activity continues, the number of U.S. mortgages that could benefit from a refinancing has declined to about $30 million.\nAlthough, still very strong by historic standards, this is down from the levels we saw in 4Q '20 and early 1Q '21.\nBased upon our most recent data from 4Q 2020, mortgage refinancings were continuing at about $1 million per month.\nAs shown on the right side of Slide 10, the pace of existing home purchases continues at historically very high levels.\nThis strong purchase market is expected to continue throughout '21 and into '22.\nBased on these trends and specifically the reduction in the pool of mortgages that would benefit from refinancing, we are reducing our expectation for the mortgage market financing activity in 2021.\nAs shown on Slide 11, we now expect mortgage credit inquiries to be about flat in 2Q '21 versus 2Q '20, and to be down about 25% in the second half of '21 as compared to the second half of '20.\nOverall, for 2021, we expect mortgage market credit inquiries to be down approximately 8%.\nThis compares to the down approximately 5% we discussed with you in February.\nSlide 12 provides our guidance for 2Q '21.\nWe expect revenue in the range of -- revenue in the range of $1.14 billion to $1.16 billion, reflecting revenue growth of about 16% to 18%, including a 2.1% benefit from FX.\nAcquisitions are positively impacting revenue by 2%.\nWe are expecting adjusted earnings per share in 2Q '21 to be $1.60 to $1.70 per share compared to 2Q '20 adjusted earnings per share of $1.63 per share.\nIn 2Q '21, technology transformation costs are expected to be around $44 million or $0.27 per share.\nExcluding these costs that were excluded from 2Q '20 adjusted EPS, 2Q '21 adjusted earnings per share would be $1.87 to $1.97 per share, up 15% to 21% from 2Q '20.\nThis performance was being delivered in the context of the U.S. mortgage market, which is expected to be flat versus 2Q '20.\nSlide 13 provides the specifics on our 2021 full year guidance.\nWe are increasing guidance substantially, despite the expectation of a weaker U.S. mortgage market.\n2021 revenue of between $4.575 billion and $4.675 billion reflects revenue growth of about 11% to 13% versus 2020, including a 1.4% benefit from FX.\nAcquisitions are positively impacting revenue by 1.7%.\nEWS is expected to deliver over 20% revenue growth with continued very strong growth in Verification Services.\nUSIS revenue is expected to be up mid to high single-digits, driven by growth in non-mortgage.\nInternational revenue is expected to deliver constant currency growth in the upper single-digits and GCS revenue is expected to be down mid-single-digits in 2021.\n2Q '21 revenue was also expected to be down mid-single-digits for GCS.\nAs a reminder, in 2021, Equifax is including all cloud technology transformation costs and adjusted operating income, adjusted EBITDA and adjusted EPS.\nThese one time costs were excluded from adjusted operating income, adjusted EBITDA and adjusted earnings per share through 2020.\nIn 2021, Equifax expects to incur one-time cloud technology transformation costs of approximately $145 million, a reduction of about 60% from the $358 million incurred in 2020.\nThe inclusion in 2021 of this about $145 million in one-time costs would reduce adjusted earnings per share by $0.91 per share.\nThis is consistent with our guidance for 2021 that we gave in February.\n2021 adjusted earnings per share of $6.75 to $7.05 per share which includes these tech transformation costs is down approximately 3% to up 1% from 2020.\nExcluding the impact of tech transformation costs of $0.91 per share, adjusted earnings per share in 2021 which show growth of about 10% to 14% versus 2020.\n2021 is also negatively impacted by redundant system costs of about -- of over $65 million relative to 2020.\nThese redundant system costs are expected to negatively impact adjusted earnings per share by approximately $0.40 a share.\nSlide 14 provides a view of Equifax total and core revenue growth from 2019 through 2021.\nCore revenue growth excludes the impact of movements in the mortgage market on Equifax revenue as well as the impact of changes in our UC claims business within our EWS Employer Services business, and also the employee retention credit revenue from our recently acquired HIREtech business.\nEmployee retention credits are specific U.S. government incentives for companies to retain their employees in response to COVID-19 and the associated revenue is not expected to continue into 2022.\nThe data shown for 2Q '21 and full year 2021 reflects the midpoint of guidance ranges we provided.\nIn 1Q '21, we delivered very strong core revenue growth of 20% and expect to continue to deliver strong core revenue growth in 2Q '21 of about 20%,and 16% for all of 2021.\nThis very strong performance, we believe, positions us well entering 2022 and beyond.\nAnd now I'd like to hand it back over to Mark.\nTurning to Slide 15, this highlights our continued focus on new product innovation, which is a critical component of our next chapter of growth as we leverage the Equifax Cloud for innovation in new products and growth.\nWe continue to focus on transforming Equifax into a product-led organization, leveraging our best-in-class Equifax Cloud Native Data and Technology to fuel top-line growth.\nIn the first quarter, we delivered 39 new products, which is up from the 35 we delivered last year.\nWe are encouraged by this continued strong performance, especially following the record 135 new products we delivered last year.\nWe wanted to highlight some of these new products, which we expect to drive revenue in '21 and beyond.\nFirst, Insight Score for credit card launched by USIS provides the credit card industry with a specific credit risk score created using credit and alternative data that predicts a likelihood of a consumer becoming 90 days past due or more within 24 months of origination.\nUSIS also launched a new commercial real estate tenant risk assessment product suite, which provides real time and unmatched data analytics and risk assessment or tenants buildings in portfolio strength delivered through an interactive Ignite Marketplace app or as a stand-alone report.\nAnd Workforce Solutions continues to expand its suite of products focused on the government vertical.\nTheir government enhanced solutions social, Social Services Verification product gives the ability for the customer to choose the desired period of employment history with options ranging from three months, six months, one year or three years or the full employment history.\nThese products help government agencies quickly and efficiently administer federally -- federal supplement -- supplementary nutrition, child health insurance, medicaid, Medicare benefits, many child support and ensure program integrity.\nIn the first quarter, over two-thirds of our new products launched or in development leveraged our new Equifax cloud-based global product platforms.\nThis enables significant synergies and efficiencies in how we build the new products, our speed to bring the products to market and our ability to move the new products easily to our global markets.\nOur new cloud-based Luminate platform for fraud management is a great example which is launching in Canada and the U.S. simultaneously and will soon launch in the United Kingdom, Australia and India.\nThis would have taken much longer and been much more expensive in a legacy environment.\nWe're also rolling out our Equifax cloud-based Interconnect and Ignite platforms for marketing and risk and decisioning and management products throughout Latin America, Europe, Canada as well as the United States.\nAs we discussed on our call in February, we're focused on leveraging our new cloud capabilities to increase NPI rollouts and new product revenue growth in '21 and beyond.\nAs a reminder, our NPI revenue is defined as the revenue delivered by new products launched over the past three years and our vitality index is defined as the percentage of current year revenue delivered by NPI revenue.\nAs I mentioned earlier, we've increased our 2021 vitality index guidance from 7% by a 100 basis points to 8% as you can see from the left side of the slide is significant is a significant increase from about 500 basis points in 2020.\nNPIs are a big priority for me and the team as we leverage the Equifax Cloud for innovation, new products and growth.\nTurning to Slide 16, M&A plays an important role in our growth strategy and will be central to our long-term growth framework.\nOur team is focused on building an active pipeline of bolt-on targets that will both broaden and strengthen Equifax.\nOur M&A strategy centers on acquiring accretive and strategic companies that add unique data assets, new capabilities, deliver expansion into identity and fraud or expand our geographic footprint.\nIn the first quarter, we closed five acquisitions totaling $866 million across strategic focus areas of identity and fraud, Workforce Solutions, open data and SME.\nWe discussed three of these transactions with you in February which were the acquisitions of Kount, AccountScore and Creditworks.\nAs I just discussed earlier, we're excited excited about expanding opportunities we see from the combined Kount and Equifax in the fast growing identity and fraud marketplace.\nIn March, we closed two Workforce Solutions bolt-on transactions HIREtech and i2verify, which will further broaden and strengthen our Workforce Solutions business.\nHIREtech is a Houston-based company that provides employee-related tax credit services as well as verification services.\nHIREtech also has unique channel relationships to provide these services through payroll providers, consulting firms and CPA firms.\nI2verify is a Newburyport Massachusetts-based company that provides secure digital verifications of income and employment services.\nThe company has a unique nationwide set of record contributing employers with concentrations in the healthcare and education sectors.\ni2verify also brings unique records to the TWN database, which are contributed by direct relationships.\nYou should expect Equifax to continue to make acquisitions in these strategic growth areas that offer unique data and analytics to our customers with the goal of increasing our top line by 100 to 200 basis points annually from M&A.\nBefore wrapping up, I want to speak to you about an area of significant focus at Equifax and importance to me personally.\nSlide 17 provides an overview of Equifax's ESG strategy and how it helps position us for long-term sustainability.\nI hope you saw and had a chance to read our annual report letter that highlighted our increased focus on ESG.\nFirst, Equifax plays an important role in helping consumers live their financial best.\nA primary example of this is that our alternative data assets such as utility and phone payment data provide lenders with a better picture of the approximately 30 million U.S. individuals who do not have traditional credit files or access to the formal financial system.\nI've also made advancing, inclusion and diversity, a personal priority since I joined Equifax.\nBelieving that diversity of thought leads to better decisions, we're taking clear steps to broaden diversity at Equifax, including the last three directors added to our Board are diverse and all seven individuals who have added to my senior leadership team since I joined three years ago have also been diverse.\nWe're carrying out this focus on inclusion and diversity across Equifax.\nWe're also focused on environment -- on our environmental impact in our greenhouse gas print.\nOur cloud transformation will move our existing legacy technology infrastructure to the cloud which will dramatically reduce our environmental impact as we leverage the efficiencies and carbon-neutral infrastructure at our cloud service providers.\nOver the course of this year we -- over the course of last year we decommissioned six data centers, over 6,800 legacy data assets and over 1,000 legacy applications.\nWe have a detailed program under way to baseline our energy usage and benefits from our cloud transformation as we work toward a commitment regarding carbon emissions and a net-zero footprint.\nWe're also committed to be an industry leaders regarding security.\nWith the leadership of our CSO, Jamil Farshchi, our culture puts security first.\nAll employees are required to take a mandatory security focused training sessions every year.\nAnd all of our 4,000 bonus eligible employees have a security goal in their annual MBOs.\nWe believe -- we also believe in sharing our security protocols and strategies with our partners, customers and competitors to collaborate to keep us all safe.\nIn 2020, we hosted our inaugural Customer Security Summit where we detailed our progress on security transformation and discussed advancements in supply chain and security.\nAs threats continue to involve, we remain highly focused on continuing to advance our security efforts.\nWrapping up on Slide 18, Equifax delivered a record setting first quarter and we have a strong momentum as we move into second quarter in 2021.\nOur 27% overall and 20% core growth in first quarter reflects the strength and resiliency of our business model, while still operating in a challenging COVID environment.\nWe've now delivered five consecutive quarters of sequentially improving double-digit growth.\nWe're confident in our outlook for 2021.\nAnd as John described, are raising our full year midpoint revenue by 500 basis points to $4.625 billion and our earnings per share midpoint by 9% to $6.90 a share.\nOur revised revenue estimate of 12% growth in 2021 at the midpoint of the range off a very strong 17% in 2020, reflects the resiliency, strength and momentum of the EFX business model.\nOur increased 2021 growth framework incorporated our expectation as John discussed that the U.S. mortgage market will decline about 8% in 2021 and while operating in a still recovering COVID economy.\nOur expectation for core revenue growth of 16% in 2021 reflects how our EFX 2023 strategic priorities are delivering.\nWorkforce Solutions had another outstanding quarter of 59% growth and will continue to power Equifax operating performance throughout 2021 and beyond.\nThe Work Number is our most differentiated data assets and Workforce Solutions is our most valuable business.\nRudy Ploder and his team are driving outsized growth by focusing on their key levers, new records, new products, penetration and expansion in the new verticals with our differentiated TWN database.\nUSIS also delivered an outstanding quarter of 19% growth, highlighted by non-mortgage revenue growth of 15% and 11% organic non-mortgage growth.\nWe expect our non-mortgage growth to accelerate as the U.S. economy recovers.\nThe acquisition of Kount is providing new opportunities and products in the rapidly expanding identity and fraud marketplace and USIS continues to outperform the mortgage market from new products, pricing and increased penetration.\nUSIS is clearly competitive and winning in the marketplace and will continue to deliver in '21 and beyond.\nInternational grew in the first quarter for the second consecutive quarter, overcoming economic headwinds from significant COVID lockdowns and slower vaccine rollouts in our global markets.\nOur expectations are high for ongoing sequential improvement in International during 2021 and for accelerating growth as their underlying markets recover from the COVID pandemic.\nWe're also making strong progress rolling out our new EFX Cloud technology and data infrastructure and remain confident as John described in the significant top line cost and cash benefits of our new EFX Cloud capabilities.\nThese financial benefits will ramp as we move through 2021 and continue to grow in 2022 and are enabled by our always on stability, speed to market and ability to rapidly build new products around the globe.\nOur strong performance -- operating performance is allowing us to continue to accelerate investments in new products, leveraging our new Equifax Cloud capabilities.\nAnd we're off to a strong start in 2021 with 39 NPIs in the first quarter, on top of the record 134 we launched in 2020.\nAnd our strong outperformance is fueling our cash generation, which is allowing us to reinvest in accretive and strategic bolt-on acquisitions.\nAs discussed earlier, we closed five acquisitions in strategic growth areas in the first quarter and we have an active M&A pipeline.\nWe look for bolt-on acquisitions that will strengthen our technology and data assets and that are financially accretive with the goal of adding 100 to 200 basis points to our top line growth rate in the future.\nI'm energized about what the future holds for Equifax.\nWe have strong momentum across all of our businesses as we move in the second quarter.\nWe're on offense and positioned to bring new and unique solutions to our customers that only Equifax can deliver, leveraging our new EFX Cloud capabilities and our strong results and the increased guidance that we provided reflect that.\n", "role": "user" }, { "content": "compname posts q1 adjusted earnings per share $1.97.\nq1 adjusted earnings per share $1.97.\nreported revenue of $1,213.0 million in q1 of 2021, up 27 percent compared to q1 of 2020.\nsees q2 2021 adjusted earnings per share $1.60 -$1.70.\nsees fy 2021 adjusted earnings per share $6.75 to $7.05.\nsees fy 2021 revenue $4.575 billion to $4.675 billion.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I am Dorian Hare.\nToday's call is being recorded.\nAn archive of the recording will be available later today on the IR Calendar Section of the News & Events tab at our IR website www.\nThese materials are labeled Q2 2021 earnings conference call.\nCertain risk factors that may impact our business are set forth in our filings with the SEC including our 2020 Form 10-K and subsequent filings.\nAlso, we will be referring to certain non-GAAP financial measures, including adjusted earnings per share attributable to Equifax and adjusted EBITDA, which will be adjusted for certain items that affect the comparability of our underlying operational performance.\nBefore I address Equifax's strong second quarter results, I want to recognize our 11,000 associates around the globe for their continued hard work and dedication in these challenging times.\nOur team members are our most important asset and they play a vital role in helping millions of consumers around the world to get access to credit.\nOn July one, we opened all of our U.S. offices fully, and rolled out our new Equifax Flex program, a hybrid working environment that gives our team the opportunity to work-from-home one day per week.\nOur full one program recognizes our learnings from the past year around remote work during COVID, but maintains the core of our Equifax culture of collaboration and teamwork that is optimized by an in-person work environment.\nWe've also resumed in-person meetings with our customers, and I've been energized with the conversations that have taken place so far.\nIt's great to be moving back to a new normal.\nWe had a very strong second quarter and first half, which built off our strong outperformance in 2020.\nOur team has executed extremely well against the critical priorities of our new Equifax 2023 strategy, which has shown on Slide 4.\nWe are accelerating new product introductions, beginning to leverage our expanding Equifax Cloud capabilities and our highly differentiated data assets.\nWe continue to expand our differentiated data assets, both organically and through acquisitions and partnerships.\nWhile still in the early days, our new Equifax Cloud Data and Technology capabilities are providing competitive advantages and capabilities that only Equifax can provide.\nAnd our Customer First initiatives are deepening our relationships with customers and delivering new products and solutions along with above-market Equifax growth.\nAnd as always, we remain focused on extending our leadership in security.\nOur EFX2023 growth strategy is our compass for the future and drives all of our growth initiatives as we move through the second half and into '22 and beyond.\nWe expect this focus to drive our top-line and bottom-line in the future.\nTurning now to Slide 5.\nEquifax's financial performance in the second quarter was very strong and outperformed our underlying markets.\nRevenue at $1.235 billion was the highest quarterly revenue in our history, breaking the record from last quarter.\nLocal currency revenue growth of 23% and organic local currency growth of 20% were both very strong in some of the highest growth rates in our history.\nOur U.S. B2B businesses, our Workforce Solutions and USIS, which together represent over 70% of our revenue, again drove our overall growth delivering very strong 25% total and 22% organic revenue growth despite the headwinds from the mortgage market that declined about 5%.\nThe 5% decline in the mortgage market was about 500 basis points more than our flat expectation we shared with you in April.\nU.S. B2B organic non-mortgage growth of 20% accelerated sequentially from the 16% we delivered in the first quarter.\nThe 20% organic growth is also a record and reflects the underlying strength of Workforce Solutions and USIS has returned to a competitive position.\nI'll cover the business performance rather performance in detail in a moment.\nBut at a high level, Workforce Solutions again led Equifax growth with revenue up a strong 40%.\nAnd as a reminder, this is off growth of 53% in second quarter last year and the mortgage market that declined 5% in the quarter.\nUSIS delivered another strong quarter with revenue up 11%, driven by non-mortgage total revenue growth of over 20% and strong organic revenue growth of 14%.\nInternational delivered a very strong quarter of COVID recovery with revenue growth of 25% in local currency and importantly all regions internationally delivered growth about 20%.\nSlightly better than expected GCS revenue was down 3% in local currency.\nHowever, our consumer-direct revenue delivered 11% growth in the quarter, its second consecutive quarter in double-digits.\nSecond quarter Equifax adjusted EBITDA totaled $431 million, up 20% with margins of 34.9%.\nMargins were down a 160 basis points versus last year due to the inclusion of the cloud technology transformation costs in our adjusted results in 2021, which were excluded last year.\nThis negatively impacted second quarter adjusted EBITDA margins by 310 basis points.\nAdjusting for cloud transformation costs of $38 million in the quarter, our margins would have been up a strong 150 basis points.\nWe are getting strong leverage out of our above market revenue growth.\nAdjusted earnings per share of $1.98 per share was up a strong 21% from last year.\nAgain, adjusting for the cloud transformation costs, adjusted earnings per share would have been up a very strong 36%, reflecting the strong performance in operating leverage of Equifax.\nDuring the quarter, we continue to make significant progress with the Equifax Cloud Data and Technology transformation, including an additional 7,700 customer migrations to the Cloud in the United States and more than 900 migrations internationally.\nWe remain on track with our Cloud transformation and are confident in our plan.\nWe continue to expect the North American transformation to be principally complete in early 2022 with the remaining customer migrations completed by the end of next year.\nInternational transformation will follow North America being principally completed by the end of 2023.\nAnd as you know, last year, we started to ramp-up our focus and resources on new products, leveraging the new Equifax Cloud Data and Capabilities.\nIn the second quarter, we released 46 new products, which is up almost 2x from the 24 products we released a year ago in the quarter.\nThese new products are increasingly leveraging the new Equifax Cloud to deliver better data and decisioning for our customers.\nDriving NPIs leveraging the new Equifax Cloud is central to our EFX2023 growth strategy.\nAnd we continue to expect our vitality index defined as revenue from new products introduced in the last three years to exceed 8%, a big step-up from the 5% last year and a reflection of the strong product focus across EFX.\nOur first half performance exceeded our expectations and we are clearly seeing continued strong momentum as we move into the second half.\nBased on our strong first half results and confidence in the future, we increased our full year revenue guidance by a $155 million to a midpoint of $4.78 billion, which is up 400 basis points to 16% growth.\nWe also increased our full year adjusted earnings per share guidance by $0.45 per share to a midpoint of $7.35 per share which adjusting for the technology transformation costs is up 700 basis points to 19% growth.\nThis includes our expectation that the U.S. mortgage market as measured by credit inquiries will decline approximately 8% in the year, which is consistent with the guidance we provided in April.\nIn the second quarter, Equifax core revenue growth, the green section of the bars on Slide 6 accelerated to 29%.\nThis is up significantly from the 20% core revenue contribution we delivered in the first quarter and 11% in the fourth quarter and well above our historical core growth rates.\nWhile our outperformance in the mortgage market continues to drive significant core growth, the contribution from U.S. non-mortgage in International increased significantly in the quarter, reflecting approximately 50% of core revenue growth in the quarter, excluding acquisitions and FX favorability.\nTurning now to Slide 7.\nOur strong second quarter results were broad-based and reflect better than expected performance for all four Equifax business units.\nWorkforce Solutions, our largest business had another exceptional quarter, delivering 40% revenue growth and 58% adjusted EBITDA margins.\nAgain as a reminder, the 40% revenue growth is on top of 53% growth last year in the second quarter.\nEWS is cementing itself is our largest and most valuable business and is powering our results, representing 40% of total Equifax revenue in the quarter.\nEWS Verification Services revenue of $395 million was up a strong 57%.\nVerification Services mortgage revenue grew 52% in the quarter, despite the 5% decline in the mortgage market from increased records, penetration and new products.\nImportantly, Verification Services non-mortgage revenue was up over 60% in the quarter and up over 15% sequentially from the first quarter.\nOur government vertical, which provide solutions to federal and state governments in support of assistance programs including food and rental support grew over 10% in the quarter.\nGovernment remains one of our largest non-mortgage segments, representing about a third of non-mortgage verification revenue.\nWe continue to expand our products and solutions in the government vertical and expect our new Social Security Administration contract to go live this quarter with revenue ramping to a $40 million to $50 million run-rate in 2022.\nTalent Solutions, which arise income and employment verifications as well as other information for the hiring and on-boarding process through our EWS Data Hub had another outstanding quarter from customer expansion and NPIs, growing over 200%.\nTalent Solutions now represents almost 30% of non-mortgage verification revenue.\nBuilding out the EWS Data Hub that leverages the work history in our TWN database with other unique data elements used in the hiring process is a priority for us.\nOver 75 million people changed jobs in the U.S. annually, with the vast majority having some level of screening as a part of that hiring process.\nOur non-mortgage consumer business, principally in Banking and Auto showed strong growth of about 50% in the quarter as well, though from deepening penetration with lenders and some recovery in these markets.\nDebt management also returned to growth in the quarter.\nEmployer Services revenue of a $101 million was about flat in the quarter as expected.\nCombined, our unemployment claims and employee retention credit businesses had revenue of about $64 million, down over 15% from last year.\nSubstantial declines in UC revenue in the second quarter were partially offset by new ERC revenue that began in the quarter as we support businesses and obtaining federal employee retention credit payments.\nEmployer Services non-UC and ERC businesses had revenue up over 50% in the quarter.\nOur I-9 business driven by our new I-9 Anywhere product, continue to show very strong growth, up over 50%.\nOur I-9 business is now almost half of Employer Services non-UC and ERC revenue.\nReflecting on the growth in I-9 and the return to growth of workforce analytics, we expect Employer Services non-UC and ERC businesses to deliver organic growth of over 20% for the year.\nReflecting the power and uniqueness of between dataset, strong verified revenue growth and operating leverage resulted in adjusted EWS EBITDA margins of 58%, a 160 basis point expansion from last year.\nExcluding Technology Transformation expenses, EWS margins would have been up over 240 basis points.\nRudy Ploder and EWS team delivered another outstanding quarter and are position to deliver a very strong 2021.\nWorkforce Solutions is our most powerful and unique business and is powering Equifax results would grow substantially above the rest of the company.\nTurning now to USIS.\nThey had another strong quarter with revenue up 11%, driven by strong performance across the business.\nTotal USIS mortgage revenue of a $160 million was down about 2% in the quarter, while mortgage inquiries were down 5%, a little bit flat expectation we shared in April.\nJohn will cover our updated view of the mortgage market shortly.\nUSIS mortgage revenue outgrew the market by over 300 basis points, driven by growth in marketing and debt monitoring products.\nImportantly, non-mortgage revenue performance was up 21% with strong organic growth of 14%.\nThis performance reflects the commercial focus of Sid Singh and his team and their competitive position in the marketplace.\nImportantly, organic non-mortgage revenue also delivered strong sequential growth, acceleration of 250 basis points from the first quarter's 11%, an important indicator of the continued strengthening of the USIS business.\nBanking and Insurance both grew over 20% in the quarter.\nAuto and Direct-to-Consumer were both up over 10% and Telecom and Commercial were just about flat in the quarter.\nFinancial Marketing Services revenue, which is broadly speaking, our offline or batch business was $59 million in the quarter and up about 14%.\nThe strong performance was driven by marketing related revenue, which was up over 20% and ID and fraud revenue growth of over 15% as consumer marketing and originations ramped up coming out of COVID.\nIn 2021, marketing related revenue is expected to represent about 40% of FMS revenue, identity and fraud about 20% and risk decisioning about 35%.\nThis strong growth across our non-mortgage business is encouraging as we move into the third quarter and the rest of 2021.\nThe USIS new deal pipeline remains very strong and comparable to the strong levels we've seen so far in 2021.\nWe have seen the highest growth in auto, financial services and mortgage.\nUSIS adjusted EBITDA margins were 40.3% in the quarter, the decline of 380 basis points from second quarter last year was principally due to the costs related with Cloud transformation.\nBoth the cost of redundant systems and the inclusion in our adjusted results of the technology transformation costs, which were being excluded in 2020.\nSales and marketing expenses also increased in the quarter and sequentially to leverage both the stronger U.S. markets and increased NPI rollouts to drive growth.\nShifting now to International.\nTheir revenue was up a strong 25% on a local currency basis, which is a third consecutive quarter of growth in our global markets.\nRevenue growth was up over 20% in all of our markets in Canada, Asia Pacific, Latin America and Europe.\nAsia-Pacific, which is principally our Australia business had a very strong quarter with revenue up $91 million or up about 21% in local currency.\nAustralia consumer revenue turned positive and was up 23% versus last year and up about 2% sequentially.\nOur Commercial business combined online and offline, revenue was up a very strong 26% in the quarter and almost 18%, up almost 18% sequentially.\nFraud and identity was up 30% in the quarter, following 15% growth in the first quarter.\nEuropean revenues of $68 million were up 27% in local currency in the quarter.\nOur European credit reporting business was up about 20% with strong growth in both the UK and Spain.\nIn UK, which is our largest European market, we saw growth of over 25% in consumer, data analytics and scores and over 40% growth in commercial.\nOur European debt management business revenue increased about 30% in local currency off the lows we saw in the second quarter last year during the COVID recession.\nCanada delivered record setting revenue of $47 million in the quarter, up about 26% in local currency.\nConsumer online was up about 26% in the quarter, an improvement of 12 percentage points from the first quarter.\nDouble-digit growth in commercial, analytical and decision solutions and ID and fraud also drove growth in the Canadian revenue in the quarter.\nLatin American revenues of $44 million, grew 30% in the quarter in local currency, which was the second consecutive quarter of growth coming out of COVID.\nWe continue to see the benefits in Latin America of the strong new product introductions, the team has rolled out over the past three years.\nInternational adjusted EBITDA margins of 27.3% were up 540 basis points from last year, driven by leverage on revenue growth and continued very good cost control by the international team.\nExcluding the impact of the inclusion of the technology transformation costs in adjusted EBITDA, margins were up over 750 basis points.\nGlobal Consumer Solutions revenue was down 2% on a reported basis and 3% on a local currency basis in the quarter and slightly above our expectations.\nWe again saw strong double-digit growth in our global consumer direct business, which sells direct-to-consumers through equifax.com and which represents a little over half of GCS revenue.\nDirect-to-Consumer revenue was up a strong 11% in the quarter, their fourth consecutive quarter of growth.\nThe decline in overall GCS revenue in the second quarter was again driven by our U.S. lead generation partner business.\nWe expect the GCS partner business and GCS business overall to return to growth in the fourth quarter.\nGCS adjusted EBITDA margins of 22.5% were up just about a 170 basis points, which was better than our expectations.\nTurning now to Slide 8.\nWorkforce Solutions continues to power Equifax and is clearly our strongest fastest growing and most valuable business.\nWorkforce Solutions revenue grew a very strong 40% in the quarter, with core revenue growth of 46%.\nAnd again the 40% growth in the quarter was on top of 53% growth in the second quarter last year.\nThis above market performance is driven by the uniqueness of the TWN income and employment data, the scale of the TWN database and the consistent execution by Rudy and his team.\nAt the end of the second quarter, TWN reached a 119 million active records, an increase of 13% or 14 million records from a year ago and included 91 million unique records.\nAt 91 million unique, we now have over 60% of non-farm payrolls, which makes our TWN dataset we're valuable to our customers by delivering higher hit rates.\nBeyond focusing on adding the over 50 million non-farm payroll records not in the TWN database yet, we're also focused on adding data records from the 40 million to 50 million gig workers and around 30 million pension recipients in the United States marketplace to further broaden the TWN database.\nWe have plenty of room to grow.\nWe are now receiving contributions from 1.2 million companies across the U.S., up from 27,000 employers a short two plus years ago.\nAnd as a reminder, over 60% of our records are contributed directly by employers that EWS provides comprehensive employer services to like unemployment claims, W-2 management, I-9, WOTC, Employee Retention Credit, HSA and other HR in compliance-related solutions.\nThese relationships have been built up over the past decade by the Workforce Solutions team.\nThe remaining 35% are contributed through partnerships with payroll providers in HR software companies, most of which are exclusive.\nThe exclusive arrangement with a major payroll processor that we announced on our February call is still on track to become active later this year.\nWe have a dedicated team with an active pipeline of record additions to continue to expand our TWN database in the future.\nAnd as you know, as we add records to the dataset, they're monetized almost instantly with our customer system-to-system integrations interacting with our TWN database.\nWorkforce Solutions continues to grow, penetration in key existing markets while expanding into new markets.\nWe continue to increase our penetration in the mortgage market.\nAs of the most recent data available at the end of 2020, Workforce Solutions received an inquiry in almost 60% of completed U.S. mortgages, which is up from 55% in 2019.\nThis 500 basis point increase shows a continuation of growth in TWN mortgage penetration as well as the substantial opportunity for continued growth at existed mortgage with only 60% of mortgages using TWN data today.\nWe're also seeing substantial growth in TWN in the non-credit markets of government and Talent Solutions as well as increased TWN usage within the card and auto verticals.\nAs we discussed in the past, growing system-to-system integrations is a key lever in driving both increased penetration and the increased number of polls per transaction for Workforce Solutions.\nDuring the quarter, about 75% of TWN mortgage transactions were fulfilled system-to-system, which was up 2x from the 32% in 2019.\nThe Workforce Solutions new product pipeline is also rapidly expanding, as our teams leveraged the power of our new Equifax Cloud infrastructure.\nWe plan to roll-out new products in mortgage Talent Solutions government and I-9 in the second half of the year.\nNew product revenue will increase in '21 and '22 as we begin to reap the benefits of our new products introduced in the market by Workforce Solutions in the past 18 months.\nRudy in the Workforce Solutions team had multiple levers for growth in '21, '22 and beyond.\nWorkforce is clearly our largest and most valuable business and will continue to power our results in the future.\nWorkforce Solutions growth rates and margins are highly accretive to Equifax now and in the future.\nSlide 9 provides perspective on the tremendous growth Workforce has delivered since 2017 and the increasing impact of the business has on Equifax with its highly accretive revenue growth rates and margins.\nIn 2017, Workforce Solutions revenue and EBITDA made up 23% of Equifax revenue and 27% of business unit EBITDA.\nFor the first half of '21, Workforce Solutions revenue and EBITDA have increased to 40% of Equifax revenue and over half of Equifax business unit EBITDA.\nIn a short four years, Workforce Solutions has more than doubled in size and is now almost 50% in the first half versus the same period last year.\nIt is up almost 50% in the first half versus same period last year.\nOur unique TWN employment in income assets and the continued expansion of employment-related assets within the Equifax Data Hub provides opportunities for both ongoing outsized growth in Equifax's traditional financial markets of mortgage, banking, auto as well as a substantial growth in new verticals in government talent solution others to come.\nWe expect that Workforce Solutions will continue to be an increasingly large part of Equifax and power our top and bottom-line with the above-market growth in margins.\nTurning to Slide 10.\nThis provides a perspective on the return to growth USIS delivered since 2018.\nUSIS has delivered strong double-digit revenue growth over the past six quarters.\nThe strong mortgage market has advantage USIS as shown in the bottom left of the slide, USIS has driven consistent sequential improvement in non-mortgage growth in second quarter last year, with the overall growth in USIS being driven by 18% non-mortgage growth in the first half of 2021.\nUSIS team is also increasingly leveraging the Equifax Cloud to design and implement new NPIs for customers.\nThe Equifax Cloud new products in our unique data assets are making USIS teams more competitive in the marketplace.\nAnd the USIS team is focused on integrating count in the new Equifax Cloud, we're seeing increased used cases in opportunities with our ID and fraud vertical from the count acquisition.\nWe expect ID and fraud to play a large role in USIS growth in 2021 and beyond.\nTurning to Slide 11.\nThis highlights the core growth performance in our mortgage for our U.S. B2B businesses, Workforce Solutions and USIS.\nOur U.S. B2B businesses delivered a combined 25% revenue growth in mortgage in the second quarter, which was 30 point stronger than the 5% mortgage decline we saw in overall mortgage market.\nThe strong outperformance was again primarily driven by Workforce Solutions with core mortgage growth of 57%.\nConsistent with past quarters, EWS's outperformance was driven by new records, increased market penetration, larger fulfillment rates and new products.\nProof that lenders are increasingly becoming reliant on the unique TWN income and employment data on making credit decisions in the mortgage space.\nUSIS delivered 4% core mortgage revenue growth in the second quarter, driven primarily by new debt monitoring solutions and further support from marketing.\nOur ability to substantially outgrow underlying markets is core to our business model and core to our future growth.\nAs Mark discussed, our Q2 results were very much stronger than we discussed with you in April, with revenue about $85 million higher than the midpoint of the expectations we shared.\nFor perspective, all we used performed well relative to the expectations we shared.\nPerformance in non-mortgage in our U.S. businesses Workforce and USIS was very strong in absolute terms, and relative to the expectations we shared.\nOur unemployment claims and employee retention credit businesses in Workforce Solutions declined in the quarter, but much less than expected.\nInternational revenue performance was also very strong, again both in absolute terms, and relative to our expectations.\nAnd although the mortgage market was down 5% versus our expectation of flat, our mortgage revenue principally in Workforce was not impacted to the same degree.\nThis strong revenue drove the upside in adjusted earnings per share relative to the expectations we shared.\nNow, turning to mortgage.\nAs shown on Slide 12, U.S. mortgage market credit increase declined 5% in 2Q'21, weaker than the about flat we had included in our guidance.\nOur financial guidance for 2021 assumes that the trend in mortgage credit increase we saw in late June and July continues in 3Q'21 resulting in a decline of mortgage market credit increase of about 23% in 3Q'21 versus 3Q'20.\nAlthough our second half '21 market credit inquiry assumptions are down significantly from the second half of '20, they remained above the average as we saw prior to 2020.\nAs shown in the left side of Slide 13, mortgage market indicators remain above the peak seen in previous mortgage cycles.\nDespite the substantial refinance activity that has occurred over the past year, the number of U.S. mortgages that could benefit from a refinancing remains at a relatively strong level of about $12 million.\nRefinance activity continues to benefit from low and recently declining mortgage rates and a substantial appreciation in home prices over the past year.\nBased upon our most recent data from January, mortgage refinancings continue to run just under 1 million per month.\nAs shown on the right side of Slide 13, the pace of existing home purchases continues at historically very high levels.\nThe strong new purchase market is expected to continue throughout 2021 and into 2022.\nSlide 14 provides our guidance for 3Q'21.\nWe expect revenue in the range of $1.160 billion to $1.180 billion, reflecting revenue growth of about 9% to 11%, including a 1% benefit from FX.\nAcquisitions are positively impacting revenue by 1.8%.\nWe're expecting adjusted earnings per share in 3Q'21 to be $1.62 to $1.72 per share compared to 3Q'20 adjusted earnings per share of $1.91 per share.\nIn 3Q'21, technology transformation costs are expected to be around $40 million or $0.25 a share.\nExcluding these costs, which were excluded from 3Q'20 adjusted EPS, 3Q'21 adjusted earnings per share would be $1.87 to $1.97 per share.\nThis performance is being delivered in the context of the U.S. mortgage market, which is expected to be down 23% versus 3Q' 20.\nComparing the midpoint of our 3Q'21 guidance sequentially to our very strong 2Q'21 performance, revenue is down about $65 million.\nThe drivers of this decline are two main factors.\nThe largest factor is a decline in mortgage revenue driven by the impact of the expectation we shared regarding the decline in the U.S. mortgage market.\nThe other significant factor is our expectation that we'll see a significant sequential decline in unemployment claims revenue.\nOur guidance for adjusted earnings per share declines about $0.30 per share sequentially.\nThe bulk of this decline is driven by lower gross profit and the revenue expectation I just discussed.\nIn addition, we are increasing investment sequentially in sales and marketing, particularly in the U.S. as well as increasing investment in product and technology.\nSlide 15 provides the specifics on our 2021 full-year guidance.\nWe are increasing guidance substantially, reflecting our very strong 2Q'21 performance.\nIn the second half of 2021, we expect strong growth in our U.S. non-mortgage business and international and a return to growth in GCS.\nWe also expect our U.S. mortgage business to grow about 15% in 2021 over 20 points faster than we expected approximately 8% decline in the U.S. mortgage market.\n2021 revenue of between $4.76 billion and $4.8 billion reflects revenue growth of about 15% to 16% versus 2020, including the 1.5% benefit from FX.\nAcquisitions are positively impacting revenue by 1.9%.\nEWS is expected to deliver about 30% revenue growth with continued very strong growth in Verification Services.\nUSIS revenue is expected to be up mid to high single-digits, driven by growth in non-mortgage.\nInternational revenue is expected to deliver constant currency growth of about 10% and GCS revenue is expected to be down mid single-digits in 2021.\n3Q'21 revenue is also expected to be down mid single-digits, with 4Q'21 revenue returning to growth.\nAs a reminder, in 2021, Equifax is including all technology transformation costs in adjusted operating income, adjusted EBITDA and adjusted EPS.\nThese one-time costs were excluded from adjusted operating income, adjusted EBITDA and adjusted earnings per share in 2017 through 2020.\nIn 2021, Equifax expects to incur one-time Cloud technology transformation costs of approximately a $155 million, a reduction of over 55% from the $358 million incurred in 2020.\nThe inclusion in 2021 of this about a $155 million and one-time costs would reduce adjusted earnings per share by about $0.97 per share.\nThis estimate of one-time technology transformation costs is up $10 million from a $145 million we guided in April.\nGiven our very strong performance in 2021, we are investing to accelerate our tech transformation globally.\n2021 adjusted earnings per share of $7.25 to $7.45 per share which includes these tech transformation costs is up 4% to 7% from 2020.\nExcluding the impact of the tech transformation cost of $0.97 per share, adjusted earnings per share in 2021 which show growth of about 18% to 21% versus 2020.\n2021 is also negatively impacted by the redundant system costs of $79 million related to 2020.\nThese redundant system costs are expected to negatively impact adjusted earnings per share by about $0.49 per share and negatively impact adjusted earnings per share growth by about 7 percentage points.\nSlide 16 provides a view of Equifax total and core revenue growth that is included in our current guidance.\nCore revenue growth excludes the impact of movements in the mortgage market and Equifax revenue as well as the impact of changes in our UC claims and employee retention credit businesses within our Employer Services business.\nEmployee retention credits are specific U.S. government incentives for companies to retain their employees in response to COVID-19 and the associated revenue is not expected to continue into 2022.\nThe data shown for 3Q'21 and full year 2021 reflects the midpoint of the guidance ranges we provided.\nIn 1Q'21 and 2Q'21, we delivered very strong core revenue growth of 20% and 29% respectively.\nWe continue to deliver strong core revenue growth in 3Q'21 of 17% and 19% for all of 2021 in our expectations.\nAs Mark mentioned earlier, the composition of our core revenue growth is becoming more balanced, reflecting substantially increasing contributions from U.S. non-mortgage, international and as we enter 4Q'21 GCS.\nAnd we continue to expect our mortgage business to grow at that rates faster than the overall mortgage market.\nThis very strong performance we believe positions us well entering 2022 and beyond.\nAnd now, I'd like to hand it back to Mark.\nTurning now to Slide 17.\nAs I referenced earlier, pricing in our technology teams continue to make very strong progress on our new Equifax Cloud Data and Technology Transformation, with the North American technology transformation expected to be principally complete in early '22 and the remainder of North America transformation and customer migrations completing by the end of next year.\nAnd our international transformation following North America being principally complete by the end of 2023.\nEquifax's transformation to a Cloud native environment delivers a host of capabilities that only Equifax can provide as the only cloud native data and technology company.\nThe Equifax Cloud will deliver always on stability, accelerate response time and built in industry-leading security.\nIt will provide our customers with real-time access to data and insights that they can rely on to make decisions.\nThe Equifax Cloud through our Ignite analytics platform, where our customers and Equifax data scientists to work together utilizing EFX unique data assets and customer proprietary assets to define attributes and models to improve customer outcomes.\nAnd we will continue to accelerate the time from analytics to production to bring new products and solutions to market faster and more efficiently enhancing customer benefits and Equifax revenue.\nAlready the Equifax Cloud is enabled us to produce new products designed and delivered on our Cloud infrastructure four times faster in the past.\nWe began to leverage these cloud benefits in 2020, as we more effectively developed new products and delivered them to market leveraging the new EFX cloud, growing new product introductions by 44% last year, in 2020.\nThese new improvements have been further accelerated in 2021 as we are delivering the highest number of new products in our history and we are realizing higher revenue from new product introductions.\nSlide 18 provides an update on NPIs, a key driver of our current and future revenue growth.\nAs we just discussed, the new cloud transformation is significantly strengthened our NPI capabilities, allowing us to increase both the number of NPIs and the revenue generated from new products.\nWe continue to expand our product resources and focus on transforming Equifax into a product led organization, leveraging our best-in-class Equifax cloud native data and technology to fuel top-line growth.\nAs I discussed earlier in the second quarter, we delivered 46 new products, which is up about almost 2x from the 24 we delivered last year.\nYear-to-date, we've rolled out 85 new products, which is up 44% from the 59 that we delivered in the first half last year.\nWe're energized as we continue to grow off an NPI record-setting 2020.\nWe want to highlight some of these products rolled out during the quarter, which we expect to drive revenue growth over the second half and the next few years.\nOur new payment Insights products launched by USIS in April was delivered in partnership with Urjanet and uses consumer permission utility in telco data to improve use of customers, consumers' financial picture and help credit invisibles.\nThe cloud-based solution promotes greater financial inclusion regardless of the consumers' traditional credit score by empowering consumers to show utility in telco payment history with banks or lenders when applying for loans or other services.\nThe product also allows lenders to seamlessly integrate data into review processes while meeting industry leading standards for protection of consumer data security, confidentiality and integrity.\nWorkforce Solution launched a new mortgage 36 product in May.\nThis solution addresses income verification needs by enabling mortgage lenders to pull an extended set of both active and inactive income in employment data for a more complex income mortgage applicants were additional history may be needed in the underwriting process.\nEWS also launched a new talent report employment staffing product in April.\nThis solution provides flexibility on the number of past employers pulled to meet the employment verification needs of the employer.\nStaffing agencies leveraged VOE as a reference check was often looking to verify only to employers, which this product helps deliver.\nIn the United Kingdom, we launched the credit vitality view app.\nThis Ignite-based app visualizes key credit data trends across the UK versus a company's own performance.\nIt uses a range of macroeconomic measures and includes filtering capability, so our customers can focus on the performance of their own portfolio and product lines such as mortgages or credit cards.\nThe app also can illustrate these company and market trends over multiple years.\nLastly, we introduced the Equifax Affordability Solutions in Australia New Zealand.\nThese solutions deliver automated categorized income and expense verification in a way that delivers meaningful and actionable insights for our customers.\nOur customers can easily digest and act on these insights through the delivery of comprehensive consumer affordability reports, which are now required from a regulatory standpoint in these markets.\nThis new solution will reduce loan application processing timing cost, improve conversion rates and maximize efficiency while fulfilling responsible lending regulatory requirements, delivering overall improvements to the consumer experience.\nThese are just some examples of the new solutions we launched during the quarter.\nWe're focused on leveraging our new cloud capabilities to increase NPI rollouts and new product revenue in 2021 and beyond.\nGrowing NPIs is central to our EFX2023 growth strategy.\nAnd as a reminder, our vitality index is defined as the percentage of revenue delivered by NPIs launched during the past three years.\nIn April, we increased our vitality index outlook for 2021 from 7% to 8% and we remain confident in this framework for 2021.\nAs you can see from the left of the slide, our 8% vitality outlook for 2021 is a big step forward from the 5% vitality we delivered last year.\nNPIs are a big priority for me and the team as we leverage the Equifax Cloud for innovation new products and growth.\nSlide 19 showcases the capabilities we've been building over the past three years that only Equifax can bring to the marketplace.\nWe have unique market-leading differentiated data at scale that includes our 228 million ACRO credit records, 119 million TWN income and employment records and additional data at scale that comes from our alternative datasets, including Kount and CTUE, PayNet, IXI and others.\nOur advanced analytics allow us to build and test attributes faster, leverage artificial intelligence and machine learning, and developing models in days and weeks where used to take months.\nOur team of 320 data scientists located around the world are leveraging our advanced analytics in Equifax Cloud native infrastructure to define and deploy cloud native products and solutions.\nAnd our cloud native data fabric is allowing us to key EnLink our unique data asset in ways that we could never do before.\nOur data fabric scratches across the globe and we are in the early innings of leveraging its global capabilities.\nOnly Equifax can provide these capabilities, and we are on offense as we deploy these into the marketplace.\nWrapping up on Slide 20.\nEquifax delivered a record-setting second quarter.\nWe have strong momentum as we move into the second half.\nOur 26% overall and 29% core revenue growth in the quarter reflects the strength and breadth of our business model and early benefits from our Equifax Cloud investments and of course it's enhanced focus on new products.\nWe delivered six consecutive quarters of strong above market double-digit growth.\nOur strong performance reflects the execution against our EFX2023 strategic priorities Equifax's on offense.\nAs we discussed earlier, we're confident in our outlook for 2021 and we raised our full year midpoint revenue guidance to $4.78 billion, increasing our 2021 growth rate by over 370 basis points, almost 16%.\nWe also raised our midpoint earnings per share guidance to $7.35, increasing the growth rate by over 640 basis points.\nAs we discussed earlier, Workforce Solutions had another outstanding quarter, delivering 40% revenue growth and 58% EBITDA margins.\nEWS is our largest fastest growing and most valuable business.\nDuring the quarter, Workforce Solutions delivered 40% of Equifax revenue and we expect EWS to continue to drive Equifax's operating performance throughout 2021 and beyond, as consumers recognize the value of our growing TWN database.\nRudy and his team remain focused on driving outsized growth by focusing on their key growth drivers of adding new records, rolling out new products, driving penetration, driving their new Talent Solutions Data Hub, expansion in new verticals and leveraging their new EFX cloud capabilities.\nUSIS also delivered another strong quarter of 11% growth, driven by their 14% non-mortgage organic growth.\nWe expect USIS non-mortgage growth to continue to be strong due to the economic recovery, the commercial focus of the team, new products and our unique alternative data assets.\nSydney USIS teams are competitive and winning in the marketplace and will continue to deliver in '21 and beyond.\nInternational grew for the third consecutive quarter, accelerating to 25% in local currency in the second quarter as economies reopened and business activity resumes.\nOur new international leader Lisa Nelson has high expectations for our team and we expect continued strong growth through the rest of 2021.\nWe are beginning to realize the benefits of our EFX Cloud Data and Technology transformation as we accelerate new product innovation with products designed and built off of our new EFX Cloud infrastructure.\nWe spent the last three years building the Equifax Cloud and we're now starting to leverage our new cloud capabilities.\nAs we move through the rest of the year and into 2022, we'll be increasingly realize the topline, cost and cash benefits from these new cloud capabilities.\nAccelerate new products, leveraging our differentiated data and the new EFX cloud capabilities is central to our EFX2023 growth strategy.\nWe're beginning to see the benefits of our new product focus and resources leveraging the EFX cloud with the 85 NPIs completed in the first half, pacing well ahead of the record 134 we delivered last year.\nAs we discussed in the past, bolt-on acquisitions that expand our differentiated data assets, strengthening Workforce Solutions and broadening our ID and fraud capabilities are integral to our future growth framework.\nWe have reinvested our strong cash flow in five bolt-on acquisitions so far this year, that will add a 170 basis points to our revenue in the second half.\nWe will continue to focus on accretive bolt-on acquisitions that strengthen Workforce Solutions.\nI'm more energized now than when I joined Equifax three years ago.\nWhat the future holds as we move from building the cloud through our next chapter of growth, leveraging the new Equifax cloud for innovation, growth and new products.\nWe have strong momentum across our business as we move into the second half and we're beginning to deliver on the benefits of the significant Cloud Data and Technology investments we made over the past three years.\nEquifax's on offense in position to bring new and unique solutions for our customers, then only Equifax can deliver, leveraging our new EFX cloud capabilities.\n", "role": "user" }, { "content": "equifax q2 adjusted earnings per share $1.98.\nq2 adjusted earnings per share $1.98.\nq2 revenue rose 26 percent to $1.235 billion.\nincreasing full-year revenue and earnings per share guidance.\nqtrly adjusted earnings per share attributable to equifax was $1.98.\nsees fy adjusted earnings per share $7.25 to $7.45.\nsees q3 adjusted earnings per share $1.62 - $1.72.\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: As always, we appreciate your interest.\nBrent Wood, our CFO, is also participating on the call.\nWe refer to certain of these risks in our SEC filings.\nWe hope everyone and their families remain well and out of harm's way.\nThey've done a great job transitioning our operating strategy quickly and doing so while working remotely.\nOur second quarter results were strong and demonstrate the resiliency of our portfolio and of the industrial market.\nThe team had a solid quarter, producing such stats as funds from operations came in above guidance, up 9% compared to second quarter last year.\nThis marks 29 consecutive quarters of higher FFO per share as compared to the prior year quarter, truly a long-term trend.\nAnd for the year, FFO per share is up 9.5%.\nOur quarterly occupancy was high, averaging 96.6%, leaving us 97.5% leased and 97% occupied at quarter end, ahead of our projections.\nOur occupancy is benefiting from a healthy market with accelerating e-commerce and last-mile delivery trends, also benefiting our occupancy as a high year-to-date retention rate of 84%.\nRe-leasing spreads were strong for the quarter at 13.8% GAAP and 7.9% cash.\nYear-to-date leasing spreads are higher at 20.1% GAAP and 11.5% cash.\nFinally, same-store NOI was up 4.1% for the quarter and 3.9% year-to-date.\nIn sum, during an extremely choppy environment, I'm proud of our team's results.\nOur strategy remains one of maintaining occupancy and cash flow with an eye on liquidity.\nI'm hopeful our strategy will shift again later in 2020 to focus on growth.\nBrent will give you color or commentary about our upcoming debt placement, further improves our liquidity while lowering our cost of capital.\nI'm grateful we ended the quarter generally full at 97.5% leased, while Houston, our largest market at 13.8% of rents, is 97.9% leased, has roughly a 4% square footage roll through year-end and a five-month average collection rate on rents of over 99%.\nMy five months used being the length of this pandemic to date.\nCompany level rent collections remain resilient.\nFor July thus far, we've collected 95% of rents.\nThe unknown is when the economy truly reopens, how fast it will reopen, in which cities and are there any shutdowns remaining.\nWe and everyone else simply have less clarity than normal even several months into this.\nBrent will speak to our budget assumptions, but I'm pleased that with our second quarter results and a realistic plan, we can reach $5.28 per share in FFO.\nWe are only $0.02 shy of our original pre-pandemic expectations.\nAs we've stated before, our development starts are pulled by market demand.\nWith the shutdown, we reduced projected 2020 starts to reflect first quarter actual starts as well as some level of pre-lease conversations under way.\nIn other words, we're not forecasting new spec developments at this time.\nWe're also looking at acquisitions and value-add investments in the same light.\nGiven the positive long-term distribution trends we foresee, we're working on several land sites which we view as valuable development parcels when the economy stabilizes.\nAnd in the meantime, we view operations, working with our tenants and maximizing liquidity as the key goals until we reach the next market phase.\nAnd now Brent will review a variety of financial topics, including our updated 2020 guidance.\nOur second quarter results reflect the resiliency of our team and strong overall performance of our portfolio amid unprecedented conditions.\nFFO per share for the second quarter exceeded our guidance range at $1.33 per share and, compared to second quarter 2019 of $1.22, represented an increase of 9%.\nThe outperformance was primarily driven by our operating portfolio, maintaining occupancy and collections better than we had estimated in April, which was the initial onset of the pandemic.\nI will center my comments around our capital status, rent collections and deferment requests and assumption changes that increased the midpoint of our FFO per share estimate.\nDuring the second quarter, we raised $30 million of equity at an average price of $123 per share.\nAnd earlier this month, we agreed to terms on two senior unsecured private placement notes totaling $175 million.\nThe $100 million note has a 10-year term with a fixed interest rate of 2.61%.\nThe second note is $75 million on a 12-year term with a fixed interest rate of 2.71%.\nWe anticipate closing on both notes in October.\nThat activity, combined with our already strong and conservative balance sheet, has kept us in a position of financial strength, which is serving us well during this time of uncertainty.\nOur debt-to-total market capitalization is 21%, debt-to-EBITDA ratio is 5.1 times, and our interest and fixed charge coverage ratios are over 7.2 times.\nOur rent collections have been equally strong.\nWe have collected 98.1% of our second quarter revenue and entered into deferral agreements for an additional 0.8%, bringing our total collected and deferred to 99% for the second quarter.\nAs for July, we have collected 95.5% of rents thus far and have entered into deferral agreements on an additional 0.7%, bringing the total of collected and deferred for the month to 96.2%.\nThat is slightly ahead of June's pace.\nLast April, we reported that 26% of our tenants have requested some form of rent deferment.\nIn the three subsequent months, that has only risen to 29%.\nWe have denied 79% of the request, are in various stages of consideration on 8% and have entered into some form of deferral agreement with 13% of the request.\nThe rent deferred this far totals $1.5 million, which only represents approximately 0.4% of our estimated 2020 revenues.\nAs we stated last quarter, the depth and duration of the pandemic and its impact on the economy is undeterminable.\nHowever, the menacy and degree of potential tenant financial stress and loss of occupancy we had budgeted for in April did not occur in the second quarter.\nAs a result, our actual performance and revised assumptions for the remainder of the year increased our FFO earnings guidance by 2.1% from a midpoint of $5.17 per share to $5.28 per share or a 6% increase over 2019.\nAmong the changes were an increase in average occupancy from 95.2% to 96% and a decrease in reserves for uncollectible rent from $3.8 million to $3.6 million.\nNote that the reserve for potential bad debt for the third and fourth quarter of $2.4 million is not attributable to specific tenants.\nRather, it is a general assumption that there will be some companies who succumb to the disruption in the economy caused by the pandemic.\nOther notable revisions include a lower average interest rate on new debt and the increase of equity issuances by $95 million.\nIn summary, we were very pleased with our second quarter results.\nWe will continue to rely on our financial strength, the experience of our team and the quality of our portfolio to navigate us through the remainder of the year.\nNow Marshall will make some final comments.\nIn closing, I'm proud of our second quarter results.\nWe said the past few years, our fear wasn't shallow bay oversupply as much as a black swan economic event.\nWe don't want either, but now we have just that.\nOur company and our team have worked through these before and while different, we're working through this one, too.\nAs the economy stabilizes, it's the future that makes me the most excited for EastGroup.\nOur strategy, which has worked well the past few years, will come out of this pandemic with trends that we're hearing of, including companies carrying additional safety stock inventory, shopping habits that have changed accelerating the consumer to e-commerce, new industrial users as a result of these shopping habits and increased U.S. manufacturing or nearshoring in Mexico.\nMeanwhile, our bread and butter traditional tenants will remain and continue needing last-mile distribution space in fast-growing Sunbelt markets.\nAll of these, along with the combination of our team, our markets and our properties, have me optimistic about our future.\n", "role": "user" }, { "content": "q2 ffo per share $1.33.\nduring q2 did not begin construction of any new development projects.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 always, we appreciate your interest.\nBrent Wood, our CFO is also participating on the call.\nWe refer to certain of these risks in our SEC filings.\nWe hope everyone is enjoying their summer.\nThey continue performing at a high level and reaping the rewards of a very positive environment.\nOur second quarter results were strong and demonstrate the resiliency of our portfolio and of the industrial market.\nSome of the results the team produced include, funds from operations, coming in above guidance, up 10.5% compared to second quarter last year and $0.03 ahead of our guidance midpoint.\nThis marks 33 consecutive quarters of higher FFO per share, as compared to the prior year quarter, truly a long-term trend.\nOur second quarter occupancy averaged 96.8%, up 20 basis points from second quarter 2020.\nAnd at quarter end, we're ahead of projections at 98.3% leased and 96.8% occupied.\nOur occupancy is benefiting from a healthy market, with accelerating e-commerce and last-mile delivery trends.\nQuarterly releasing spreads were among the best in our history at 31.2% GAAP and 16.2% cash.\nAnd year-to-date, those results are 28% GAAP and 16% cash.\nFinally, cash same-store NOI rose by 5.6% for the quarter and 5.8% year-to-date.\nIn summary, I'm proud of our team's results, putting up one of the best quarters in our history.\nToday, we're responding to the strength in the market and demand for industrial product, both by users and investors by focusing on value creation via development and value-add investments.\nI'm grateful, we ended the quarter at 98.3% leased, matching our highest quarter on record.\nTo demonstrate the market strength, our last three quarters were the highest three quarterly rates in the company's history.\nLooking at Houston, we're 96.5% leased, with it representing 12.3% of rents, down 150 basis points from a year ago and is projected to continue shrinking.\nBrent will speak to our budget assumptions, but I'm pleased that we finished the quarter at $1.47 per share in FFO and are raising our 2021 forecast by $0.09 to $5.88 per share.\nAs we've stated before, our development starts are pulled by market demand.\nBased on the market strength we're seeing today, we're raising our forecasted starts to $275 million for 2021.\nThis represents a record annual level of starts for the company.\nAnd to position us following the pandemic, we've acquired several new sites with more in our pipeline along with value-add and direct investments.\nMore details to follow as we close on each of these opportunities.\nAnd Brent will now review a variety of financial topics, including our 2021 guidance.\nFFO per share for the second quarter exceeded our guidance range at $1.47 per share and compared to second quarter 2020 of $1.33, represented an increase of 10.5%.\nThe outperformance continues to be driven by our operating portfolio performing better than anticipated, particularly the quick releasing of vacated space during the quarter.\nFrom a capital perspective, during the second quarter we issued $60 million of equity at an average price over $162 per share, and we issued and sold $125 million of senior unsecured notes, with a fixed interest rate of 2.74% in a 10-year term.\nIn June, we amended and restated our unsecured credit facilities, which now mature July 2025.\nThe capacity was increased from $395 million to $475 million, while the interest rate spread was reduced to 22.5 basis points, and our ongoing efforts to bolster our ESG efforts we incorporated a sustainability-linked metric into the renewal.\nThat activity combined with our already strong and conservative balance sheet has kept us in a position of financial strength and flexibility.\nOur debt-to-total market capitalization was 17%, debt-to-EBITDA ratio at 4.9 times, and our interest and fixed charge coverage ratio increased to over eight times.\nOur rent collections have been equally strong.\nBad debt for the first half of the year is a net positive $90,000, because of tenants whose balance was previously reserved that brought current exceeding new tenant reserves.\nLooking forward FFO guidance for the third quarter of 2021 is estimated to be in the range of $1.46 to $1.50 per share and $5.83 to $5.93 for the year, a $0.09 per share increase over our prior guidance.\nThe 2021 FFO per share midpoint represents a 9.3% increase over 2020.\nAmong the notable assumption changes that comprise our revised 2021 guidance, include: increasing the cash same-property midpoint by 18% to 5.2%, increasing projected development starts by over 30% to $275 million and increasing equity issuance from $140 million to $185 million.\nIn summary, we were very pleased with our second quarter results.\nWe will continue to rely on our financial strength, the experience of our team, and the quality and location of our portfolio, to carry our momentum through the year.\nNow, Marshall will make some final comments.\nIn closing, I'm excited about our first half of the year.\nWe're ahead of our forecast and are carrying that momentum into the back half of the year.\nOur company, our team, and our strategy are working well as evidenced by our quarterly statistics, and it's the future that makes me the most excited for EastGroup.\nOur strategy has worked the past few years, and we're seeing an acceleration, and a number of positive trends for our properties, and within our markets.\nMeanwhile, our bread and butter traditional tenants remain and will continue needing last-mile distribution space in fast-growing Sunbelt markets.\nThese along with the mix of our team, our operating strategy and our market has us optimistic about the future.\nAnd we'll now open up the call for any questions.\n", "role": "user" }, { "content": "compname announces q2 ffo per share $1.47.\nq2 ffo per share $1.47.\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: As always, we appreciate your interest.\nBrent Wood, our CFO, is also participating on the call.\nWe refer to certain of these risks in our SEC filings.\nWe hope everyone and their families remain well and out of harm's way.\nOur third quarter results were strong and demonstrated the resiliency of our portfolio and of the industrial market.\nThe team produced another solid quarter with statistics such as funds from operations came in above guidance, up 6.3% compared to last quarter -- third quarter last year.\nThis marks 30 consecutive quarters of higher FFO per share as compared to the prior year quarter, truly a long-term trend.\nYear-to-date FFO per share is up 7.8%.\nOur quarterly occupancy, while below prior year, was high averaging 96.6% and at quarter end were ahead of projections at 97.8% leased and 96.4% occupied.\nOur occupancy is benefiting from a healthy market with accelerating e-commerce and last mile delivery trends, also benefiting occupancy as a high 83% year-to-date retention rate.\nRe-leasing spreads set a quarterly record at 28% GAAP and 16.1% cash.\nYear-to-date leasing spreads were solid at 23.1% GAAP and 13.3% cash.\nAnd finally, same-store NOI was up 3% for the quarter and 3.6% year-to-date.\nIn summary, during a choppy environment, I'm proud of our team's results.\nOur strategy is evolving to not only include maintaining occupancy, cash flow and liquidity, as has been the case since March.\nToday, we're responding to the strength in the market and restarting development.\nLooking at each of our goals, I'm grateful we ended the quarter generally fall at 97.8% leased, our second highest quarter on record.\nHouston, our largest market, at 13.5% of rents is 96.2% leased, with an eight-month average collection rate over 99%.\nCompanywide rent collections remain resilient.\nFor October, thus far, we've collected 97.6% of monthly rents.\nThere's still many unknowns about how fast and when the economy truly reopens and recovers.\nWe all, as a result, simply have less clarity than normal.\nBrent will speak to our budget assumptions, but I'm pleased that in spite of the uncertainty, we're tracking toward $5.35 per share in FFO.\nThis represents a $0.07 per share increase to our July forecast and $0.05 per share above our pre pandemic expectations.\nAs we've stated before, our development starts are pulled by market demand.\nSo with the shutdown, we halted new starts.\nGiven the strength we're seeing in select submarkets, we're planning a few fourth quarter starts and pending permitting timing, these will continue into first quarter of 2021.\nAnd to position us following the pandemic, we've also been working on several new land sites and park expansion.\nMore details to follow as we close on these investments.\nOther strategic transitions -- transactions we've worked on include our 162,000 square foot value-add acquisition in Rancho Cucamonga, near the Ontario airport and dispositions, which hopefully continue toward closing in Houston and on our last property in Santa Barbara.\nAnd now Brent will review a variety of financial topics, including our updated 2020 guidance.\nOur third quarter results reflect the resiliency of our team and strong overall performance of our portfolio amid a very challenging year.\nFFO per share for the third quarter exceeded our guidance range at $1.36 per share and compared to third quarter 2019 of $1.28 represented an increase of 6.3%.\nThe outperformance continues to be driven by our operating portfolio performing better-than-anticipated namely higher occupancy and strong rent collections.\nFrom a capital perspective, during the third quarter, we issued $32 million of equity at an average price of $133 per share and earlier this month we closed on two senior unsecured private placement notes totaling $175 million.\nThe $100 million note was a 10-year -- has a 10-year term with a fixed interest rate of 2.61%.\nThe second note is $75 million on a 12-year term with a fixed interest rate of 2.71%.\nThat activity, combined with our already strong and conservative balance sheet, has kept us in a position of financial strength and flexibility, including the complete availability of our $395 million revolver as of today.\nOur debt to total market capitalization is 19%, debt-to-EBITDA ratio is 4.9 times, and our interest and fixed charge coverage ratios are over 7.4 times.\nOur rent collections have been equally strong.\nWe have collected 99% of our third quarter revenue and entered into deferral agreements for an additional 0.5%, bringing our total collected and deferred to 99.5% for the third quarter.\nLast April, we reported that 26% of our tenants have requested some form of rent deferment.\nIn the six subsequent months, that only rose to 28% and deferral requests have basically ceased.\nThe agreed-upon rent deferrals thus far totaled $1.7 million, an increase of only $200,000 since our report in July.\nThat represents just 0.5% of our estimated 2020 revenues.\nWe have consistently stated the depth and duration of the pandemic and its impact on the economy is undeterminable.\nHowever, the immediacy and degree of potential tenant financial stress and loss of occupancy we had budgeted for has not materialized.\nAs a result, our actual performance and revised assumptions for the fourth quarter increased our FFO earnings guidance from a midpoint of $5.28 per share to $5.35 per share or a 7.4% increase over 2019.\nThe revised midpoint exceeds our original pre-COVID guidance at the beginning of the year.\nAmong the budget changes were an increase in average occupancy from 96% to 96.5% and a decrease in reserves for uncollectible rent from $3.6 million to $2.3 million.\nNote that the reserve for potential bad debt for fourth quarter of $600,000 is not attributable to specific tenants.\nOur continued earnings growth directly contributed to increasing our quarterly dividend by 5.3% to $0.79 per share.\nOur third quarter dividend was the 163rd consecutive quarterly distribution to EastGroup shareholders and represents an annualized dividend rate of $3.16 per share.\nIn summary, we were very pleased with our third quarter results.\nWe will continue to rely on our financial strength, the experience of our team and the quality and location of our portfolio to carry our momentum into next year.\nNow Marshall will make some final comments.\nIn closing, I'm also proud of our third quarter results.\nOur company and our team has worked through numerous downturns and, while different, will work through this one, too.\nAs the economy stabilizes, it's the future that makes me the most excited for EastGroup.\nOur strategy has worked well the past few years.\nAnd coming out of this pandemic, we foresee an acceleration and a number of positive trends for our properties and within our markets.\nMeanwhile, our bread and butter traditional tenants remain and will continue needing last-mile distribution space in fast-growing Sun Belt markets.\nThese, along with the mix of our team, our operating strategy and our markets, has us optimistic about the future.\n", "role": "user" }, { "content": "q3 ffo per share $1.36.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 always, we appreciate your interest.\nBrent Wood, our CFO, is also participating on the call.\nWe hope everyone is enjoying their fall.\nThey continue performing at a high level and reaping the rewards of a very positive environment.\nOur third quarter results were strong and demonstrate the resiliency of our portfolio and of the industrial market.\nSome of the results the team produced include, funds from operations coming in above guidance up 14% compared to third quarter last year and ahead of our forecast.\nThis marks 34 consecutive quarters of higher FFO per share as compared to the prior year quarter, truly a long-term trend.\nOur quarterly occupancy averaged 97.1%, up 50 basis points from third quarter 2020 and at quarter end, we're ahead of projections at 98.8% lease and 97.6% occupied.\nOur occupancy is benefiting from a healthy market with accelerating e-commerce and last mile delivery trends.\nQuarterly releasing spreads were at record levels at 37.4% GAAP and 23.9% cash and year-to-date, those results are 31% GAAP and 18.5% cash.\nFinally, cash same-store NOI rose 5.2% for the quarter and 5.6% year-to-date.\nIn summary, I'm proud of our team's results, putting up one of the best quarters in our history.\nToday, we're responding to the strength in the market and demand for industrial product by both users and investors by focusing on value creation via development and value-add investments.\nI'm grateful we ended the quarter at 98.8% leased, our highest quarter on record and to demonstrate the market strength, our last four quarters marked the highest four quarterly rates in our company's history.\nLooking at Houston, we're 96.7% leased.\nIt now represents 12% of rents, down 140 basis points from a year ago and is projected to continue shrinking.\nAs we've stated before, our development starts are pulled by market demand.\nBased on the market strength we're seeing today, we're raising our forecasted starts to $340 million for 2021.\nThis represents an annual record level of starts for our company.\nTo position us for this market demand, we've acquired several new sites with more in our pipeline along with value-add and direct investments.\nMore details to follow as we close on each of these opportunities.\nAnd Brent will now review a variety of financial topics, including our 2021 guidance.\nOur third quarter results reflect the terrific execution of our team, strong overall performance of our portfolio and the continued success of our time-tested strategy.\nFFO per share for the third quarter exceeded our guidance range at $1.55 per share and compared to third quarter 2020 of $1.36 represented an increase of 14%.\nThe outperformance continues to be driven by our operating portfolio performing better than anticipated, particularly occupancy and rental rate growth.\nFrom a capital perspective, during the third quarter, we issued $49 million of equity at an average price over $176 per share.\nIn July, we repaid a maturing $40 million senior unsecured term loan.\nAnd in September, we closed on the refinance of $100 million unsecured term loan that reduced the effective fixed interest rate from 2.75% to 2.1%, with five years of term remaining.\nIn our ongoing efforts to bolster our ESG efforts, we incorporated a sustainability-linked metric into the amended terms.\nThat activity combined with our already strong and conservative balance sheet, kept us in a position of financial strength and flexibility.\nOur debt to total market capitalization was below 17%, debt-to-EBITDA ratio at 4.7 times and our interest and fixed charge coverage ratio increased to over 8.5 times.\nOur rent collections have been equally strong.\nBad debt for the first three quarters of the year is a net positive $346,000 because of tenants whose balance was previously reserved but brought current, exceeding new tenant reserves.\nThis trend continues to exemplify the stability, credit strength and diversity of our tenant base.\nLooking forward, FFO guidance for the fourth quarter of 2021 is estimated to be in the range of $1.54 to $1.58 per share and $6.01 to $6.05 for the year, a $0.15 per share increase over our prior guidance.\nThe 2021 FFO per share midpoint represents a 12.1% increase over 2020.\nAmong the notable assumption changes that comprise our revised 2021 guidance include: increasing the cash same-property midpoint by 8% to 5.6%, decreasing reserves for uncollectible rent by $900,000, increasing projected development starts by 24% to $340 million and increasing equity and debt issuance by combined $95 million.\nIn summary, we were very pleased with our third quarter results.\nWe will continue to rely on our financial strength, the experience of our team and the quality and location of our portfolio to carry our momentum through the year.\nNow Marshall will make some final comments.\nIn closing, I'm excited about where we stand this far into 2021.\nWe're ahead of our initial forecast and adhering that momentum into 2022.\nOur company, our team and our strategy are working well, as evidenced by the quarterly results.\nAnd it's the future that makes me most excited for EastGroup.\nOur strategy has worked well the past few years.\nWe're further seeing an acceleration and a number of positive trends for our properties and within our markets.\nMeanwhile, our bread and butter traditional tenants remain and will continue needing last-mile distribution space in fast-growing Sunbelt markets.\nThese, along with the mix of our team, our operating strategy and our markets has us optimistic about the future.\n", "role": "user" }, { "content": "q3 ffo per share $1.55.\neastgroup - qtrly same property net operating income for same property pool excluding income from lease terminations increased 5.2% on a cash 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: It's a pleasure to be with you today.\n2020 was an exceptional year for Employers and that we achieved record levels for the number of policies in force, stockholders' equity, statutory surplus and book value per share.\nWe also generated more submissions, quotes and binds than at any time in the history of the Company.\nWe accomplished these feats during a pandemic while working from home and supporting agents' small businesses and their injured workers.\nOur fourth quarter and full-year results were very strong, especially considering the challenging macroeconomic environment.\nOur record number of policies in force at year-end demonstrates that our policyholders are enduring the pandemic with reduced payrolls, which directly impact workers' compensation premium.\nWe remain optimistic that as more vaccines are delivered and state restrictions are lifted, we will be able to begin replacing the premium we lost in 2020.\nIn support of this anticipated recovery, we have continued to pursue in advance the significant investments we have made in delivering a superior customer experience for our agents and insureds.\nAs expected the challenging pandemic environment confirmed that ease of doing business is the critical element in producing and servicing small account business.\nPrior to the COVID-19 pandemic, we experienced strong new business opportunities, as evidenced by record levels of submissions, quotes and binds.\nBut the levels began to decrease as the pandemic progressed, particularly in certain states.\nLater in the year as many businesses began to reopen and resume more fulsome operations, we began to experience year-over-year increases in new business submissions and new policies bound in nearly all of the states in which we operate with the notable exception of California.\nUnfortunately, even with the increase in new business policies that we experienced outside of California in 2020, our new business premium has fallen driven primarily by significant declines in payrolls and declines in the number of policies with annual premiums greater than $25,000.\nIn regard to losses, we experienced a significant decline in the frequency of compensable indemnity claims in 2020 despite government mandates and legislative changes related to the COVID-19 pandemic, including the presumption of COVID-19 compensability for all or certain occupational groups in many states.\nWe experienced this decline in nearly all states including California.\nAs a result, we reduced our current accident year loss and LAE ratio to 64.3% during the fourth quarter from the 65.5% maintained throughout the prior 21 months.\nWe also reduced our prior accident year loss and LAE reserves by nearly $40 million during the quarter which related to nearly every prior accident year.\nOur underwriting expenses for the quarter and the year were each down and we have recently taken actions that will further reduce our underwriting expenses in 2021.\nOur plan is to achieve our targeted expense ratios as quickly as possible despite the meaningful reductions in earned premium we're currently experiencing.\nMy primary goal as the new CEO will be to fully capitalize on the post COVID economic lift on the horizon, while continuing to maintain discipline both in terms of our underwriting and/or underwriting expenses.\nWith that Mike will now provide a further discussion of our financial results, Steve will then discuss some of the current trends and then Doug will provide his closing remarks.\nFor the year, we delivered a 7.6% return on adjusted equity and increased our book value per share, including the deferred gain by more than 15%.\nThese results are impressive in just about any operating environment and particularly during a pandemic.\nOur fourth quarter results contributed nicely to these financial successes in 2020.\nOur in-force policy count ended the year at an all-time high.\nWe experienced reductions in our current accident year loss and LAE and underwriting expense ratios.\nAnd we recognized a significant amount of favorable prior-year loss reserve development, all despite the significant declines we experienced in our premiums written and earned.\nOur net premiums earned were $152 million, a decrease of 11% year-over-year.\nSince premiums earned are primarily a function of the amount and the timing of the associated premiums written, I'll let Steve describe that increase in his remarks.\nOur loss and loss adjustment expenses were $48 million, a decrease of 51% year-over-year due to the current and prior-year favorable loss reserve development that Kathy spoke to previously as well as the decrease in earned premiums.\nCommission expenses were $19 million for the quarter, a decrease of 7% year-over-year.\nThe decrease was largely the result of a decrease in earned premium, partially offset by a higher concentration of alternative distribution business, which is subject to a higher commission rate.\nUnderwriting and general administrative expenses were $43 million for the quarter, a decrease of 15% year-over-year.\nThe decrease was largely the result of reductions in employee benefit costs, professional fees and travel expenses.\nFrom a segment reporting perspective, our Employers segment had underwriting income of $45 million for the quarter versus $8 million a year ago and its combined ratios were 70% and 96% respectively.\nOur Cerity segment had an underwriting loss of $5 million for the quarter, consistent with its underwriting loss of a year ago.\nNet investment income was $18 million for the quarter, down 20%.\nThe decrease was primarily due to lower bond yields.\nAt quarter-end, our fixed maturities had a duration of 3.2 and an average credit quality of A+ and our equity securities and other investments represented 8% of the total investment portfolio.\nWe were favorably impacted by $5 million of after-tax unrealized gains from fixed maturity securities, which are reflected on our balance sheet and $15 million of net after-tax unrealized gains from equity securities and other investments, which are reflected on our income statement.\nThese net unrealized investment gains contributed to our nearly 6% increase in our book value per share including the deferred gain this quarter.\nDuring the quarter, we repurchased $17 million of our common stock at an average price of $32.50 per share and we have repurchased an additional $10 million of our common stock thus far in 2021 at an average price per share of $32.19.\nOur remaining share repurchase authority currently stands at $19 million.\nYesterday, the Board of Directors declared a first quarter 2021 dividend of $0.25 per share, which is payable on March 17th to stockholders of record as of March 3rd.\nNet written premiums for the year of $575 million were down $117 million or 16.9% from the prior year.\nThe primary drivers for this decrease are new business written and final audit pick-up.\nWith respect to the decrease in final audit pick-up, we continue to see the impact of declining payrolls due to the pandemic and resulting shutdowns as discussed on previous calls.\nNew business premium decreased 33.3% despite increases in submissions, quotes and bound policies.\nSubmissions were up 3.7% year-over-year, quotes were up 7.4% and bound policies were at 0.2% growth.\nOn a year-over-year basis, our in-force policy count increased by 4.8%.\nA recent workers' compensation industry report that was released with information from the Valen Data Consortium reflected decreased new business opportunity trends.\nNew business submissions were down 10% from the comparable periods in 2019 and were down as much as 23% in some industries.\nThe authors of the report suggested that the owners of these businesses were likely preoccupied with other matters and did not take time to shop for insurance.\nDespite our increase in submissions over the prior year, this is in line with some of our observations and feedback from our distribution partners relative to the pandemic's impact starting in the second quarter of 2020.\nWe continue to experience high unit retention rates.\nHowever, renewal premium for the year decreased 3.6%.\nThe decrease in renewal premium was driven primarily by decreased payroll related to the pandemic and continuing -- or continued declining rates in the majority of states in which we do business.\nIn addition, we non-renewed some middle market accounts that underperformed our profitability expectations.\nI will be retiring in March.\nSo this will be my last earnings call.\nIt's been my pleasure to lead Employers for over 27 years and I believe that the Company is in the strongest financial position in its 108-year history.\nI will soon be handing control of the Company over to Kathy whose background and experience are ideal to move Employers forward into the future.\nI am very excited for Kathy and her team and for the future of the Company.\nIn closing, I want to express my gratitude to all of you for giving me the opportunity to be the CEO of this remarkable organization.\nI'm very proud of what we've achieved and it's been a privilege to serve you.\n", "role": "user" }, { "content": "employers holdings declares qtrly cash dividend of $0.25 per share.\ncompname reports fourth quarter 2020 and year end financial results; declares quarterly cash dividend of $0.25 per share.\nqtrly net premiums earned of $151.5 million, down 11% year-over-year.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Also on the call are other members of the management team.\nMaterials supporting today's call are available at www.\nActual results could differ materially from current expectations.\nImportant factors that could cause different results are set forth in our SEC filings.\nPlease read these carefully.\nI hope of all you and loved ones are staying healthy safe.\nEdison International reported core earnings per share of $0.94 compared to $1 a year ago.\nHowever, this comparison is not meaningful because SCE did not receive a final decision in track 1 of its 2021 General Rate Case during the quarter.\nAs many of you are aware, a proposed decision was issued on July 9th.\nThe utility will file its opening comments later today and reply comments on August 3rd.\nWhile Maria will cover the PD in more detail, our financial performance for the quarter, and other financial topics, let me first give you a few observations, which are summarized on page 2.\nThe PD's base rate revenue requirement of $6.9 billion is approximately 90% of SCE's request.\nThe primary drivers of the reduction are lower funding for wildfire insurance premiums, vegetation management, and depreciation.\nThe main reduction to SCE's 2021 capital forecast was for the Wildfire Covered Conductor Program.\nExcluding wildfire mitigation-related capital, the PD would approve 98% of SCE's 2021 capital request, much of which was uncontested.\nThe PD also notes that wildfire mitigation is a high priority for the state and the Commission.\nThe PD supports critical safety and reliability investments and provides the foundation for capital spending and rate base through 2023.\nWe believe it is generally well-reasoned, but it has some major policy implications that are fundamentally inconsistent with where the state is headed.\nSCE's CEO, Kevin Payne, addressed these implications well during oral arguments earlier this week, and the utility will elaborate on them in its opening comments, which are outlined on page 3.\nThe largest area of concern is the significant proposed cut to SCE's Wildfire Covered Conductor Program.\nThis is SCE's paramount wildfire mitigation program and the utility's comments will focus on ensuring the program's scope is consistent with the appropriate risk analyses, state policy, and achieving the desired level of risk mitigation.\nThe proposed reductions would deprive customers of a key risk reduction tool, so SCE is advocating strongly for a balanced final decision.\nWe believe additional CPUC-authorized funding for SCE's covered conductor deployment is warranted to protect customers' and communities' vital interests and achieve the state's objective for minimizing wildfire risk.\nAs noted in prior discussions, SCE has prioritized covered conductor and other wildfire mitigation activities to urgently reduce wildfire risk.\nA scorecard of SCE's wildfire mitigation plan progress is on page 4 of the deck.\nWe believe that through the execution of the WMP and other efforts, SCE has made meaningful progress in reducing the risk that utility equipment will spark a catastrophic wildfire.\nPage 5 provides a few proof points of how SCE believes it has reduced wildfire risk for its customers.\nFirst, circuits with covered conductor have experienced 69% fewer faults than those without, which demonstrates the efficacy of this tool.\nIn fact, on segments where we have covered the bare wire, there has not been a single CPUC-reportable ignition from contact with objects or wire-to-wire contact.\nSecond, where SCE has expanded vegetation clearance distances and removed trees that could fall into its lines, there have been 50% fewer tree or vegetation-caused faults than the historic average.\nLastly, since SCE began its high fire risk inspection program in 2019, it has found 66% fewer conditions requiring remediation on the same structures year-over-year.\nThese serve as observable data points of the substantial risk reduction from SCE's wildfire mitigation activities.\nThe utility will use the tools at its disposal to mitigate wildfire risk.\nThis includes deploying covered conductor at a level informed by the Final Decision, augmented by using Public Safety Power Shutoffs, or PSPS, to achieve the risk reduction originally contemplated for the benefit of customers.\nThe PD also included comments on the topic of affordability.\nWe agree that affordability is always important and must be weighed against the long-term investments in public safety.\nI will highlight that SCE's rates have generally tracked local inflation over the last 30 years and have risen the least since 2009 relative to the other major California IOUs.\nCurrently, SCE's system average rate is about 17% lower than PG&E's and 34% lower than SDG&E's, reflecting the emphasis SCE has placed on operational excellence over the years.\nWhile we recognize that the increases in the next few years, tied to the investments in safety for the communities SCE serves are higher than this historical average, SCE has demonstrated its ability to manage rate increases to the benefit of customers.\nUnderfunding prudent mitigations like covered conductor is penny wise and pound foolish, as it may ultimately lead to even greater economic pain and even loss of life for communities impacted by wildfires that could have been prevented.\nAn active wildfire season is underway right now, and I would like to emphasize SCE's substantial progress in executing its WMP.\nThrough the first half of the year, SCE completed over 190,000 high fire risk-informed inspections of its transmission and distribution equipment, achieving over 100% of its full year targets.\nThe utility also continues to deploy covered conductor in the highest risk areas.\nYear-to date, SCE installed over 540 circuit miles of covered conductor in high fire risk areas.\nFor the full year, SCE expects to cover at least another 460 miles for a total of 1,000 miles deployed in 2021, consistent with its WMP goal.\nAdditionally, SCE is executing its PSPS Action Plan to further reduce the risk of utility equipment igniting wildfires and to minimize the effects on customers.\nSCE is on target to complete its expedited grid hardening efforts on frequently impacted circuits and expects to reduce customer minutes of interruption by 78%, while not increasing risks, assuming the same weather conditions as last year.\nTo support the most vulnerable customers living in high fire risk areas when a PSPS is called, the utility has distributed over 4,000 batteries for backup power through its Critical Care Back-Up Battery program.\nWe believe California is also better prepared to combat this wildfire season.\nThe Legislature has continued to allocate substantial funding to support wildfire prevention and additional firefighting resources.\nJust last week, the state announced that CAL FIRE had secured 12 additional firefighting aircraft for exclusive use in its statewide response efforts, augmenting the largest civil aerial firefighting fleet in the world.\nSCE is also supporting the readiness and response efforts of local fire agencies.\nIn June, SCE contributed $18 million to lease three fire-suppression helicopters.\nThis includes two CH-47 helitankers, the world's largest fire-suppression helicopters, and a Sikorsky-61 helitanker.\nAll three aircraft have unique water and fire-retardant-dropping capabilities and can fly day and night.\nIn addition, a Sikorsky-76 command and control helicopter, along with ground-based equipment to support rapid retardant refills and drops, will be available to assist with wildfires.\nThe helitankers and command-and-control helicopter will be strategically stationed across SCE's service area and made available to various jurisdictions through existing partnerships and coordination agreements between the agencies through the end of the year.\nWe also appreciate the strong efforts by President Biden, Energy Secretary Granholm, and the broader Administration.\nI was pleased to join the President, Vice President, cabinet members, and Western Governors including Governor Newsom for a virtual working session on Western wildfire preparedness last month.\nThe group highlighted key areas for continued partnership among the Federal government, states, and utilities, including land and vegetation management, deploying technology from DOE's national labs and other Federal entities, and enabling response and recovery.\nLet me conclude my comments on SCE's wildfire preparations for this year by pointing out a resource we made available for investors.\nWe recently posted a video to our Investor Relations website featuring SCE subject matter experts discussing the utility's operational and infrastructure mitigation efforts and an overview of state actions to meet California's 2021 drought and wildfire risk, so please go check it out.\nInvesting to make the grid resilient to climate change-driven wildfires is a critical component of our strategy and just one element of our ESG performance.\nOur recently published Sustainability Report details our progress and long-term goals related to the clean energy transition and electrification.\nIn 2020, approximately 43% of the electricity SCE delivered to customers came from carbon-free resources, and the company remains well-positioned to achieve its goal to deliver 100% carbon-free power by 2045.\nSCE doubled it's energy storage capacity during this year, and continues to maintain one of the largest storage portfolios in the nation.\nWe have been engaged in Federal discussions on potential clean energy provisions and continue to support policies aligned with SCE's Pathway 2045 target of 80% carbon-free electricity by 2030.\nHowever, electric affordability and reliability must be top of mind as we push to decarbonize the economy through electrification.\nThe dollars needed to eliminate the last molecule of CO2 from power generation will have a bigger impact when spent instead on an electric vehicle or heat pump.\nFor example, the utility is spending over $800 million to accelerate vehicle electrification across its service area, that's a key component to achieve an economywide net zero goal most affordably.\nRecently, SCE opened its Charge Ready 2 program for customer enrollment.\nThis program is going to support 38,000 new electric car chargers over the next 5 years, with an emphasis on locations with limited access to at-home charging options and disadvantaged communities.\nWe are really proud that Edison's leadership in transportation electrification was recently recognized by our peers with EEI's Edison Award, our industry's highest honor.\nSCE has been able to execute on these objectives, while maintaining the lowest system average rate among California's investor owned utilities and monthly residential customer bills below the national average.\nAs we grow our business toward a clean energy future, we are also adapting our infrastructure and operations to a new climate reality, striving for best-in-class operations, and importantly we are aiming to deliver superior value to our customers and investors.\nWith that, let me turn over Maria for the financial report.\nMy comments today will cover second quarter 2021 results, comments on the proposed decision in SCE's General Rate Case, our capital expenditure and rate base forecasts, and updates on other financial topics.\nEdison International reported core earnings of $0.94 per share for the second quarter 2021, a decrease of $0.06 per share from the same period last year.\nAs Pedro noted earlier, this year-over-year comparison is not meaningful because SCE has not received a final decision in its 2021 General Rate Case and continues to recognize revenue from CPUC activities based on 2020 authorized levels.\nWe will account for the 2021 GRC track 1 final decision in the quarter SCE receives it.\nOn page 7, you can see SCE's key second quarter earnings per share drivers on the right hand side.\nI'll highlight the primary contributors to the variance.\nTo begin, revenue was higher by $0.10 per share.\nCPUC-related revenue contributed $0.06 to this variance, however this was offset by balancing account expenses.\nFERC-related revenue contributed $0.04 to this variance, driven by higher rate base and a true-up associated with filing SCE's annual formula rate update.\nO&M had a positive variance of $0.11 and two items account for the bulk of this variance.\nFirst, cost recovery activities, which have no effect on earnings, were $0.05.\nThis variance is largely due to costs recognized last year following the approval of costs tracked in a memo account.\nSecond, lower wildfire mitigation-related O&M drove a $0.02 positive variance, primarily because fewer remediations were identified through the inspection process.\nThis continues the trend we observed in first quarter.\nOver the past few years, SCE has accelerated and enhanced its approach to risk-informed inspections of its assets.\nInspections continue to be one of the important measures for reducing the probability of ignitions.\nFor the first half of the year, while we have maintained the pace of inspections and met our annual target, we have observed fewer findings of equipment requiring remediation.\nLastly, depreciation and property taxes had a combined negative variance of $0.10, driven by higher asset base resulting from SCE's continued execution of its capital plan.\nAs Pedro mentioned earlier, SCE received a proposed decision on track 1 of its 2021 General Rate Case on July 9.\nIf adopted, the PD would result in base rate revenue requirements of $6.9 billion in 2021, $7.2 billion in 2022, and $7.6 billion in 2023.\nThis is lower than SCE's request primarily related to lower authorized expenses for wildfire insurance premiums, vegetation management, employee benefits, and depreciation.\nFor wildfire insurance, the PD would allow SCE to track premiums above authorized in a memo account for future recovery applications.\nThe PD would also approve a vegetation management balancing account for costs above authorized.\nIn it's opening comments, SCE will address the PD's procedural error that resulted in the exclusion of increased vegetation management labor costs driven by updated wage rates.\nVegetation management costs that exceed a defined cap, including these higher labor costs, would be deferred to the vegetation management balancing account.\nThe earliest the Commission can vote on the proposed decision is at its August 19 voting meeting.\nConsistent with our past practice, we will provide 2021 earnings per share guidance a few weeks after receiving a final decision.\nI would also like to comment on SCE's capital expenditure and rate base growth forecasts.\nAs shown on page 8, over the track one period of 2021 through 2023, rate base growth would be approximately 7% based on SCE's request and approximately 6% based on the proposed decision.\nIn the absence of a 2021 GRC final decision, SCE continues to execute a capital spending plan for 2021 that would result in spending in the range of $5.4 to $5.5 billion.\nSCE will adjust spending for what is ultimately authorized in the 2021 GRC final decision, while minimizing the risk of disallowed spending.\nWe have updated our 2021 through 2023 rate base forecast to include the Customer Service Re-Platform project.\nSCE filed a cost recovery application for the project last week.\nI will note that this rate base forecast does not include capital spending for fire restoration related to wildfires affecting SCE's facilities and equipment in late 2020.\nThis could add approximately $350 million to rate base by 2023.\nPage 9 provides a summary of the approved and pending cost recovery applications for incremental wildfire-related costs.\nSCE recently received a proposed decision in the CEMA proceeding for drought and 2017 fire-related costs.\nThe PD would authorize recovery of $81 million of the requested revenue.\nAs you can see on page 10, during the quarter, SCE requested a financing order that would allow it to issue up to $1 billion of recovery bonds to securitize the costs authorized in GRC track 2, 2020 residential uncollectibles, and additional AB 1054 capital authorized in GRC track 1.\nSCE expects a final decision on the financing order in the fourth quarter.\nTurning to page 11, SCE continues to make solid progress settling the remaining individual plaintiff claims arising from the 2017 and 2018 Wildfire and Mudslide events.\nDuring the second quarter, SCE resolved approximately $560 million of individual plaintiff claims.\nThat leaves about $1.4 billion of claims to be resolved, or less than 23% of the best estimate of total losses.\nTurning to page 12, let me conclude by building on Pedro's earlier comments on sustainability.\nI will emphasize the strong alignment between the strategy and drivers of EIX's business, and the clean energy transition that is underway.\nIn June, we published our sustainable financing framework, outlining our intention to continue aligning capital-raising activities with sustainability principles.\nWe have identified several eligible project categories, both green and social, which capture a sizable portion of our capital plan, including T&D infrastructure for the interconnection and delivery of renewable generation using our grid, our EV charging infrastructure programs, grid modernization, and grid resiliency investments.\nShortly after publishing the framework, SCE issued $900 million of sustainability bonds that will be allocated to eligible projects and reported on next year.\nOur commitment to sustainability is core to the company's values and a key element of our stakeholder engagement efforts.\nImportantly, our approach to sustainability drives the large capital investment plan that needs to be implemented to address the impacts of climate change and to serve our customers safely, reliably, and affordably.\nThat concludes my remarks.\nAs a reminder, we request you to limit yourself to one question and one follow up.\nSo everyone in line has the opportunity to ask questions.\n", "role": "user" }, { "content": "qtrly core earnings per share of $0.94.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 adapted procedures with the safety of our employees and customers in mind, while also continuing to serve our residents and customers in a difficult environment.\nWe have seamlessly transitioned to work-from-home in our corporate and regional offices.\nThe effort and dedication that our teams have shown during these past five weeks is admirable.\nWe have successfully navigated through new regulatory protocols and operating environments at an impressive pace, while maintaining our high quality standards.\nI am proud of our team.\nOur first quarter was strong with an NOI growth rate of 5.2%.\nWe saw strong demand on the MH side of the business, with a 4.9% increase in rental revenue.\nWe wrapped up our snowbird season and have a total RV revenue growth rate of 4.8%.\nThe drivers in that revenue were a 7.4% growth rate in annual revenue, a 7% growth rate in seasonal revenue and a 7.6% decline in transient revenue.\nLet me first address our MH business.\nSince the middle of March, we have taken steps to increase social distancing, include closing the common area amenities and opening our offices by appointment only.\nWe have been and remain focused on ensuring the health and well-being of our employees, residents, members and guests.\nOur customers have appreciated the importance of these steps and have followed the new guidelines.\nWe have an occupancy rate of 95% in our core portfolio.\nWe have often focused on the occupancy rate, but at this time, I think it's important to focus on the quality of our resident base.\nOur residents are homeowners who have generally paid cash for their home.\nOur residents are committed to their communities, they care about the community and they actively display a pride of ownership in their homes.\nOur overall occupancy consists of less than 6% renters.\nWe see our renters as future owners.\nIn 2019, 33% of all home sales were the result of a renter conversion.\nIn April, we saw continued strength in MH platform, with 96% of our residents paying us timely.\nWe have a deferral plan in place for April rental payments for those residents facing financial hardship due to the impact of COVID-19.\nMoving to our RV business, we have had an acquisition strategy over the years of buying RV resorts that are heavily focused on annual and seasonal revenue streams.\n80% of our RV revenue is longer term in nature and 20% come from our Transient customers.\nOur properties have been impacted by local shelter and place orders which call for reduced or eliminated travel activity inside a jurisdiction.\nOur RV annual customer generally has developed roots at the community.\nThe annual customer tends to own a park model, resort cottage or has an RV on the site that has add-ons that create a more permanent footprint.\nFor the first quarter, the annual revenue grew by 7.4%, comprised of 5.8% rate and 1.6% occupancy.\nOur northern RV resorts generally open in April.\nOur annual customers at these locations pay a deposit in advance and then complete their payment when they arrive for the season.\nThese are summer homes and weekend getaways for our customers.\nThis year the opening of 46 of our RV resorts has been delayed until at least the end of April.\nWhile we have begun collecting the annual rent due, the delay in opening has caused a change in the normal payment pattern for these customers.\nOur seasonal revenue stream comes from customers who have a reservation of 30 days or more.\nOur seasonal revenue primarily comes from our sunbelt locations with 70% of the revenue generated between November and March.\nThe first quarter, which represents half of the full year anticipated seasonal revenue grew by 7%.\nThe second quarter seasonal revenue is generally our slowest quarter with approximately 15% of the overall seasonal revenue in 2019, occurring in the second quarter.\nOur transient business represents under 6% of our total revenue.\nWe have always said that this piece is the most difficult to forecast.\nOur transient customer stays with us an average of three nights.\nThe transient business serves an important role for us as we seek to convert that transient customer to a seasonal or annual customer.\nMost of our RV resorts have a small portion of their overall revenue stream focused on the transient business, which becomes a lead generator for the rest of the business.\nTowards the end of March, we stopped accepting transient reservations for the remainder of March and all of April.\nAs a result, the following shelter-in-place orders, we reduced activity to protect our employees and residents from any potential risks associated with transient traffic.\nAt this point, the shelter-in-place orders are limiting our ability to accept transient reservation.\nWith respect to our membership business, we have seen strong demand from the members during this pandemic.\nAs shown in our supplemental, cash receipts are similar to this year to last year at this time.\nWe made the decision to withdraw guidance because we are operating under unprecedented conditions and thought it would be more meaningful for us to provide an outlook when there are updates to regulatory protocol.\nOur business has held up extremely well during these circumstances.\nWe are seeing the best of humanity from our employees, residents, guests and members.\nWe have often described a sense of community at our properties and we have seen these in full display over the past month.\nWe see neighbors caring for neighbors, working together to support the greater community.\nThe demand is high for our property that is seen by our April results.\nBased on feedback that we have received, our customers are very much looking forward to enjoying the outdoors lifestyle at our properties this season.\nThe ELS team has reacted to an evolving climate in an impressive manner, and for that I'm grateful.\nI will provide an overview of our first quarter results, highlight operating performance in April, including the results of our recent annual property and casualty insurance renewal and discuss our balance sheet and liquidity position.\nFor the first quarter we reported $0.59 normalized FFO per share.\nOur results reflect the initial impact of COVID-19, which primarily affected our transient RV business.\nCore MH rent growth of 4.9% includes 4.4% rate growth and approximately 50 basis points related to occupancy gains.\nCore RV rental income from annuals and seasonals outperformed expectations for the quarter.\nOur transient revenues, which were pacing ahead of guidance through February ended the quarter down 7.6% compared to last year.\nAs Marguerite mentioned, we began closing our reservation grid to incoming customers in mid-March.\nFirst quarter membership dues revenue, as well as the net contribution from upgrade sales were higher than guidance.\nDues revenues increased 6.1% as a result of rate increases and an increase in our paid member count of 4.3%.\nDuring the quarter we sold approximately 3,200 Thousand Trails camping passes.\nWe upgraded 727 members during the quarter, 15% more than the first quarter last year.\nCore utility and other income was in line with guidance for the quarter and includes the year-over-year increase in real-estate tax pass-throughs resulting from the Florida reassessments we discussed in January.\nFirst quarter core property operating maintenance and real-estate tax expenses were unfavorable to forecast, mainly as a result of higher than expected R&M expenses.\nWe incurred expenses to recover from storms in California and certain northern properties.\nIn summary, first quarter core property operating revenues were up 5.4% and core NOI before property management increased 5.2%.\nProperty operating income from the non-core portfolio, which includes our Marina portfolio, as well as assets acquired during 2019 was $2.8 million in the quarter.\nOverall, the acquisition properties continue to perform in line with expectations.\nProperty management and corporate G&A were higher than guidance in the quarter because of the timing of expenses related to certain administrative matters.\nOther income and expenses generated the net contribution of $1.4 million for the quarter.\nAncillary, retail and restaurant operations were impacted by COVID-19 and were lower than expected.\nInterest and related amortization was $26.1 million and includes the impact of the refinancing we completed during the quarter.\nI'll provide some detail on this transaction shortly when I discuss our balance sheet.\nIn addition to describing our operational response to the pandemic, the update highlights cash collections and liquidity as indicators of April performance.\nIn our MH properties, we've collected 96% of April rent.\nThe collection rate is net of approximately $180,000 of rent deferral requests we've approved.\nOur largest population within the MH portfolio age qualified properties have the highest collection rate at 97% collected.\nOur renter population, while a very small portion of our portfolio, has the lowest rate of collection with approximately 91% collected.\nAt this time of the year, our RV collection efforts are focused on the northern resorts, annual customers as they typically are returning to begin their season of camping.\nAs detailed in the update, 46 of these properties have delayed openings, which has affected typical payment patterns.\nTo-date, we have collected approximately 61% of the April and May annual RV renewals as compared to 71% collected at this time last year.\nOur seasonal revenue in April was impacted by cancellations as certain customers chose to leave early.\nHowever, we also saw customers extend their stays and are currently showing a revenue decline of 12% in April.\nOur last update relates to our recent property and casualty insurance renewal.\nOn April 1st, we completed the renewal of our property general liability, workers comp and other ancillary insurance programs.\nWhile terms and conditions are substantially similar to the expiring policies, adverse market conditions resulted in a higher than expected premium increase of 27%.\nThe resulting insurance expense for the remainder of the year is approximately $1.1 million higher than our expectation.\nNow, I'll discuss our refinancing activity in the first quarter, highlight current secured debt market conditions and provide some comments on our balance sheet, including our current liquidity position.\nDuring the quarter, we closed a $275.4 million secured facility with Fannie Mae.\nThe loan is a fixed interest rate of 2.69%.\nwhich is the lowest coupon we've seen on a secured 10-year deal in the MH, RV space.\nWith the proceeds, we've repaid our secured debt maturing in 2020, which carried a weighted average interest rate of 5.2% and the outstanding balance in our line of credit.\nThe remaining proceeds funded working capital, primarily our expansion activity.\nAs I provide an update on the secure debt market, bear in mind that the current environment is quite volatile.\nConditions have been changing rapidly and we anticipate they'll continue to do so for some time.\nThat said, current secured financing terms available for MH and RV assets range from 55% to 75% LTV, with rates from 3% to 3.75% for 10-year money.\nAs we've seen in challenging times in the past, sponsor strength is highly valued by lenders and ELS continues to be highly regarded.\nHigh quality aged qualified MH will command preferred terms from participating lenders.\nIn these uncertain times, we decided it was prudent to increase our available cash balance.\nAs noted on our COVID-19 update page, we have a current available cash balance of $126 million with no debt maturing in 2020.\nWe continue to place high importance on balance sheet flexibility and we believe we have multiple sources of capital available to us.\nOur debt to EBITDA and our interest coverage are both around 4.9 times.\nThe weighted average maturity of our outstanding secured debt is almost 13 years.\n", "role": "user" }, { "content": "withdrawing our full year 2020 guidance.\nqtrly normalized funds from operations $0.59 per 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: I am pleased to report the results for the first quarter of 2021.\nOur performance shows the increased demand for our properties.\nWe continued our record of strong core operations and FFO growth, with an 8.1% growth in normalized FFO per share in the quarter.\nNew customer growth in both our RV and MH business contributed to the positive results in the quarter.\nOur new home sales grew by 24%, contributing to the high quality of occupancy at our MH communities.\nWe ended the quarter with Core Portfolio occupancy of 95.4%.\nHome sale leads from websites increased by 37% in the quarter.\nWithin our RV platform, we were successful in offsetting some of the loss in seasonal business with significant growth in transient business for the quarter.\nWe ended the quarter with a 15% increase in transient revenue.\nOur subscription-based Thousand Trails Camping Pass showed strength this quarter.\nOver 5,000 new members purchased the camp pass, which was an increase of 64% over the first quarter of 2020.\nIn the quarter, we saw an increased demand for upgrades in the Thousand Trail system.\nOur members we're looking for expanded access to our portfolio and we saw an increase of $5 million in sales.\nWe now have 117,000 members with access to the Thousand Trails footprint.\nWe are approaching our summer RV season and encouraged by the reservation pace and the feedback we have received from our customers.\nWe recently completed a customer survey and the results support our view that our customers are looking forward to spending time outdoors and at our properties.\nThe survey results show that 98% of respondents who were new to camping last year, plan to camp again this year.\nThe respondents indicated that they chose to camp because it felt like a safe choice and they were able to safely travel with their family and friends.\nThe survey indicate the plan for increased camping adventures with 65% of those responding indicating an intention to more this year.\nThe survey also showed that 70% of those responding do not plan to travel by plane this year.\nIn 2020, to help support the safety of our guests and members, we launched a new online check-in option for our RV guests.\nSince launch, over 160,000 guests completed the online checking process, allowing them to get to their site more quickly and with less direct interaction.\nIn addition, we provided our guests an added way to communicate with our onsite teams during their visit by launching a text message program to reduce the number of in-person interaction.\nOur guests reported high satisfaction levels based on the experience provided by our teams at our properties.\nBased on the first quarter survey results, guests responded to customer experienced questions with a rating of 4.5 out of 5.\nWe continue to protect and enhance the environments where we live, work and play, and encourage our residents, members and guests to do the same.\nOur annual sustainability report will provide updates on our partnerships with conservation focused organizations.\nWe have increased our efforts through partnerships with leading organizations focused on water conservation, supporting the reforestation movement and ocean conservation.\nOur team members did a wonderful job ensuring the safety and well-being of our snowbird residents and guests.\nOur COVID response team has been instrumental in arranging 39 vaccination events at our properties that supplied vaccinations for approximately 8,700 individuals.\nOur operating team will now turn their attention toward the summer season properties and will focus on delivering excellent customer service to our residents, members and guests as they explore our properties this summer.\nI will provide an overview of our first quarter results and walk through our guidance for second quarter and full year 2021.\nI will also discuss our balance sheet before the operator opens the call for Q&A.\nFor the first quarter, we reported $0.64 normalized FFO per share.\nThe outperformance to guidance in the quarter resulted from better-than-expected transient performance, membership upgrades, and expense savings.\nIn addition, our guidance did not assume the net contribution from our southern marinas portfolio acquisition.\nCore MH rent growth of 4.7% includes 4.1% rate growth and approximately 60 basis points related to occupancy gains.\nCore RV and marina rental income from annuals was in line with expectations for the quarter.\nAnnual RV rental income represents 90% of the combined RV and marina rental income from annuals, and has increased 3.5% with 3.4% from rate.\nWithin the core marina portfolio, marina rent from annuals represents approximately 99% of total marina rental income.\nCore RV and marina rental income from seasonal and transient customers outperformed our expectations.\nIncluded with our guidance assumptions composed in January, we estimated a $10 million decline from combined seasonal and transient revenues compared to first quarter 2020.\nThe actual decline was approximately $6 million.\nThe main factors driving this favorable result were increased customer confidence in travel, given declining COVID case counts and increased vaccine availability, as well as the cold weather pattern in February that increased customer demand for stays in warmer climates.\nTransient revenues represented approximately two thirds of the combined outperformance.\nFirst quarter membership subscriptions as well as the net contribution from upgrade sales outperformed our expectations.\nThe main contributor to outperformance was strong demand for our upgrade products.\nUpgrade sales volume increased by 640 units compared to first quarter 2020.\nThe price of upgrade sold increased approximately 10% compared to last year.\nIn addition to strong demand for upgrades, our camping pass sales volume increased more than 60% during the quarter.\nFirst quarter core property operating maintenance and real estate tax expenses increased 2.3% compared to prior year.\nUtility expense payroll, real estate taxes and repairs and maintenance combined represent more than 80% of our core expenses in the quarter, and the average increase across these categories was 2.3%.\nIn summary, first quarter core property operating revenues increased 2.8% and core NOI before property management increased 1.9%.\nProperty operating income from the non-core portfolio, which includes assets acquired in 2020 and during the first quarter 2021, was $3.3 million.\nOverall, the acquisition properties performed in line with expectations.\nProperty management and corporate G&A were $25.9 million, flat to first quarter 2020.\nA key contributor to the year-over-year comparison is lower travel expenses in 2021.\nOther income and expenses were approximately $3.1 million higher than first quarter 2020, mainly from home sale profits and ancillary income.\nInterest and related amortization was $26.3 million, slightly higher than prior year.\nThe first quarter 2021 results include the interest expense resulting from debt used to fund our acquisition activity, offset by the accretive refinancings we closed in the first and third quarters of 2020.\nAs I provide some context for the information we've provided, keep in mind, my remarks are intended to provide our current estimate of future results.\nA significant factor in our guidance assumptions for the remainder of 2021 is the level of demand for transient stays in our RV communities.\nWe have developed guidance based on our current customer reservation trends.\nWhile macro indicators suggest we're heading in a favorable direction relative to the impact of COVID on daily life, our experience over the past year has shown that circumstances can change.\nWe intend to continue to monitor the situation closely and we'll manage our business accordingly.\nOur full-year 2021 normalized FFO guidance is $2.38 per share, at the midpoint of our range of $2.33 to $2.43.\nNormalized FFO per share at the midpoint represents an estimated 9.7% growth rate compared to 2020.\nCore NOI is projected to increase 5.3% at the midpoint of our range of 4.8% to 5.8%.\nThe core NOI growth rate increase from our prior guidance is mainly the result of our first quarter outperformance.\nOur expectation for the second through fourth quarters is consistent with our budget.\nAs a reminder, our core portfolio changes annually.\nOur guidance for the full year and second quarter includes the impact of the acquisition activity we've closed in the first quarter with no assumptions for additional acquisitions during the year.\nWe've also included the impact of the financing activity we've disclosed, including the recast of our unsecured credit facility, which I'll discuss after highlighting some of our second quarter guidance assumptions.\nWe expect second quarter normalized FFO at the midpoint of our range of approximately $103.5 million, with a per share range of $0.51 to $0.57.\nWe expect the second quarter to contribute 22% to 23% of full year normalized FFO.\nWe project a core NOI growth rate range of 6.9% to 7.5%.\nKeep in mind, our second quarter 2020 transient RV business was significantly impacted by COVID-related travel restrictions and shelter-in-place orders.\nMH and RV annual rate growth assumptions for the second quarter and full year remain consistent with our prior guidance.\nAs Marguerite mentioned, we anticipate continued strong demand across our RV platform.\nWe've built our transient RV revenue assumptions for the second and third quarters using factors, including current reservation pace compared to both 2020 and 2019.\nOur guidance for the second quarter assumes a growth rate of approximately 14% compared to 2019.\nThis represents a core transient RV revenue increase of approximately $8.8 million compared to 2020.\nDuring the quarter, we closed the previously disclosed $270 million 10-year secured loan with a fixed interest rate of 2.4%.\nIn April, we closed on an amended unsecured credit facility, including a $500 million revolver and a $300 million fully funded term loan.\nThe term loan proceeds were used to repay an acquisition loan we originated in early February.\nThe revolver matures in four years and we have two six-month extension options.\nThe term loan matures in five years and we've executed a fixed rate swap that locks in the interest rate at 1.8% for three years.\nCurrent secured debt terms available for MH and RV assets range from 55% to 75% LTV, with rates from 2.5% to 3% for 10-year maturities.\nHigh quality, age qualified MH assets will command best financing terms.\nRV assets with a high percentage of annual occupancy have access to financing from certain life companies as well as CMBS lenders.\nLife companies continue to quote competitively on longer term maturities.\nWe continue to place high importance on balance sheet flexibility, and we believe we have multiple sources of capital available to us.\nOur debt to EBITDA is 5.7 times and our interest coverage is 5.2 times.\nThe weighted average maturity of our outstanding secured debt is almost 13 years.\n", "role": "user" }, { "content": "q1 adjusted ffo per share $0.64.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I am pleased to report the results for the second quarter of 2021.\nOur properties experienced unprecedented demand in the quarter.\nOur MH revenue, RV revenue, home sales and subscription revenue exceeded our expectations.\nWe continued our record of strong core operations and FFO growth with a 30% growth in normalized FFO per share in the quarter.\nWhile this great -- growth rate is significantly impacted by the negative comps from 2020, it represents 28% growth from the second quarter 2019.\nNew customer growth in both MH and RV contributed to the positive results in the quarter.\nYear-to-date, new home sales grew by 122% contributing to the high quality of occupancy at our MH communities.\nHomeowners grew by 179 in the quarter, driven by a record number of new home sales.\nOur residents recognize the high quality and value of homes in our communities and are especially motivated to buy given trends in the broader real estate market.\nWe continue to focus on digital marketing and our website experience as a catalyst for growing our home sales pipeline.\nThe unique traffic to our website has grown over 35% compared to the same time prior to the pandemic.\nWithin our RV platform, we saw increased demand during holidays and weekends, as well as strength in weekday activity.\nWe saw an increase in customers committing to us on an annual basis.\nThe resort LifeStyle appeals to our customers as they choose an ELS property for their second home.\nWe are attracting a larger number of new guests than in previous years and new customers look a lot like our pre-pandemic guests, indicating stability in our growing customer base.\nThe number of new customers added to our database during the first half of 2021 is up 25% compared to 2019.\nThese, first time our viewers are drawn to campaign because of an increased desire to spend time outside and the feeling that campaign is a safe activity.\nWe see our new customers choosing to increase engagement with us.\nOur subscription-based Thousand Trails Camping Pass showed significant growth in the quarter.\nOver 8,000 new members purchase a campus, which was an increase of 40% over the second quarter of 2020.\nWe reached a new high with almost 50% of all camp passes being sold online.\nWith increased RV sales, we saw our RV dealer past activations increased 39%.\nIn our customer surveys, our new customers are indicating that they intend to camp more even after returning to other vacation travel including plane travel and hotel stays.\nIn 2020 to help support the safety of our guests and team members, we launched a new online check-in option for our RV guests.\nSince launch, over 250,000 reservations were completed through the online check-in process allowing them to get to their site more quickly and with less direct interaction.\nThe 2021 TripAdvisor Traveler's Choice Awards have been announced and we are pleased that 54 of our properties won this year, 26 of those properties are Hall of Fame winners as they have maintained a Travelers' Choice Award for 5 years.\nOur guests reported high satisfaction levels based on the experience provided by our teams at our properties.\nBased on the second quarter survey results, guests responded to customer experience questions with a rating of 4.46 out of 5.\nIn May, we released our Annual Sustainability Report, highlighting our commitments to American Forest and Marine Life as well as our ongoing project centered around energy efficiency at our properties.\nWe have increased our efforts to bolster diversity through our CEO action pledge, expanded learning curriculum and recruitment efforts.\nThe report highlights all the ways that we unite people, places and purpose within our communities.\nWe are halfway through our primary camping season and the feedback we've received is a testament to the hard work of our teams in the field and in the home and regional offices.\nI will review our second quarter results, highlight our guidance assumptions for the third quarter and full year 2021 and discuss our balance sheet and debt market conditions.\nFor the second quarter, we reported $0.61 normalized FFO per share, $0.07 ahead of the midpoint of our guidance range.\nThe main drivers of outperformance compared to our guidance were core RV rent revenues and membership revenues including upgrade sales.\nOur core MH rent growth of 4, 7% consists of approximately 4.1% rate growth and 60 basis points related to occupancy gains.\nWe have increased occupancy 153 sites since December with an increase in owners of 283, while renters decreased by 130.\nWhile our occupied sites increased during the second quarter, our reported occupancy percentage reflects the impact of expansion sites we've added to our portfolio.\nCore RV resort base rental income from annuals, increased 7.5% for the second quarter and 5.6% year-to-date compared to the same periods last year.\nAnnual RV rate increases, continue to be in line with our expectations.\nIncreased occupancy from annual RV residents in our Northern properties was higher than expected during the quarter.\nThe average annual rates in these locations are lower than our Southern and Western Resorts, so the increased occupancy slightly reduced our core portfolio average rate.\nFor the quarter, RV rent from seasonal, increased 31% and rent from transients increased 180% compared to 2020.\nThe comparison to prior year is impacted significantly by COVID-related property closures and shelter in place orders that were in effect during the second quarter 2020.\nStrong demand in the quarter is evidenced by seasonal and transient growth rates of 19% and 50% respectively over 2019.\nMembership dues revenue increased 10.1% and 7.2% for the quarter and year-to-date respectively compared to the prior year.\nYear-to-date, we've sold approximately 13,000 to 500,000 Trails Camping Pass memberships, this represents a 50% increase over the same period in 2020 and an increase of 32% over the same period in 2019.\nThe net contribution from membership upgrade sales year-to-date is $5 million higher than 2020.\nDuring the quarter, members purchase more than 1,200 upgrades at an average price of approximately $7,400.\nCore utility and other income was higher than expected during the quarter as a result of the receipt of insurance proceeds related to Hurricane Hanna in 2020.\nWe recognized approximately $2.3 million of income in the quarter related to that storm event.\nCore property operating, maintenance and real estate tax expenses were generally in line with our expectations for the quarter, higher than expected utility expenses for offset by lower payroll expense as we faced challenges filling open positions across the portfolio.\nThe comparison to second quarter 2020, shows an elevated expense growth rate as a result of the COVID-related limited operations conducted across our portfolio during the second quarter last year.\nIn summary, second quarter core property operating revenues increased 14.9% and Core property operating expenses increased 13.9%, resulting in an increase in core NOI before property management of 15.6%.\nFor reference, the second quarter core NOI growth CAGR from 2019 is 8%.\nIncome from property operations generated by our non-core portfolio was $5.2 million in the quarter.\nThis result was higher than our expectations in part because of the NOI contributed by Pine Haven, the RV resorts we acquired during the quarter.\nRevenues from annual customers at the marinas and other properties in the non-core portfolio generated more than 90% of total non-core revenues in the quarter and year-to-date periods.\nProperty management and corporate G&A expenses were $26.8 million for the second quarter of 2021 and $52.7 million for the year-to-date period.\nOther income and expenses generated a net contribution of $5.7 million for the quarter.\nNew home sales profits along with the recovery in our ancillary retail and restaurant operations contributed to an increase of $4 million in sales and ancillary NOI compared to the second quarter 2020.\nInterest and related loan cost amortization expense was $27.1 million for the quarter and $53.4 million for the year-to-date period.\nAs I provide some context for the information we've provided, keep in mind my remarks are intended to provide our current estimate of future results.\nA significant factor in our guidance assumptions for the remainder of 2021 is the level of demand for transient stays in our RV communities.\nWe have developed guidance based on our current customer reservation trends.\nOur full year 2021 normalized FFO is $2.47 per share, at the midpoint of our range of $2.42 to $2.52 per share.\nNormalized FFO per share at the midpoint represents an estimated 13.4% growth rate compared to 2020.\nCore NOI is projected to increase 7.9% at the midpoint of our range of 7.4% to 8.4%.\nThe core NOI growth rate increased from our prior guidance is mainly the result of our second quarter outperformance.\nOur expectation for the third and fourth quarters has been updated to include MH occupancy gains in the second quarter, current RV reservation trends and expense adjustments based on year-to-date activity.\nAs a reminder, we make no assumptions for storm events or other uninsured property losses we may incur.\nOur guidance for the full year and third quarter includes the impact of the acquisition activity we've closed in the first and second quarters with no assumptions for additional acquisitions during the year.\nWe've also included the impact of the financing activity we've disclosed including the recast of our unsecured credit facility.\nWe expect third quarter normalized FFO at the midpoint of our range of approximately $119.5 million with a per share range of $0.59 to $0.65.\nWe expect the third quarter to contribute 25% of full year normalized FFO.\nWe project a core NOI growth rate range of 8.7% to 9.3%.\nMH and RV annual growth -- rate growth assumptions for the third quarter and full year remained consistent with our prior guidance.\nWe've built our transient RV revenue assumptions for the third and fourth quarters using factors including current reservation pace compared to both 2020 and 2019.\nOur guidance for the third quarter assumes a growth rate of approximately 23% compared to 2019, this represents a core transient RV revenue increase of approximately $3.5 million compared to 2020.\nOur fourth quarter assumptions include a reopening of the Canadian border and return of those customers for the upcoming winter season.\nNow, some comments on debt markets and our balance sheet.\nCurrent secured debt terms available for MH and RV assets range from 50% to 75% LTV with rates from 2.5% to 3.5% for 10-year maturities.\nHigh quality age-qualified MH will command best financing terms.\nRV assets with a high percentage of annual occupancy have access to financing from certain life companies as well as CMBS lenders.\nLife companies continue to quote competitively on longer term maturities.\nWe continue to place high importance on balance sheet flexibility and we believe, we have multiple sources of capital available to us.\nOur debt-to-EBITDAre is 5.4 times and our interest coverage is 5.4 times.\nThe weighted average maturity of our outstanding secured debt is approximately 12.5 years.\n", "role": "user" }, { "content": "q2 adjusted ffo per share $0.61.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I am pleased to report the final results for 2020.\nOur performance shows the resiliency of our business.\nIn 2020, our team has met each challenge with confidence and conviction.\nOur team is focused on providing a safe experience for residents, customers and employees.\nWe were able to serve our residents and customers in a challenging operating environment while maintaining our impressive customer feedback scores.\nWe continued our record of strong core operations and FFO growth with a 10% growth in normalized FFO per share in the quarter.\nThe fundamentals of our business remain strong with demographic and economic trends creating tailwinds for future growth.\nIn 2020, our MH portfolio increased occupancy by 293 sites.\nWe experienced continued strength at our MH properties with full-year rent revenue growth of 4.6%.\nWe saw fewer move-outs this year, primarily due to shelter-in-place orders.\nWe adjusted our sales and marketing efforts and were able to access new customers and efficiently showcase our homes in a virtual environment.\nThroughout the fourth quarter, there were over 100 virtual home tours on our website.\nWebsite visitors looking at our listings were three times more likely to express interest in the community and share their contact information for a follow-up from our team after reviewing a virtual tour on our website.\nWe see this as an opportunity to further grow RV base.\nIn 2020, the demand was strong for RV sites across the country.\nIn the quarter, we saw an increase in core transient revenue of 15%.\nThis growth was fueled by marketing campaigns for fall and winter campaign opportunities.\nOur customers are interested in experiencing vacations in a safe environment.\nWe also see an increased flexibility in customer schedules that will continue to benefit us.\nIn 2020, our Thousand Trails membership portfolio performed in line with pre-pandemic expectations.\nOur dues revenue increased over 4% to $53 million.\nWe sold over 20,000 camping passes, an increase of over 6% from 2019.\nOur upgrade sales increased 15% over 2019 as we saw more customers interested in increasing their commitment to the Thousand Trails system.\nIn 2020, to help support the safety of our guests and team members, we launched a new online check-in option for our RV guests.\nAbout one-third of guests completed the online check-in process, allowing them to get to their site more quickly and with less direct interaction.\nIn addition, in 2020, we provided our guests an added way to communicate with our on-site teams during their visit by launching a text message program to reduce the number of in-person interactions.\nOur guests reported high satisfaction levels, based on the experience provided by our teams at our properties.\nWe send online service to our guests after they stay at our RV resorts and campgrounds.\nBased on the fourth quarter survey results, guests responding to customer experiences questions with the rating of over 4.5 out of 5.\nWe have issued guidance of $2.31 at the midpoint, which is a 6.4% growth in normalized FFO per share.\nThe demand for our MH communities continues to increase.\nOver the last five years, we have sold more than 2,200 new homes in our communities.\nWe finished the year strong with a 30% increase in new home sales year-over-year.\nWe see heightened demand for our locations and believe our home sales volume will reflect that demand.\nWe have noticed rent increases for approximately 60% of our residents and anticipate a 4.2% rate growth in MH revenue.\nOur RV business in 2020 showed resiliency as it rebounded from pandemic-related closures.\nAs we head into 2021, we continue to have the backdrop of COVID-related travel issues in Canada and the U.S. hampering our results for the first quarter.\nAs we have discussed, our Canadian traffic has been significantly impacted by the border closures.\nOur guidance for 2021 reflects the strength in our business.\nOur guidance is built based on the operating climate of each property, including a robust market survey process and continuous communication with our residents.\nSince our last call, we have closed on over $200 million of transactions.\nWe added approximately 2,100 RV sites to the portfolio and approximately 500 MH sites, with over 700 sites of adjacent expansion and 500 marina slips.\nThe acquisitions were geographically diverse and complementary to our existing footprint.\nAdditionally, we closed on four parcels of entitled land with 300 acres.\nWe anticipate being able to build 1,000 sites in these acquired acres.\nIn total, in 2020, we purchased eight parcels of land adjacent to our existing properties.\nWe will continue to pursue and execute on these value add transactions.\nNext, I would like to update you on our 2021 dividend policy.\nThe Board has approved setting the annual dividend rate at a $1.45 per share, a 6% increase.\nThe Board will determine the amount of each quarterly dividend in advance of payment.\nThe stability in growth of our cash flow, our solid balance sheet and the strong underlying trends in our business are the primary drivers of the decision to increase the dividend.\nHistorically, we have been able to take advantage of opportunities due to the free cash flow generated by our operations.\nConsistent with the past, in 2021, we expect to have an excess of $90 million of discretionary capital after meeting our obligations for dividend payments, recurring capital expenditures and principal payments.\nWe have increased our dividend significantly over the last few years.\nOver the past five years, we have increased our dividend 71%.\n2020 was a difficult year.\nWe have over 4,000 team members dedicated to ensuring success in our organization, and for that I am grateful.\nWe asked a lot of our team members this year, with each new regulation or change in operating climate, we saw increased dedication to our continued success.\nOur team members strive to perform their best each day and the results of their efforts have been impressive.\nI will review our fourth quarter and full-year 2020 results, and provide an overview of our full-year 2021 guidance.\nFourth quarter normalized FFO was $0.57 per share.\nStrong performance in our Core Portfolio generated 3.6% NOI growth for the fourth quarter.\nCore NOI growth of 2.9% for the full year contributed to our normalized FFO per share growth of 3.9%.\nAs Marguerite mentioned, full-year core community base rental income growth was 4.6%.\nRate increases contributed 4.1% growth while occupancy generated the additional 50 basis points.\nOur 2020 core occupancy increase included a gain of 345 homeowners.\nOur rental homes continue to represent less than 6% of our MH occupancy.\nFull-year core resort base rental income growth from annuals was 5.6% with 4.9% from rate increases and 70 basis points from occupancy gains.\nCore RV seasonal and transient revenues declined 3.7% and 8%, respectively for the year.\nFourth quarter seasonal RV revenues were approximately $2 million less than last year, mainly due to the travel-related restrictions impacting Canadian and U.S. domestic customers' decisions to spend the winter season in our Southern resorts.\nFor the full year, net contribution from our membership business was $2.9 million higher than 2019, an increase of 5.3%.\nDues revenues increased 4%, mainly as a result of increased rate.\nStrong demand for our upgrade products is evidenced by the full-year increase in sales volume of 16%.\nFull-year growth in utility and other income is mainly the result of increases in real estate tax pass-throughs and utility income.\nThe pass-through income represents recovery of 2019 tax increases, mainly in Florida, and the utility income increase reflects recovery of increased expense resulting from higher usage in our properties.\nFull-year core property operating, maintenance and real estate taxes increased 5% compared to 2019.\nThis increase includes approximately $5.1 million in unplanned expenses associated with cleanup following hurricanes Hanna and Isaias, as well as expenses incurred as a result of cleaning and safety protocols and frontline employee compensation following the onset of COVID-19.\nOur non-core properties, including those acquired during the fourth quarter, contributed $4.4 million in the quarter and $14.4 million for the full year.\nProperty management and corporate G&A were $97.2 million for the full year.\nOther income and expenses, net, which includes our sales operations, joint venture income as well as interest and other corporate income, was $10.5 million for the year.\nInterest and amortization expenses were $102.8 million for the full year.\nThis includes the partial year impact of our refinancing activity in the first and third quarters, as well as the line of credit borrowings used to fund our recent acquisitions.\nAs I provide some context for the information we provided, keep in mind, my remarks are intended to provide our current estimate of future results.\nOur guidance for 2021 normalized FFO is $445 million or $2.31 per share at the midpoint of our guidance range of $2.26 to $2.36 per share.\nWe projected core NOI growth rate between 3.3% and 4.3% with 3.8% at the midpoint.\nFull-year guidance includes 4.2% rate growth for MH and 4.5% for annual RV rents.\nWe assume flat occupancy in our MH properties for 2021.\nOur guidance assumes first quarter seasonal and transient RV revenues perform in line with our current reservation pacing.\nWe estimate the first quarter decline in revenue from these line items compared to same period last year to be almost $10 million.\nAlmost 50% of that shortfall is caused by our Canadian customers deciding not to visit for the season.\nOur customer reservation trends indicate a strong interest in returning to our properties for the 2021-'22 winter season.\nCurrent reservations for seasonal stays in the first quarter of 2022 are four times higher than last time at this year.\nAs a reminder, in years prior to 2020, the first quarter represented approximately 50% of our seasonal RV revenues for the year.\nWithin our transient RV business, we have two lines of revenue, one services the customers who drive their RV to our property and the other services the cottage rental customers.\nFor the first quarter, we have seen an increase of 10% in the reservations from customers driving their RV to our resorts and a decline in our cottage rental business of almost 40%.\nThis represents approximately $1 million less cottage rental income in 2020.\nWhile we have less visibility into the transient business for the remainder of the year, we have seen an increased reservation pace for the spring and summer season.\nWe expect first quarter normalized FFO per share to represent approximately 24% to 25% of full-year normalized FFO per share.\nOur guidance model includes the impact of our recent acquisitions, including the RV property we acquired last week.\nThe model also includes the financing activity I'll discuss shortly.\nThe full-year guidance model makes no assumptions regarding other capital events or the use of free cash flow we expect to generate in 2021.\nI'll now provide some comments on the financing market and our balance sheet.\nThe lender currently holds the mortgage on two of the properties to be financed.\nThose existing mortgages mature in 2022 and carry a weighted average rate of 5.1%.\nWe intend to use the loan proceeds to repay a portion of our 2022 maturities and amounts outstanding on our line of credit.\nPlease note, as this loan is not yet closed, we can make no assurance that it will close pursuant to these terms or at all.\nCurrent secured debt terms are 10 years at coupons between 2.5% and 3.5%, 60% to 75% loan-to-value and 1.4 times to 1.6 times debt service coverage.\nWe continue to see strong interest from life companies, GSEs and CMBS lenders to lend at historically low rates for terms 10 years and longer.\nHigh-quality age-qualified MH assets continue to command best financing terms.\nWe have no secured debt maturing in 2021.\nOur $400 million line of credit currently has approximately $297 million outstanding.\nOur ATM program has $200 million of available liquidity.\nOur weighted average secured debt maturity is approximately 13 years.\nOur debt-to-adjusted EBITDA is around 5.2 times and our interest coverage is 5.1 times.\nWe continue to place high importance on balance sheet flexibility, and we believe we have multiple sources of capital available to us.\n", "role": "user" }, { "content": "q4 revenue rose 5.1 percent to $271.9 million.\nsees 2021 normalized ffo/share $2.26 to $2.36.\nqtrly ffo available for common stock and op unit holders were $0.57 per common share.\nsees 2021 fy normalized ffo/share to be $2.26 to $2.36.\nq1 2021 normalized ffo per share is anticipated to represent 24-25% of full year normalized ffo per shar.\nboard has approved setting annual dividend rate for 2021 at $1.45 per share of common stock, an increase of 5.8%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 Patrick Burke, the company's head of investor relations.\nIt's great to be with you today to discuss what we believe were excellent Q1 results as well as to provide some color on the outlook for the business going forward.\nOur Q1 results exceeded our revenue and profitability expectations in all three of our principal business segments.\nOur golf equipment segment continued to experience unprecedented demand, which combined with a strong performance by our supply chain team, delivered 29% revenue growth versus 2020, and 16% growth versus 2019.\nOur apparel and soft goods segment also overperformed our expectations, driven by positive brand momentum in both TravisMathew and Jack Wolfskin.\nThe fact that this segment delivered positive segment profitability was, in my opinion, an exceptional performance given the headwinds faced by COVID restrictions and shutdowns in the European markets.\nI believe these trends bode very well for the long-term outlook of this segment.\nLastly, Topgolf outperformed expectations based on a faster-than-anticipated recovery in demand as well as strong operating efficiencies.\nWe believe it would be hard to find three better-positioned business segments both for the current environment and our expectations going forward.\nLike me, I'm sure our team remains highly motivated to capitalize on the strong list of opportunities in front of us.\nLet's now turn to Page 6 and jump into our Q1 results by segment.\nOur golf equipment segment continues to benefit from record demand levels.\nretail sales of golf equipment hard goods were up 49% compared to Q1 2019 and 72% compared to 2020, thus setting another record for Q1 just as the last two quarters delivered records for their respective time periods.\nOur supply chain team did a great job in Q1 chasing demand and exceeding our expectations on supply.\nEven with this great work, field inventory levels remain extremely low and we expect them to remain so at least through midyear, perhaps even longer.\nFortunately, we also believe our supply chain is and will continue to deliver us a competitive advantage through the balance of the year, especially in custom fitting, where demand is also surging right now.\nAlthough we fully expect the current unprecedented demand to moderate at some point, we have yet to see a slowdown, and we continue to see particular strength in product aimed at women's, juniors and new entrants to the game.\nWe are now quite confident that 2021 will be a very strong year and we also believe there will be a long-term benefit to the golf industry as we expect it will leave the pandemic period with a significantly larger total addressable market and strong momentum.\nOur Q1 market share was a little weaker than desired during the quarter as four major golf equipment brands launched metal wood product this year, while Q1 2020 only had two of the four launch.\nWe never like to cede share, but at this point, we are not overly concerned.\nAs our most recent share trends are improving, we expect this improvement to continue through Q2, and we are performing relatively stronger in key accounts that are not reporting to Datatech as well as a strategically important green grass channel.\nFurthermore, we've been receiving excellent feedback on the performance of our products, especially the Epic MAX Woods, the Apex Ford tires, the two-bolt tin putter as well as our entire ball lineup.\nWe also remain comfortable with our brand strength and position.\nIn the U.S., third-party research from Datatech showed our brand to be the No.\n1 club brand in overall brand rating as well as the leader in innovation and technology.\nOver the last several years, we have shown resilience with these important brand positions.\nTurning to our soft goods and apparel segment.\nGiven the headwinds faced by COVID restrictions and lockdowns in the European markets, the results delivered in this segment were both better than our expectations, and in my opinion, an exceptional performance.\nLooking at the larger individual businesses in this segment, starting with TravisMathew, we had high expectations for growth, and still, the business exceeded these expectations.\nDriving this performance, e-com was up 145% year over year in Q1, and company-owned stores comped up nearly 10% despite some code restrictions early in the quarter.\nSell-through at wholesale was also very strong.\nRyan Ellison and his team at TravisMathew are to be commended as momentum for this business is at an all-time high.\nTurning to Jack Wolfskin.\nThis is the business that probably most overperformed expectations in Q1.\nAs you probably recall, this business has started to deliver some nice year-over-year growth at the end of last year and was starting to look like we had turned the corner on brand momentum.\nThough the COVID resurgence and resulting third-wave shutdowns in Europe, we were naturally concerned.\nAlthough these circumstances have significantly impacted our business, how could they not?\nAnd they will continue to do so through at least Q2.\nOur brand momentum in our European e-com channel and key digital partners has really moderated that negative impact.\nCombine this with both nice growth in China and strong financial discipline, what could have been a significant drag on our business has become manageable.\nOn top of this, the improving brand momentum should set us up for a strong second half, assuming, of course, the European markets open up as expected by then.\nOur sell-through momentum in this business is good, and prebooks for the full winter line have been quite strong.\nAs a reminder, Richard Collier joined the brand in December as CEO.\nRichard joined us from Helly Hansen, where he held the title of global product officer and served in that capacity as well as de facto COO.\nWe are really pleased with the leadership team we now have in place, and I'm increasingly confident in the future of this brand.\nLast but not least, a few comments on the Callaway branded softwood business.\nAs mentioned last quarter, in Korea, we plan to take back the Callaway Golf apparel brand that's been licensed to a third party for several years and launched our own apparel business during the second half of this year.\nWe remain on track for this and are investing in staffing and IT systems accordingly.\nThe team there is energized by this opportunity as this is something, we have been considering for several years now.\nTaking a step back in looking at the big picture.\nFor the last year, the hero of the soft goods and apparel segment is certainly e-com.\nThis is a channel that was significantly strengthened by investments we made prior to the pandemic as well as those continuing to this day.\nThese investments enable our apparel business e-com to deliver 96% year-over-year growth in Q1.\nE-com is now a significant portion of the channel mix of this segment, and we are confident our expanded capabilities and strength here will bolster this business' growth prospects and profitability going forward.\nPost-COVID, we continue to expect our apparel and soft goods segment to grow faster than our golf equipment business, and with that growth, deliver operating leverage and enhanced profitability.\nAnd although the pandemic delayed our efforts, we still believe we'll be able to deliver $15 million of synergies in this segment over the coming years.\nLike our company overall, this segment, with its concentration in golf and outdoor, appears to be well positioned for both the months and years ahead both during the pandemic and after.\nNow turning to Top Golf.\nThis exciting new segment also outperformed expectations based on a faster-than-anticipated recovery in demand as well as strong operating efficiencies.\nWe were pleased to close the transaction in early March, and equally pleased to onboard Artie Starrs as the new CEO in early April.\nArtie brings a wealth of valuable experience and talent to an already strong management team and an exciting business.\nNeedless to say, I'm thrilled by this combination.\nOn the venue side, all venues are now open globally.\nAfter a challenging start to the year, COVID restrictions are continuing to ease.\nCOVID impacted, so these include the impact of venues shut or restricted during COVID during the period.\nSame venue sales versus 2019 was in the low 80s for the quarter, which was above our expectations and showed improving trends through the quarter.\nWe now believe we will be either at the high end or modestly above our previous full year same venue sales expectations, which was 80 to 85%.\nWalk-in traffic remains stronger than events still, and both are trending well.\nOur financial results benefited from the same venue sales fee as well as the operating efficiencies that are higher than both historical levels and our plan.\nSome of this is due to the fact that in the current environment, like so many other service businesses, it's hard to keep the venues fully staffed.\nFortunately, we're working through this well, and so far, it has neither meaningfully constrained us, nor has it had a negative impact on guest satisfaction measures.\nWe see it as the manageable challenges of now.\nAlso, with these results, we're increasingly confident that previously communicated venue economics will be achievable long term.\nWe successfully opened five new venues so far this year, two in Q1 and three, so far, in Q2.\nGlobally, we have 66 company-owned venues in operation.\nFor the full year, we are on track to open at least three more venues, for a total of at least eight venues this year.\nWe also remain confident in our pipeline for future venues.\nWe successfully installed 1,533 bays in Q1, a new record despite the COVID challenges globally.\nWe now have just over 10,000 bays globally, which is significantly more than our largest competitor.\nDemand remains strong for the product, and we are finding strong synergies between the Callaway sales team and the Toptracer team.\nWe remain on track for 8,000 bays this year.\nAt the end of this week, we'll be launching the next global Toptracer tournament, the 9-Shot Challenge.\nThis time, presented by the PGA America and the PGA Championship.\nThis is an excellent example of how we can leverage our global scale and build a digital community.\nLooking forward, given the unsettled market conditions globally, we're still not providing specific revenue and earnings guidance.\nHowever, we now have enough new information and visibility to provide the following color: As discussed on our previous calls, we continue to have headwinds in our supply chain, logistics and labor.\nAs far as I'm aware, most companies do at this point.\nOur cost estimates for these headwinds have increased since we last spoke.\nHowever, our supply chain and HR teams are proving up to these challenges.\nI believe we may even have a competitive advantage here.\nAlso, at present, the demand is high enough that positive volume variances are expected to overshadow the majority of this year's cost impacts from these challenges.\nWe also continue to make select reinvestments back into our business.\nFor the balance of the year, these will be marginally more than what we discussed during our last call.\nThese include incremental new store openings at TravisMathew, investments in demand creation and digital resources for all brands, as well as the apparel business.\nWe have a track record for making these kind of internal investments and are confident these will deliver higher returns for shareholders.\nAlthough we continue to fight COVID impacts globally,and business conditions remain unsettled, the strong demand equation and the momentum of our brands is such that it's clearly going to be a strong financial year; significantly stronger than previously thought.\nWe now expect that revenue and adjusted EBITDA for the full 12 months of 2021 will meet or beat 2019 results.\nMore specifically, We are now expecting our legacy business to exceed its 2019 results and the Topgolf business to meet or exceed its 2019 full-year results, as measured over the full 12-month period.\nIt is worth noting that a couple of quarters ago, I said I thought this was not in reach.\nI'm happy to have to correct that previous statement.\nLastly, we are increasingly confident in the future potential of this unique and powerful business.\nBrian, over to you.\nWe are very pleased with our first-quarter results, with consolidated revenue increasing 47% and adjusted EBITDA increasing 113% compared to the same period in 2020.\nOur consolidated revenue and adjusted EBITDA for the first quarter of 2021 increased by 26% and 38%, respectively compared to the first quarter of 2019.\nEach of our three operating segments performed ahead of plan during the first quarter of 2021.\nIn addition to this better-than-expected operating performance, our liquidity has also improved substantially compared to a year ago.\nAs of March 31, 2021, our available liquidity, which is comprised of cash on-hand and availability under our credit facilities, was $713 million compared to $260 million at March 31, 2020.\nAll in all, we are pleased with the current state of our business and are optimistic for the balance of the year.\nIn evaluating our results for the first quarter, you should keep in mind some specific factors that affect year-over-year comparisons.\nFirst, as a result of the OGIO, TravisMathew and Jack Wolfskin acquisition, we incurred non-cash amortization expense of intangible assets in the first quarter of 2021 and 2020.\nThe first quarter of 2021 also includes non-cash amortization of intangible assets related to the Topgolf merger as well as depreciation expense from the fair value step-up of Topgolf property, plant and equipment and expense related to the fair value adjustments to Topgolf's leases and debt.\nSecond, we also incurred other acquisition and non-recurring charges in the first quarter of 2021, including Topgolf merger transaction and transition expenses and implementation costs related to the new Jack Wolfskin IT system.\nIn 2020, the company incurred non-recurring integration costs related to the Jack Wolfskin acquisition and costs related to the transition to our new North American distribution center in Texas.\nThird, we recognized in the first quarter of 2021 a $253 million non-cash gain related to the write-off of our premerger Topgolf investment.\nFourth, we incurred in the first quarter of 2021 and will continue to incur noncash amortization of the debt discount on the notes issued during the second quarter of 2020.\nFifth, we recorded in the first quarter of 2021, a non-cash valuation allowance related to certain of our deferred tax assets as a result of the merger.\nLastly, the Topgolf merger was completed on March 8, 2021.\nTopgolf generally operates in a 13-week quarter.\nAs a result, our first-quarter 2021 financial statements include Topgolf results for our four-week period, commencing March 8, 2021 and ending April 4.\nThis can become confusing, and we would do our best to call out when we are discussing Topgolf results for the full quarter versus the four-week stub period.\nBut you should do care when preparing your models to ensure you are using the correct one.\nWe have provided in the tables to this release a schedule detailing the impact of these items on first-quarter results, and these items are excluded from our non-GAAP results.\nWith those factors in mind, I will now provide some specific financial results for the first quarter of 2021 compared to the first quarter of 2020.\nTurning now to Slide 11.\nToday, we are reporting record consolidated first-quarter 2021 net revenues of $652 million, compared to $442 million for the same period in 2020, an increase of 210 million or 47%.\nThis increase was led by a 26% increase in the legacy Callaway business, as well as an incremental $93 million from the four weeks of the Topgolf business.\nChanges in foreign currency rates had a $17 million favorable impact on first-quarter 2021 net sales.\nWe are also reporting for the first quarter of 2021 operating income of $76 million, an increase of $35 million or 85%, compared to $41 million for the same period in 2020.\nOn a non-GAAP basis, operating income for the first quarter of 2021 was $97 million, a 54 million or 126% increase compared to 43 million for the same period in 2020.\nThe increase in non-GAAP operating income was led by a $50 million increase in segment operating income from the legacy Callaway business as well as an incremental $4 million from the four weeks of the Topgolf business.\nOther income was $244 million in the first quarter of 2021 compared to other expense of $3 million in the same period of the prior year.\nThis includes the $253 million non-cash gain related to the Topgolf merger.\nOn a non-GAAP basis, which includes Topgolf gain, other expense was $5 million in the first quarter of 2021 compared to other expense of $3 million for the comparable period in 2020.\nThe $2 million increase in other expense was primarily related to higher interest expense related to incremental interest from the convertible bonds issued in May 2020, plus four weeks of Topgolf interest, partially offset by a decrease in foreign currency-related losses.\nPretax income was $320 million in the first quarter of 2021 compared to $38 million for the same period in 2020.\nNon-GAAP pre-tax income was $91 million in the first quarter of 2021 compared to non-GAAP pre-tax income of $41 million in the same period of 2020.\nEarnings per share was $2.19 or approximately 125 million shares in the first quarter of 2021 compared to earnings of $0.30 or approximately 96 million shares in the first quarter of 2020.\nNon-GAAP earnings per share was $0.62 in the first quarter of 2021 compared to earnings per share of $0.32 for the first quarter of 2020.\nFully diluted shares were 125 million in the first quarter of 2021 compared to 96 million shares for the same period in 2020.\nThe net 29 million share increase is primarily related to the issuance of additional shares in connection with the Topgolf merger.\nFull year estimated diluted shares is approximately 176 million shares, which represents the weighted average shares issued in connection with the merger over approximately a 10-month period.\nAs of March 31, 2021, we had approximately 185 million shares that were issued and outstanding.\nAdjusted EBITDA was $128 million in the first quarter of 2021 compared to $60 million in the first quarter of 2020 and $93 million in the first quarter of 2019.\nTopgolf contributed adjusted EBITDA of $15 million for the four-week period.\nTo provide some additional perspective, The Topgolf first quarter 2021 EBITDA, the full three months was $17 million.\nThe golf equipment segment's net revenue increased $85 million or 29% to, $377 million in the first quarter of 2021, compared to $292 million in the first quarter of 2020.\nThis increase was driven by the continued surge in golf demand and participation, our supply chain team's ability to secure a greater-than-expected supply of golf equipment components during the first quarter as well as the COVID-19 shutdowns across portions of our business in the first quarter of 2020.\nBoth golf club and golf ball sales increased by 26% and 50%, respectively.\nThe golf equipment segment operating income was $85 million or 22.5% of net revenues in the first quarter of 2021 compared to $59 million or 20.2% of net revenues in the first quarter of 2020, an increase of $26 million or 230 basis points.\nThe increase was driven by the increased revenue, operating expense leverage and favorable foreign currency exchange rates, partially offset by increased freight and product mix, including lower margins on our higher technology golf club product offerings and package sets.\nThe apparel, gear and other segment's net revenue increased $31 million or 21% to $182 million in the first quarter of 2021 compared to $151 million in the first quarter of 2020.\nThe increase was driven by a 23% increase in apparel sales as well as an 18% increase in gear and accessories and other.\nBoth the TravisMathew and Jack Wolfskin business had a recovery from a pandemic faster than expected, despite continued retail restrictions and other effects from COVID-19, particularly in Europe.\nThe apparel, gear and other segment's operating income increased $24 million to $20 million compared to a loss of $4 million for the same period in the prior year.\nIn 2021, this equated to 11% of segment revenue, a 1,360-basis-point improvement over the first quarter of 2020.\nThe increase was driven by the increased sales, operating expense and cost of revenue leverage, favorable foreign exchange rates and increased commerce revenue, partially offset by the lower retail revenue in Jack Wolfskin due to further government-mandated retail shutdowns during the first quarter in Central Europe.\nThe Topgolf segment net revenue was $93 million in the first quarter of 2021, which includes four weeks of the Topgolf business.\nThe Topgolf segment's operating income was $4 million for the four-week stub period.\nTo provide investors additional perspective, Topgolf's full first quarter net revenues were $236 million and full first quarter GAAP operating loss was $30 million and on a non-GAAP basis, Topgolf's operating loss was 15 million.\nTurning now to Slide 13.\nI will now cover certain key balance sheet and other items.\nAs of March 31, 2021, available liquidity was $713 million compared to $260 million at the end of the first quarter.\nThis additional liquidity reflects higher revenues in the legacy Callaway business, improved liquidity from working capital management, and proceeds from the convertible notes we issued during the second quarter.\nAt March 31, 2020, we had total net debt of $1,160 million, including 640 million of Topgolf related net debt.\nThe Topgolf debt includes landlord financing of $222 million related to financing the venues business.\nOur consolidated net accounts receivable was $329 million, an increase of 27% compared to $260 million at the end of the first quarter of 2020.\nDays sales outstanding decreased slightly to 61 days on March 31, 2021, compared to 62 days as of March 31, 2020.\nThe increase in net accounts receivable primarily is attributable to the increase in first quarter revenue, but also includes an incremental $9 million of accounts receivable.\nWe continue to remain very comfortable with the overall quality of our accounts receivable at this time.\nAlso, this on Slide 13, our inventory balance decreased by 19% to $336 million at the end of the first quarter of 2021 compared to 413 million at the end of the first quarter of the prior year.\nThe $77 million decrease was due to the high demand we are experiencing in the golf equipment business, recovery of our soft goods businesses, as well as inventory reduction efforts in the soft goods business.\nCapital expenditures for the first quarter of 2021 were $29 million.\nThis includes $16 million related to Topgolf.\nFrom a full-year 2021 forecast perspective, the legacy Callaway forecast is increasing to approximately $65 million versus the previous forecast of 50 million due to capacity investments in our plants and warehouses, as well as increasing the number of play in TravisMathew retail stores.\nThe full year and 12-month forecast for Callaway and Topgolf is approximately $265 million, driven primarily by the new venue openings.\nIf you include Topgolf for only 10 months, that would be approximately $235 million.\nDepreciation and amortization expense was $20 million in the first quarter of 2021.\nNon-GAAP depreciation and amortization expense was $17 million in the first quarter of 2021 compared to $8 million in 2020.\nThis includes $9 million of non-GAAP depreciation and amortization related to Topgolf.\nTo help give investors additional perspective, the Topgolf full Q1 non-GAAP depreciation and amortization was $27 million.\nFor the full year of 2021, we expect non-GAAP depreciation and amortization expense to be approximately $155 million, which includes 115 million for the Topgolf business.\nI'm now on Slide 14.\nWe are not providing specific revenue and earnings guidance ranges for 2021 at this time due to the continued uncertainty surrounding the duration and impact of COVID-19.\nHowever, we would like to provide some guidance comments we previously made.\nFirst, last quarter, we provided some guidance on full year consolidated gross margins and operating expenses.\nDue to the merger with Topgolf, that guidance is no longer applicable.\nWe are no longer providing specific guidance for consolidated gross margins and operating expenses, given the disparate treatment of those items from the legacy Callaway business and the Topgolf business.\nWith that said, I would like to call out a few factors that have changed since our call in February.\nFirst, we have changed our accounting for golf advertising and our golf equipment business.\nFor 2021, it is treated as a discount to sales as opposed to an operating expense in 2020 and 2019.\nThis negatively impacted gross margins for the golf equipment business in the first quarter of 2021 by approximately 85 basis points and will continue to affect comparisons with prior periods for the balance of the year as prior periods were not changed.\nThere is no change to operating income.\nThis is only a shift between gross margin and operating expenses.\nWe previously estimated that the freight container shortage was expected to have a negative impact of $13 million on freight costs in 2021, with a substantial majority affecting the first half.\nAt this point, the impact of COVID-19 in our overall freight cost is expected to be greater than the 13 million, with more costs hitting the balance of the year than originally expected.\nWe also previously estimated that operating expenses for the legacy Callaway business would be approximately $78 million higher than in 2019 due to the negative impact of foreign currency inflationary pressures and continued investment in the company's business, which included investment needed to assume the apparel business, investment in the other soft goods businesses and investment in Pro Tour.\nWe now expect these factors along with both deferred spending from the first quarter and increased variable costs associated with the increased revenue and higher stock price will have an overall greater impact than we originally anticipated for the balance of the year.\nIn addition, we plan to invest a little more back into our business than originally planned.\nThese incremental investments include additional TravisMathew stores given that brand's momentum and the availability of favorable lease terms in the current environment, and incremental investments in demand creation and digital resources for all brands as well as the Korea apparel business.\nLastly, we, along with most other companies are experiencing increased wage pressure due to a tight labor market, increased freight costs as I mentioned earlier, and increased commodity prices.\nThese are impacting all aspects of our business.\nWe're seeing increased freight costs in terms of increased container prices, but also increased air freight expense as well.\nWe're also seeing an increase in commodity prices from steel to titanium, from rubber urethane to textiles and from cheese to chicken wings.\nAs Chip mentioned, at present, demand is high enough the positive volume variances are expected to overshadow the majority of these increased costs.\nBut these increased costs in the aggregate will still have some impact on balance of the year operating margins.\nIn 2022, we will have to explore price increases if those higher costs continue.\nWe have previously guided that due to the impact of COVID-19, the company's revenue and adjusted EBITDA would not return to 2019 levels until 2022 for either legacy Callaway business or the Topgolf business.\nGiven the faster-than-expected recovery of both businesses, and with all three of our operating segments performing above plan in the first quarter, we now project that revenue and adjusted EBITDA from our legacy businesses will exceed 2019 levels, and then our Topgolf business for the full 12 months of 2021 will meet or exceed 2019 levels, which is a year faster than expected.\nAs a reminder, in 2019, the Calllaway legacy business reported revenue of $1.7 billion and adjusted EBITDA of $211 million.\nFor full year 2019, that's 12 months.\nThe Topgolf business reported revenue of $1.06 billion and adjusted EBITDA of $59 million in 2019.\nPlease note that Callaway's actual reported full year financial results will only include 10 months of Topgolf results in 2021, and therefore, will not include January and February results which were in the aggregate, $143 million in revenue and $2.3 million in adjusted EBITDA.\nOperator, over to you.\n", "role": "user" }, { "content": "callaway golf q1 non-gaap earnings per share $0.62.\nq1 non-gaap earnings per share $0.62.\nq1 earnings per share $2.19.\nnot providing specific net revenue and earnings guidance ranges for 2021 at this time.\nexpects that revenue and adjusted ebitda for full year 2021 for legacy callaway business will exceed 2019 levels.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 Patrick Burke, the company's head of investor relations.\nWe are pleased to be with you today to discuss our Q3 results, results that have exceeded our expectations, and strengthened our confidence in the future.\nWith recently announced plans to merge with Topgolf, we are naturally anticipating further questions on that subject as well.\nHaving said this, and turning to Page 6, let's now jump into our results.\nWe were pleased with our results in virtually all markets and business segments.\nOur golf equipment segment has been experiencing unprecedented demand globally as interest in the sport and participation has surged.\nWe saw strong market conditions in all markets globally.\nAccording to Golf Datatech, U.S. retail sales of golf equipment were up 42% during Q3, the highest Q3 on record.\nU.S. rounds were up 25% in September, and are now showing full-year growth despite the shutdowns earlier this year.\nWe also believe there will be a long-term benefit from the increased participation as we are welcoming both new entrants and returning golfers back to our sport.\nGolf retail, outside of resort locations, remains very strong at present and barring a shutdown situation has not been sensitive to the upticks in COVID cases.\nInventory at golf retail is at all-time lows and is likely these low inventory levels will continue into next year.\nCallaway's global hard goods market shares remained strong during the quarter.\nWe estimate our U.S. market share is roughly flat year over year.\nOur share in Japan is up slightly, and our share in Europe is down slightly.\nOn a global basis, I believe we remain the leading golf company in terms of market share and total revenues, and the No.\nIn the U.S., third-party research showed our brand to once again be the #1 club brand in overall brand rating as well as the leader in innovation and technology.\nOver the last several years, we have shown resilience with these important brand positions.\nWe have also started to show our 2021 product range to key customers and are receiving strong feedback.\nTurning to our soft goods and apparel segment, with total revenue only down 3.4% year over year, the segment also experienced a rapid recovery in demand during the quarter.\nThe speed and magnitude of the recovery exceeded our expectations.\nLike our golf equipment business, this segment appears to be well-positioned for both the months and years ahead, both during the pandemic and after.\nLooking at individual businesses in this segment, both our TravisMathew and Callaway branded businesses experienced significant year-over-year growth during the quarter.\nJack Wolfskin was down year over year but only 16% on a revenue basis with improved trends continuing into October.\nThe hero of the soft goods and apparel segment is certainly e-com, a channel that was strengthened by investments we've made over the last several years.\nAs a result of these investments, we were able to deliver a 108% year-over-year growth in this channel during the quarter.\nE-com is now a significant portion of the channel mix of this segment.\nWe believe our expanded capabilities and strength here will bolster this business growth prospects and profitability going forward.\nLong term, we continue to expect our apparel and soft goods segment to grow faster than our overall business, and with that growth to deliver operating leverage and enhance profitability.\nAnd although the pandemic delayed our efforts, we still believe we'll be able to deliver $15 million of synergies in this segment over the coming years.\nDuring the quarter, we also made good progress on key initiatives, including the transition to our new 800,000 square-foot Superhub distribution center located just outside of Fort Worth, Texas.\nWe are now completely consolidated into this new facility.\nWe also made further progress in our Chicopee golf ball facility modernization with productivity rates in this plant ramping positively during the quarter.\nThe primary investment phase on both of these significant projects is behind us now.\nLooking forward, we are in a strong financial position and are pleased with the pace of our recovery and the business trends we have seen.\nWith the resurgence in the virus, there clearly could be some volatility over the next few months.\nPortions of Q4 are likely to be at least partially impacted by the increase in restrictions being put into place globally.\nFortunately, for us, either low impact months for our golf equipment business, and we currently expect to continue to benefit from increased year-over-year demand.\nIn our apparel and soft goods segment, the impact will be larger than our golf equipment business.\nBut these businesses, too, are fortunate to be well-positioned in this environment and also benefit from strong e-com capabilities, which should offset some portion of any potential negative impacts in markets where in-store shopping might be constrained.\nWe also benefit from global scale and diversity across all of our segments.\nAs demonstrated by our Q3 results, we are fortunate in that our principal business segments are well-positioned for consumer needs and trends, both during the pandemic and afterward.\nIn addition, we are confident that we have both brands, human capital, and financial strength necessary to not only weather this storm but to also perform well during it and to emerge stronger than when we entered the crisis.\nIn closing, while we are pleased with our recent results and outlook, the safety and health of the company's employees, customers, and partners continue to be paramount in our minds.\nAs we operate our businesses, we are careful to follow appropriate protocols for social distancing, in-office capacity management, personal protective equipment, and other safety precautions.\nIn addition, our thoughts and prayers continue to go out to those directly impacted by the virus and those diligently working on the front line to protect, serve, and care for the rest of us.\nBrian, over to you.\nWe are happy to report record net sales and earnings for the third quarter of 2020.\nWe feel fortunate that both our golf equipment and soft goods businesses are recovering faster than expected as both businesses support healthy, active outdoor lifestyles and activities that are compatible with social distancing.\nThis faster-than-expected recovery has placed us in a position of strength.\nOur available liquidity, which includes cash on hand plus availability under our credit facilities increased to $630 million on September 30, 2020, compared to $340 million on September 30, 2019.\nWe are also excited about our prospective merger with Topgolf, which also provides a healthy, active, outdoor activity that is compatible with social distancing.\nAnd Callaway Topgolf merger is a natural fit.\nWith the significant overlap in golf consumers, there should be significant advantages to both businesses through increased consumer engagement, marketing, and sales opportunities and faster growth than could be achieved on a stand-alone basis.\nAnd the best part is that these synergies provide upside to the financial model we provided.\nThe financial returns of this transaction are so compelling, we did not need the synergies to justify the transaction.\nGrowing the Topgolf Venue and Toptracer businesses alone will create significant shareholder value.\nWe look forward to discussing the Topgolf business further during the virtual investor conference on Thursday.\nIn evaluating our results for the third quarter, you should keep in mind some specific factors that affect year-over-year comparisons.\nFirst, as a result of the Jack Wolfskin acquisition in January 2019, we incurred nonrecurring transaction and transition-related expenses in 2019.\nSecond, as a result of the OGIO, TravisMathew, and Jack Wolfskin acquisition, we incurred non-cash amortization in 2020 and 2019, including amortization of the Jack Wolfskin inventory step-up in the first quarter of 2019.\nThird, we also incurred other nonrecurring charges including costs related to the transition to our new North American distribution center in Texas.\nImplementation costs related to the new Jack Wolfskin IT system and severance costs related to our cost reduction initiatives.\nFourth, the $174 million non-cash impairment charge in the second quarter of 2020 is nonrecurring and did not affect 2019 results.\nFifth, we incurred and will continue to incur non-cash amortization of the debt discount on the notes issued during the second quarter of 2020.\nWe have provided in the tables to this release as scheduled breaking out the impact of these items on the third quarter and the first nine months' results, and these items are excluded from our non-GAAP results.\nWith those factors in mind, I will now provide some specific financial results.\nTurning now to Slide 10.\nToday, we are reporting record consolidated third quarter 2020 net sales of $476 million, compared to $426 million in 2019, an increase of $50 million or 12%.\nThis increase was driven by a 27% increase in the golf equipment segment, resulting from a faster-than-expected recovery and the strength of the company's product offerings across all skill levels.\nThe company's soft goods segment is also recovering faster than expected, with third-quarter 2020 sales decreasing only 3.4% versus the same period in 2019.\nChanges in foreign currency rates had an $8 million favorable impact on third-quarter 2020 net sales.\nGross margin was 42.2% in the third quarter of 2020, compared to 44.9% in the third quarter of 2019, a decrease of 270 basis points.\nOn a non-GAAP basis, gross margin was 42.7% in the third quarter, compared to 44.9% in the third quarter of 2019, a decrease of 220 basis points.\nThis decrease is primarily attributable to a decline in gross margin in the soft goods segment due to the impact of COVID-19 on that business, including our proactive inventory reduction initiatives, partially offset by favorable changes in foreign currency exchange rates, an increase in e-commerce sales, and a slight increase in overall golf equipment gross margins.\nOperating expenses were $137 million in the third quarter of 2020, which is a $14 million decrease, compared to $151 million in the third quarter of 2019.\nNon-GAAP operating expenses for the third quarter were $135 million, a $12 million decrease compared to the third quarter of 2019.\nThis decrease is due to decreased travel and entertainment expenses and the actions we undertook to reduce costs in response to the COVID pandemic.\nOther expense was $6 million in the third quarter of 2020, compared to other expense of $7 million in the same period of the prior year.\nOn a non-GAAP basis, other expense was $3 million in the third quarter of 2020, compared to $7 million for the comparable period in 2019.\nThe $4 million improvements were primarily related to a net increase in foreign currency-related gains period over period, partially offset by a $1 million increase in interest expense related to our convertible notes.\nPretax earnings were $58 million in the third quarter of 2020, compared to pre-tax earnings of $33 million for the same period in 2019.\nNon-GAAP pre-tax income was $65 million in the third quarter of 2020, compared to non-GAAP pre-tax income of $37 million in the same period of 2019.\nDiluted earnings per share were $0.54 on 96.6 million shares in the third quarter of 2020, compared to earnings per share of $0.32 on 96.3 million shares in the third quarter of 2019.\nNon-GAAP fully diluted earnings per share were $0.60 in the third quarter of 2020, compared to fully diluted earnings per share of $0.36 for the third quarter of 2019.\nAdjusted EBITDA was $87 million in the third quarter of 2020, compared to $57 million in the third quarter of 2019, a record for Callaway Golf.\nTurning now to Slide 11.\nThe first nine months of 2020 net sales are $1.2 million, compared to $1.4 million in 2019, a decrease of $174 million or 13%.\nThe decrease was primarily driven by the COVID-19 pandemic, partially offset by an increase in our e-commerce business.\nThe decrease in net sales reflects a decrease in both our golf equipment segment, which decreased 7%, and our soft goods segment, which decreased 21%.\nThis decrease also reflects a decrease in all major regions and product categories period-over-period due to COVID-19.\nChange in the foreign currency rates positively impacted first nine months 2020 net sales by $2 million.\nGross margin was 42.7% in the first nine months of 2010 compared to 45.8% in the first nine months of 2019, a decrease of 310 basis points.\nGross margins in 2020 were negatively impacted by the North America warehouse consolidation and in 2019 were negatively impacted by the nonrecurring purchase price step-up associated with the Jack Wolfskin acquisition.\nOn a non-GAAP basis, which excludes these recurring items -- excuse me, nonrecurring items, gross margin was 43.3% in the first nine months of 2020 compared to 46.6% in the first nine months of 2019, a decrease of 330 basis points.\nThe decrease in non-GAAP gross margin is primarily attributable to the decrease in sales related to the COVID-19 pandemic, costs associated with idle facilities during the government-mandated shutdown, and the company's inventory reduction initiatives.\nThe decrease in gross margin during the first nine months was partially offset by an increase in the company's e-commerce business.\nOperating expense was $592 million in the first nine months of 2020, which is a $111 million increase compared to $481 million in the first nine months of 2019.\nThis increase is due to the $174 million non-cash impairment charge related to the Jack Wolfskin goodwill and trade name.\nExcluding the impairment charge and other items previously mentioned, non-GAAP operating expenses for the first nine months of 2020 were $410 million, a $58 million decrease, compared to $468 million in the first nine months of 2019.\nThis decrease is due to our cost reduction initiatives, decreased travel and entertainment expenses as well as a reduction in variable expenses due to lower sales.\nOther expense was approximately $7 million in the first nine months of 2020, compared to other expense of $28 million in the same period in the prior year.\nOn a non-GAAP basis, other expense was $3 million for the first nine months of 2020, compared to $24 million for the same period of 2019.\nThe $21 million improvements is primarily related to a $22 million increase in foreign currency-related gains period over period, including the $11 million gain related to the settlement of the cross-currency swap arrangement.\nPretax loss was $80 million in the first nine months of 2020, compared to pre-tax income of $127 million for the same period in 2019.\nExcluding the impairment charge and other items previously mentioned, non-GAAP pre-tax income was $113 million in the first nine months of 2020 compared to non-GAAP pre-tax income of $155 million in the same period of 2019.\nLoss per share was $0.92 on $94.2 million in the first nine months of 2020, compared to earnings per share of $1.13 on 96.2 million shares in the first nine months of 2019.\nExcluding the impairment charge and the items previously mentioned, non-GAAP fully diluted earnings per share was $0.98 in the first nine months of 2020, compared to fully diluted earnings per share of $1.35 for the first nine months of 2019.\nAdjusted EBITDAS was $175 million in the first nine months of 2020, compared to $216 million in the first nine months of 2019.\nTurning now to Slide 12.\nI will now cover certain key balance sheet and cash flow items.\nAs of September 30, 2020, available liquidity, which represents additional availability under our credit facilities plus cash on hand was $637 million compared to $340 million at the end of the third quarter of 2019.\nThis additional liquidity reflects improved liquidity from working capital management, our cost reductions, and proceeds from the convertible notes we issued during the second quarter.\nWe had a total net debt of $498 million, including $443 million of principal outstanding under our term loan B facility that was used to purchase Jack Wolfskin.\nOur net accounts receivable was $240 million, an increase of 7%, compared to $223 million at the end of the third quarter of 2019, which is attributable to record sales in the quarter.\nDay sales outstanding decreased slightly to 55 days as of September 30, 2020, compared to 56 days as of September 30, 2019.\nWe continue to remain very comfortable, if not pleasantly surprised with the overall quality of our accounts receivable at this time.\nAlso displayed on Slide 12, our inventory balance decreased by 5% to $325 million at the end of the third quarter of 2020.\nThis decrease was primarily due to the high demand we are experiencing in the golf equipment business, partially offset by higher soft goods inventory related to COVID-19.\nOur teams have done an excellent job being proactive with regard to managing inventory as soon as COVID hit us.\nThey continue to be highly focused on inventory on hand as well as inventory in the field.\nWe are very pleased with our overall inventory position and the inventory at retail, particularly on the golf side of the business, which remains low at this time.\nCapital expenditures for the first nine months of 2020 were $31 million, compared to $37 million for the first nine months of 2019.\nWe expect our capital expenditures in 2020 to be approximately $35 million to $40 million, up slightly from the estimate we provided in May but down substantially from our $55 million of planned capital expenditures at the beginning of the year due to our cost reduction actions.\nDepreciation and amortization expense was $203 million for the first nine months of 2020.\nOn a non-GAAP basis, depreciation and amortization expense, excluding the $174 million impairment charge, was $29 million for the first nine months of 2020 and is estimated to be $35 million for the full year of 2020.\nDepreciation and amortization expense was $25 million for the first nine months of 2019 and $35 million for full-year 2019.\nI'm now on Slide 13.\nAs we previously reported, we are no longer providing other specific financial guidance at this time due to continued uncertainty surrounding the duration and impact of COVID-19.\nAlthough we expect some level of continued volatility due to the ongoing pandemic, third-quarter trends have thus far continued into the fourth quarter.\nPerhaps more importantly, all of our business segments as well as the Topgolf business support an outdoor, active, and healthy way of life that is compatible with the world of social distancing.\nAnd we now appreciate even further that all of our businesses are likely to be favored in both the realities of the current environment as well as anticipated consumer trends post-pandemic.\nThese circumstances, along with our increased liquidity will allow us to weather the pandemic and emerge in a position of strength to the benefit of our businesses and the Topgolf business post-merger.\nAs Chip mentioned in his remarks, due to time constraints, the primary focus of the Q&A should be the Callaway business, and we have scheduled a virtual conference on Thursday to discuss the Topgolf business further.\nOperator, over to you.\n", "role": "user" }, { "content": "compname posts q3 non-gaap earnings per share $0.60.\nq3 non-gaap earnings per share $0.60.\nq3 earnings per share $0.54.\nq3 2020 net sales of $476 million, a 12% increase compared to q3 of 2019.\nis not providing financial guidance for q4 of 2020.\ncallaway golf - golf business now experiencing unprecedented demand, soft goods business is recovering significantly more quickly than expected.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 Lauren Scott, the company's director of investor relations.\nPatrick Burke, Callaway's senior vice president of global finance; and Jennifer Thomas, our chief accounting officer, are also in the room today for Q&A.\nI'm pleased to report strong third quarter results that exceeded our expectations as Callaway continued to benefit from broad-based momentum across all segments.\nThe operational headwinds we and nearly all consumer brands faced during the quarter were no match for our world-class team of professionals and the strong demand we are experiencing in golf equipment and apparel.\nIn addition, Topgolf delivered exceptional results as increased walk-in traffic and social event bookings led to further gains in sales and productivity.\nOur company is on a role, and I'm very optimistic about the road ahead.\nI hope the No.\n1 takeaway from today's call is the upside we are seeing on the long-run earnings potential of this business.\nAt a high level, total net revenue for the third quarter increased 80% year over year to 856 million, with 39% coming from the Topgolf segment, 34% from golf equipment, and 27% from apparel, gear, and other.\nProfitability also increased with adjusted EBITDA up 57% to 139 million.\nBefore providing commentary on each segment's progress during the quarter, I want to remind everyone of the transformation that has taken place here at Callaway over the past several years.\nLess than five years ago, we were almost exclusively a golf equipment company, but that has changed significantly with the addition of OGIO, TravisMathew, Jack Wolfskin, and now even more so with the addition of Topgolf.\nWhen you invest in Callaway, you are now investing in, what I like to call, modern golf, a combination of traditional golf with lifestyle apparel and the world's leading tech-enabled golf entertainment company.\nWe are engaging with a wide range of consumers and meeting them where they play, whether that's on the golf course, off course that are top golf venues in Toptracer bays, out hiking a mountain, or out socializing with friends.\nGolf equipment is a great business with wind at its back.\nbut is now just a portion of our business, just under 40% of this year's estimated full year revenues.\nLooking ahead, we expect all of our segments and business units to deliver growth and to support each other's continued success.\nTopgolf, in particular, has exceptional growth embedded within its portfolio, and our apparel assets have strong brand momentum that will continue to drive strong results.\nThe combined entity has a competitive advantage in scale in the golf sector and an unmatched reach to a wide range of consumers.\nWith that said, I'll move now to segment highlights, starting with an update on our Topgolf business.\nI'm pleased to report that our owned venues continued their positive trends with Q3 same venue sales at approximately 100% of 2019 levels.\nThe overperformance in Q3 was driven by continued strong walk-in traffic and improved event sales, especially in the social event bookings.\nOur performance was particularly impressive considering the headwinds we faced from the increase in Delta COVID cases early in the quarter.\nGetting back to 2019 levels of same venue sales is a significant milestone for the Topgolf team and a strong indicator of more growth to come as the business fully recovers from COVID impacts.\nIn addition, we're seeing very strong flow-through to the bottom line with adjusted EBITDA of 59 million for the quarter, which significantly outpaced our forecast.\nTo put this in perspective, Topgolf earned as much in Q3 as it did for the entire year in 2019.\nAs we look out over the remainder of the year, we continue to believe the corporate events business will be lighter than it was in 2019.\nHowever, now that we are one week into November, we are pleased to report that the number of leads for corporate events in Q4 is improving, as is the conversion rate from those leads.\nOverall, relative to Q3, we see total systems same venue sales stepping down in Q4, but only because corporate events are historically a larger portion of the Q4 sales mix.\nAnd we now anticipate low to mid-90 same venue sales rates for both Q4 and the full year, up nicely from our prior forecast.\nLike many companies, for the remainder of this year and into 2022, we anticipate above-average inflationary pressures on food, beverage, and wages, but we believe we will be able to continue to effectively mitigate the impacts of these by sustaining strong top line revenues, continued labor efficiency and selectively taking price.\nVenue expansion continued as planned during the quarter with the opening of Colorado Springs, a 74-bay medium-sized venue and Holtsville, Long Island, a large 102-bay venue.\nYear to date, we've opened a total of eight new venues, and we have our final venue for the year slated to open later this month in Fort Myers, Florida.\nWe now also have a strong visibility into the 2022 development pipeline and are confident that we can hit our target of 10 new venues next year.\nToptracer expansion continued during the quarter with year-to-date installation surpassing a full year of installs in 2020 and nearly double the full year of installs in 2019.\nHowever, COVID restriction supply chain issues led to fewer installs during the quarter than we anticipated.\nNow for the full year, we anticipate that our total new bay installs will be approximately 10% below our 8,000 bay target.\nMost importantly, though, demand for Toptracer remains very strong as is customer feedback with driver ranges reporting 25 to 60% revenue increases post installation.\nWe are confident that in a normal operating environment, we will be able to get back to our goal of 8,000-plus installations per year.\nBefore I continue on to our other segments, I want to take a moment to highlight the Five Iron Golf minority investment we announced last week as it aligns nicely with both our golf entertainment and our golf equipment segments.\nFive Iron is a privately owned indoor golf and entertainment concept predominantly located in major metropolitan cities.\nThey offer simulated rentals, golf lessons and custom club fittings, while also providing a fun space for social events.\nWe are excited about the Five Iron investment and partnership as it increases our exposure to the off-course golf and entertainment space, which we believe will be a key driver of the long-term growth of the industry as it introduces more new entrants to the sport.\nIn addition, through the partnership, we have a nonexclusive marketing agreement where Five Iron members and guests will have the opportunity to demo Callaway clubs and balls increasing our reach to golfers at all levels.\nIf you're in New York, Baltimore, Chicago, or several other major cities, we encourage you to check out one of their facilities.\nMoving to the golf equipment segment.\nDemand and interest in golf remains at all-time highs, and our supply chain team successfully navigated the Q3 supply chain challenges to capture more demand than we thought was possible when we last spoke.\nDigging deeper into the operational side, we're pleased with the trends we are now seeing in the supply chain.\nAnd although we expect both us and the industry at large to be supply constrained for the foreseeable future, we are also confident we'll be able to manage through in a manner that supports our growth and profitability initiatives.\nWe are also cautiously optimistic that our efforts and scale are creating a competitive advantage for us here.\nSpecific to the most recent Vietnam shutdowns, I'm pleased to report that our suppliers' factories in Vietnam are back open and ramping to support our 2022 product launch plans.\nBarring any foreseen new macro issues, we anticipate no meaningful disruption to our 2022 product launches.\nWe've also been fielding questions as of late on the sustainability of the heightened interest in golf.\nAnd I want to go on the record saying that all signs show that the high level of interest is continuing and will do so through the foreseeable future.\nHardgoods retail sell-through has continued to trend higher according to Golf Datatech, with Q3 up 1.3% year over year, and up 46.5% compared to 2019.\nWe are not seeing demand decline, and our customers are telling us that they expect a strong year for golf in 2022.\nShifting to the apparel and gear segment.\nResults for the quarter highlighted the strong momentum within the TravisMathew and Jack Wolfskin brands, as well as the success of our Callaway branded product in Asian markets.\nThe TravisMathew brand continues to be on fire, gaining strong traction in newer East Coast markets while maintaining a strong following here on the West Coast.\nThe brand is performing extremely well in all channels.\nLooking specifically at our own stores.\ncomp store sales for the quarter were very strong, up 84% versus 2020, and 50% versus 2019.\nDuring the quarter, we opened two new Travis stores in Florida, one in Boca and the other in Palm Gardens, ending the quarter with a total of 26 retail locations.\nWe expect to open another three doors in Q4 for a total of 29 doors by year-end.\nNeedless to say, the performance of our retail doors have been outstanding on a stand-alone basis.\nBut what makes them even more attractive as they tend to drive increased brand strength in wholesale demand in the regions and communities where they are located.\nE-commerce was also a strong driver of growth with normalized sales up 50% year over year.\nThat is excluding a onetime sale we did last year.\nIn line with the company's sustainability initiatives, we were excited to launch the TravisMathew Eco Collection in September in partnership with the Surfrider Foundation.\nThe fabric blends in this collection use at least 98% organic cotton and at least 62% recycled polyester created from plastic bottles, with 100% of the profits going to the Surfrider Foundation, an organization dedicated to protecting the world's oceans and beaches.\nJack Wolfskin experienced a strong Q3 as well, with 2022 spring/summer pre-books up significantly over 2020 and comp store sales increasing almost 10% over both 2019 and 2020.\nwere also an issue in Hamburg, Germany, but the team did a wonderful job navigating the challenges, and we were able to successfully fulfill all orders in the quarter without cancellations.\nLastly, Callaway apparel in Japan continued to be a top-performing brand in the wholesale channel, holding the No.\n1 position year to date.\nAnd in Korea, the brand was off to a solid start as well with positive reception from the major department stores in the region.\nIn conclusion, as I said at the top of the call, our business is on a roll.\nWhile we are not providing 2022 guidance at this time, based on the strong trends we're seeing across all segments, we believe that all business lines, all regions are poised for growth next year.\nI want to start by echoing Chip's enthusiasm about our third quarter results and positive outlook for the remainder of the year and into 2022.\nThe record results highlight the significant growth potential embedded in our business which we are realizing more quickly than we initially anticipated.\nThe demand for our golf equipment and apparel products, coupled with our operation team's ability to navigate successfully the COVID supply chain challenges, have resulted in stronger-than-anticipated financial results in those businesses.\nWe also benefited from very strong Topgolf revenue, driven by increased walk-in traffic and more social events business as COVID concerns ease during the past few months.\nProfitability at Topgolf also exceeded our expectations due to the strong sales combined with increased operating margins.\nFortunately, we have overperformed, but we would also have liked to have been more accurate.\nThe reality is forecasting our business in this environment has been very challenging for a variety of reasons.\nThese include the ebbs and flows of COVID cases globally, a steady diet of new and exciting supply chain challenges that we have never had to work through before, unique operating conditions that cause profitability to flow a lot differently than in the past, and the increased overall scale of our business, which is new to us.\nWe appreciate your patience and understanding as we work through these issues.\nWe are learning accordingly, and we will be adjusting to return to more accurate forecasts.\nIn the guidance we are providing you today we are reflecting the more normalized spending levels, as well as sustainable operating leverage.\nIn the meantime, we hope the forecasting challenges do not overshadow what is clearly an outstanding year, as well as higher long-term expectations.\nAs we turn to discuss our financial results, I want to remind you that we use certain non-GAAP measures to evaluate our business performance.\nMoving to Slides 12 and 13.\nConsolidated net revenue for the quarter was $856 million, an increase of 80% or $381 million compared to Q3 2020.\nThe increase was led by the addition of Topgolf revenue of $334 million, along with an 8.4% increase in golf equipment revenue and an 11.9% increase in apparel, gear, and other.\nChanges in foreign currency rates had a $4 million favorable impact on third quarter 2021 revenues.\nTotal cost and expenses were $772 million on a non-GAAP basis in the third quarter of 2021, compared to $406 million in the third quarter of 2020.\nOf the 366 million increase, Topgolf added $310 million of total costs and expenses.\nThe remaining $56 million increase includes moving spending levels back to normal levels, the start-up of the new Korean Callaway apparel business and expansion of the TravisMathew business, increase corporate structure -- increase corporate costs to support a larger organization, and increase freight costs and inflationary pressures.\nTo date, increased sales volumes and selective price increases have balanced out the cost increases, and we believe this will continue to be the case in Q4 and into early 2022.\nWe are also reporting for the third quarter of 2021, non-GAAP operating income of $85 million, a $15 million increase over the same period in 2020.\nThe increase was led by a $24 million increase in segment profit due to the addition of the Topgolf business, and a $9 million increase in apparel, gear, and other operating income, partially offset by $11 million decrease in golf equipment operating income due to increased freight costs and return to more normalized spend.\nNon-GAAP other expense was $22 million in the third quarter compared to other expense of 3 million in Q3 2020.\nThe $19 million increase was primarily related to a $16 million increase in interest expense related to the addition of Topgolf, as well as lower hedge gains, compared to the prior period.\nOn a GAAP basis, the effective tax rate for the third quarter was an unusual 132%.\nYou may recall that in the second quarter, we were required to use the discrete method for calculating our tax rate, and therefore, reversed a significant portion of the valuation allowance we had recorded during the first quarter as a result of the Topgolf merger.\nIn the third quarter, we were required to move back to using the annual rate method and once again record the valuation allowance that was reversed in the second quarter.\nI have my own opinion, but we'll leave it to you to assess whether there was any value added by this round trip of the valuation allowance.\nOn a nine-month GAAP basis, the effective tax rate was 22%.\nExcluding the valuation allowance we recorded again and the impact of the other nonrecurring items, our non-GAAP effective tax rate for the third quarter was 58% and for the nine months was 29%.\nThe third quarter rate was impacted by the transition from the discrete method to the annual rate method, and both periods were impacted by the deferred benefits of certain tax items.\nThere are a lot of moving parts with our tax rates, and the interim period rates are not always an accurate guide.\nFor internal purposes, we are using low 20s for our planning purposes for the non-GAAP full year rate.\nNon-GAAP earnings per share was $0.14 or an approximately 194 million shares in the third quarter of 2021, compared to $0.61 per share on approximately 97 million shares in the third quarter of 2020.\nThe share increase is primarily related to the issuance of additional shares in connection with the Topgolf merger.\nFull year estimated diluted shares is approximately 177 million shares, which includes the weighted average shares issued in connection with the merger over approximately a 10-month period.\nLastly, adjusted EBITDA was $139 million in the third quarter of 2021, compared to $88 million in the third quarter of 2020.\nThe $51 million increase was driven by a $59 million contribution for the Topgolf business, which performed exceptionally well this quarter and was partially offset by a return toward more normal spend levels in the golf equipment and soft goods businesses.\nTurning now to Slide 15.\nI will now cover certain key balance sheet and other items.\nAs of September 30, 2021, available liquidity, which is comprised of cash on hand and availability under our credit facilities was $918 million, compared to $630 million at September 30, 2020.\nThis additional liquidity reflects overperformance in all of our business segments.\nAt quarter end, we had a total net debt of $1 billion, including deemed landlord financing of $311 million related to the financing of Topgolf venues.\nOur leverage ratios have improved significantly period over period and on a net debt basis is now 2.5 times, compared to 3.5 times at September 30, 2020.\nAs we look forward over the next few years, we expect the leverage ratio to trend a little higher, depending on the level of top of development and deemed landlord financing.\nConsolidated net accounts receivable was $255 million, an increase of 6%, compared to $240 million at the end of the third quarter of 2020.\nThis increase is primarily attributable to the increase in third quarter revenue, as well as an incremental $10 million of Topgolf accounts receivable.\nWe continue to remain very comfortable with the overall quality of our accounts receivable at this time.\nLegacy days sales outstanding decreased to 53 days as of September 30, 2021, compared to 55 days as of September 30, 2020.\nOur inventory balance increased to $385 million at the end of the third quarter of 2021, compared to $325 million at the end of the third quarter of the prior year.\nThis $60 million increase was due to higher golf equipment inventory, especially toward the end of the quarter, reflecting an increase in in-transit inventory and a shift to making '22 launch product.\nThe Topgolf business also added $18 million to total inventory this quarter.\nCapital expenditures for the first nine months of 2021 were $149 million, net of expected REIT reimbursements.\nThis includes $109 million related to Topgolf.\nFrom a full year 2021 forecast perspective, the golf equipment and soft goods business forecast is $60 million.\nThe 2021 full year forecast for Callaway and Topgolf is approximately $225 million, net of REIT reimbursements, primarily related to the new venue openings.\nThe foregoing amounts do not include approximately 33 million in capital expenditures for Topgolf in January and February, which was premerger.\nNon-GAAP depreciation and amortization expense was $37 million in the third quarter of 2021, compared to $8 million in 2020.\nThis includes $28 million of non-GAAP depreciation and amortization related to Topgolf.\nFor the full year 2021, we expect non-GAAP depreciation and amortization expense to be approximately $130 million, which includes $93 million for the Topgolf business.\nThe foregoing does not include approximately 18 million of Topgolf non-GAAP depreciation and amortization from January and February in the aggregate.\nNow turning to our outlook on Slide 16.\nFor the full year, we expect revenue to range between 3.11 and $3.12 billion.\nThat compares to 1.59 billion in 2020 and 1.70 billion in 2019.\nThe company's full year 2021 net sales estimate assumes continued positive demand fundamentals for our golf equipment and soft goods segments and no further business, supply chain or retail shutdowns due to COVID.\nIt also assumes continued strong momentum in the Topgolf business, which is expected to generate 10-month segment revenue that will come in slightly above its 2019 full 12-month revenue of $1.06 billion.\nFull year adjusted EBITDA is projected to be between 424 and $430 million, which assumes approximately 158 million from Topgolf.\nFor the fourth quarter, our implied revenue guidance is increasing by approximately 30 million, with about 50% of that flowing through to adjusted EBITDA.\nThe revenue increase is driven by continued over performance in the venues, increased supply and golf equipment and spend levels continue to ramp up to normalized levels.\nOn the operational side, as I mentioned earlier in my remarks, we are expecting continued cost pressure from increased freight costs and inflationary pressures, including labor and commodity prices, as well as negative foreign currency impacts due to a strengthening U.S. dollar for the balance of 2021 and into 2022.\nHowever, despite these headwinds, we believe strong demand sales volumes and select price increases across our business segments will balance out these pressures, and we expect all businesses to grow next year.\nOperator, over to you.\n", "role": "user" }, { "content": "q3 non-gaap earnings per share $0.14.\nq3 2021 consolidated net revenue increased $381 million to $856 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Patrick Burke, the company's head of investor relations.\nFinally, earlier today, we experienced a power outage, but we've been assured by the local power company that there will be no further outages.\nBut we do have a backup plan to restart the call just in case we get interrupted.\nIt's great to be with you today to discuss our 2020 full year and Q4 results, as well as to provide some color on the business going forward.\nLooking back on 2020, I have to start with a simple wow, what an interesting and eventful year.\nWe started with business as usual.\nSurvived an unforeseen global shutdown working our way through in a manner that is sure we came through in a position of strength.\nThen as the world opened back up, we emerged to find Golf experiencing record demand and participation levels.\nFinally, we finish the year announcing a transformational merger with Topgolf, signing Jon Rahm, and delivering on some key strategic initiatives.\nAnd now looking forward all things considered we could not feel more fortunate or be happier about where our business is and our future prospects.\nWith that said, we're also mindful that many people have been significantly, negatively impacted by COVID-19, and our thoughts and prayers go out to them and their families.\nLooking at Q4 in isolation.\nThe operating results in our golf equipment segment continued the strong momentum shown in Q3, while the apparel business returned to growth and showed great signs for the future.\nOn the Topgolf side, we continue to make progress on the merger front with our shareholder vote scheduled for March 3, and hopefully closing shortly thereafter.\nAll the while, setting us up for transformational change and growth.\nLike me, I'm sure our team realizes that we have a lot more opportunity in front of us and remains highly motivated.\nLet's not turn to Page 6 and jump into our Q4 results.\nWe were pleased with our results in virtually all markets and business segments.\nOur golf equipment segment continued to experience unprecedented demand globally as interest in the sport and participation have surged.\nAccording to Golf Datatech, U.S. retail sales of golf equipment specifically hard goods were up 59% during Q4, the highest Q4 ever on record.\nResults that followed the highest Q3 on record as well.\nrounds were up 41% in Q4.\nAnd despite the shutdowns earlier in the year delivered 14% growth for the full year.\nWe continue to believe there will be a long-term benefit from the increased participation as we are welcoming both new entrants and returning golfers back to our sport.\nGolf retail outside of resort location remains very strong at present, while inventory at golf retail remains at all-time lows, it is likely these low inventory levels will continue at least through Q1.\nCallaway's global hardwoods market shares remain strong during the quarter.\nWe estimate our U.S. market share across all channels grew slightly during both Q4 and for the full-year 2020.\nOur share in Japan was also up slightly for the full-year allowing us to finish 2020 as the No.\n1 hardwoods brand in that market.\nThis is the first time that a non -Japanese brand has ever finished No.\n1 for the full year in total hardwoods.\nOur full-year share in Europe was down slightly, but we still finished as the No.\n1 hardwoods brand in this market as well.\nOn a global basis, I believe we remain the leading club company in terms of both market share and total revenues, and the No.\n2 ball company in the U.S., third-party research showed our brand to be the No.\n1 club brand in overall brand rating as well as the leader in innovation and technology.\nOver the last several years, we have shown resilience with these important brand positions.\nWe had a good year on tour in 2020 finishing the year with the No.\n1 putter and the No.\n1 driver on global tours.\nHowever, we didn't have as many wins or total brand exposure as we would have liked, as a result, we strengthened our tour position significantly during 2020 with the signing of Jon Rahm to a full equipment headwear and apparel deal.\nThe addition of Jon, along with Xander and Phil, and our ongoing strong complement of players across global men's and women's tours leaves us well-positioned in this important area of our business.\nWe've also started 2021 nicely with two wins already on the PGA Tour and a lot of exposure at all events.\nOn the product front, we're thrilled with our new 2021 lineup allowing us to focus on -- our focuses on our most premium brands those being our Epic drivers and Apex Irons.\nFor 2021, both brands are being supercharged with new technology, including a new speed frame version of our proprietary jailbreak technology in the woods, and a new version of the Apex line called DCB, which should broaden the appeal of this already highly popular line of Irons.\nReaction to the lineup has been outstanding both on tour and in the marketplace.\nTurning to our soft goods and apparel segment, this portion of our business along with the apparel industry generally was of course more impacted by the pandemic during Q4.\nHowever, the speed magnitude of the recovery also continued to exceed our expectations.\nLooking at individual businesses in this segment starting with the Callaway apparel business in Asia.\nIn Japan, we had a good quarter and finish the year as the No.\n1 golf apparel brand in that market based on market share.\nIn Korea, we plan to take back the Callaway Golf apparel brand that has been licensed to a third party for several years and launch our own apparel business in Korea during the second half of 2021.\nWe are investing in staffing and I.T. systems for this.\nThe team there is energized by this opportunity as this is something that they have been considering for several years now.\nTurning TravisMatthew, this brand and business continue to impress.\nTheir brand momentum is extremely strong both in direct to consumer channels and at wholesale.\nGiven their success, we are increasingly confident this can be a large and highly profitable brand presenting us with an even bigger opportunity than we originally anticipated.\nTo enable this, we have been investing in their systems and supply chain infrastructure.\nThis investment phase will continue through 2021 and then taper off.\nWe are also investing in direct-to-consumer efforts both through the addition of new stores selectively taking advantage of some great opportunities and of course e-commerce.\nWe could not be more excited about this business overall.\nJack Wolfskin also had a strong quarter delivering year-over-year revenue growth.\nThe price even more importantly we cleared some key strategic and operational hurdles during the quarter.\nIn Europe, our new CEO, Global Jack Wolfskin, Richard Collier joined the team in December.\nRichard joined us from Helley Hansen where he held the title Global Product Officer and served in that capacity as well as de facto Chief Operating Officer.\nWe're excited to have Richard on the team.\nThe reaction to Richard and the new CFO, André who joined us a few months earlier from my move.\nWe enter 2021 with a very strong leadership team fully in place.\nEqually importantly, prior to the full Europe retail shut down in mid-December, the sell-through of our fall winter lineup was excellent in both Europe and in China.\nThis speaks to the strength of the brand in these key markets, improved channel management, and the strength of the product lineup.\nNoting that in China, Q4 was the first quarter to showcase the local product design by a new team that was recruited in 2019.\nThe success of this new China for China product was a key strategic initiative for us.\nAcross the globe, but especially in their key markets of China and Europe, we believe the combination of strong leadership and sell through momentum bodes well for this brand as markets open up and recover.\nTaking a step back and looking at the larger apparel and soft goods segment, for the last nine months the hero has certainly been e-com.\nThis is a channel that was significantly strengthened by investments we made prior to the pandemic as well as those continuing to this day.\nThese investments enabled our apparel business e-com to deliver 64% year-over-year growth in Q4.\nE-com is now a significant portion of the channel mix of this segment and we are confident our expanding capabilities and strength here will bolster this business growth prospects and profitability going forward.\nPost-COVID, we continue to expect our apparel soft goods segment to grow faster than our golf equipment business, and with that growth to deliver operating leverage enhanced profitability.\nAnd although the pandemic delayed our efforts, we still believe we'll be able to deliver 15 million synergies in the segment over the coming years.\nLike our company overall, this segment with its concentration in golf and outdoor appears to be well-positioned for both the months and years ahead both during the pandemic and after.\nOur comments here will be limited given we have not closed the transaction yet.\nBut during late Q4 due to COVID restrictions, three of the U.S. venues were forced to shut as well as three of the U.K. venues.\nHowever, despite these headwinds, Topgolf's overall results exceeded expectations in Q4.\nThis was driven primarily by strong walking sales.\nvenue in Portland, Oregon are closed, and COVID restrictions appear to be gradually even.\nDespite 2021 starting out with more COVID restrictions than we expected, strong walk-in traffic is allowing this business to continue to perform at a level consistent with achieving our total venue full-year same venue sales target of 80% to 85% of 2019 levels.\nTurning to new venue development.\nTopgolf has opened two new domestic venues already this year; Lake Mary, Florida; and Albuquerque, New Mexico, and is on track to hit their new venue plan of eight new owned venues for this year.\nOn the international front, our third franchise location opened earlier this year in Dubai.\nThe sales have been getting strong reviews despite ongoing COVID complications in this market, and we expect this to be a flagship site for us internationally.\nLooking forward, given the uncertainties of the COVID situation globally, we're not currently providing 2021 guidance.\nWe can however provide the following color.\nThe golf equipment sector is likely to be slightly impacted by COVID in Q1 with the majority of European markets in portions of Asia, Tokyo for instance, in some sort of locked down or retail constraint, and with some supply constraints based on both capacity limitations and logistics.\nWe are also experiencing higher operating costs associated with COVID.\nOur container shipping costs alone are estimated to be up approximately 13 million for the full year as these processes have surged, but we do not see this as a long-term issue, just a short-term anomaly associated with the pandemic.\nThe demand situation is strong enough that we expect a very strong year in golf equipment despite these issues.\nA little constrained in Q1 based on capacity and logistics with increasing opportunity catch up with demand in Q2.\nOur soft goods and apparel segment continues to be more impacted by COVID.\nThe Europe shutdown is especially impactful for a business there certainly for Q1.\nHowever, the key points of operating strategic progress we mentioned earlier along with the attractive long-term prospects of both golf and outdoor lifestyle apparel make me increasingly confident for this business post the COVID closures and their short-term impact.\nTopgolf is performing consistent with the plan, new venue openings are on track and we are increasingly confident for this business overall.\nWe hope to close in early March, if this happens, we'll have a lot more say on this business starting on our next call.\nWe continue to see this as a transformational opportunity.\nOn the operating expense side and comparison 2019, which is the only meaningful comparison you're going to see some further investments in 2021.\nThese include investments in our growth infrastructure such as the Korea apparel business, increased tour presence, and direct to consumer resources.\nWe have a track record for making this kind of internal investments, and we're confident these will deliver high returns for shareholders.\nLastly, we remain confident in the 2022 guidance we provide as part of the topped up merger process as well as the future potential of what is going to be a unique and powerful business.\nBrian, over to you.\nAs Chip mentioned, 2020 was quite a year.\nWe were pleasantly surprised with how quickly our golf business and the golf industry began recovering from COVID-19 once the governmental restrictions began to abate during the second quarter.\nWe were also pleased with the recovery of both our TravisMatthew and Jack Wolfskin businesses, while the recovery in those businesses will not be as quick as the golf equipment business through the long supply chain lead times and seasonality.\nThe recovery of our apparel businesses is pacing ahead of our expectations and that of comparable businesses.\nThe stronger than expected recovery has contributed to our significantly improved liquidity position.\nOur available liquidity, which includes cash on hand plus availability under our credit facilities increased to $632 million on December 31, 2020, compared to $303 million on December 31, 2019.\nIn addition to the core business recovery, we may also -- we also remain very excited about our prospective merger with Topgolf, which clearly will be transformational for Callaway.\nThe Topgolf shareholders have already approved the transaction, we are holding a special Callaway shareholder meeting on March 3, 2021, to approve the merger.\nWe would expect to close the merger shortly thereafter.\nWe evaluate -- evaluating our results for the fourth quarter and full year, you should keep in mind some specific factors that affect the year-over-year comparisons; First, as a result of the Jack Wolfskin acquisition in January 2019, we incurred non-recurring transaction and transition-related expenses in 2019; Second, as a result of the OGIO TravisMatthew and Jack Wolfskin acquisitions, we incurred non-cash amortization in purchase accounting adjustments in 2020 and 2019, including the Jack Wolfskin inventory step up in the first quarter of 2019; Third, we also incurred other non-recurring charges including costs related to the transition to our North American distribution center in Texas.\nImplementation costs related to the new Jack Wolfskin IP system, severance costs related to our COVID-19 cost reduction initiatives, and costs related to the proposed Topgolf merger; Fourth, the $174 million non-cash impairment charge in the second quarter of 2020 is non-recurring and did not affect 2019 results.\nThus, we incurred and will continue to incur non-cash amortization of the debt discount in the notes issued during the second quarter of 2020.\nWith those factors in mind, we'll now provide some specific financial results.\nTurning now to Slide 11.\nToday, we were reporting record consolidated fourth quarter 2020 net sales of $375 million, compared to $312 million for the same period in 2019, an increase of $63 million or 20.1%.\nThis increase was driven by a 40% increase in the golf equipment segment resulting from the high demand for golf products late into the year as well as the strength of the company's product offerings across all skill levels.\nThe company soft goods segment continued its faster than expected recovery with fourth-quarter 2020 sales increasing 1% versus the same period 2019.\nChanges in foreign currency rates had a $9 million favorable impact on fourth-quarter 2020 net sales.\nThe gross margin was 37.1% in the fourth quarter of 2020, compared to 41.7% in the fourth quarter of 2021, a decrease of 460-basis-points.\nOn a non-GAAP basis, the gross margin was 37.2% in the fourth quarter, compared to 42.4% in the fourth quarter of 2019, a decrease of 520-basis-points.\nThe decrease is primarily attributable to the company's proactive inventory reduction initiatives in the soft goods segment, increased operational cost due to COVID-19, increased freight costs -- freight costs associated with higher rates, and a higher mix of air shipments in order to meet demand.\nThese decreases were partially offset by favorable changes in foreign currency exchange rates and a favorable mix created by an increase in the company's e-commerce sales.\nOperating expenses were $171 million in the fourth quarter of 2020, which is an $18 million increase, compared to $153 million in the fourth quarter of 2019.\nNon-GAAP operating expenses for the fourth quarter were $152 million, a $14 million increase compared to the fourth quarter of 2019.\nThis increase was driven by the company's decision to pay back to employees other than executive officers to reduce our salary levels for a portion of the year, variable expenses related to the higher revenues in the quarter, continued investments in our new businesses, and an unfavorable change in foreign currency exchange rates.\nOther expenses were $15 million in the fourth quarter of 2020, compared to other expense of $9 million in the same period the prior year.\nOn a non-GAAP basis, other expenses with $13 million in the fourth quarter of 2020, compared to $9 million for the comparable period in 2019.\nThe $4 million increase in other expenses primarily related to a net decrease in foreign currency-related gains as well as interest expense related to our convertible notes.\nPre-tax loss was $48 million in the fourth quarter of 2020, compared to a pre-tax loss of $32 million for the same period in 2019.\nNon-GAAP pre-tax loss was $35 million in the fourth quarter of 2020, compared to a non-GAAP pre-tax loss of $25 million in the same period of 2019.\nLoss per share was $0.43, or 94.2 million shares in the fourth quarter of 2020, compared to a loss per share of $0.31 on 94.2 million shares in the fourth quarter of 2019.\nNon-GAAP loss per share was $0.33 in the fourth quarter of 2020, compared to a loss per share of $0.26 for the fourth quarter of 2019.\nAdjusted EBITDA was negative 12 million in the fourth quarter of 2020, compared to negative 6 million in the fourth quarter of 2019.\nTurning now to Slide 12.\nNet sales for full-year 2020 were $1.589 billion, compared to $1.701 billion in 2019, a decrease of $112 million or 6.6%.\nAll things considered, we were very pleased with the sales level given the global pandemic.\nThe decrease in net sales reflects a decrease in our soft good segment, which decreased 15.9%t and our golf equipment segment increased slightly year over year.\nChanges in foreign currency rates positively impacted 2020 net sales by $11 million versus 2019.\nThe gross margin for full-year 2020 was 41.4%, compared to 45.1% in 2019, a decrease of 370-basis-points.\nGross margins in 2020 were negatively impacted by the North American warehouse consolidation, and in 2019 were negatively impacted by a non-recurring purchase price inventory step-up associated Jack Wolfskin acquisition.\non a non-GAAP basis, which is good and they were not referring item, gross margin was 41.8% in 2020, compared to 45.8% in 2019, a decrease of 400-basis-points.\nThe decrease in non-GAAP gross margin is primarily attributable to the decrease in sales related to the COVID-19 pandemic, costs associated with all facilities during the governor -- government mandated shutdown, the company's inventory reduction initiatives, and increased freight expense in the back half of the year.\nThe decrease in gross margin was partially offset by favorable changes in currency exchange rates and an increase in the company's e-commerce business.\nOperating expense with $763 million in 2020, which is a $129 million increase compared to $634 million in 2019.\nThis increase is due to the $174 million of the non-cash impairment charge, related to the Jack Wolfskin goodwill and trading, excluding the impairment charge and other items previously mentioned, non-GAAP operating expenses for 2020 were $570 million, a $47 million decrease, compared to $670 million in 2019.\nThis decrease is due to our cost reduction initiatives, decreased travel and entertainment expenses, lower variable expenses due to the lower sales, and reduced spending in marketing tour golf events around the world was canceled.\nThe decrease was partially offset by continued investment in our new businesses and unfavorable impacts of foreign exchange rates.\nAnother expense was approximately $22 million in 2020, compared to other expense of $37 million in 2019.\nOn a non-GAAP basis, other expenses $15 million for 2020, compared to $33 million for 2019.\nThose $18 million improvements are primarily related to a $19 million increase in foreign currency-related gains period over a period, including the $11 million gain related to the settlement of the cross-currency swap arrangement.\nPre-tax loss of $127 million in 2020, compared to pre-tax income of $96 million in 2019.\nExcluding the impairment charge in the other non-GAAP items previously mentioned, non-GAAP pre-tax income was $79 million in 2020, compared to non-GAAP pre-tax income of $130 million in 2019.\nLoss per share was $1.35, or 94.2 million shares in 2020, compared to fully diluted earnings per share of $0.82, or 96.3 million shares in 2019.\nExcluding the impairment charge in the other non-GAAP item previously mentioned, non-GAAP full-year earnings per share were $0.67 in 2020, compared to fairly good earnings per share of $1.10 for 2019.\nAdjusted EBITDA was $165 million in 2020, compared to $210 million in 2019.\nTurning now to Slide 13.\nI will now cover certain key balance sheet and cash flow items.\nAs of December 31, 2020, available liquidity, which represents additional availability under our credit facilities plus cash on hand, was $632 million, compared to $303 million at the end of the fourth quarter of 2019.\nThis additional liquidity reflects improved liquidity from working capital management, cost reductions, and proceeds from the convertible notes we issued during the second quarter.\nWe had total net debt of $406 million, including $442 million of principal outstanding under our term loan B facility that was used to purchase Jack Wolfskin.\nOur consolidated net accounts receivable was $138 million, a decrease of 1.4% compared to $140 million at the end of the fourth quarter of 2019.\nDays sales outstanding decreased to 45 days on December 31, 2020, compared to 53 days on December 31, 2019.\nWe continue to remain very comfortable with the overall quality of our accounts receivable at this time.\nAlso displayed on Slide 12, our inventory balance decreased by 22.8% to $353 million at the end of the fourth quarter of 2020.\nThis decrease was primarily due to the high demand we are experiencing in the golf equipment business as well as inventory reduction efforts in our soft goods businesses.\nThe teams continue to be highly focused on inventory on hand as well as inventory in the field, both of which remain relatively very low at this time.\nCapital expenditures for 2020 were $39 million, which is right in line with the range provided during our Q3 update.\nThis amount is down substantially from our $55 million of planned capital expenditures at the beginning of the year due to our cost reduction actions.\nIn 2021, we expect our capital expenditures to be approximately $50 million for the current Callaway business.\nDepreciation and amortization expense was $214 million in 2020.\nD&A expense excluding the $174 million impairment charge was $40 million in 2020, compared to $35 million in 2019.\nIn 2021, we expect non-GAAP depreciation and amortization expense to be approximately $45 million for the current Callaway business.\nI am now on Slide 14.\nWe're not providing revenue and earnings guidance for 2021 at this time due to the continued uncertainty surrounding the duration and impact of COVID-19.\nHowever, we would like to highlight certain factors that are expected to affect 2021 financial results compared to 2020.\nOn a premerger basis, which includes only Callaway golf business and does not take into account Topgolf's business following the proposed merger, consolidated net sales for the first quarter of 2021 will exceed 2020 net sales but will continue to be negatively impacted by COVID-19.\nThe company's soft goods business will continue to be impacted by the regulatory shutdown orders in Europe and Asia, which should then strengthen during the balance of the year as the regulatory restrictions subside.\nThe company's golf equipment business is expected to be impacted by temporary supply constraints caused by COVID-19 during the first quarter, which could affect the company's ability to fulfill all of the robust demand in its golf equipment business.\nThe company believes that there are opportunities for supply to catch up beginning in the second quarter.\nOn a premerger basis, the full-year 2021 non-GAAP gross margin will also be negatively impacted by increased operational costs due to COVID-19, including higher labor costs, logistical challenges as well as increased freight expense resulting from a shortage of ocean freight containers.\nThe freight container shortage alone is estimated to have a negative $13 million impact on freight costs in 2021, with the substantial majority of the impact occurring during the first half.\nThe company believes that its full-year 2020 gross margin will be approximately the same as in 2019 despite these gross margin headwinds, which should be offset by increased direct-to-consumer sales and foreign currency exchange rates.\nOn a premerger basis, full-year 2021 non-GAAP operating expenses are estimated to be approximately $70 million to $80 million higher compared to full-year 2019 non-GAAP operating expenses.\nIn addition to the negative impact of changes in foreign currency rates estimated to be approximately $20 million and inflationary pressures, the increased operating expenses generally reflect continued investment in the company's current business.\nThese investments include investment needed to assume the Korea apparel business, investment in the pro tour, and continued investment in the soft goods business, including the TravisMathew business related to opening new retail doors, investment in infrastructure and systems, and investments related to new market expansions for Jack Wolfskin in North America and Japan.\nThe company believes that these investments will continue to drive growth in sales and profit but expect to incur the expenses for these investments prior to receiving the associated benefit.\nIn 2020, the company realized gains from certain foreign currency hedges in the aggregate amount of approximately $25 million.\nThis gain is not expected to repeat in 2021.\nIn sum, the COVID-19 pandemic had a significant impact on our business beginning in the first quarter of 2021.\nAfter we absorb the initial -- after we absorb the initial shock of the impact of the pandemic, including the various governmental shutdown orders and restrictions, Chip challenged us to protect our business, avail ourselves of opportunities that arise during the pandemic, and take actions so that we not only survive the pandemic but also emerge in a position of relative strength.\nGiven the recovery in our core business, our prospective merger with Topgolf, and our increased liquidity, I believe we have done that.\nWe are cautiously optimistic as we enter 2021.\nAll of our business segments as well as the Topgolf business support an active, outdoor, healthy way of life.\nIt is compatible with the world of social distancing, and we believe this will continue to mitigate the impact of COVID-19.\nWe continue to believe that 2021 will be a stepping stone to more normal conditions in 2022, and the resulting transformational growth we have projected for 2022.\nAs Chip mentioned in his remarks, the primary focus of the Q&A should be with regard to the Callaway business as we are still pending shareholder approval on the merger.\nOperator, over to you.\n", "role": "user" }, { "content": "q4 non-gaap loss per share $0.33.\nq4 loss per share $0.43.\nq4 2020 consolidated net sales of $375 million.\nanticipate covid-19 will continue to negatively impact business in 2021.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We're having a technical difficulty on our end, and we'll be extending the call by 15 minutes to be sure that we make up for any of the lost time.\nAs the operator said, I'm Lauren Scott, the company's director of investor relations.\nPatrick Burke, Callaway's SVP of global finance; and Jennifer Thomas, our chief accounting officer, are also in the room today for Q&A.\nWe apologize for the late start.\nI'm pleased to report another quarter of strong results and look forward to providing more detail around our outlook for the year ahead.\n2021 was a pivotal year for Callaway marked by exceptional results significant growth and strong momentum across all our business segments.\nWe closed on the acquisition of Topgolf in Q1, transforming our company into the unrivaled leader in the modern golf and lifestyle apparel space.\nOver the past five years, we've combined a traditional Golf Equipment business with select lifestyle apparel brands and the world's leading tech-enabled Golf entertainment company to deliver a truly differentiated business model.\nAmid continued high demand for our Golf Equipment and Lifestyle products.\nOur global sales and operations teams worked tirelessly delivering quarter after quarter of impressive results despite significant global COVID-related operating challenges.\nThe team has proven itself to be an impressive and battle-hardened asset for [Audio gap].\nIn addition, we've increasingly made key investments in infrastructure and people to support a larger business and to set us up for continued growth and financial success.\nOur positive results would not be possible without your dedication and passion for this business.\nOur results came in better than expected, led by another quarter of exceptional results from Topgolf and continued high demand for both Golf Equipment and Lifestyle Apparel and Gear.\nTotal net revenue was $712 million, up 90% year over year, and adjusted EBITDA was $14 million, up $27 million.\nTurning to Topgolf, for the quarter, both walk-in traffic and event sales surpassed our expectations, driving same venue sales to an impressive increase of 6% over 2019 levels.\nFor the full year, same venue sales were approximately 95% of 2019 levels, meaningfully higher than projected and an encouraging and very strong result given the operating environment.\nA resurgence in corporate events business drove most of the same venue sales positive surprise in Q4.\nWalk-in sales in smaller social events have been strong for some time and continued their trends.\nHaving said this, as one would expect, in the last week of December and continuing into January, we have seen some softness in same venue sales as the rise in omicron has resulted in a decline in group events and increased short-term staffing challenges.\nvenues, which experienced omicron impacts approximately a month ahead of our U.S. venues bounce back very quickly and are now once again performing quite well.\nThis is a good indicator of the resiliency we expect in the U.S. business through the remainder of Q1 and we are already starting to see some signs of this anticipated improvement.\nFor the first quarter of 2022, we're expecting same venue sales to be down slightly compared to 2019.\nAnd for the full year, we anticipate low single-digit growth over 2019 levels.\nNew venue openings continued on pace with our 72 Bay Fort Myers, Florida location opening strongly in mid-November.\nWhile we're on venues, I want to remind everyone on the success rate we're consistently delivering here.\nWe had nine very successful openings in 2021, and the financial performance of this group is on track to exceed our expectations despite the challenging operating environment.\nI've had a ringside seat watching Topgolf open venues for nearly 10 years now.\nAnd in my opinion, we are uniquely good here.\nAs a result of increasing brand strength, competency of our real estate team, and our operating team's expertise, this is now a proven and repeatable model, a fact I believe the financial community may not fully appreciate yet.\nFor 2022, we are confident in our ability to deliver at least 10 new venues with the potential of adding an 11th in very late Q4.\nWe're also extremely excited about the lineup for this year, with the first two Southern California locations opening in the Los Angeles area in Q1 and Q2: one in Ontario, which is just east of LA; and the other in El Segundo, near SoFi Stadium.\nThe El Segundo location is particularly intriguing as is the first venue to include an on-course element.\nAnd in true Topgolf fashion, this will not be your typical golf course.\nIt will be a 10-hole lighted course perfect for night-time rounds, incorporating elements of entertainment and our Toptracer technology to create a truly unique guest experience.\nAdditional locations of note include Seattle and Baltimore, both of which will feature our latest premium venue enhancements, as well as Callaway fitting base.\nIt's important to note that due to the disruption of the development activities in 2020, the timing of this year's venue openings will be heavily weighted toward the back half of the year with five expected to open in Q4.\nThis timing will impact this year's contribution from new venues.\nDuring [Audio gap] we installed over 1,700 new bays, bringing our total for the year to just under 7,000 new bay installations.\nWe remain encouraged by continued strong demand and expect to install 8,000 bays or more in 2022.\nLastly, within the Topgolf media business, I'm pleased to announce that we are leveraging our mobile game development expertise from World Golf Tour to launch a new game later this year that caters to the younger, more traditional gamer, whereas existing game focuses more on the traditional golfer.\nWhile we expect the game to have minimal contribution to our financial results in 2022, we believe that it will provide future upside as our community of digital customers continues to grow.\nIn addition, in due time, we'll integrate this new game into our digital offerings at both our venues and Toptracer ranges, thus driving synergies from our game development capabilities.\nMoving to our Golf Equipment segment.\nWe're pleased to report that demand remains very high for our clubs and balls and trade inventory remains low across the industry.\nAccording to the National Golf Foundation's annual report, the number of on-course golfers increased by approximately 300,000 in 2021 to 25.1 million players, marking the fourth straight year of increased participation in traditional golf.\nOff-course participation also continued to grow, with 24.8 million people visiting nontraditional venues such as Topgolf and 5-Iron and approximately half of those playing exclusively off course.\nLooking out over the next 12-months and beyond, as Topgolf venues continue to expand, we expect even more new players to be introduced to the sport, both on and off course.\nFor Q4, our Golf Equipment results were in line with our expectations.\nAs we explained last quarter, we anticipated some softness in Q4 revenues as we made the decision to shift production to build 2022 new launch product.\nIn addition, we launched several new products in the comparable fourth quarter of 2020, thus creating an uneven year-over-year comparison.\nAs we look ahead to Q1 and the full year 2022, we are seeing promising momentum with the launch of our new Rogue ST family of Woods & Irons and new Chrome Soft golf balls.\nThe reception has been very positive so far.\nPre-books are up significantly and feedback on the product has been outstanding, with Rogue ST being the No.\n1 driver on tour in its first week on tour at the tournament of Champions, and Callaway receiving more gold metals than any other manufacturer in Golf Digest's Recent Hot list.\nThe new launch product will be available at retailers starting next week.\nFor the full year, we are reiterating our Golf Equipment business will grow based on continued strong demand from consumers, price increases on our new launch product, and the opportunity for a restocking at retail.\nTurning to our Apparel and Gear.\nIn our Apparel and Gear segment, revenue was up 33% year over year in Q4, led by a 40% increase in Apparel and a 19% increase in Gear.\nTravisMathew continued to grow at a roaring pace, with our own retail comp store sales up over 67% versus 2020.\nE-commerce sales were also up a healthy 30% versus 2020.\nThe team also signed a high-profile new ambassador, actor Chris Pratt, during Q4, who helped further increase brand visibility and raise awareness for a multi-day charity flash sale benefiting the Special Olympics.\nThe event was very successful with TravisMathew contributing over $1 million in donations to this very worthy cost.\nOn the product side, TravisMathew expanded its product range to include women's apparel as part the His and Her Cloud Collection launched in December, as well as more cold-weather gear within their outerwear collection.\nBoth additions performed very well with the women's product selling out predominantly in the first 48 hours, and jackets and pants accounting for 37% of direct-to-consumer sales.\nJack Wolfskin sales were up in the quarter as compared to both 2020 and 2019 as the public relaunch of the brand's fresh new image was positively received by consumers.\nFeedback on prebooks has been outstanding, and we're excited for the year ahead.\nOn the sustainability front, Jack Wolfskin launched a new initiative in Q4 called the Nature Counts campaign, which is dedicated to forestry, rewilding, and conservation efforts.\nIn place of Black Friday and Cyber Monday sales discounts, the brand decided to donate 2 euros from every purchase made during the week to Peter Rowland's Forest Academy.\nWe love to see the brand stay true to its roots and continue to be an ambassador for environmentalism.\nLastly, our Callaway Apparel business in Asia continued to thrive.\nThe Callaway Golf brand in Japan have the No.\n1 share in the wholesale channel during the quarter and direct-to-consumer efforts paid off with strong sales in our owned retail stores as foot traffic in the region increased.\nLooking ahead to 2022 and the consolidated company, we believe revenue will increase approximately 21%, and we expect adjusted EBITDA will be between $490 million and $515 million.\nThis strong outlook is underpinned by our belief that our Golf Equipment business will continue to grow as participation remains high and supply continues to scales up to match exceptional consumer demand.\nOur strong prebooks and demand trends for [Inaudible] Apparel and Gear brands and embedded growth in the Topgolf business through new venue openings and year-over-year growth in same venue sales.\nLonger term, we remain excited and confident about the direction of the business.\nWhile macro trends over the past two years have provided favorable tailwinds for golf, we believe there has also been a more sustainable structural shift in the market that will support all of Callaway's businesses.\nThese structural shifts include what we believe are long-term increases in remote and hybrid work.\nThe increase desire to get out in the nature.\nThe momentum behind Casual Lifestyle Apparel brands, the growth of new golfers with waiting list to get into golf courses, and the growth and positive impact of off-course golf.\nOff-course golf experiences such as Topgolf are both growing rapidly in their own right and at the same time, changing the way people are introduced to the sport of golf, creating increased interest in more new entrants.\nWe believe Callaway is uniquely positioned to engage with these consumers through our differentiated portfolio of brands and look forward to unlocking the embedded growth within this business for years to come.\nIn conclusion and before handing the call off to Brian, I want to call out two additional items.\nFirst, I'm pleased to announce that we're planning to publish our first comprehensive sustainability report next month.\nAs a company, we were [Inaudible] Callaway's view that good ethics is good business, and we continue to operate with this ethos at our core today.\nYou will see this theme carried out through the report and through the four strategic pillars of our sustainability strategy: people, planet, product, and procurement.\nI encourage you to review the report and when it comes out and engage with the team to discuss the content is an important component of our long-term business strategy.\nSecond, I'm very excited to announce our plan to hold an Investor Day in Q2, where you have the opportunity to hear more from senior executives across each of our businesses and learn more about our medium- and long-term vision for the company.\nMore details for this event will be provided by the IR team in the coming weeks, and we hope you can participate.\n2021 was an outstanding and transformational year for Callaway, which is clearly highlighted in our financial results.\nThe Topgolf business recovered from COVID more quickly and significantly than we expected and demand for our Golf Equipment and Apparel products remain strong throughout the year and has continued so far in 2022.\nAs Chip mentioned, we believe there has been a structural shift in the market that will benefit each of our businesses including increased interest and participation in golf, momentum behind Casual Lifestyle or Power brands, and an increased desire for leisure and entertainment, such as Topgolf, hiking, and camping.\nAs a result, we expect continued high demand and growth across each of our businesses into 2022 and beyond.\nShifting to our financial results.\nAs shown on Slides 10 and 11, consolidated net revenue for the full year 2021 was $3.1 billion, a 97% increase, compared to full year 2020 revenue of $1.6 billion.\nFull year 2021 adjusted EBITDA was $445 million, an increase of 170% over full year 2020 adjusted EBITDA of $165 million.\nThe outperformance versus our guidance was related to Topgolf and resurgence in corporate events during the quarter, as Chip mentioned earlier.\nThe Golf Equipment and soft goods businesses were in line with our guidance.\nWhen you look at a breakdown of our 2021 revenue, Golf Equipment represented 39% of total revenue.\nTopgolf was 35%, and Apparel, Gear, and Other represented 26%.\nWe believe Golf Equipment continued to grow at a steady pace and be an important component of our strategy moving forward.\nBut as Topgolf venues continue to expand at the rate of 10-plus new openings per year, and the strong momentum of TravisMathew and Jack Wolfskin continues, we see a larger portion of our revenue more toward these high-growth segments.\nFor the fourth quarter, consolidated net revenue was $712 million, an increase of 90% compared to Q4 2020.\nTopgolf was the largest contributor by segment, generating $336 million.\nOur strong social events, strengthening corporate events, and continued robust demand from walking guests collectively delivered 6% same venue sales growth over 2019.\nApparel, Gear, and Other also performed very well during the quarter with revenue up 33% year over year as strong brand momentum, recovery from COVID, and well-positioned products translated to strong sales growth in the quarter.\nConsistent with our guidance, and as Chip highlighted earlier, the Golf Equipment segment was down year over year due to third-quarter supply chain disruptions and a shift to prioritizing 2022 new launch inventory over fourth quarter 2021 sales.\nWe also launched several new products in Q4 2020, thus creating an uneven year-over-year comparison.\nChanges in foreign currency rates had a $6 million negative impact on fourth quarter 2021 revenues.\nTotal costs and expenses were $755 million on a non-GAAP basis in the fourth quarter of 2021, compared to $397 million in the fourth quarter of 2020.\nOf the $358 million increase, Topgolf added an incremental $330 million of total costs and expenses.\nThe remaining $28 million increase includes moving spending levels back toward normal levels, increased corporate costs to support a larger organization, investments in growth initiatives, including TravisMathew expansion and the Korea apparel business, and increased freight costs and inflation.\nAs we move into 2022, we continue to believe that higher sales volumes and select price increases will balance out inflationary pressures.\nFourth quarter 2021 non-GAAP operating income was a loss of $43 million, down $21 million, compared to a loss of $22 million in the fourth quarter of 2020 due to the previously mentioned planned shift in Golf Equipment supply to 2022 launch products, as well as the increased costs previously mentioned.\nNon-GAAP other expense was $37 million in the fourth quarter, compared to other expense of $13 million in Q4 2020.\nThe increase was primarily related to a $28 million increase in interest expense related to the addition of Topgolf.\nNon-GAAP loss per share was $0.19 on approximately 186 million shares in the fourth quarter of 2021, compared to a loss of $0.33 per share on approximately 94 million shares in the fourth quarter of 2020.\nLastly, fourth quarter 2021 adjusted EBITDA was $14 million, compared to negative $13 million in the fourth quarter of 2020.\nThe $27 million increase was driven by a $46 million contribution from the Topgolf business.\nTurning to certain balance sheet items on Slide 13.\nI am pleased to report that we are in a strong financial position with ample liquidity.\nAs of December 31, 2021, available liquidity, which is comprised of cash on hand and availability under our credit facilities was $753 million, compared to $632 million at December 31, 2021, an increase of 19%.\nIn addition, the Topgolf funding requirements from Callaway have improved compared to our initial expectations.\nWhen we announced the merger over a year ago, the funding needs for Topgolf were estimated at $325 million.\nAs of year-end, their need for funding was significantly lower due to its faster-than-expected recovery and strong 2021 performance.\nAt this point, we estimate that Topgolf will need almost $200 million less funding than we originally anticipated.\nAnd going forward, we estimate Topgolf will only need incremental funding from Callaway of less than $70 million, which would be used for future venue growth.\nTopgolf is already operating cash flow positive [Audio gap].\nAnd we expect Topgolf to be able to fund its own growth and be free cash flow positive in 2024.\nAt quarter-end, we had a total net debt of $1.4 billion, including venue financing obligations of $593 million related to the development of Topgolf venues.\nSince the merger, our leverage ratios have improved significantly.\nOur net debt leverage ratio was 3.1 times at December 31, 2021, compared to five times at March 31, 2021.\nConsolidated net accounts receivable was $105 million, a decrease of 24%, compared to $138 million at the end of the fourth quarter of 2020.\nDays sales outstanding for our Golf Equipment and Apparel businesses improved to 35 days as of December 31, 2021, compared to 45 days as of December 31, 2020.\nOur inventory balance increased to $523 million at the end of the fourth quarter of 2021, compared to $353 million at the end of the fourth quarter 2020 as we built supply for our new products within the Golf Equipment and Apparel businesses.\nIn addition, Topgolf added $22 million in inventory.\nCapital expenditures for the full year 2021 were $234 million, net of REIT reimbursements.\nThis includes $173 million related to Topgolf, primarily for new openings for the 10 months since the merger.\nThis does not include $12 million of capex for January and February of 2021 prior to the merger.\nThe full year 2022 forecast for Callaway and Topgolf is approximately $310 million, net of REIT reimbursements, including approximately $230 million for Topgolf.\nThis increase in capital expenditures is due to the timing of REIT reimbursements and investment in systems integration and growth within the Golf Equipment and Apparel businesses.\nLastly, on December 13, we announced that our board of directors approved a $50 million stock repurchase program.\nWe repurchased a total of approximately 947,000 shares at an average price of $26.41 during the quarter and now have approximately $25 million authorization remaining under that program.\nNow, turning to our full year and first quarter 2022 outlook on Slide 14 and 15.\nFor the full year, we expect revenue to be approximately $3.8 billion.\nThat compares to $3.13 billion in 2021.\nOur full year 2022 net revenue estimate assumes continued positive demand for our Golf Equipment and soft goods segments and no significant supply chain or retail shutdowns due to any COVID resurgence.\nIt also assumes approximately $1.5 billion in net revenue from Topgolf for the year.\nFull-year adjusted EBITDA is projected to be $490 million to $515 million, which assumes approximately to $210 million to $220 million from Topgolf.\nAs Chip stated, we plan to add at least 10 new Topgolf venues in 2022, although the venue openings will be heavily weighted toward the back half of the year with five expected to open in the fourth quarter.\nFrom a profitability perspective, this means our 2022 venues will have a more limited impact to adjusted EBITDA in 2022 as we will incur full preopening costs for those venues with limited revenue.\nFrom a cost perspective, we will be making investments in personnel and infrastructure to support an overall larger business and future growth.\nWe also anticipate continued cost pressure from increased freight cost and inflation including labor and commodity prices.\nLastly, we anticipate a negative impact from changes in foreign currency rates of approximately $54 million on revenue and $38 million on pre-tax income due to a strengthening U.S. dollar and $8 million in hedge gains that are not expected to repeat.\nDespite these headwinds, we continue to believe strong demand, sales volumes, and select price increases across our business segments will balance out these pressures, and we expect all businesses to grow this year.\nLastly, looking at the share count for full year 2022, want to note an accounting change taking effect this year that will cause our share count to increase to approximately 204 million shares.\nThis change relates to the accounting for our convertible bond.\nThis new role will require us to account for the bond, assuming it has been converted for calculating earnings per share.\nWhen calculating EPS, we will eliminate the interest paid related to the bond, and we will add 14.7 million shares to the earnings per share calculation as if the bond had been converted.\nFor purposes of this calculation, we do not include the benefit of the [Inaudible] transaction we entered into at the time of the bond issuance, which at maturity would reduce the number of new shares issued by us [Inaudible] conversion by approximately 4 million to 5 million shares at current prices.\nMoving to the first quarter 2022 outlook.\nOur revenue guidance is just over $1 billion.\nAdjusted EBITDA guidance is $130 million to $145 million.\nThis includes a negative foreign currency impact of approximately $21 million on revenue and $21 million in pre-tax income.\nAgain, including the $8 million hedge gains in Q1 2021 that are not expected to repeat.\nI want to emphasize that there are several factors which could cause a positive or negative shift in our financial results between Q1 and Q2.\nSome of these factors include the timing of when we receive supply in the Golf Equipment or soft goods segments and whether products scheduled to be shipped at the end of March or beginning of April are deferred to Q2 or accelerated into Q1 as our Q1 guidance reflects our assumption that COVID continues to lessen during Q1 and that the Topgolf business including corporate events, returns close to 2019 levels.\nThe pace at which happens will affect our first-quarter results.\nWe feel good about our full-year guidance.\nIn closing, we are proud of the performance of our business in 2021 and are excited to share our continued progress throughout 2022.\nOperator, over to you.\n", "role": "user" }, { "content": "q4 non-gaap loss per share $0.19.\nsees full year 2022 revenue outlook of $3,780 million to $3,820 million and adjusted ebitda guidance of $490 million to $515 million.\nsees fy 2022 adjusted ebitda $490 million - $515 million.\nchanges in foreign currency effects are estimated to have a negative full year impact of $54 million on 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: Unless otherwise stated, all net sales growth numbers are in constant currency and all organic results exclude the non-comparable impacts of acquisitions, divestitures, brand closures, and the impact of currency translation.\nAs a reminder, references to online sales include sales we make directly to our consumers through our brand.com sites and through third-party platforms.\nIt also includes estimated sales of our products through our retailers' websites.\nWe are grateful you have joined us today.\nWe delivered excellent performance to begin fiscal year 2022, reinforcing our optimism in the opportunities of tomorrow as we discussed with you in August.\nOur multiple engines of growth strategy enabled us to excel amid continued volatility and variability from the pandemic.\nOrganic sales rose 18%, and adjusted diluted earnings per share grew an even stronger 31%.\nEncouragingly, relative to the pre-pandemic first quarter of fiscal year 2020, our business is 13% larger on a reported basis and more profitable.\nWe achieved these outstanding results with increasingly diverse growth engines as we expected.\nBy virtue of our dynamic strategy, we could act locally amid the complexity of the pandemic to both create and capture demand.\nThe growth engines of makeup, developed markets in the West, and brick-and-mortar reignited and complemented momentum in skincare, fragrance, Mainland China, Travel Retail in Asia Pacific, and global online.\n13 brands contributed double-digit organic sales growth, demonstrating the breadth of strength across our portfolio.\nEstée Lauder and MAC drove makeup emerging renaissance, while La Mer and Clinique delivered standout results in skincare.\nImpressively, skincare solidly outpaced its prior-year organic sales growth performance despite having the far toughest comparison among the categories.\nFragrance showed double digits, driven by Tom Ford Beauty and Jo Malone London.\nLet me share a few highlights by brand.\nEstée Lauder advanced planning for the makeup renaissance delivered significant sales growth.\nAs social and professional usage occasions resumed in certain markets, the brand was well-positioned with compelling innovation, superb merchandising, and on-point communication.\nIts double wear and futurist foundation franchises rose strong double digits, while its new pure color whipped matte lipstick was a hit.\nMAC strategically engaged consumers to drive performance in makeup.\nIn the Americas and EMEA, excellent results from in-store activations and regional MAC the Moment campaigns combined with desirable innovation like luster glass sheer shine lipstick and magic extension mascara.\nThe brand's new omnichannel capabilities, which leverage its freestanding stores, also contributed to the strength and demonstrate a new capability for MAC to benefit from going forward.\nLa Mer performed magnificent and led the company with sales rising strong double digits.\nIts new hydrating infused emulsion expanded our portfolio of east to west innovation captivating consumers in every region.\nIt is a striking example of the innovation gains we can achieve when the power of our data analytics combined with our creative talent and R&D.\nLa Mer's iconic creme de la Mer prospered as a new global campaign focused on its moisturizing benefit realized terrific initial results.\nClinique strived in skincare from the strength of its heroes.\nMoreover, its new smart clinical repair wrinkle correcting serum with powerful clinically led claims and compelling before-and-after visualizations extended Clinique win streak with innovation and further demonstrated the brand's ability to be highly relevant for consumers of all ages.\nDECIEM complemented our organic sales growth in skincare with its coveted vegan brand, The Ordinary.\nDECIEM is known for its transparency, which has enamored it with consumers.\nAnd in the first quarter, we launched the insightful Everything is Chemicals campaign.\nAnd the new Regimen Builder by The Ordinary on brand.com realized spectacular adoption, further enhancing the brand's powerful online ecosystem.\nFragrance momentum continued with stellar double-digit performance in every region, powered by hero products and innovation from Tom Ford Beauty, Jo Malone London in our artisanal offerings.\nWe are excited for the Estée Lauder brand launch of its luxury collection in the second quarter as it expands our portfolio in the high-growth segment of fragrances.\nOur fragrance category benefits from diversification among our categories as well as regions with outstanding performance from both historically strong markets for fragrance and emerging fragrance opportunities.\nThe self-care rituals related to scent, which were embraced during the pandemic, continued even as social and professional usage occasions resumed.\nOf note, Tom Ford Beauty performed strongly in both fragrance and makeup such that the brand was among our top performers in the quarter.\nIts new Ombre Leather perfume and hero's Oud Wood and Lost Cherry fueled the brand's success.\nOur growth engines also diversified geographically, led by developed markets in the West.\nOur business in North America executed with excellence to deliver strong double-digit organic sales growth, powered by readiness for makeup's emerging renaissance, ongoing strength in skincare and fragrance, and recovery in hair care.\nStrategic go-to-market initiatives supported by on-trend innovation increased advertising spending, and expert in-store virtual services delighted consumers.\nOur expanded consumer reach enhanced these initiatives as Bobbi Brown launched in Ulta Beauty exceeded expectations, and we are encouraged by the early results of the new Ulta Beauty at Target and Sephora at Kohl's relationships.\nIn Asia Pacific, many markets faced COVID-induced lockdowns and temporary store closures, which pressured performance.\nDespite this, the region still grew 10% organically driven by strength in Greater China and Korea.\nMainland China achieved double-digit organic sales growth owing to skin care and fragrance, with online and brick-and-mortar both higher.\nWe launched locally relevant innovation which proved highly desirable, while we also increased advertising spending, strategically expanded our consumer reach to match success on JD, and designed successful activation for Chinese Valentine's Day.\nWe continue to invest in the vibrant and compelling long-term growth opportunity in Mainland China, led by our talented local team.\nWe are enthusiastic for our new innovation center in Shanghai to open in the second half of this fiscal year.\nThis new world-class innovation center will be the first of its kind for our company.\nWith it, we will have a unique ability to grow and build on our market and consumer insights to develop exceptional products to meet and surpass the needs and desires of Chinese consumers.\nWhat is more, we are seeing the benefits of recent investment in online fulfillment, which have led to higher service levels and better inventory manager while setting the stage for expanded omnichannel capabilities in the market.\nFrom a channel perspective globally, brick-and-mortar grew strongly in markets which are gradually emerging from the latest wave of COVID-19.\nWe realized excellent results across the board in brick-and-mortar, most especially in the Americas and EMEA.\nOur brands created excitement in store with enticing high-touch services and unique activations.\nWe are encouraged by improving trends in the productivity of brick-and-mortar, owing to both increased traffic and our strategic actions, including those under the post-COVID business acceleration program.\nAs brick-and-mortar reignites, our global online business continued to showcase its tremendous promise, with impressive organic results despite significant organic sales growth in the year-ago period.\nOnline grew to be nearly double the size, on a reported basis, of the pre-pandemic first quarter of fiscal year 2020.\nMany markets capitalized on the remarkable new consumer acquisition trend of the pandemic to deliver sustained gain in repeat purchases.\nAs we seek to engage with consumers in innovative ways, we advanced our work with Instagram, Snapchat, TikTok, WeChat, and others to capitalize on exciting trends in social commerce.\nWe also deployed a technology solution, which enables brands to better customize consumer outreach by leveraging data to merchandise and personalized communication.\nThis is leading to higher conversion rates for new consumers and a deeper level of relationship building after the initial purchase to foster retention.\nInitiatives such as this position us well to realize even greater success with trial and repeat.\nWe continued to invest in online to strategically expand our consumer reach and realize promising results.\nFor example, in the first quarter, La Mer launched on Lazada in Southeast Asia to tremendous success with differentiated merchandising, unique services, and prestige packaging, making it one of the platform's biggest brand launches ever.\nOur relationship with Lazada expanded in the current quarter with Jo Malone London's debut.\nBefore I close, I wanted to share that today we will release our fiscal year 2021 social impact and sustainability report.\nWe are incredibly inspired by the achievements of our employees globally.\nThe report highlights initiatives across key areas, including inclusion, diversity, and equity.\nClimate, packaging, social investment, responsible sources, and green chemistry.\nI'm particularly proud of our support to employees globally who faced financial hardships due to COVID-19.\nThe ELC Cares Employee Relief Fund awarded nearly 14,000 grants and distributed nearly $8 million through June 30, 2021.\nHere, a few among the many other highlights of the report: We are continuing to contribute to a low-carbon future.\nFor the second year in a row, we sourced 100% renewable electricity globally for our direct operations and achieved net-zero scope one and scope two emissions.\nThe company also made strong progress in its Science-based Targets for scope one and two and made efforts toward meeting its scope three science-based targets.\nWe achieved our existing post-consumer recycled content goal ahead of schedule and announced a more ambitious goal to increase the amount of such material in our packaging to 25% or more by the end of calendar year 2025.\nWe also committed to reduce the amount of virgin petroleum plastic in our packaging to 50% or less by the end of calendar year 2030.\nOn the last few earnings calls, I discussed actions we are taking to make more progress on our commitments for racial equity as well as women's advancement and gender equality, which are reflected in the report.\nWe also deepened our work by further aligning the strategy of The Estee Lauder Companies' charitable foundation to identify and support programs at the intersection of climate, justice, human rights, and well-being with a focus on equity, building upon our legacy of founding girls' education and leadership programs.\nIn the beginning of fiscal year 2022 and aligned with our social impact commitments, we were pleased to announce a three-year partnership with Amanda Gorman, activist, award-winning writer, and the youngest inaugural poet in U.S. history.\nThe Estée Lauder Companies will contribute $3 million over three years to support Writing Change, a special initiative to advance literacy as a pathway to equality, access, and social change.\nIn addition, Mrs. Gorman will bring her voice of change to the Estée Lauder brand, debuting her first campaign in the second half of this fiscal year.\nIn closing, we delivered outstanding performance to begin the new fiscal year amid the volatility and variability of the pandemic, while continuing to invest in sustainable long-term growth drivers.\nWe are focusing on fundamental capabilities for product quality and the consumer-centric elements of acquisition, engagement, and high-touch experiences and services.\nWe are doing this while improving our cost structure, diversifying our portfolio and its distribution, investing behind the best growth opportunities, and leading our values.\nOur confidence in the long-term growth opportunities for global prestige beauty and our company is reflected in the announcement today to raise the quarterly dividend.\nI'm forever grateful to the grace, wisdom, and ingenuity of our employees globally, who are making us a stronger company each and every day.\nWe are off to an outstanding start with first-quarter net sales growing 18% organically, driven by the nascent recovery in the Americas and EMEA during the quarter compared to a more difficult environment in the prior year.\nGlobal logistics constraints caused some retailers, primarily in North America, to order earlier to ensure popular sets and products would be on counter for holiday.\nWe estimate that this contributed approximately 1.5 points to our first-quarter sales growth that otherwise would have occurred in the second quarter.\nThe inclusion of sales from the May 2021 DECIEM investment added approximately three points to reported net sales growth, and currency added just over two points.\nFrom a geographic standpoint, organic net sales in the Americas climbed 27% as COVID restrictions eased throughout the region.\nBrick-and-mortar retail grew sharply across all formats compared to the prior-year period when many stores were temporarily shut down.\nDistribution in Kohl's with Sephora and in Target with Ulta Beauty began its phased rollout to initial stores and online in mid-August, with minimal impact on net sales growth for the quarter.\nWith the strong resurgence of brick-and-mortar traffic, online organic sales growth in the Americas declined single digits against a sharp increase last year, while organic online penetration remained solid at 31% of sales.\nThe inclusion of sales from DECIEM added about nine points to the overall reported growth in the region.\nIn our Europe, the Middle East, and Africa region, organic net sales rose 19% with virtually every market contributing to growth, led by the emerging markets in the Middle East, Turkey, and Russia as well as the U.K. Most markets throughout the region saw COVID restrictions lifted, and some tourism resumed during the peak summer months.\nBy channel, the region saw more balance between brick-and-mortar and online growth.\nAll major categories grew this quarter, and the region saw the strongest growth in fragrance and makeup as social occasions increased.\nOur global Travel Retail business grew double-digit as China and Korea continued to be strong.\nInternal travel restrictions during the quarter in China slowed Hainan sales temporarily, but restrictions lifted in early September, and traffic rebounded.\nRetailers also responded to the August dip by driving post-travel consumption online.\nSummer holiday travel in Europe and the Americas picked up, but international travel still reached only 40% of pre-COVID levels.\nIn our Asia Pacific region, organic net sales rose 10%, driven by Greater China and Korea.\nThe region overall experienced higher levels of COVID lockdowns this quarter compared to last year's quarter due to the rise of the delta variant, although online remains strong.\nSales growth in Mainland China was somewhat slower due to COVID restrictions during July and August.\nAnd the pace of online sales growth slowed following the successful 6.18 programs last quarter and in anticipation of the 11.11 shopping festival.\nAs we've mentioned before, these key shopping moments have created some additional seasonality in our business in this region.\nMore than half of our brands in virtually all channels rose double-digit in Mainland China.\nHong Kong and Macau were bright spots this quarter.\nThey benefited from strong new product launches from La Mer and Jo Malone and successful marketing campaigns from several other brands.\nFrom a category perspective, net sales growth in fragrance jumped nearly 50%.\nVirtually every brand that participates in the category contributed to growth, with exceptional double-digit increases from Tom Ford Beauty, Jo Malone London, and Le Labo.\nPerfumes and colognes led the category growth; and bath, body, and home fragrances continue to perform well.\nNet sales in makeup rose 18% as markets in the Americas and Europe began to recover from COVID shutdowns.\nWe are encouraged by the sequential improvement in makeup versus pre-COVID levels.\nHowever, makeup sales in the quarter were still 19% below two years ago.\nNonetheless, Estée Lauder foundations continue to resonate strongly with consumers, and MAC leaned into the makeup recovery with a number of fun and compelling campaigns.\nSkincare sales remained strong during the quarter.\nOrganic net sales grew 12%, and the inclusion of sales from DECIEM added six percentage points to reported growth.\nNearly all of our skincare brands contributed to growth, although Estée Lauder had a tough comparison with the prior-year launch of its improved Advanced Night Repair Serum.\nOur haircare net sales rose 8% as traffic in salons and stores in the U.S. and Europe began to return.\nBoth Aveda and Bumble and bumble saw growth in-hero products as well as continued strength from innovation.\nOur gross margin declined 100 basis points compared to the first quarter last year.\nThe positive impacts from strategic pricing and currency were more than offset by higher obsolescence costs for both basic and holiday product sets and the inclusion of DECIEM.\nOperating expenses decreased 240 basis points as a percent of sales.\nOur strong sales growth was partly due to earlier orders from some North America retailers concerned about logistics constraints, and costs related to these sales are expected to be incurred in our second quarter.\nWe do continue to manage costs with agility, realizing savings from our cost initiatives, while also investing to support a continued brick-and-mortar recovery as well as our strategic initiatives.\nOur operating income rose 32% to 941 million, and our operating margin rose 140 basis points to 21.4% in the quarter.\nDiluted earnings per share of $1.89 increased 31% compared to the prior year.\nDuring the quarter, we used 81 million in net cash flows from operating activities, which was below the prior year.\nThis reflects a more normalized first quarter where we typically have seasonally higher working capital needs.\nWe invested 205 million in capital expenditures as we ramped up our investment to build a new manufacturing facility in Japan.\nAnd we returned 749 million in cash to stockholders through both share repurchases and dividends.\nSo now let's turn to our outlook.\nWe are encouraged by the green shoots we are seeing around the world, even in the context of an environment of increased volatility.\nOur strong performance reflects our ability to navigate through the volatility while leveraging our multiple engines of growth.\nAt the same time, we are mindful that recovery is tenuous and likely to be uneven.\nNevertheless, we are cautiously optimistic, and our assumptions for fiscal 2022 remain consistent.\nWe continue to expect an emerging renaissance in the makeup category as restrictions are safely lifted and social occasions increase.\nAnd as intercontinental restrictions are lifted, we expect international passenger traffic to build toward the end of the fiscal year.\nWe began taking strategic pricing actions in July.\nAnd overall, pricing is expected to add at least three points of growth, helping to offset inflationary pressures.\nOn the costs side, we plan to continue to increase advertising to support our brands and drive traffic in all channels.\nSelling costs are expected to rise to support the reopening of brick-and-mortar retail.\nWe also continue to invest behind key strategic capabilities like data analytics, innovation, technology, and sustainability initiatives.\nAs you are all aware, global supply chains are being strained by COVID and its related effects in some markets, resulting in port congestion, higher fuel costs, and labor shortages at a time when demand for goods is rising.\nThis is causing us to experience inflation in freight and procurement, which we expect to impact our cost of goods and operating expenses beginning next quarter.\nBased on what we see through October, the expected benefit of pricing, combined with good cost discipline elsewhere, are enabling us to maintain our expectations for the year.\nFor the full fiscal year, organic net sales are forecasted to grow 9 to 12%.\nBased on rates of 1.163 for the euro, 1.351 for the pound, and 6.471 for the Chinese yuan, we expect currency translation to be negligible for the full fiscal year.\nThis range excludes approximately three points from acquisitions, divestitures, and brand closures, primarily the inclusion of DECIEM.\nDiluted earnings per share is expected to range between 7.23 and 7.38 before restructuring and other charges.\nThis includes approximately $0.04 of accretion from currency translation and $0.03 accretion from DECIEM.\nIn constant currency, we expect earnings per share to rise 11 to 14%.\nAt this time, we expect organic sales for our second quarter to rise eight to 10%.\nThe net incremental sales from acquisitions, divestitures, and brand closures are expected to add about three points to reported growth, and currency is forecasted to be neutral.\nOperating expenses are expected to rise in the second quarter as we support holiday activations and the continued recovery of brick-and-mortar retail around the world.\nAdditionally, the prior-year quarter included some benefits of government subsidies, which are not anticipated in the current year quarter.\nWe expect second quarter earnings per share of $2.51 to $2.61.\nBoth currency and the inclusion of DECIEM are expected to be immaterial to EPS.\nNotably, our earnings per share forecast also reflects a 23% tax rate, compared to 15.9% in the prior year when we benefited from certain one-time items.\nIn closing, we are pleased with the terrific start to the year and are proud of the continued efforts of our global team.\nWe remain confident in our corporate strategy with its multiple growth engines to drive sustainable, profitable growth.\n", "role": "user" }, { "content": "sees q2 earnings per share $2.51 to $2.61 excluding items.\nconfirming full year outlook.\nqtrly adjusted diluted earnings per common share to $1.89.\nqtrly net sales increased 23% to $4.39 billion.\nfor fiscal 2022, we continue to expect strong net sales and adjusted earnings per share growth with margin expansion.\nhigher transportation and logistics costs to negatively impact cost of sales and operating expenses in fiscal 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: Unless otherwise stated, all net sales growth numbers are in constant currency, and all organic net sales growth excludes the non-comparable impacts of acquisitions, divestitures, brand closures, and the impact of currency translation.\nAs a reminder, references to online sales include sales we make directly to our consumers through our brand.com sites and through third-party platforms and also includes estimated sales of our products through our retailers' websites.\n[Operator instructions] [Audio gap] Fabrizio.\nIt is good to be with you today as our hearts continues to be with those impacted by COVID-19 around the world.\nWe achieved record sales and profitability in the second quarter of fiscal year 2022.\nOur multiple engines of growth strategy showcased the benefit of its diversification.\nEvery category, region, and major channel expanded.\nWe size the favorable dynamics of skincare, fragrance-developed markets in the West, brick and mortar, and continue to prosper in the East with Chinese consumer, as well as in global travel retail and global online.\nThe flexibility we built into our business model over the last decade enable us to both allocate resources to attractive growth opportunities and effectively manage the impacts by increasing inflationary environment.\nOur advanced planning for the key shopping moments of 11.11 and holidays allowed us to overcome supply chain obstacles.\nFor our second quarter, reported net sales grew 14%.\nOrganic net sales rose 11%.\nAdjusted operating margin expanded, and adjusted diluted earnings per share increased 15%.\nToday's results are all the more impressive compared to the pre-pandemic second quarter of fiscal year 2020 when we delivered record organic sales growth in our seasonally largest quarter.\nDespite the ensuing challenges of COVID-19, which escalated during the quarter with Omicron, we far exceeded the exceptional results of two years ago.\nReported sales are 20% higher, driven by organic sales growth, and with every region now larger, and we are much more profitable.\nOur gains during the last two years reinforced our confidence in our ability to navigate the impacts of the prolonged pandemic.\nMoreover, our optimism in the opportunities of tomorrow remains incredibly strong, owing to the timeless desirability of our brands and our commitment during the pandemic to invest for the near and the long term.\nOur brand portfolio of large, scaling, and developing brands served as a powerful catalyst for growth as consumer reward the quality of our trusted brand and hero products.\nIn the second quarter, 11 brands achieved double-digit organic sales growth versus the prior-year period.\nThis broad-based trend is similar to the contribution in the first quarter despite a far tougher comparison.\nThe momentum in our largest brands, Clinique, Estee Lauder, La Mer, and M·A·C, continues as the hero franchises capitalize on innovation in product engagement and high-touch experiences and services to drive trial and repeat.\nLa Mer and Clinique delivered standout results in skin care, while Estee Lauder and M·A·C drove makeup emerging renaissance.\nOur scaling and developing brands achieved excellent results.\nJo Malone London and Tom Ford Beauty led fragrance and were among our top-performing brands, while Bobbi Brown grew strongly driven by skincare.\nAveda and Bumble and bumble delivered accelerating sales growth in hair care as Too Faced and Smashbox rose double digits in makeup.\nProduct innovation also served as a powerful catalyst for growth across our brand portfolio, contributing nearly 25% of sales.\nThis level of contribution is notable in a quarter when holidays exclusives represent a larger mix of business and especially so in a challenged supply chain environment.\nLa Mer fueled by its iconic heroes on-trend holidays merchandising and highly sought new The Hydrating Infused Emulsion led the company's sales growth.\nThe brand excelled in every region and across major channels, cheered by its loyal consumer and embraced by new cohort of consumers, including more men.\nClinique's skincare portfolio with its desirable innovation and hero franchises performed strongly.\nIts new Smart Clinical Repair Wrinkle Correcting Serum drove sales gains in North America, amplifying the brand's global momentum in the serum subcategory.\nClinique Take The Day Off makeup remover saw a dramatic uptick in sales, evidence of makeup's emerging renaissance and the staying power of this crowd-favorite skincare product, which is recruiting a new generation of consumers.\nFor makeup, the Estee Lauder brand is a driving force in the category emerging renaissance, with makeup sales for the brand already larger than two years ago.\nEstee Lauder Double Wear hero franchise delivered remarkable performance, while its Futurist foundation, which is an East to West product born of skinification of makeup trend, was very strong.\nOur fragrance portfolio continued to go from strength to strength, owing to the enduring sand-based ritual created in the pandemic and enhanced by innovation, better online storytelling, and expanded reach as consumers in the East embrace this category.\nEach of Jo Malone London, Tom Ford Beauty, Le Labo, KILIAN PARIS, and Frédéric Malle delivered strong double-digit growth in every region, demonstrating the allure of these brands around the world.\nTom Ford Beauty exemplifies the benefits of a strategic focus on heroes and innovation.\nIts new Ombre Leather Parfum had a halo effect on the other perfumes such that sales for the franchise doubled.\nIn the third quarter, the brand is leveraging its global appeal with a flare of local relevance in the fragrance launch of Tom Ford Rose Trilogy.\nOur growth engines also continue to diversify by region as we anticipate.\nDeveloped markets in the West performed especially well.\nNorth America executed with excellence to capture brick-and-mortar reopening trends and deliver a strong holiday across channels.\nFestive seasonal exclusive, including Estee Lauder Blockbuster Set and Aveda collaboration with Philip Lim, proved highly sought.\nIndeed, our in-store and online activation and merchandising were incredibly successful, with brand.com posting a record Black Friday.\nEvery category grew double digits organically in North America led by makeup where our brand paired trusted product with enticing innovation as social and professional user education increased.\nM·A·C, Bobbi Brown and Too Faced produced engaging content and artist-led education to inspire consumers to size the joy and creativity of the category.\nMainland China delivered high single-digit organic sales growth, an impressive result given the regional restrictions in the quarter, the pressured brick and mortar, and makeup.\nOnline sales rose double digits organically, even after having posted significant growth in the year-ago period.\nFor 11.11 on Tmall, the Estee Lauder brand ranked No.\n1 flagship store in beauty for the second consecutive year as La Mer's flagship store topped luxury beauty once more and Jo Malone London again led in prestige fragrance.\nOn JD, the Estee Lauder brand ranked No.\n1 flagship store in beauty in its first year.\nSkincare and fragrance grew double digits organically in Mainland China.\nHero products and innovation excelled, driving new consumer acquisition and repeat purchases.\nSeveral brands expanded prestige beauty share in the quarter, including Estee Lauder, La Mer, and Dr. Jart+.\nLooking ahead, we are excited about the long-term growth opportunity in the vibrant Asia-Pacific region and, most notably, in China.\nWe are a few months from opening our new innovation center in Shanghai.\nOur aspiration for it are bold as we aim to meet and exceed the desires of Chinese consumers.\nThe center is designed to enable end-to-end innovation from concept, from product packaging through development, scale-up, and commercialization.\nI am pleased to share that the build-out of our state-of-art manufacturing facility near Tokyo is also progressing very well, which is a testament to the amazing work of our global supply chain team amid the pandemic.\nIts first phase is complete, and we are on track to start limited production by the first quarter of fiscal year 2023.\nOur growth engines further diversified by channel as both online and brick and mortar prospered.\nSpecialty-multi and department store contributed meaningfully, and freestanding store in the West performed very well on reopening.\nTraffic improved and complemented our strategic actions, including those under the post-COVID business acceleration program, to benefit productivity in brick and mortar.\nThis channel trends are encouraging for the long term, even if tempered in this moment by Omicron.\nWe continued to expand our omnichannel capabilities in the quarter to give consumers flexible and convenient shopping options for greater certainly for fulfillment.\nBuy online, pickup in-store offerings in the United States for M·A·C, Aveda, Jo Malone London, and Le Labo are driving favorable average order value trends, and we are expanding the capability to more doors internationally, which holds great promise for the future.\nOur global online channel delivered excellent performance, with organic sales rising high single digit after having surged over 50% in the year-ago period.\nEach of brand.com, third-party platform, pure play, and retail.com contributed to growth.\nThe drivers included higher levels of engagement for virtual try-on and tools for choosing shade and scent, sophisticated assembly to drive trial and repeat, and more and better live streaming.\nIndeed, in North America, La Mer generated the most sales from a live stream to date in the quarter.\nOur brands are innovating in social commerce on Instagram, Snapchat, TikTok, and WeChat, among others.\nWe gained momentum in this promising online ecosystem during the quarter.\nToo Faced leveraged an Instagram live shopping event to launch its new fragrance.\nEstee Lauder Double Wear followers on TikTok skyrocketed with its latest campaign also driving brand awareness and affinity much higher.\nAnd Tom Ford Beauty creatively debuted its new flagship site on WeChat's mini program in China.\nEmbedded with these outstanding results across categories, regions, and channels is the progress we are making in social impact and sustainability.\nSince we spoke with you in November, we are pleased to have received several external recognition of our ESG efforts.\nWe were named to Forbes inaugural list identifying the world's top female-friendly companies, leading the way to support women inside and outside the workforces.\nAnd for the fifth year in a row, we were named to Bloomberg Gender Equality Index.\nWe were included in the CDP's Climate A-List for the second consecutive year, which is a tribute to our deep commitment to climate action and to the highest level of transparency around our environmental interest.\nLast, MSCI recognized our progress toward our 2025 ESG goal in its recent upgrade of the company to an A rating.\nThe company, our brands, and our employees have a number of events and activations planned in honor of Black History Month, and we are continuing to focus on our racial equity commitments and the work of accomplishing our goals.\nAs we embarked in -- on the second half of our fiscal year, our innovation pipeline is rich with newness, especially for sustainability.\nLa Mer newly advanced The Treatment Lotion, which will be on country in March as a powerful upgrade inside and out, crafted using our unique Green Score methodology and housed in a new recyclable glass bottle made with 20% post-consumer recycled glass.\nThis methodology, which was peer-reviewed in academic journal, Green Chemistry, during the quarter, evaluate ingredients and formulas throughout the lenses of human health, ecosystem health, and the environment.\nThis approach can be adopted, built upon, and scaled by others across our industry to further advance sustainability.\nEstee Lauder is launching an all-new Revitalizing Supreme moisturizer created with innovations in formula and ingredients in a new recyclable glass jar.\nSmashbox is introducing Photo Finish Silkscreen Primer collection featuring vegan formulas with a skin-defending complex and instant makeup benefits.\nLastly, DECIEM vegan brands, The Ordinary, is welcoming back Salicylic Acid 2% Solution, boosting a win list of over 400,000 for the new formula.\nIn closing, we delivered outstanding performance amid the accelerated volatility and variability, as well as supply chain challenges of the pandemic.\nThis demonstrates that we have the competency to navigate complexity well.\nOur commitment to invest for the long term is of great importance in this moment as we benefit from the advancement we have made over the last few years in data analytics, technology, R&D, and supply chain.\nThese announced capabilities, combined with our strong portfolio of desirable brands, exceptional talent, and more flexible resource allocation, are enabling us to realize the power of our multiple engines of growth strategy even in a difficult external environment.\nThe grace, wisdom, and ingenuity of our employees in this still-challenging moment knows no bounds.\nThey are the embodiment of our company's strong culture.\nAnd to them, I extend my deepest gratitude.\nAs you just heard, our momentum continued in our second quarter, with net sales growing 11% organically and 14% in total, led by a continued overall progression and recovery despite the volatility inherent across markets with a prolonged pandemic.\nWe had a solid holiday performance across all of our regions.\nThe inclusion of sales from the May 2021 DECIEM investment added approximately 3 points to reported net sales growth, and the currency impact was neutral.\nFrom a geographic standpoint, organic net sales in the Americas rose 19% as holiday shoppers return to brick-and-mortar retail where we had an exciting array of gifting products and holiday activations in-store.\nAnd even with more consumer shopping in stores, organic sales online also grew solidly in the Americas, with online representing more than a third of sales in the region.\nEvery market in the region contributed to sales growth this quarter, and the inclusion of sales from DECIEM added approximately 5 points to the total reported sales growth in the region.\nIn our Europe, the Middle East, and Africa region, organic net sales rose 13%.\nGrowth was diverse and broad-based, with global travel retail, as well as every market contributing.\nAll channels grew, led by double-digit growth across brick and mortar as recovery continued in both developed and emerging markets in the region.\nDespite a strong performance during key shopping moments, organic sales online declined slightly, primarily driven by the U.K., due to a tough comparison with the prior year, which was more severely impacted by brick-and-mortar lockdowns.\nThe inclusion of sales from DECIEM added about 3 points to total reported sales growth in the region.\nOur global travel retail business grew low double digits.\nTravel restrictions have eased globally, and international passenger traffic continued to progressively improve, resulting in some stores reopening during the quarter, particularly in Europe and the Americas.\nTravel retail continues to be led by Asia Pacific where demand from Chinese consumers remain strong.\nIn our Asia-Pacific region, organic net sales rose 5%.\nMost of the markets in the region grew, led by Mainland China and Australia, although we continue to see variability in COVID restrictions and retail traffic across markets.\nSales grew across most major channels in the region, especially online, which benefited from the recent launch of three brands on JD.com.\nThe inclusion of sales from DECIEM added approximately 1 point to total reported sales growth in the region.\nFrom a category standpoint, organic net sales of fragrances grew 30% with double-digit increases across all regions.\nExceptional double-digit increases from Jo Malone London, Tom Ford Beauty, Le Labo, and KILIAN PARIS reflected strong performances from hero products, new product launches, and the continued growth of the bath and body and home subcategories.\nOrganic net sales in makeup rose 12% as consumers in the Americas and Europe responded to social media activations, holiday assortments, and trends.\nEstee Lauder foundations continue to resonate very strongly with consumers, especially those in the Double Wear and Futurist franchises.\nM·A·C continued to drive the makeup renaissance with engaging, interactive campaigns throughout the quarter, like the special M·A·C trend Halloween report and solid holiday collections.\nToo Faced, Tom Ford Beauty, Smashbox, and Bobbi Brown also contributed to growth in the category this quarter.\nOrganic net sales in skincare grew 7%, reflecting double-digit increases from La Mer, Clinique, and Bobbi Brown.\nThe inclusion of sales from DECIEM added 4 percentage points to reported growth.\nOur organic net sales in hair care rose 18% as traffic in salons and stores improved, primarily in the Americas.\nAveda's growth came mostly from holiday gifts and hero franchises and in online and freestanding stores, while Bumble and bumble focused on recruiting new consumers in the specialty-multi channel.\nOur gross margin improved 20 basis points compared to last year.\nThe benefits of strategic price increases and favorable currency more than offset the impact of higher makeup mix and lower gross margin on DECIEM products.\nInflationary pressures in our supply chain are expected to begin to more prominently impact cost of goods in our fiscal third quarter.\nOperating expenses decreased 140 basis points as a percent of sales.\nOur leverage of selling expense and general and administrative expense was partially offset by increases in advertising and shipping costs, the latter due to both inflation and our direct-to-consumer online growth.\nOperating income rose 22% to $1.44 billion, and our operating margin expanded 160 basis points to 25.9% in the quarter.\nOur tax rate at 21.4% continued at a more normal level this year versus the prior year, which was impacted by a one-time benefit associated with GILTI.\nDiluted earnings per share of $3.01 increased 15% compared to the prior year.\nFor the six months, we generated $1.85 billion in net cash flows from operating activities, compared to $1.98 billion last year, which reflects both a return to more normalized working capital needs, as well as increased inventory, to mitigate some of the risk of supply chain disruption, given the ongoing global macro challenges.\nWe significantly increased our capital investment to $459 million to support the construction of our new production facility near Tokyo, as well as investments in our online business and other technology enhancements.\nAnd we returned $1.84 billion in cash to stockholders through a combination of share repurchases and dividends, with an increase in our dividend rate occurring in the second quarter.\nSo turning now to our outlook.\nWe delivered an exceptional first half characterized by strong and diversified double-digit organic sales growth and disciplined cost management in the context of intermittent COVID disruptions, including the rise of the omicron variant, high inflation, and volatility.\nLooking ahead, we are raising guidance to reflect our expectation for a strong year despite the potential further spread of Omicron, supply chain challenges, and increased inflationary pressures.\nInflation and transportation and procurement is expected to impact our cost of goods in the second half.\nHowever, the benefit of pricing and cost mitigation efforts are helping to offset some of the inflation impacts for the fiscal year.\nAt this time, we expect pricing to add approximately 3.5 points of growth with the inclusion of the additional pricing actions we are taking during our second half.\nWe are planning to support the continuation of the recovery with increased point-of-sale staffing as retail traffic continues to gradually improve.\nWe are also planning to support key hero franchise launches in our third quarter from Estee Lauder, La Mer, and Origins with increased marketing and advertising support.\nThis investment will increase cost toward the latter part of the third quarter with more of the benefit to be realized in the fourth quarter.\nFor the full fiscal year, organic net sales are forecasted to grow 10% to 13%.\nBased on rates of 1.146 for the euro, 1.357 for the pound, and 6.399 for the Chinese yuan, we expect currency translation to be negligible for the full year.\nThis range excludes approximately 3 points from acquisitions, divestitures, and brand closures, primarily the inclusion of DECIEM.\nDiluted earnings per share is expected to range between $7.43 and $7.58 before restructuring and other charges.\nThis includes approximately $0.07 of accretion from currency translation and $0.03 of accretion from DECIEM.\nIn constant currency, we expect earnings per share to rise by 14% to 17%.\nWe expect organic sales for our third quarter to rise 8% to 10%.\nThe net incremental sales from acquisitions, divestitures, and brand closures are expected to add about 3 points to reported growth, and currency is forecasted to be negative by about 1 point.\nWe expect third quarter earnings per share of $1.55 to $1.65.\nCurrency is expected to be $0.01 accretive to EPS, and the inclusion of DECIEM is not expected to be material.\nIn closing, our results thus far clearly demonstrate the power of our diversified portfolio.\nTemporary softness in our Eastern markets driven by the pandemic was again offset by renewed growth in our Western markets.\nA resulting slight slowing of growth in skin care was offset by remarkable growth in fragrances.\nWe continue to be choiceful about where we invest, and the flexibility we have built into our cost structure is helping us to mitigate some of the COVID-related disruptions and inflation while allowing us to continue to invest appropriately in our future growth.\nThis agility, along with the resilience of our remarkable teams worldwide, gives us confidence that we can continue to manage through the temporary complexities caused by the prolonged pandemic by focusing clearly on our long-term strategy and executing against it with excellence.\n", "role": "user" }, { "content": "sees q3 earnings per share $1.55 to $1.65 excluding items.\nq2 adjusted earnings per share $3.01 excluding items.\nq2 sales rose 14 percent to $5.54 billion.\nq3 reported net sales are forecasted to increase between 10% and 12% versus prior-year period.\nfull year fiscal 2022 reported net sales are forecasted to increase between 13% and 16% versus prior-year period.\nsees fy 2022 earnings per share $7.43 to $7.58 excluding items.\nq3 adjusted diluted net earnings per common share are projected to be between $1.55 and $1.65.\nexpects to take charges associated with previously approved restructuring and other activities in fy 2022.\ncompany expects higher costs to negatively impact cost of sales and operating expenses for remainder of fiscal 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: Unless otherwise stated, all net sales growth numbers are in constant currency and all organic results exclude the impact of acquisitions, divestitures, brand closures, and the impact of currency translation.\nAs a reminder, references to online sales include sales we make directly to our consumers through our brand.com sites and through third-party platforms.\nIt also includes estimated sales of our products through Retailer's websites.\nI hope you and your families are in good health, and our hearts continue to be with those impacted by COVID-19.\nWe delivered outstanding performance amid the pandemic in fiscal year 2021, capped with an exceptional fourth quarter and powered by our dynamic multiple engines of growth strategy, as well as the timeless desirability of prestige beauty.\nIn a year of pain and sorrow, our employees cared for each other, their families, and our company with compassion, creativity, and resolve.\nWhile the challenges of COVID-19 persist, we confidently begin fiscal year 2022 as a stronger company, full of aspiration for the opportunities of tomorrow.\nFor fiscal year 2021, sales rose 11% as we pivoted our energy resources to the growth engines of skin care, fragrance, Asia Pacific, travel retail in Asia Pacific, and global online.\nImpressively, eight brands grew double digits, led by Estee Lauder, La Mer, and Jo Malone London.\nMultiple waves and variants of COVID-19 to the extent the center reach were unexpected a year ago drove volatility and variability throughout the year.\nWe saw reopenings revert to closing, and reopenings in one market meant with renewed lockdowns in other markets.\nDespite this, we delivered on the goal we set last August for sales growth to improve sequentially each quarter.\nOur sales exceeded $16 billion for the first time ever, up 9% from fiscal year 2019 on a reported basis, fueled by skin care and fragrance.\nAdjusted operating margin expanded to 18.9%, which is 140 basis points above fiscal year 2019 as we invested in today's strongest growth engines, managed cost with discipline, and funded long-term growth opportunities.\nAdjusted diluted earnings per share rose 21% relative to two years ago.\nWe delivered these excellent results while pushing our social impact and sustainability goals and commitment.\nFirst and foremost, we remain focused on employee and consumer safety and well-being.\nWe achieved important milestones for our 2025 sustainability goals, expanded our inclusion, diversity, and equity programs, defined a strategy for women's advancement and gender equality, and advanced work toward our racial equity commitments.\nHere are a few among the many areas of our progress.\nWe achieved net-zero carbon emissions and 100% renewable electricity globally for our own operations.\nWe also set science-based emissions reduction target, addressing Scope 1 and 2 for our direct operation and certain elements of Scope 3 for our value chain, signaling our new level of ambition for climate actions.\nWe launched ingredient glossaries for seven additional brands, such that 11 brands now offer this insightful content.\nWe transformed our traditional inclusion, diversity, and equity week into a blockbuster virtual experience, with 35 events involving thousands of participants from 25 countries.\nWe also introduced new educational offerings, including four antiracism and inclusive leadership.\nWe expanded our grassroots-led employee resource groups, which served as a source of support and comfort throughout the tumult of last year.\nThe women leadership network is our largest group and is now global, with its expansion into Latin America and Asia Pacific.\nWe created two new leadership programs for women and black employees.\nThe Open Door women's leadership program is a unique intensive course to develop our next generation of women leaders.\nBuilding on its success, we designed the Open Doors collection, a self-guided program to bring these leadership skills to all our employees around the world.\nThe form every chair leadership and development program is successfully held to ensure that black employees have equitable access to leadership trainings, mentorships, career development, and advancement opportunity, as well as to build a stronger, more inclusive network of talent across the organization by promoting visibility and facilitating leadership connections points with participants.\nOur new partnership with Howard University focused on its alumina-hosted 12 engaging events and launched an accelerator program to help increase the pipeline for black talent with career, coaching, professional training, and self-empowering networking.\nLet me now turn to product innovation, which serve as an impactful catalyst for growth in fiscal year 2021.\nInnovation represented over 30% of sales, exceeding our expectations.\nWe combine data analytics with our creative talent and R&D to successfully anticipate scale and set trends across categories.\nThe Estee Lauder brand achieved its fourth consecutive year of double-digit sales growth in fiscal year 2021, fueled by strength across its many hero franchises in skin care.\nTrusted products, along with innovation, were highly sold from Shanghai to New York, Paris, and now Sao Paulo given the brand's well-received launch in Brazil.\nAdvanced Night Repair newly reformulated serum sparked excellent sales growth.\nRevitalizing Supreme's new Supreme+ Bright Moisturizer, further bolstered the accelerating franchise, while Re-Nutriv new eye serum served and created a halo effect on demand.\nIn makeup, the brand's double wear Futurist and Pure Color franchises produced significant double-digit sales growth in the fourth quarter and exciting early signs of makeup renaissance.\nLa Mer delivered outstanding double-digit sales growth in the fiscal year as innovation soared and engaging campaigns with iconic ingredient-based narratives drove demand for its hero products.\nClinique skin care excelled in fiscal year 2021.\nSales rose double digits and powered the brands to high single-digit sales growth.\nThe brand successfully met consumer needs through the launch of Moisture Surge 100 Hour with its unique hydration benefits and target solution for hard-to-solve skin care problem like Even Better Clinical Interrupter.\nClinique showcased its promise for makeup renaissance with stellar double-digit category growth in the fourth quarter with the new Even Better Clinical serum foundation and Even Better concealer capitalizing on its skin care authority.\nAll told, our robust skin care portfolio from entry prestige to luxury and across subcategories is fulfilling this journey needs around the world.\nDr. Jart+ with its [Inaudible] derma brand positioning and hero products delivered strong double-digit organic sales growth in the second half of fiscal year 2021.\nIn May, we amplified the strength of our skin care portfolio as we became a majority owner of DECIEM with its coveted ingredient-based brand, The Ordinary, and emerging science-driven NIOD brand as part of its portfolio.\nComplementing skin care strength, fragrance delivered striking sequential sales growth acceleration throughout the year.\nEach of our luxury and artisanal fragrance brand contributed meaningfully from Jo Malone London to Tom Ford Beauty, Le Labo, Kilian Paris, and Frederic Malle in both established fragrance markets of the West and emerging fragrance market of the East.\nTom Ford Beauty's private blend franchise is both recruiting new consumers and driving strong repeat in markets newly embracing the category, with the brand's drag in sales more than doubling in Mainland China during the year.\nThe Asia Pacific region was another dynamic growth engine in fiscal year 2021 as annual sales growth accelerated from 18% to 22% led by Mainland China where sales rose strong double digits.\nSeveral smaller markets also contributed to Asia Pacific's strengths.\nThe region, however, experienced increasing pressure from the pandemic as the year evolves with Japan and many markets in Southeast Asia, particularly impacted from renewed lockdowns in the second half.\nMainland China prospered as we invested in its vibrancy of today, an opportunity of tomorrow.\nWe entered more cities, reaching 145, expanded our presence in specialty-multi, opened the freestanding doors, and increased our advertising spending.\nSkin care and fragrance sales grew strong double digit for the fiscal year.\nWe are encouraged that the makeup accelerated to double-digit sales growth in the second half.\nOur brands delivered excellent results for the key events of Tmall's 11/11 Global Shopping Festival and 6/18 Mid-year Shopping Festival as engaging live streaming generated product discovery for many new consumers.\nFor the recent 6/18 among Tmall beauty flagship stores, the Estee Lauder brand ranked No.\n1 in total beauty, while La Mer ranked first in luxury beauty and Jo Malone London led the fragrance category.\nTo further capture the market recent online growth opportunity, we are continuing to invest in Tmall and brand.com to expand our capabilities.\nMost recently, some brands increased coverage of a different demographic by launching on JD in July.\nWith international travel largely curtailed, we expanded our investment in the dynamic travel retail development of Hainan highland to serve the Chinese consumers in the best possible way given the island tremendous traffic growth and higher duty-free purchase limits.\nOur brands further elevated the in-store and prepaid shopping experiences, delivered ideal merchandising, and leveraged live streaming to drive strong sales growth.\nOnline strive globally in fiscal year 2021, characterized by strong double-digit sales gain and step change in its power as a growth engine.\nWe accelerated our consumer-facing digital infrastructure and fulfillment investments.\nThe challenge is now more than twice as big as it was two years ago and greatly benefit from its diversification as each of brand.com third-party platforms, retail.com and pure-play retailers delivered outstanding performance.\nDuring the year, brand.com came to epitomize the allure of a luxury flagship store for each brands, localized by market and reimagined with our classic high-touch services.\nWe expanded virtual trainer, live streaming, omnichannel capabilities, and consultations with our expert beauty advisors.\nConsumers at all ages explored, replenished, and engaged in an immersive environment of entertainment and community.\nOur brands increasingly leveraged the exciting trends in social commerce by integrating with Instagram, WeChat, Snapchat, and others.\nEstee Lauder launched on TikTok with the Night Done Right hashtag, driving nearly 12 billion views and the creation of almost 2 million videos.\nIt challenged use-diverse creators to educate a younger audience on how important is to take care of your skin at night, showcasing Advanced Night Repair.\nClinique zit happens campaigns on TikTok became a viral sensation, highlighting the brand acne solution and spurring the creation of nearly 700,000 videos on the app.\nTogether, these and other strategic actions delivered exceptional results for brand.com as new consumers, conversion, basket size, repeat, and loyalty members grew considerably.\nBeyond the favorable growth rates, the direct relationship we fostered with consumers enabled us to better optimize engagement in-store and online, offering exciting future growth opportunities.\nWe are investing across all channels of online, collaborating with traditional and pure-play retailers on initiatives to actualize prestige beauty online potential.\nWe spoke on the last call about having expanded our presence with pure-play retailers, which continued into the fourth quarter, most especially in EMEA.\nAnd as I discussed a few minutes ago, we are expanding our consumer coverage in Mainland China.\nFor fiscal year 2022, we expect these growth engines of skin care, fragrance, Asia Pacific, travel retail Asia Pacific, and global online to continue to try, owing to our strong repeat purchase rates, sophisticated data analytics, drive consumer acquisitions and retention, high-touch online services, and robust innovation pipeline.\nThree compelling skin care innovation recently launched: Estee Lauder new Advanced Night Repair Eye Matrix is focused on lines in every eye zone, while La Mer The Hydrating Infused Emulsion is designed to replenish, strengthen and stabilize skin with healing moisture and has already proven to attract new consumers.\nClinique Smart Clinical Repair Wrinkle Correcting Serum is designed to visibly reduce stubborn lines.\nOur Shanghai innovation center is expected to open in the second half of this fiscal year, enriching our capability in product design, formulation, consumer insight, and trend analytics for Chinese and Asian consumers.\nAlso with the new center, our East to West innovation will benefit, enabling us to create more successes like Estee Lauder Futurist Hydra or Supreme+ Bright and La Mer, The Treatment Lotion.\nAs the world emerge from the pandemic, we will be the best diversified pure-play in prestige beauty as more engines of growth contribute across categories, geographies, and channels.\nMakeup and hair care are poised to gradually reignite as growth engines as our developed markets in the West and brick-and-mortar retail.\nGrowth in emerging markets is expected to resume over time as vaccination rates increase.\nWe anticipate the momentum in makeup will build around the world driven by local reopening and increase in socially professional user education, just as we saw in the fourth quarter.\nIndeed, makeup started to improve to the end of fiscal year 2021 driven by our hero subcategories of foundation and mascara.\nNewness in the category was highly sold, evidenced by the success of MAC Magic Extension mascara, Too Faced lip plumper, Smashbox Halo tinted moisturizer and Bobbi Brown Sheer pressed powder.\nContributing to makeup emerging renaissance, MAC launched MAC The Moment, a campaign linking its makeup products and artists inspire trends to key experiences such as dead night parties, weddings, and back-to-school shopping.\nToo Faced expanded into browse in July with a collection that includes an innovative brow gel that add color and texture.\nSimilar to makeup, hair care is set to benefit from the rise of socially professional user education, as well as salon reopenings.\nAveda, which is now 100% vegan, and Bumble and bumble enter fiscal year 2022 with momentum, owing to desirable innovation and rich consumer engagement from strong online performance globally over the past year.\nAs makeup and hair care reunite, we expect our engines of growth will gradually diversify by geography and channel, initially driven by developed markets in the West and, over time, by emerging markets.\nIn the United States, the fourth quarter, we aligned innovation, advertised spending, and in-store activations as consumers returned to stores eager to explore beauty and experience high-touch services.\nAcross brick-and-mortar from regional and national department stores to specialty-multi and freestanding stores, our business in the United States prospered, most especially in makeup and fragrance, and exceeded our expectations.\nAs we start our new fiscal year, Bobbi Brown recently debuted in Ulta Beauty.\nSeveral of our brands launched online and in-store with Sephora at Kohl's and Ulta Beauty at Target.\nIn closing, we leveraged the power of our multiple engines of growth strategy to elevate the company to new heights in fiscal year 2021.\nWe did this while living our values with the health and well-being of our employees as primary focused and making important progress on our social impact commitment and sustainability goals.\nOur success and agility in operating amid the challenges of the past year give us confidence for fiscal year 2022 as we expect volatility and variability from the pandemic to persist for some time to come.\nThis year, we are celebrating our 75th anniversary as a company and beginning our next 75 years incredibly inspired by the opportunities of tomorrow as the leading global house of prestige beauty with the most talented employees to whom I extend my deepest gratitude.\nNavigating through the highly uneven recovery this past year has certainly required greater agility and flexibility, and our teams across the globe rose to the occasion, delivering superb results for the fiscal year while also establishing a stronger foundation for future growth and profitability.\nWe delivered exceptional net sales growth of 56% in our fourth quarter as we anniversary pandemic-related store closures in the prior-year period.\nThe inclusion of six weeks of sales from DECIEM added approximately 3 points to growth in the quarter.\nOur performance also exceeded the prepandemic levels of the fiscal 2019 fourth quarter by 9% driven by significant sales increases in Mainland China, the skin care and fragrance categories, global online and travel retail in Asia.\nAll three regions grew and all product categories within each region grew during the quarter.\nNet sales in the Americas region rose 86% against the prior-year period with almost no brick-and-mortar retail open.\nThroughout the quarter, consumer confidence in the U.S. grew as COVID restrictions abated and people resume shopping in stores again.\nOur brands responded with strong programs supporting recovery, new product launches, and animating key brand shopping events like Mother's Day.\nSales in the region remain below fiscal '19 levels for the quarter, reflecting in part the loss of over 900 retail locations that represented nearly $170 million in annual sales.\nAdditionally, makeup has historically been the largest category in the region, and the category has yet to fully recoup sales lost during the pandemic.\nNevertheless, we are encouraged by the sequential acceleration in North American sales, which has been better than we expected.\nNet sales in our Europe, the Middle East, and Africa region increased 65%, with all markets contributing to growth as COVID restrictions eased throughout the quarter.\nGlobal travel retail, which is primarily reported in this region, continued to suffer from a significant drop in international passenger traffic but grew strong double digits in the quarter as comparisons eased and local tourism in China, especially to Hainan, remained robust.\nAcross developed markets in the region, store traffic has begun to pick up, and retailers have become more comfortable with restocking.\nEmerging markets in the region saw strong retail in the quarter driven by locally relevant holiday activation, retailer events, and online performance.\nSales in the region were slightly above fiscal '19 levels for the quarter, primarily due to the resilience of travel retail.\nNet sales in the Asia Pacific region rose 30%.\nVirtually every country contributed to growth, although the pace of improvement varies widely among the markets, and the resurgence of COVID has slowed a full recovery.\nSales of our products online continued to rise strong double digits in the region driven by the successful 6/18 Shopping Festival Campaign in China and including the continued strength of social e-commerce.\nMainland China continued to experience robust double-digit growth with broad-based improvement across product categories, brands, and channels.\nOther markets in the region, including Korea, Hong Kong, and Japan, grew exceptionally against prior-year brick-and-mortar lockdown.\nSales in the region were 50% above 2019 levels, largely reflecting China's rapid emergence from the pandemic last year.\nNet sales in all product categories grew sharply this quarter.\nAnd skin care, fragrance, and hair care drove higher sales in fiscal 2019.\nFragrance led growth with net sales rising 150% versus prior year.\nLuxury fragrances resonated with consumers looking for self-care and indulgence and among Chinese consumers increasingly attracted to the category.\nHome, Bath & Body products have also gained traction during the pandemic and help to attract new consumers.\nJo Malone London saw recovery to prepandemic levels in brick-and-mortar.\nAnd the brand's blossom and brit collections were popular in Asia.\nStandouts from Tom Ford Beauty include the recent launch of Tubereuse Nue and the continued strength of Bitter Peach and Rose Prick.\nNet sales in makeup jumped 70% against the prior year that reflected the greatest beauty category impact of COVID-19, particularly in Western markets where makeup is the largest category.\nThe makeup category in prestige beauty has proven to be especially sensitive to brick-and-mortar recovery due to the use of testers and in-store services by consumers.\nEstee Lauder saw strong growth of Futurist and double wear foundations in Asia, and MAC liquid lip color and eye products, especially mascara, outperformed.\nHair care net sales grew 52% as salons and stores reopened.\nThe launch of the Aveda's blonde revival shampoo and conditioner also contributed to category growth, adding to other strong innovation programs over the past several months from Aveda.\nNet sales in skin care continued to thrive.\nJart+ brands, particularly in Asia.\nSkin care sales growth also benefited from the addition of DECIEM in the quarter by approximately 4 percentage points.\nOur gross margin improved 650 basis points compared to the fourth quarter last year.\nThis favorability reflected significant improvements in obsolescence and manufacturing efficiencies compared to the prior-year impact of COVID-19 on our sales and on our manufacturing locations.\nOperating expenses rose 36% driven by the planned increase in advertising and selling costs to support the reopening of retail and the recovery.\nAdditionally, we sharply curtailed spending last year in response to the onset of the pandemic, and some of these costs were reinstated, primarily compensation.\nWe delivered operating income of $385 million for the quarter, compared to a $228 million operating loss in the prior-year quarter.\nDiluted earnings per share of $0.78 included $0.02 of favorable currency translation and $0.02 dilution from the acquisition of DECIEM.\nOur full-year results reflect the benefits of our strategic focus as we leaned into current growth drivers and invested behind future areas of growth while effectively managing both costs and cash.\nThe sequential acceleration of our business throughout the year culminated in net sales growth of 11%.\nThe strength of Chinese consumer demand, both at home and in travel retail, the resilience of the skin care and fragrance categories, and the momentum we drove in our online channels all supported our growth.\nOur distribution mix continued to evolve even as brick-and-mortar reopened.\nSales of our products through all online channels continue to thrive as they rose 34% for the year and represented 28% of sales.\nDespite the continued curtailment of international travel, our business in the travel retail channel grew, ending fiscal 2021 at 29% of sales.\nAmong brick-and-mortar retail, specialty-multi and perfumeries grew, while department stores and freestanding stores experienced the greatest impact from the ongoing pandemic and declined for the year.\nOperating expenses declined 300 basis points to 57.5% of sales.\nSelling and store operating costs decreased as high service stores were either closed for part of the year or they reopened with reduced traffic and staffing levels.\nAdditionally, in-store merchandising costs decreased, while advertising investments, primarily digital media, rose faster than sales to support our brands and the recovery.\nWe achieved significant savings from our cost initiatives, including Leading Beauty Forward and the preliminary benefits from the post-COVID business acceleration program, and this gave us the flexibility to reinvest in necessary capabilities, absorb some of the inflation in media and logistics costs, as well as support the reinstatement of certain compensation elements that were reduced or frozen due to the onset of the pandemic.\nOur full-year operating margin was 18.9%, representing a 420-basis-point improvement over last year and 140 basis points above fiscal 2019.\nThis year also includes 50 basis points of dilution from the inclusion of Dr. Jart+ and DECIEM.\nOur effective tax rate for the year was 18.7%, a decrease of 450 basis points over the prior year, primarily driven by the geographic mix of earnings, which included a favorable one-time adjustment for fiscal years 2019 and 2020 related to recently issued GILTI tax regulations.\nNet earnings rose 57% to $2.4 billion and diluted earnings per share increased 57% to $6.45.\nEarnings per share includes $0.11 accretion from currency translation and $0.08 dilution from the acquisition of Dr. Jart+ and DECIEM.\nIn fiscal 2021, we recorded $148 million after tax or $0.40 per share of impairment charges related to our Smashbox and GLAMGLOW brand, as well as certain freestanding retail stores.\nRestructuring and other charges related primarily to the post-COVID business acceleration program were $176 million after tax or $0.48 per share.\nThese charges were more than offset by the one-time gain on our minority interest in DECIEM of $847 million after tax or $2.30 per share.\nThe Post-COVID Business Acceleration Program is progressing quickly, with projects underway across all regions.\nWe have closed nearly 500 doors or counters, including about 50 freestanding stores under the program in fiscal 2021.\nWe also closed approximately 100 additional freestanding stores outside of the program and upon lease expiration, primarily in North America and in Europe.\nWe realigned our go-to-market organizations to better reflect our evolving channel mix.\nWe are also winding down certain brands such as BECCA and RODIN.\nThese actions are expected to continue into fiscal 2022.\nFor the total program, we continue to expect to take charges of between $400 million and $500 million through fiscal 2022 and generate savings of $300 million to $400 million before tax by fiscal 2023, a portion of which will be reinvested.\nWe continue to focus on maintaining strong liquidity while also investing for future growth during the year.\nCash generated from operations rose 59% to $3.6 billion, primarily reflecting the higher net earnings.\nWe utilized $637 million for capital improvement, supporting increased capacity and other supply chain improvements, further e-commerce development, and information technology.\nWe repaid $750 million of debt outstanding from our revolving credit facility, issued $600 million of new long-term debt, and retired $450 million of debt.\nWe used $1.1 billion net of cash acquired to increase our ownership interest in DECIEM, and we returned $1.5 billion in cash to stockholders during the year via increased dividends and the reinstatement of share repurchase activity in the second half of the fiscal year.\nSo looking ahead to fiscal 2022, we are encouraged by the increasing vaccination rates and reopening of markets around the world.\nWe look forward to the resumption of international travel, increasing foot traffic in brick-and-mortar retail, and the development of our recent acquisitions.\nWe are still mindful, however, that the recovery has evolved unevenly, and some markets are seeing their third or fourth waves of COVID, including increasing effects of new more contagious strains of the virus hindering a return to normal life.\nThis has been particularly evident in the U.S. over the past several weeks.\nAdditionally, increasing climate and geopolitical events make it difficult to predict the corresponding impact on our business.\nNevertheless, given the strength of our programs, we are cautiously optimistic, and therefore, providing a range of sales and earnings per share expectations for the fiscal year, caveated with the following underlying assumptions: progressive recovery in the makeup category as full vaccination rates increase and mask-wearing abates in Western markets during the first half of the fiscal year; beginning of the resumption of international travel in the second half of the fiscal year; the addition of new retail accounts for some of our brands should provide broader access to new consumers, notably through Sephora at Kohl's and Ulta at Target in North America and the addition of JD.com in China online; the inclusion of incremental sales from DECIEM, benefiting sales growth for the fiscal year, primarily in the Americas and EMEA regions and in the skin care category; pricing is expected to add approximately 3 points of growth, helping to offset inflation risk in freight, media, labor and commodities; increased advertising support as markets reopen and further investment behind select capabilities, including data analytics, innovation, technology and sustainability initiatives while maintaining good cost discipline elsewhere.\nWe forecast increasing benefits from our post-COVID business acceleration program as it ramps up this year.\nApproximately $200 million of the cost we cut during the pandemic are expected to be reinstated.\nThese primarily include hiring, travel and meeting expenses, furloughs, and other leaves of absence and compensation.\nIn addition to these assumptions, there are a few nonoperating items you should be aware of as you adjust your models.\nOur full-year effective tax rate is expected to return to a more normalized level of approximately 23% from 18.7% in fiscal 2021.\nNet interest and investment expense is expected to be around $150 million.\nThe increase is primarily due to the comparison to last year when we recorded the benefit of our minority interest in DECIEM through May 18, 2021.\nAt that time, we acquired a majority ownership in DECIEM, and we began to fully consolidate the entire business and deduct the portion of the income we don't own as a charge to net earnings attributable to noncontrolling interest.\nThis charge is expected to be less than $5 million in fiscal 2022.\nNet cash flows from operating activities are forecast between $3.2 billion and $3.4 billion.\nCapital expenditures are planned at approximately 5% of projected sales as we develop additional manufacturing and distribution capacity, notably for the building of our new facility in Japan.\nWe also expect to fund more robust research and development capabilities in China and North America, increase investment in technology and support new distribution and e-commerce for our brands.\nOur capex plan for the year also includes some spending deferred from last year.\nOrganic growth adjusts reported sales growth for both currency and changes in structure such as acquisitions, divestitures, and brand closures.\nThis should help provide a more meaningful understanding of the performance of our comparable business.\nAdditionally, reflecting the level of volatility still in the environment, we are at this point widening our guidance ranges for the year.\nFor the full fiscal year, organic net sales are forecasted to grow 9% to 12%.\nBased on August 13 spot rates of 1.17 for the euro, 1.381 for the pound, 1,164 for the Korean Won, and 6.479 for the Chinese yuan, we expect currency translation to add 1 point to reported sales growth for the full fiscal year.\nAs I mentioned earlier, this range excludes approximately 3 points from acquisitions, divestitures, and brand closures, primarily the inclusion of DECIEM.\nDiluted earnings per share is expected to range between $7.23 and $7.38 before restructuring and other charges.\nThis includes approximately $0.19 of accretion from currency translation.\nIn constant currency, we expect earnings per share to rise by 9% to 12%.\nThis also includes approximately $0.03 accretion from DECIEM.\nAt this time, we expect organic sales for our first quarter to rise 11% to 13%.\nThe incremental sales from acquisitions, divestitures, and brand closures are expected to add about 3 points to reported growth, and currency is expected to be accretive by approximately 3 points.\nOperating expenses are expected to rise in the first quarter as we invest in the reopening and recovery of brick-and-mortar retail around the world and some of the temporary cost measures start to ease.\nWe expect first-quarter earnings per share of $1.55 to $1.65.\nCurrency is expected to be accretive to earnings per share by $0.05, and DECIEM is forecast to have no impact.\nIn closing, while we are cautious about the uneven recovery to date, we remain confident about the strategic actions we continue to take to support sustainable, profitable growth post-pandemic and the agility we have demonstrated this past year.\n", "role": "user" }, { "content": "sees q1 earnings per share $1.55 to $1.65 excluding items.\nstrong net sales recovery expected to continue in fiscal 2022.\nsees fy 2022 earnings per share $7.23 to $7.38 excluding items.\nqtrly adjusted earnings per share $0.78.\nq1 organic net sales forecasted to increase between 11% and 13%.\nfy reported net sales are forecasted to increase between 13% and 16%.\nfy organic net sales forecasted to increase between 9% and 12%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: And I'm going to start my discussion on Pages four through six.\nI don't have to recount all the areas of uncertainty and turmoil we faced last year, not only at EMCOR, but our country and world writ large.\nHowever at EMCOR, we were able to point to our values of mission first, people always.\nAnd they held us together and allowed us to perform at a very high level.\nThese values served as our touch point to have a focus first on the health and safety of our employees.\nAt the same time, we knew we also had to continue to serve our customers as we provided essential services across a range of projects and service calls.\nAs demonstrated by our first quarter results, we continue to deliver strong performance by executing well for our customers while focusing on the well-being and safety of our employees.\nThe first quarter of 2021 was an outstanding quarter by any measure.\nWe earned $1.54 per diluted share versus $1.35 in the year-ago period on revenues of $2.3 billion with operating income margins of 5.1%.\nWe had strong revenue growth in Mechanical Construction segment, up 8.4%.\nWe had strong growth in our U.S. Building Services segment, up 10.3% and had strong growth in our U.K. Building Services segment, up 12.8%.\nThat was aided somewhat by FX.\nWe were essentially flat in our Electrical Construction segment.\nAnd as expected, we had a significant decline in revenues of over 35.3% in our Industrial Services segment, which was impacted not only by industry conditions but also the Texas Freeze, which in many cases, pushed out our turnaround schedule into the second quarter of 2021.\nAnd the work we did in connection with the freeze could not make up for the shortfall caused by that freeze.\nWe also had a TRIR or a recordable incident rate of under one at 0.92, which was exceptional performance and again, shows our focus on safety and well-being throughout the pandemic, but really that's everyday at EMCOR because it's one of our core values.\nThese results, again, show the diversity of EMCOR's business with our ability to pivot to more resilient and stronger markets when some markets like the current downstream refining and petrochemical, oil and gas markets are weakened as a result of reduced demand.\nAs we analyze our first quarter performance, we continue to earn strong operating income margins in our Electrical and Mechanical Construction segments.\nAt 8.8% in our Electrical Construction segment and 7.2% in our Mechanical construction segment, these operating income margins show that we are earning very good conversion on the work that we win, and we are executing well on our contracts, which are largely fixed-price contracts.\nI intentionally use the word earned in describing these operating income margins.\nWe have tough and demanding customers, who drive a very competitive bidding and selection process.\nThe more complex the work, the more we compete not only on price but also on capability.\nWe have to invest for productivity, not only through tools like BIM or Building Information Modeling prefab, but also better personal protective equipment and hand tools and individual work practices.\nBut we also invest in training and best practice sharing so that we are always learning from each others to employ the best means and methods for our work.\nWe also must work collaboratively with our supply chain partners, and that is more important than ever as the economy starts back up to make sure that we have the right products at the right place, at the right price across our geography and portfolio of projects.\nThis is especially important on large, complex projects with accelerated time schedules.\nOur subsidiary and segment leadership teams work hard to perform for our customers every day, and they are among the most skilled teams in our industry.\nOur U.S. Building Services team had an exceptional quarter, earning 5% operating income margins on 10.3% revenue growth.\nWe had strong performance from mechanical services and both our government and commercial site-based businesses.\nWe continue to have strong demand for mechanical retrofit projects and IAQ or indoor air quality solutions.\nOur site-based businesses continue to see increased demand for small project work from our total facility management customers.\nOur leadership from our subsidiaries to the business units to the segments are working well with our customers as they return to more in-office or on-site work.\nWe are a trusted partner as they prepare and operate their facilities to keep their employees safe and improve their employee safety and peace of mind as they return to the workplace in a more significant way.\nAnd we do expect that to accelerate in the next few months.\nOur U.K. team is performing well and has experienced the same demand drivers and business context as our U.S. Building Services team.\nAt 7.4% operating income margins and revenue growth of 4.5% without the impact of foreign exchange, we are doing very well.\nWe continue to perform well in serving our customers, which have some of the most complex facility services needs in the U.K.\nWe also continue to execute well on our project work in the U.K.\nWe have a very good team, who are laser-focused on serving their customers well and have earned their customers' trust.\nOur Industrial Services segment had a tough quarter as expected.\nWe earned positive EBITDA but we're slightly negative on an operating income basis.\nWe have likely made positive operating income in this segment but for the impact of the Texas Freeze, which pushed out the turnaround schedule.\nWe leave the quarter with increased remaining performance obligations or RPOs at $4.77 billion, up from $4.59 billion at year-end 2020, an increase from the year ago level of $4.42 billion.\nWe will discuss our remaining performance obligation trends more later in my remarks.\nWe exit the quarter with a pristine balance sheet.\nAnd we are putting that balance sheet to work to build our business and to return cash to our shareholders.\nWith my opening complete, I'll now turn over the conversation to Mark, who will discuss his favorite quarter as he only has to comment on the quarterly performance.\nSo let's expand our review of EMCOR's first quarter performance.\nConsolidated revenues of $2.3 billion are up a modest $4.2 million or 20 basis points over quarter one 2020.\nOur first quarter results include $29.1 million of revenues attributable to businesses acquired pertaining to the period of time that such businesses were not owned by EMCOR in last year's first quarter.\nAcquisition revenues positively impacted each of our United States Electrical Construction, United States Mechanical Construction and United States Building Services segments.\nExcluding the impact of businesses acquired, first quarter consolidated revenues declined $24.8 million or 1.1% organically.\nBefore reviewing the operating results of our individual reportable segments, I should point out that such results reflect certain reclassifications of prior year amounts due to changes in our internal reporting structure aimed at realigning our service offerings.\nMost notably, we have transferred our Ardent and Rabalais subsidiaries from our United States Electrical Construction segment to our United States Industrial Services segment.\nWith that being said, I will now review the results of each of our reportable segments, starting with our revenue performance during the quarter.\nWith the exception of United States Industrial Services and United States Electrical Construction, all of EMCOR's reportable segments experienced first quarter revenue growth.\nUnited States Electrical Construction quarter one revenues of $456.2 million decreased $5.6 million or 1.2% from 2020's comparable quarter.\nExcluding acquisition revenues of $6.5 million, this segment's revenues declined 2.6% organically as revenue reductions within the manufacturing and transportation market sectors were only partially offset by increased project activities within the commercial and institutional market sectors.\nUnited States Mechanical Construction revenues of $903.9 million increased $69.8 million or 8.4% from quarter one of 2020.\nRevenue growth was primarily attributable to an increase in commercial, healthcare and transportation market sector activities due to continued strong demand for our services, partially offset by revenue declines within the manufacturing and institutional market sectors.\nThis substantial quarterly revenue growth was despite a reduction in short-duration project volumes as a consequence of the continuing impact of the COVID-19 pandemic and represents a new first quarter revenue record for this segment.\nEMCOR's total domestic construction business first quarter revenues of $1.36 billion increased $64.2 million or 5% and reflects a strong start to the year.\nUnited States Building Services record quarterly revenues of $581.8 million increased $54.2 million or 10.3%.\nExcluding acquisition revenue contribution of $22.6 million, this segment's revenues increased to $31.6 million or 6% organically.\nRevenue gains within their commercial site-based services division due to an increase in event-driven snow removal as well as a resumption in project volume as certain customer facilities begin to reopen were the primary drivers in quarter-over-quarter revenue improvement.\nThe segment's mobile mechanical services division additionally experienced stronger project and retrofit demand with an emphasis on services aimed at improving indoor air quality.\nUnited States Industrial Services revenues of $235.4 million decreased $128.5 million or 35.3% as this segment continues to be impacted by the negative macroeconomic conditions and uncertainty within the markets in which it operates.\nAdditionally, and as Tony mentioned, the Industrial Services segment was negatively impacted by normal weather conditions and related power outages within the Gulf Coast region, which resulted in the delay of active projects and the deferral of previously planned maintenance and turnaround activities with certain of their customers.\nAlthough we were able to assist some of our customers with emergency repairs resulting from the February storm, this unplanned work was not enough to offset the lost quarterly revenue caused by these deferrals and delays.\nUnited Kingdom Building Services segment revenues of $126.7 million increased $14.3 million or 12.8% due to growth in project activities across the portfolio as customers began to release projects which were previously on hold due to the COVID -- due to COVID-19.\nThis segment's results additionally benefited by $9.5 million as a result of the strengthening of the pound sterling, given the lifting of uncertainty around the terms of the United Kingdom's trade deal with the European Union that became effective on January 1, 2021.\nSelling, general and administrative expenses of $224.1 million represent 9.7% of first quarter revenues and reflect a decrease of $2.9 million from 2020.\nSGandA for the first quarter includes approximately $2.4 million of incremental expenses from businesses acquired inclusive of intangible asset amortization expense, resulting in an organic quarter-over-quarter decline in SGandA of $5.4 million.\nThis organic reduction is primarily attributable to lower employment costs as a result of reduced headcount due to various cost-control measures enacted during 2020 as well as a period-over-period decline in travel and entertainment expenses due to a combination of cost-avoidance measures as well as restricted company travel protocols.\nThese decreases were partially offset by an increase in incentive compensation expense, predominantly within our United States Mechanical Construction segment, due to higher projected annual operating results than what was anticipated during the same prior year period.\nReported operating income for the quarter of $117 million compares to $106 million in 2020's first quarter and represents an increase of $11 million or 10.4%.\nOperating margin of 5.1% has expanded by 50 basis points from the prior year's 4.6% operating margin.\nThis performance reflects a new first quarter operating income and operating margin record for EMCOR.\nOur United States Electrical Construction segment's operating income of $40.3 million is consistent with 2020's quarter one performance.\nReported operating margin of 8.8% represents a 10 basis point improvement over last year's first quarter as a result of a modest increase in this segment's gross profit margin.\nFirst quarter operating income of our U.S. Mechanical Construction segment of $65 million increased nearly $20 million from the comparable 2020 period, and operating margin of 7.2% represents a 180 basis point expansion year-over-year.\nThis improved performance is primarily due to greater gross profit across most of the market sectors we serve as a result of both the volume increases previously referenced and a slight improvement in revenue mix as compared to the year-ago period.\nThis segment's operating margin additionally benefited from a reduction in the ratio of selling, general and administrative expenses to revenues as a result of strong quarterly revenue growth without a commensurate increase in this segment's overhead cost structure.\nConsistent with the commentary during my revenue discussion, this performance has established a new first quarter record in terms of both operating income and operating margin for our United States Mechanical Construction segment.\nOur total U.S. construction business is reporting $105.2 million of operating income and a 7.7% operating margin.\nThis performance has improved quarter-over-quarter by $19.7 million or 23.1%.\nOperating income for our U.S. Building Services segment of $29.3 million is an $8.1 million increase from last year's first quarter, while operating margin of 5% represents a 100 basis point improvement.\nAn increase in gross profit resulting from greater snow removal activities with customers that are contracted on a per snow event basis within the segment's commercial site-based services division and an increase in gross profit from project building controls and repair activities within the segment's mobile mechanical services division were the primary drivers of the quarterly increase in operating income.\nIn addition, the segment's operating income and operating margin benefited from a reduction in SGandA expenses as compared to the prior year due to the various cost-reduction actions instituted subsequent to the first quarter of 2020.\nThis operating income and operating margin performance represents a new first quarter record for this segment.\nOur U.S. Industrial Services segment operating loss of $2.4 million represents a decline of $17.9 million when compared to operating income of $15.4 million in last year's first quarter.\nThe reduction in period-over-period operating results is due to the previously referenced adverse market conditions, which this segment continues to face as well as the impact of February's extreme winter weather event.\nIn addition, performance of this segment was negatively impacted by lower plant and labor utilization due to significant reduction in revenues.\nOn a positive note, this segment was able to partially offset these negative headwinds with a nearly 21% reduction in first quarter selling, general and administrative expenses due to certain cost savings initiatives enacted in calendar year 2020.\nU.K. Building Services operating income of $9.4 million or 7.4% of revenues represents an improvement of $3.6 million and 230 basis points of operating margin expansion over 2020's first quarter.\nThis performance represents an all-time quarterly record for operating income and operating margin as we experienced a strong resumption in project work during the quarter as the United Kingdom market approaches the hopeful conclusion of their COVID-19 lockdown mandates.\nAdditionally, operating income for the quarter benefited from approximately $800,000 of favorable foreign exchange rate movement.\nWe are now on slide nine.\nAdditional financial items of significance for the quarter not addressed in my previous slides are as follows.\nQuarter one gross profit of $341.1 million represents 14.8% of revenues, which has improved from the comparable 2020 quarter by $8 million and 30 basis points of gross margin.\nBoth our gross profit and gross profit margin represent new first quarter records for EMCOR despite the significant headwinds we continue to experience within our United States Industrial Services segment.\nDiluted earnings per common share in the first quarter is $1.54 as compared to $1.35 per diluted share for the prior year period.\nThis $0.19 or 14.1% improvement establishes a new quarter one record for the company and also ties the all-time quarterly diluted earnings per share record, which we previously achieved in quarter four of 2019.\nWe are now on slide 10.\nAs evident from slide 10, EMCOR's liquidity profile remains strong.\nCash on hand is down from year-end 2020 primarily as a result of cash used in operations due to the funding of 2020's companywide incentive compensation awards as well as the funding of our United Kingdom subsidiaries' VAT deferral from the prior year.\nAdditionally, we repurchased $13 million of our common stock pursuant to our share repurchase program and utilized nearly $32 million of cash and investing activities, including $24 million to fund the two acquisitions that we completed during the first quarter of this year.\nWorking capital levels have increased modestly primarily due to a reduction in our current liabilities, given a decrease in accounts payable as well as a reduction in accrued payroll and benefits due to the previously mentioned funding of prior year incentive awards, the increase in goodwill as a result of the businesses acquired within our United States Electrical and United States Mechanical Construction segments.\nNet identifiable intangible assets have decreased as a result of approximately $15 million of intangible asset amortization expense, partially offset by the impact of additional intangible assets recognized in connection with the previously referenced 2021 acquisitions.\nTotal debt, exclusive of operating lease liabilities, is virtually unchanged since year-end 2020.\nAs a result of our consistent outstanding borrowings and the growth in stockholders' equity due to our net income for the quarter, EMCOR's debt-to-capitalization ratio has reduced to 11.5%.\nOur balance sheet remains pristine and in conjunction with our available credit allows us to invest in our business, return capital to shareholders and execute against our strategic objectives as we navigate through ever-changing market conditions.\nIt's all yours, Tony.\nI'm going to be on page 11, remaining performance obligations by segment and market sector.\nSo if I had to sum it up in a lot of ways, in 2020, we had a lot of COVID disruption here in this quarter, the first quarter going to the second.\nWe have a little bit of that left, but for the most part, first quarter 2021, the demand environment and the project bidding for construction and service projects were continuing to be active.\nAs I mentioned earlier, total remaining performance obligations or RPOs at the end of the first quarter were just under $4.8 billion, up $351 million or 7.9% when compared to the year-ago level of $4.4 billion.\nAnd RPOs increased $181 million for the first three months of the year from the year-end level of $4.6 billion.\nOur domestic construction segments experienced strong project growth in the quarter, with the RPOs increasing $219 million or 6.1% since the year-ago period of March 31, 2020.\nAll but $15 million of that is organic growth.\nThe $15 million belongs to a Chicago-based electrical contractor that really focuses on infrastructure that joined us in February.\nBuilding Services segment RPOs increased in the quarter $121 million or 22% from the year ago quarter, a portion of which was the August 2020 acquisition of a Washington D.C. full-service mechanical contractor.\nHowever, more representative of what we are now experiencing in this segment, RPOs grew $60 million or up 10% from December 31.\nAll of that is organic growth.\nAnd to paraphrase what I said in February, this work is both the resumption of regularly scheduled mechanical systems maintenance.\nSo we're maintaining -- we're maintaining systems that haven't been running full out, and then small project work as a result is coming back in.\nAnd then there's modifications and improvements around that on efficiency and indoor air quality.\nIf you go to the right side of that page by market sector, clearly, our largest sector for RPOs continues to be commercial projects.\nAnd we're continuing to see strength, and I'll talk about this on the next page, in the resilient sectors that we've highlighted such as data center.\nAnd I call it supply chain's buildup for e-commerce delivery and fulfillment.\nThose -- that commercial segment, which also includes the retrofit activity and new build, is 44% of total RPOs.\nFor the year-over-year and sequential quarter-over-quarter comparison, commercial RPOs increased $314 million and $216 million, respectively.\nThe rest of this sector is pretty much netted as in and out as project activity increased a little in some sectors and decreased a little in others.\nAnd that's really just the normal ebb and flow of project activity.\nIn general, project interest is favorable in most all sectors with the exception of hospitality that continues to be challenged.\nAs an indication of future market activity, the March ABI came out a week or so ago.\nAnd while I think this is a soft index always, it's worked on a board survey from architects and it's self-reported numbers.\nBut it's been the same forever, so it's OK.\nIf it's consistently that way, then you can start to draw trends off of it.\nIt jumped over 50, which is expansion territory in February and was over 55 in March.\nAnd one of the analysts noted the regional scores, for the most part, were in positive territory, and the general outlook was upbeat.\nNow that's clearly true from a year-ago period.\nCorrespondingly, the March Dodge Momentum Index, which is an index of nonresidential building projects in planning, also posted a pair of strong gauge in February and March.\nIt's up low double digits at 11% from a year-ago period, pretty much right before the full impact of the pandemic.\nLook, I think it's important for me to just take a step back here.\nFirst quarter of last year was a good quarter.\nAnd until the pandemic came, it was probably one of the best economies that, in my business career, I've ever operated in.\nSo that's the compare that a lot of these numbers are coming off of.\nSo it's important to know that.\nAnd both of these leading indicators are indicators of potential future activity.\nThey're moving in tandem, which is what we like to see.\nAnd we do a whole bunch of other analysis, and I'll talk about that later of what we're going to -- what we believe could happen to nonres this year.\nI'm now going to jump to page 12, and I'm going to give you a little updated commentary on these resilient sectors that we talk about.\nIf you look at the first two, I'd like to think about that as the build-out of our data infrastructure and our supply chain infrastructure.\nThat's still very strong.\nIt's concentrated in about -- on the data center side, five or six geographic areas.\nWe're in 60%, 70% of those areas now either electrically or mechanically.\nWe continue to build our data center maintenance business.\nAnd on the warehousing side, these are the big million square foot-plus warehouses.\nFor the most part, this is a life safety play for us on the fire protection side.\nI would argue we are the best in the business at it.\nNot only are we providing a great solution, we do it cost effectively, and we do it time efficiently.\nAnd we got some of the best prefab capability in the industry.\nWe're also doing targeted electrical work depending on the region of the country on these warehouses.\nIndustrial and manufacturing, it's down a little bit for us right now, but that's really driven by food process, which we have a pretty good pipeline of potential opportunities.\nBut we're actually very bullish on manufacturing because of where we play.\nWe do see supply chain reshoring back to the southeast.\nThat could be either out of Asia, most notably China, or Mexico as people look for redundant supply.\nI don't think we want to go -- people on their high-margin projects want to be caught in a situation like they were at the beginning of the pandemic, or I do think we're in a decoupling mode versus China as far as supply to the U.S. I think the other part is we are in some good secular markets that we expect to continue, most notably, semiconductors.\nWe are very strong in some of the key markets, whether they be Arizona, which were very strong mechanically.\nWe have a terrific team in Arizona that does this work superbly.\nThis is very difficult work and very complex.\nAnd the team we have in Arizona that execute is the best in the business.\nWe also have electrical capability in Utah, which is the Salt Lake City area, which is another one of the semiconductor hubs.\nAnd we also have electrical capability in the Pacific Northwest, most notably the Portland area, which is also a semiconductor hub.\nThese are the three major hubs.\nWe have capability in each, and we have great relationships with both our general contractor customers and construction management customers as well as the OEMs and end users.\nHealth care, we continue to see strength.\nWe've made the right acquisitions.\nYou look at the work we'll be doing down in the Georgia market with BKI.\nYou look at the work we'll do in the Houston market with Gowan.\nYou look at the work we'll do -- continue to do in the Midwest with Shambaugh and a combination of companies.\nAnd you look at the work we'll continue to do in California.\nThe healthcare market continues to be very strong for us.\nAnd I just gave you a couple of markets.\nWe really do this work, broadly speaking, across the country.\nAnd we do it both in a retrofit basis, which we expect more and more mechanical and electrical retrofits.\nAnd we also see new build coming back in healthcare.\nAgain, this is both a construction opportunity for us and a maintenance opportunity for us.\nI think one thing people appreciated when they were an EMCOR customer through the pandemic is we can help them make their facilities more flexible when they needed to, to handle patient surges or different kinds of healthcare they needed to deliver.\nWater and wastewater continues to be a good market for us, especially in Florida.\nThese projects can be lumpy in how they get delivered.\nWe've got one of the best teams in the industry down in Florida, and we're very proud of them.\nI'll get to the last two, mechanical services, indoor air quality.\nWe're the best in the business at this.\nThe OEMs develop solutions, but they need a company like EMCOR to be able to deliver those solutions.\nAnd we deliver these solutions as good or better, and I would say better on a consistent basis than anybody in the industry.\nThat's both the mechanical services, to fix things; indoor air quality, as their whole well building concept becomes more prevalent; and then finally, on efficiency.\nAnd we've been the best efficiency people for a long, long time.\nI would add another sector that sort of overlays this.\nWe will participate in any energy transition.\nPeople ask us about that.\nAnd clearly, when you have the best pipe fitters and electricians in the business and the people that know how to supervise them, you're going to be part of that.\nWe already are part of it on small-scale solar in a more significant way out in California.\nThe way I think about small-scale solar is the way I thought about distributed generation and cogeneration.\nThat's really what it is in 20 megawatts or less.\nAs you get to the bigger things, we are building capability, especially in Texas right now.\nWe'll see how that goes.\nI think it's going to go well, and we'll continue to build that capability and anything that the refiners do along the line of carbon capture, it's pipe.\nAnd I'm very happy that Exxon and people like Valero are talking more about renewables, renewable diesel and carbon capture.\nWe'll be there to help them do that.\nSo we feel good about these resilient markets.\nWe don't chase fads at EMCOR.\nWe build capability, and we execute.\nAnd we can pivot around these markets, and we've done that over a long period of time.\nI'm going to finish now on page 13 and 14.\nAs we entered 2021, let's think about what the context of it was.\nVaccinations were just starting to get rolled out.\nWe were in a world of COVID surges in parts of the country.\nAnd as February started to come, we gave guidance, but that was our backdrop.\nBut we continued to perform.\nOur folks are resilient, and they're really good at what they do.\nIn that initial guidance, we gave you about eight -- seven, eight weeks ago, we expected to earn $6.20 to $6.70 in earnings per diluted share.\nAnd if you look at that midpoint, that would be another record year, Mark, after how many, 7?\nAnd we expected to do that on $9.2 billion to $9.4 billion in revenue.\nAnd so we clearly thought that the revenue was going to accelerate as the year went on.\nAnd think about the tough compare we're having here in the first quarter with industrial.\nUp until the third week of March of last year, industrial was having a very good first quarter.\nSo we went back.\nWe thought about it and we said, \"Okay, we had a better first quarter than we expected.\nAnd so with that, we're going to raise the low end of our guidance range to $6.35\".\nThat's a $0.15 movement from the $6.20.\nAnd we're going to take the top end of the range up about a $0.05 or $6.75 per diluted share.\nWe're going to keep revenue guidance where it is, and we'll certainly know more about that when we get out of the second quarter.\nAnd as we said in February 2021, we did expect 2021 to be another year of outstanding performance.\nBut let's think about this.\nWe have to execute every day.\nWe're doing this across 4,000 projects of size of $250,000 or more.\nBut if you added up all our projects, we're doing this now over about 12,000 projects and service events.\nAnd if you take service calls, it's multiples of that.\nAnd we have to do that against the backdrop of record operating income margins in our Electrical and Mechanical Construction segments in 2020.\nAnd we do expect those increased revenues to help us mitigate some of that challenge.\nSo when we gave you our guidance, we laid out some assumptions.\nAnd what I'm going to do now is talk about what that assumption was and what the update on that assumption is now eight weeks later with first quarter in the books.\nSo the first assumption was our Industrial Services segment, as many of you know, primarily serve the downstream petrochemical and refining markets.\nWe didn't think it would materially improve until the fourth quarter and that it would gain momentum going into 2022 as demand for refined products will continue to be challenged early in 2021, especially through the end of the second quarter.\nDemand is picking up.\nSo let's talk about what that view is now.\nWe still believe as far as performance in the segment, that's the accurate view of the market.\nSome trends are clearly positive now.\nCrack spreads are very good in high teens.\nThe renewable diesel market is a market we're helping our customers get ready for and serve through upgrades and adaptation of their facilities.\nAnd refinery utilization has moved into the low 80s, trending toward the mid-80s.\nWe fully expect that to be in the high 80s by early June.\nIt's going to be driven by really aviation fuel at this point.\nSo we had an assumption at the beginning of the year also that the nonresidential market would decline modestly.\nWhat do we think now?\nWe think that market potentially could be flat for the year.\nAnd the second quarter trends will provide more insight as we may see accelerating demand through the year.\nThis market now could have either breakeven performance or modest growth in 2021.\nWe also said that we would continue to execute well on our more resilient market sectors to include manufacturing, commercial driven by data center and logistics warehousing, water and wastewater and all the things I just mentioned on the previous page.\nWe still think that's true and even more true today.\nAnd we do expect as the year to go on that manufacturing gains strength, and we'll see it first in our backlog.\nWe did talk about the COVID environment.\nWe did not expect -- did not expect a more restrictive COVID environment than what we were operating in as we gave guidance in February.\nWe did expect a more normal operating environment as the year progressed.\nWe talked about that we were operating near 100% capability.\nWe don't use the word capacity because we always look -- we can add tradespeople.\nWe've learned how to work under these COVID precautions.\nIt does require a lot more planning, and we have to be much more precise in our execution.\nBut you know what?\nThat's sort of how we operate anyway.\nAnd it's nothing new for us to keep our employees' safety first.\nIt's one of our core values, and quite frankly, people would not want to work for us if it was not.\nSo what's my updated view on that?\nI believe that as we enter third quarter, move through third quarter into fourth quarter, more of our job sites will start to be -- look more normal in conditions in most of the states that we operate in because we continue to see positive trends in those states.\nAnd we will see that in the U.K., too.\nI think that might happen here as our vaccinations continue to pick up.\nWe do expect -- we said we expect to continue to help our customers with IAQ, energy efficiency replacement projects, optimizing their systems and helping bring their employees back to work.\nI would say that's going as expected.\nSo then you say, \"How do we go from where we are at the low end of the range, the midpoint of the range to the top end of the range\"?\nI'd say that each one of those trends or mix of those trends get better.\nSo maybe the nonres market's better than we thought it was, especially for projects that can be completed in the year.\nAnd that's especially true as things normalize and work normalizes and people start to spend more capital.\nOur refining and petrochemical customers begin to gain more comfort with improved demand for refined products.\nAnd they say, \"Look, instead of trying to bunch all that work into '22, we start to pull some of that work forward into '21\".\nThat would be a logical thing to do.\nThey do worry about manpower in tight -- when they have a bunch of work scheduled.\nWe may be able to have some of those discussions.\nMomentum in IAQ and efficiency accelerates.\nThat could happen, especially on the efficiency side as folks realize that all the investment in IAQ actually hurts efficiency.\nAnd their customers will be demanding them to make their facilities more efficient.\nAnd look, we've got to keep our productivity strong as we transition.\nWe want to keep some of those gains we've made with scheduling.\nWe want to keep the emphasis we've had on prefab even on smaller jobs as we transition.\nI think -- I sort of know we will.\nBut we have to keep that first and foremost in our minds, and of course, we're not going to open the floodgates on travel.\nMark talked a little bit about the organic SG and A. That's more positive than you think it is because he had a sentence in there that was pretty key.\nThink about the outlook we were taking on incentive compensation last year versus this year.\nWe told you we expected to have organic reduction of around $15 million, $20 million.\nWe're at the high end of that right now on a run rate basis.\nAnd if we have increased incentive long term, that's a good thing in our field operations because that means we're doing better.\nThe other thing that I know you ask about, and I'll just get in front of it now a little bit is on stimulus.\nThe thing that will impact us this year, the government spending that will impact us this year is all related to these COVID emergency packages.\nWe will benefit from that because of the money that went to the states and municipalities to make their budgets more flushed to allow them to complete some of their smaller capital projects and get some of the transit systems moving again.\nIt will help them think through that and start that.\nWe'll also benefit from some of the spending that's going to go on institutions and schools.\nAgain, go back to this IAQ efficiency and building wellness theme.\nWe're seeing that already.\nThat's what will impact 2021.\nIf this larger infrastructure package of about 50% of the money, give or take, is stuff we could participate in or projects we could potentially participate in, that for the most part is a late '22, early '23, likely late '23, early '24 event for us.\nYou think about everything that has to happen with a project to get it going.\nAnd I think let's all recall late 2008, early 2009.\nFor large-scale infrastructure projects, yes, there's concepts that people want to execute.\nPeople don't do detailed design on concept.\nAnd so as we learned back then, there's no such thing as a shovel-ready project.\nThere isn't here either.\nBut one of the things that could be quicker is if we get energy efficiency dollars right and figure out how to flow that out, which, in my mind, would be through the utilities in their programs.\nThe other thing you'll ask about is labor.\nLook, we're sort of at the top end of that food chain.\nThat's not something that we had issues with.\nI do think I'm glad I'm not a painter or a roofer or a cleaner right now because there is headwinds about hiring labor at the low end, especially with the enhanced employment benefit -- unemployment benefit.\nIt requires us -- also on the factory side, we're lucky to be who we are because we can, like I said earlier, work closely with our supply chain partners and work real hard to mitigate the impact because they're also having difficulty ramping up.\nAnd you probably heard that on all the calls with the manufacturers.\nI'm sure you did.\nWhen we get to capital allocation, we had a lot of detail on that in our year-end discussions.\nOur guidance contemplates that we will continue to be disciplined capital allocators.\nAnd we'll do that between organic growth, which we love to fund; acquisitions; share repurchases; and dividends.\nWe're on track to meeting -- toward meeting that goal this year.\nThis year, we've already done three acquisitions.\nWe have a very good pipeline.\nThose may be moving a little slower as we try to understand the impact of pandemic on operations, but we'll get through that.\nAnd we feel very good about our pipeline right now.\n", "role": "user" }, { "content": "q1 earnings per share $1.54.\nq1 revenue rose 0.2 percent to $2.3 billion.\nraises fy earnings per share view to $6.35 to $6.75.\nsees fy revenue $9.2 billion to $9.4 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: Our performance under these conditions is outstanding.\nOur organization showed the grit, resiliency, discipline and innovation that we are known far.\nAnd we stayed focused on keeping our employees safe, while executing for our customers.\nTurning to our financial results.\nThroughout our discussion, all my financial commentary disregards the impact of the impairment charge that Mark will cover in detail.\nWe earned an adjusted $1.44 per diluted share for the second quarter.\nAdjusted operating income margins for the second quarter were a strong 5.47% [Phonetic].\nOperating cash flow is excellent at $276 million on a year-to-date basis.\nWe accomplished this in an environment where we had 15.5% negative organic revenue growth for the quarter just ended.\nOur Mechanical Construction segment performance was exceptional with operating income growth of 24% and 8.5% operating income margins.\nOur Electrical Construction segment had strong operating income margins of 7.2%, despite having a 20.17% [Phonetic] decrease in revenues as they were more significantly impacted by the mandated shutdowns than our Mechanical Construction segment was, and further the Electrical Construction segment is more exposed to the volatility caused by our oil and gas exposure in this segment.\nOur US Building Services segment had a very strong quarter with 5.6% operating income margins, despite a 9.8% revenue decrease.\nWe saw demand improved through the quarter, especially in our mechanical services and government services businesses.\nWe exited the quarter in a nice hot steamy summer with an even more competitive cost structure.\nOur Industrial Services segment is also moving ahead in a very challenged market.\nOur customers are cutting costs, deferring work and fighting through a really tough market for them and as a result, for us.\nWe will continue to maximize any opportunity available, cut costs and look to provide flexible solutions when possible.\nI don't anticipate this trend to improve until at least the first quarter of 2021 at the earliest.\nWe are fortunate to be a segment leader and have long-standing relationships with the most important customers in the downstream refining and petrochemical markets.\nOur UK segment had a strong quarter and we expect this execution and performance to continue.\nThey faced many of the same challenges that our US Building Services segment faced.\nHowever, our UK customer base is more institutional, manufacturing and government-focused, and as a result, we have field [Phonetic] employment throughout the UK shutdown as we were deemed essential in many cases.\nSo how did we continue performing in this environment and how will we continue to perform.\nMy comments cut across all EMCOR reporting segments.\nWe outlined some of these actions on our first quarter call in April and we executed well.\nSo number one, we focused on employee safety first and as a result, we were able to staff drop safely and with the right people.\nSaid differently, our people had confidence that we would do the right thing.\nWe limited guidelines to keep operating, and when necessary to reopen.\nWe aggressively procured PPE, that's the personal protective equipment upfront.\nThere are employees needed to keep working and we execute the training necessary to work safely in this environment.\nWe communicated at all levels with a focus on safety, execution and results.\nOur flat organizational structure helped our communications remain effective and unhampered despite COVID-related challenges.\nNumber two, we thoroughly, quickly implement all the different government mandates and programs with respect to COVID.\nOur staff did a superb job in distilling these mandates and programs into specific actions for our subsidiary operations to continue operating productively and safely and in compliance with these varied government mandates.\nNumber three, we aggressively cut SG&A through both the short and long-term measures.\nWe cut executive pay 25% in the quarter, cut other salary employees pay in the quarter, furloughed staff, permanently laid off salary staff, cut almost all travel and entertainment expenses, and reduced any additional discretionary expenses.\nWe reduced $21 million in the quarter versus the year-ago period, and when removing incremental SG&A for businesses acquired, we cut $28 million on an organic basis.\nI expect about half of those cuts to be permanent.\nWe acted fast and decisively and it shows in our results.\nFurther, we aggressively right-sized our craft labor workforce to match demand through layoffs and furloughs.\nNumber four, we knew we had to comp out what would be reduced productivity because of increased use of PPE and the implementation of other COVID-related safety measures.\nWe have successfully combated this challenge and met this challenge by working with our customers and our workforce to offer better scheduling, planning and work practices.\nWe believe for the most part that we are near breakeven on a productivity basis to where we would have been pre-COVID.\nNumber five, we trained our field and sales force on IAQ, that is, indoor air quality and other building enhancement products and projects during the initial phases of COVID, so we would be ready to provide solutions for our customers to be able to return to their facilities with confidence and in an improved indoor environment.\nNumber six, our subsidiary leaders led us well as any organization that I could imagine.\nI'll say that again.\nOur subsidiary leaders led us well as any organization that I could imagine and they executed all the above initiatives I just mentioned in an exceptional manner.\nWith all that said, we leave the quarter with a strong RPO position of $4.6 billion [Phonetic], our balance sheet has strengthened through the quarter despite adverse conditions and an even more competitive cost structure than we already had.\nWith all that said, I will turn the discussion over to Mark.\nOver the next several slides, I will supplement Tony's opening commentary on EMCOR's second quarter performance, as well as provide an update on our year-to-date results through June 30.\nSo let's revisit and expand our review of EMCOR's second quarter performance.\nConsolidated revenues of $2 billion, were down $310.2 million or 13.3% over quarter two 2019.\nOur second quarter results include $50.2 million of revenues attributable to businesses acquired, pertaining to the time that such businesses were not owned by EMCOR in last year's second quarter.\nAcquisition revenues positively impacted both our United States Mechanical Construction and United States Building Services segments.\nExcluding the impact of businesses acquired, second quarter consolidated revenues decreased approximately $360.4 million or 15.5%.\nAll of EMCOR's reportable segments experienced quarter-over-quarter revenue declines as a result of the containment and mitigation measures mandated by certain of our customers, as well as numerous governmental authorities in response to COVID-19.\nThis resulted in facilities closures and project delays, which impacted our ability to execute on our remaining performance obligations in many of the geographies that we serve.\nThe specifics to each of our reportable segments are as follows.\nUnited States Electrical Construction segment revenues of $445.9 million, decreased $123.5 million or 21.7% from 2019 second quarter.\nIn addition to the negative impact of the COVID-19 pandemic on second quarter revenues, the unfavorable variance year-over-year was partially attributable to 2019's all-time record quarterly revenue performance.\nRevenue declines in most of the market sectors we serve were partially offset by quarter-over-quarter revenue growth in the institutional and hospitality market sectors.\nUnited States Mechanical Construction segment revenues of $790.4 million, decreased $32.7 million or 4% from quarter two 2019.\nExcluding acquisition revenues of $47.9 million, this segment's revenues decreased organically 9.8% quarter-over-quarter.\nRevenue declines in manufacturing and commercial market sector activities were muted by revenue gains quarter-over-quarter within the institutional transportation and healthcare market sectors.\nThe prior-year quarter also represented an all-time quarterly revenue record for our US Mechanical Construction segment.\nSecond quarter revenues from EMCOR's combined United States Construction business of $1.24 billion, decreased $156.2 million or 11.2%.\nSome of this growth in RPOs has come at the expense of revenue generation during the second quarter due to COVID-19.\nHowever, we were also successful in obtaining new project opportunities during this period.\nUnited States Building Services quarterly revenues of $472.4 million, decreased $51.3 million or 9.8%.\nExcluding acquisition revenues of $2.3 million, this segment's revenues decreased 10.2% from the record results achieved in the second quarter of 2019.\nReduced project and controls activities within their mobile mechanical services division largely attributable to the impact of COVID-19 as well as large project activity in their Energy Services division were the primary drivers of the quarterly revenue decline.\nAdditionally, as mentioned on previous calls, we are continuing to see a reduction in IDIQ project activity within our government services division due to both a smaller contract base as well as an overall reduction in government spending.\nEMCOR's Industrial Services segment was significantly impacted by the sharp decrease and volatility in crude oil prices resulting from geopolitical tensions between OPEC and Russia, as well as the dramatic reduction in demand for refined oil products due to the containment and mitigation measures implemented in response to COVID-19.\nThese factors have resulted in a decreased demand for our services, as this segment's customer base has initiated severe cost containment measures, which have resulted in the deferral or cancellation of previously planned maintenance, as well as the suspension of most capital spending programs.\nAs a result, our Industrial Services segment's second quarter revenues declined $212.2 million from the $295.5 million reported in 2019 second quarter.\nThis represents a reduction of $83.3 million or 28.2%.\nUnited Kingdom Building Services revenues of $93.1 million, decreased $19.4 million or 17.3% from last year's quarter.\nThe period-over-period revenue reduction was primarily attributable to a decrease in project activities resulting from COVID-19 containment and mitigation measures instituted by the UK government.\nThis segment's quarterly revenues were also negatively impacted by $3.4 million of foreign exchange headwinds.\nSelling, general and administrative expenses of $205.2 million, represent 10.2% of revenues and reflect a decrease of $21.1 million from quarter two 2019.\nSG&A for the second quarter includes approximately $7.2 million of incremental expenses from businesses acquired inclusive of intangible asset amortization, resulting in an organic quarter-over-quarter decrease of approximately $28.3 million.\nThe decline in organic selling, general and administrative expenses was primarily due to certain cost reductions resulting from our actions taken in response to the COVID-19 pandemic.\nThis includes a period-over-period decrease in salaries expense due to both reduced head count as well as temporary salary reductions.\nAdditionally, incentive compensation expenses decreased due to lower projected annual operating results relative to incentive targets when compared to the prior year.\nLastly, we have experienced reductions in both medical claims as well as certain discretionary spending such as travel and entertainment costs quarter-over-quarter.\nThe increase in SG&A as a percentage of revenues is due to the reduction in quarterly consolidated revenues, without a commensurate decrease in certain of our fixed overhead costs as we do not deem the current operating environment to be permanent.\nDuring the second quarter, we identified certain indicators of impairment within those of our businesses that are highly dependent on the strength of the oil and gas and related industrial markets.\nPreviously referenced volatility in crude oil prices as well as the containment and mitigation measures implemented in response to the COVID-19 pandemic significantly impacted the demand for our services within these businesses resulting in revised near-term revenue and operating margin expectations.\nThese negative developments additionally resulted in uncertainty within the US equity markets, which led to an increase in the weighted average cost of capital utilized in our impairment analysis.\nThe combination of lower forecasted revenue and profitability along with the higher weighted average cost of capital has resulted in the recognition of $232.8 million non-cash impairment charge during the quarter.\n$225.5 million of this charge pertains to a write-off of goodwill associated with our Industrial Services reporting unit, while the remaining $7.3 million relate to the diminution in value of certain trade names and fixed assets within our United States Industrial Services and our United States Electrical Construction segments.\nAs a result of the non-cash impairment charge just referenced, we are reporting an operating loss for the second quarter of 2020 of $122.6 million, which represents a decrease in absolute dollars of $242.6 million when compared to operating income of $120 million reported in the comparable 2019 period.\nOn an adjusted basis, excluding the impact of the non-cash impairment loss, our second quarter operating income would have been $110.1 million, which represents a period-over-period decrease of $9.8 million or 8.2%.\nWhile adjusted operating income has declined, we have experienced an increase in operating margin on an adjusted basis.\nFor the second quarter of 2020, our non-GAAP operating margin was 5.5% compared to our reported operating margin of 5.2% in the second quarter of 2019, reflecting strong operating conversion within most of our reportable segments.\nConsidering the operating environment during the quarter, our entire team did a great job.\nSpecific quarterly performance by reporting segment is as follows.\nOur US Electrical Construction Services segment operating income of $32.2 million, decreased $11.6 million from the comparable 2019 period.\nReported operating margin of 7.2%, represents a 50 basis point decline over last year's second quarter.\nThe reduction in quarterly operating income and operating margin is due to the significant decrease in revenues as well as the impact of favorable project closeouts within 2019 second quarter.\nSecond quarter operating income of our US Mechanical Construction Services segment of $66.9 million, represents a $13 million increase from last year's quarter.\nDespite the disruption caused by the COVID-19 pandemic, this segment experienced an increase in gross profit within the commercial, institutional and healthcare market sectors.\nOperating margin of 8.5%, improved 190 basis points over the 6.6% operating margin generated in 2019, primarily due to a more favorable revenue mix than in the year-ago quarter.\nOur total US Construction business is reporting $99.1 million of operating income and an 8% operating margin.\nThis performance has improved by $1.4 million and 100 basis points of operating margin from 2019 second quarter.\nIn addition, it represents a sequential improvement from 2020 first quarter in both absolute dollars and margin performance.\nOperating income for US Building Services is $26.4 million or 5.6% of revenues.\nAnd although reduced by $1.6 million from last year's second quarter, represents a 30 basis point improvement in operating margin.\nThe quarter-over-quarter reduction in operating income was due to lower gross profit contributions from their mobile mechanical services and energy services division as a result of reductions in revenues as previously mentioned.\nThe improvement in operating margin is due to a better mix of service maintenance and repair activities within this segment's mobile mechanical services division.\nOur US Industrial Services segment operating income of $3 million, represents a decrease of $13.1 million from last year's second quarter operating income of $16 million.\nOperating margin of this segment for the three months ended June 30, 2020 was 1.4% compared to 5.4% for the three months ended June 30, 2019.\nThe decrease in operating income and operating margin was primarily driven by the reduction in quarter-over-quarter revenues, which resulted from the adverse market conditions mentioned during today's call, as well as significant pricing pressure due to limited shop services opportunities.\nUK Building Services operating income of $5.4 million was essentially flat with 2019 second quarter, as foreign exchange headwinds accounted for the modest period-over-period decline.\nOperating margin of 5.7%, represents an 80 basis point increase over last year as a result of improved maintenance contract performance as well as the implementation of cost containment measures which resulted in SG&A expense reductions.\nWe are now on Slide 9.\nAdditional financial items of significance for the quarter not addressed on the previous slides are as follows.\nQuarter two gross profit of $315.3 million is reduced from 2019 second quarter by $31.1 million or 9%.\nDespite this reduction in gross profit dollars, we did experience an improvement in gross profit as a percentage of revenues with the reported gross margin of 15.7%, which is 80 basis points higher than last year's quarter.\nWe are reporting a loss per diluted share of $1.52 as compared to earnings per diluted share in last year's second quarter of $1.49.\nOn an adjusted basis, after adding back the impairment loss on goodwill, identifiable intangible assets, and other long-lived assets, non-GAAP diluted earnings per share is $1.44 as compared to the same reported at $1.49 in last year's quarter.\nThis represents a modest reduction of $0.05 or just over 3%.\nNot to be repetitive in my commentary, but in light of COVID-19 in the economic backdrop we all experienced during the last several months, EMCOR has done a great job of maximizing returns were given the opportunity to deliver its services.\nWith the quarter commentary complete, let's turn our attention to EMCOR's first six month results.\nRevenues of $4.31 billion, represent a decrease of $169.1 million or 3.8% when compared to revenues of $4.48 billion in the corresponding prior-year period.\nOur second quarter revenue declines offset revenue gains posted in quarter one at each of our US Mechanical Construction, US Building Services, US Industrial Services and UK Building Services segments, while our US Electrical Construction Services segment has had two consecutive quarters of revenue contraction.\nYear-to-date gross profit of $648.3 million is lower than the 2019 six-month period by $6.8 million or a modest 1%.\nYear-to-date gross margin is 15%, which favorably compares to 2019's year-to-date gross margin of 14.6%.\nGross margin improvement was largely driven by our combined US Construction business as well as our UK Building Services segment.\nSelling, general and administrative expenses of $432.2 million for the 2020 six-month period, represent 10% of revenues compared to $432.4 million or 9.6% of revenues in 2019.\nWhile SG&A for the year-to-date period has decreased nominally from the prior-year, the substantial cost reduction measures implemented in the second quarter have positioned us at a lower run rate than at this time last year.\nWe reported a loss per diluted share of $0.14 for the six-month ended June 30, 2020, which compares to diluted earnings per share of $2.77 in the corresponding 2019 period.\nAdjusting the results for the current year to exclude the non-cash impairment loss on goodwill, identifiable intangible assets, and other long-lived assets, results in a non-GAAP diluted earnings per share of $2.78.\nWhen comparing this as adjusted number to last year's reported amount of $2.77, we are reporting a $0.01 increase.\nI would like to remind everyone on the call that our performance for the first six months of 2019 set records for most financial metrics with earnings per share in particular, exceeding the prior benchmark by almost 30%, not to marginalize the sizable impairment charge taken this year, but the fact that on an adjusted basis, we were able to slightly exceed our previous year record.\nDespite the extraordinary market challenges presented, I believe EMCOR has done quite an exceptional job.\nMy last comment on this slide pertains to EMCOR's income tax rate for 2020.\nAs noted on the slide, EMCOR's tax rate for the six months ended June 30, 2020 was 59.4%.\nOur tax rate for the remainder of 2020 will continue to be impacted by the impairment charges recorded during the second quarter, the majority of which were nondeductible for -- tax purposes.\nSo with that said, at this time, our full-year estimated tax rate is between 58% and 59%.\nHowever, this can change if any discrete tax events occur during the remainder of the year.\nWe are now on Slide 11.\nI spent some time during our quarter one earnings call detailing EMCOR's liquidity profile.\nAs a reminder, the first quarter is historically our weakest from a cash generation standpoint, due to the funding of prior-year earned incentive awards.\nIn addition, 2020's first quarter was negatively impacted by our inability to monetize certain of our first quarter revenue activities due to delays in customer billings resulting from our previously communicated ransomware attack.\nHowever, as Tony mentioned, we had record operating cash flow for the first half of the year and as a result, our liquidity profile has improved from our already strong position.\nWith strong operating cash flow through June, we have paid down the $200 million revolving credit borrowings outstanding as of March 31, 2020 and our cash on hand has increased to $481.4 million from the approximately $359 million on our year-end 2019 balance sheet.\nThe improvement in operating cash flow was due to excellent working capital management by our subsidiary leadership teams as well as the benefit of the deferral of certain tax payments due to government measures enacted in response to the COVID-19 pandemic.\nThese measures which included the deferral of estimated US federal income tax payments, the employer's portion of Social Security tax payments.\nPlease note that while we will continue to benefit from some of these deferrals throughout the remainder of 2020, our estimated US federal tax payments were funded subsequent to the quarter on July 15.\nChanges in additional key balance sheet positions are as follows.\nWorking capital levels have increased primarily due to the increase in cash just referenced.\nGoodwill and identifiable intangible assets have decreased since December 31, 2019, largely as a result of the impairment charges previously referenced, in addition intangible assets have decreased as a result of $29.4 million of amortization during the year-to-date period.\nStockholders' equity has declined due to the operating loss recognized during the first six months of 2020.\nEMCOR's debt to capitalization ratio of 13.5%, is essentially flat when compared to our position at 2019's year-end and is reduced from 19.9% at March 31, 2020.\nWe have just over $1.2 billion of availability under our revolving credit line and anticipate that we will continue to generate positive operating cash flow during the last six months of calendar 2020.\nEMCOR's balance sheet and resulting liquidity position remains strong and we continue to preserve our flexibility in evaluating all market opportunities.\nIn short, we continue to win work and have seen our small productivity improve through the second quarter as it hit a low point in April for bookings and execution.\nSome comparisons to consider.\nTotal RPOs at the end of the second quarter were just about $4.6 billion, up $365 million or 8.6% when compared to the June 2019 level of $4.23 billion.\nRPO has also increased $167 million from the first quarter of 2020, reflective of the continued demand as we are seeing for market -- continued demand we are seeing for our services in our markets.\nSo for the first six months of 2020, total RPOs increased $555 million or 13.8% from December 31.\nWith all this growth, only $11 million relates to a tuck-in acquisition.\nSo almost all of that growth is organic.\nDomestic RPOs have increased $346 million or 8.4% since the year-ago period, driven mainly by our Mechanical Construction segment.\nWe did burn through some Electrical Construction project as we completed some complex work.\nHowever, we expect to backfill these projects as we continue to see demand, especially in the high-tech and data center market, and high-tech for us means semiconductor and the data center market.\nAs the economy opens up, combined with the hotter weather, we are getting more access to facilities and seeing a resumption of our work.\nAdditionally, both of our Industrial Services and EMCOR UK segments increased RPO level by roughly 15% respectively from June 30, 2019.\nOn the right side of the page, we have, on 12, we show RPOs by market sector.\nOf the eight market sectors listed, all had year-over-year RPO increases, except for manufacturing and industrial.\nThis is not to be confused with our Industrial segment.\nCurrently, we are in the process of completing some major food processing projects.\nWe continue to see demand for these large complicated projects and have a number of potential opportunities we are looking at.\nCommercial project RPOs comprise our largest sector -- market sector to over 40% of the total.\nThis is a 19% increase from year-end, spurred by our data center projects.\nAnd as we have said before, we are uniquely suited for these fast-paced, especially in the hyperscale projects from both electrical and mechanical perspective.\nOther very active markets for us are healthcare, and water and wastewater, with these sectors being up 25% and 49% respectively from year-end 2019.\nTo-date, we have not seen any material slowdown in bidding opportunities apart from the mandated areas, that was New York, New Jersey, Boston and parts of California, and a little bit in Pennsylvania.\nHowever, these areas are now open.\nAs I said earlier, the industry has adapted safety -- safe work practices and protocols to keep project progressing and especially to keep workers safe.\nFinally, we are positioned very well to help our customers as they adjust our HVAC and building control systems to improve the IAQ and cleanliness of their buildings and other facilities.\nIt starts with the introduction of more outside air into the space as one of the simplest ways to make a building healthier.\nBut unfortunately, this makes the building less efficient.\nWe have strong experience in IAQ systems and our service companies and mechanical contractors know how to implement UV lights, bipolar ionization, enhanced filtering and control system modifications.\nMost of this work will never make it into reported RPOs from a quarter-to-quarter basis and it is a quick turn, high margin activity.\nTogether, it will amount to a nice medium-sized project with good margins.\nI do expect these IAQ additions to longer-term spur a more robust HVAC replacement market as we seek to increase efficiency to combat the increase in IAQ, especially the introduction of outside air.\nSo as I said in our first quarter call, I don't know exactly how all the work, specifically will rollout and how that booking will be, it's a fluid and challenging environment.\nThere will be bumps along the way.\nHowever, the direction of future opportunities for a contractor like us remain pointed in a positive direction.\nSo now I'm going to close on Pages 13 to 14.\nWhen we went through guidance in April, we said we had hoped that we can provide a view on the outlook for the remainder of the year during the second quarter earnings call.\nWe have spent the last few weeks debating internally whether to provide more definitive versus generic guidance for the remainder of the year.\nWe have decided to provide more specific guidance with some caveats which mostly deal with the external environment.\nThe main caveat is, we expect operating conditions to remain similar to today's operating conditions where most of the country is open for our type of work and we are deemed an essential [Phonetic] activity.\nSo we decided to give guidance as to the why and what as outlined below.\nSubject to that main caveat, we are likely going to earn $5 to $5.50 diluted earnings per share this year on an adjusted basis adding back the impact of impairment.\nI think revenues will likely be $8.6 billion to $8.7 billion.\nIn this revenue guidance is our expectation from our recent forecast where we believe that all of our reporting segments will grow revenues in the second half of the year versus the first half of the year except for our Industrial Services segment.\nWe now understand how COVID-19 has impacted our productivity.\nWe have seen stabilization in small project work and the summer heat is helping our US Building Services segment.\nWe have a strong RPO position and we see markets recovering, especially in our Mechanical and Electrical Construction segments and in our US and UK Building Services segments.\nSo how do you move up in this range largely will depend on three factors, the external market remains largely same or even improves from today's operating environment.\nUnder today's conditions, we can book and execute work, keep our workforce productive and we believe we will continue to see the recovery in the small project work.\nIF the Industrial Services segment -- our folks have an opportunity to help customers in an unexpected way, then we will perform slightly better than expected.\nAnd we have no major project disruptions or any new significant customer bankruptcies.\nSo as far as capital allocation, the dividend is safe for the foreseeable future.\nHowever, we are unlikely to make any more share repurchases in the near term.\nWe will look to execute sensible tuck-in acquisitions, where we have decent visibility into and belief in the long-term success of the acquisition.\nThat's really no different than any time we buy a company, and we are based on the business, the market and the improvements we can make.\nWe have several potential Mechanical or Electrical Construction segment acquisitions and are in the preliminary stage of discussion on -- several mechanical services, a few small ones and fire protection acquisitions that we will likely execute.\n", "role": "user" }, { "content": "q2 non-gaap earnings per share $1.44 excluding items.\nq2 loss per share $1.52.\nsees fy 2020 revenue $8.6 billion to $8.7 billion.\nsees fy 2020 non-gaap earnings per share $5.00 to $5.50.\nemcor group - during q2, recorded significant impairment charge primarily related to u.s. industrial services segment.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We had an exceptional quarter.\nAs reported with respect to operating income at $135.9 million, operating income percentage at 6.2% and with respect to earnings per diluted share at $1.76 on a non-GAAP adjusted basis.\nWe earned revenues of $2.2 billion in the quarter and had operating cash flow of $270 million.\nWe had excellent operational performance and cost control.\nOur team executed with focus, discipline and precision.\nWe continue to take steps to keep our skilled trades workforce safe, motivated and productive.\nWe achieved this performance despite a very difficult operating environment for our EMCOR Industrial Services segment, which you know focuses on downstream, petrochemical and oil and gas.\nWe have structurally reduced our SG&A by about $7 million to $9 million per quarter on a go-forward basis.\nThe exceptional performance of our segments billed in the industrial services GAAP, thus demonstrating how the diversity and balance in EMCOR can work for our shareholders.\nI will cover some of the highlights by segment, and I will cover the broad themes and practices that have driven our performance during these challenging times.\nOur electrical and mechanical construction segments had outstanding performance in the quarter and on a year-to-date basis.\nWe leveraged our cost structure across a solid mix of projects to earn strong and robust operating income margins of 9.2% in our Electrical Construction segment and 9% in our Mechanical Construction segment.\nWe leveraged a lower cost structure, but more importantly, had exceptional field performance on our projects.\nWe did benefit on some project closeouts and resolutions.\nWe always have some of those, something that Mark will cover in more detail.\nBut the underlying performance and productivity in these segments is as good as we have ever had.\nOur building -- U.S. Building Services segment performed exceptionally well.\nWith a record quarterly operating income percentage of 6.9%.\nOur commercial site-based business and their best third quarter ever and resets our cost base to position us for even more success in the future as we grow the business.\nWe have a very good customer mix.\nOur customers are demanding, but by involving us in their maintenance capital spending they provide us with the opportunity to add value through incremental small project and service activity.\nOur Government business also had a very good quarter.\nIn addition, we excellent repair service and project performance in our mobile mechanical services division.\nOur repair service is aided by a hot summer, coupled with significant demand for our IAQ or indoor air quality product and services.\nWe also are near flat year-to-date for project bookings on an organic basis, which shows significant recovery from the large drop in organic bookings in April and May.\nWe also completed a nice acquisition in August, that will build our project capabilities and allow for long-term service growth in the Washington, D.C. market.\nOur Industrial Services segment had a tough quarter in line with what we expected and discussed on our second quarter earnings call.\nDemand has dropped significantly across the industry.\nAnd that, coupled with successive hurricanes made for a very difficult quarter.\nThis is a tough environment for industrial services as we focus on petrochemical and refining.\nHowever, we are well positioned with our customers rebound, we have reset the business through aggressive cost-cutting and redeploying personnel to the work that is available.\nThe issue is our field supervision is absorbed and productive.\nHowever, they are capable of managing much larger work scopes versus what is available today, and that is where the leverage is in this segment.\nOur U.K. segment continues to steady performance and continues to build on its strong market position.\nOur strong customer relationships give us opportunities to not only meet their service needs, but also their maintenance and project retrofit needs.\nI want to take this opportunity to share with you how we've succeeded in this challenging operating environment across EMCOR.\nThese actions and themes are why we have had this exceptional year-to-date performance across our business.\nNumber one, we kept our focus as an organization.\nAs we have moved through this ever-changing environment in 2020, we have stayed focused on accomplishing our mission for our customers.\nWe are already a flat organization.\nAnd we had direct communication at multiple levels.\nWe became even flatter with even better communication across our company.\nNumber two, employee safety is and has been our number one priority throughout this pandemic.\nOur people were able to keep this priority paramount as it is one of our core values.\nWe just had to implement these practices in a different way.\nOur team knows we avoid short cuts and we always emphasize worker safety.\nThis unrelenting focus and commitment to safety is not new to us, and it is one of the main reasons we can fill the best team in the industry.\nNumber three, would work together across this large decentralized organization by focusing on the task at hand, and we have sought to comply at all times with a multitude of regulations, programs and procedures in this constantly changing environment.\nOur staff has made sure that our subsidiaries had the best available information to implement the practices needed to keep progress moving on a project or a service demand.\nAgain, teamwork and mutual respect for each other are core values of EMCOR.\nNumber four, we stayed focused not only on safety, but also productivity.\nOur people took ownership of job sites, brought solutions forward that allowed us to at least maintain the productivity we bid in the jobs, through better scheduling, adjusted work practices, more prefabrication and better job site logistics.\nIn many ways, we were uniquely trained to perform in this constantly changing environment.\nWe are a team of very successful trade contractors who know how to react and adapt to changing markets and job site conditions.\nNumber 5, we have positioned ourselves into some good long-term markets, which I will talk about later, such as healthcare, manufacturing, high-tech manufacturing, data centers, commercial and food processing.\nWe offer valuable services in these markets through our electrical trades, our HVAC technicians are pipers, welders, millwright, sprinkler fitters and plumbers.\nWe are able to move between markets with scale and agility and can handle the most complex construction and service opportunities within these markets.\nNumber six, we were prepared and trained to serve our customers with new products when the pandemic hit.\nWe bundled together our services and products related to IAQ/indoor air quality and building wellness and had these solutions ready to present to our customers when we were able to reenter buildings, campuses and industrial facilities.\nWe've helped and continue to help our customers reopen with more peace of mind by improving the airflow and air quality in their workplaces.\nWe became leaner and more productive.\nWe cut costs early and deep in some of our businesses.\nWe did not wait to react.\nWe found new ways to work through technology.\nAnd finally, number eight, we leveraged our scale, our suppliers work with us to make sure we had the necessary personal protective equipment necessary for our people to do their jobs.\nWe had the job materials we needed to be successful, despite supply disruptions that may have impacted others.\nWe shared ideas on how to keep safe, but also stay productive.\nFor me, it's been humbling to see this high level of execution during these difficult times.\nIt speaks to the leadership of our segment and subsidiary leaders who look for solution when obstacles are in front of them.\nAnd our highly skilled and dedicated workforce who continue to work and serve our customers throughout these difficult times driven by this pandemic.\nAnd with that, Mark, I'll turn it to you.\nOver the next several slides, I will augment Tony's opening commentary on EMCOR's third quarter performance as well as provide an update on our year-to-date results through September 30.\nSo let's revisit and expand our review of EMCOR's third quarter performance.\nConsolidated revenues of $2.2 billion are down $86 million or 3.8% from quarter 3, 2019.\nOur third quarter results include $81.4 million of revenues attributable to businesses acquired, pertaining to the time that such businesses were not owned by EMCOR in last year's third quarter.\nAcquisition revenues positively impacted both our United States Mechanical Construction and the United States Building Services segments.\nExcluding the impact of businesses acquired, third quarter consolidated revenues decreased approximately $167.5 million or 7.3%.\nUnlike our results for the second quarter of 2020, where each of our reportable segments had quarter-over-quarter revenue declines we did see revenue gains in three of our five segments during the third quarter of this year.\nHowever, when you remove the impact of businesses acquired, all of our U.S. reportable segments experienced organic revenue declines period-over-period, as the effects of the COVID-19 pandemic as well as the disruption within the oil and gas markets are still impacting a number of our businesses.\nUnited States electrical construction revenues of $508.9 million decreased $45.8 million or 8.3% from 2019's third quarter.\nRevenue declined across multiple market sectors due to the continuing impact of the pandemic, including the associated containment and mitigation measures as well as the curtailment of certain capital spending by some of our customers.\nThis segment additionally experienced a significant reduction in revenues within the manufacturing or industrial market sector, where certain of our electrical businesses perform services for both midstream and upstream oil and gas customers.\nNot dissimilar to our Industrial Services segment, the Electrical Construction segment has experienced numerous project deferrals, specifically in the Manufacturing and Industrial market sector resulting from cost control actions initiated by many of their customers within the broader oil and gas industry.\nUnited States Mechanical Construction segment revenues of $891.5 million, increased $22.3 million or 2.6% from quarter three of 2019.\nThe results of this segment represent record third quarter revenue performance, excluding acquisition revenues of $61.1 million, the segment's revenues decreased $38.8 million or 4.5% organically.\nReductions in quarter-over-quarter revenues from the manufacturing market sector inclusive of activities within the food processing submarket sector as well as the healthcare market sector due to project completions in the prior year are the primary reasons for this segment's organic revenue decline.\nEMCOR's total Domestic Construction business third quarter revenues of $1.4 billion decreased by $23.5 million or 1.6%.\nUnited States Building Services quarterly revenues of $551.5 million increased $19.4 million or 3.7% and represents an all-time quarterly record for this segment.\nExcluding acquisition revenues of $20.3 million, this segment's revenues decreased approximately $900,000 or less than 0.25%.\nReduced building control project activities due to access restrictions created by the COVID-19 pandemic were almost entirely offset by increased small project revenues, including indefinite delivery, indefinite quantity project volume from this segment's government services division as well as an increase in demand for certain services aimed at improving indoor air quality in response to the pandemic and in line with the recommendations from the CDC.\nUnited States Industrial Services revenues of $139.7 million decreased $94.4 million or 40.3% and as this segment continues to be impacted by the negative macroeconomic conditions and uncertainty within the markets in which it operates.\nAdditionally, our quarterly performance within this segment was adversely affected by work stoppages resulting from hurricane and tropical storm activity in the Gulf Coast region, where the majority of our industrial services operations are located.\nUnited Kingdom Building Services segment revenues of $110.1 million increased $12.5 million or 12.7% from last year's quarter.\nRevenue gains for the quarter resulted from new maintenance contract awards as well as strong project activity across our customer portfolio.\nIn addition, revenues of this segment were positively impacted by $5 million as a result of favorable foreign exchange rate movements within the quarter.\nSelling, general and administrative expenses of $226.8 million represent 10.3% of third quarter revenues and reflect an increase of $6.7 million.\nThe current year's quarter includes approximately $8.9 million of incremental expenses from businesses acquired, inclusive of intangible asset amortization, resulting in an organic quarter-over-quarter decrease in selling, general and administrative expenses of approximately $2.2 million.\nSG&A expenses for the third quarter of 2019 and were favorably impacted by $4.5 million of insurance recovery and legal settlements within the Industrial Services segment.\nWhen excluding these recoveries from the prior year period, the adjusted organic decline in 2020's third quarter SG&A is $6.7 million.\nQuarter-over-quarter reductions in salaries and travel and entertainment expenses due to a combination of cost-cutting measures and the continuing impact of the COVID-19 pandemic were partially offset by an increase in quarterly incentive compensation expense due to EMCOR's improved operating performance during the period and our revised upward expectations for full year 2020.\nThe increase in SG&A as a percentage of revenues is due to the reduction in quarterly consolidated revenues without a commensurate decrease in certain of our fixed overhead costs as we do not deem the current operating environment to be permanent.\nThis is consistent with our assessment during this year's second quarter.\nAdditionally, with quarter-over-quarter a sequential increase in total incentive compensation expense previously mentioned, our SG&A as a percentage of revenues was unfavorably impacted by approximately 50 basis points within the third quarter of 2020.\nReported operating income for the quarter of $135.9 million represents a $20.1 million increase or 17.4% as compared to operating income of $115.7 million in 2019's third quarter.\nThis represents an all-time quarterly operating income record for EMCOR, which is quite remarkable performance when you consider the economic backdrop.\nOur third quarter operating margin is 6.2%, and which favorably compares to the 5.1% of operating margin reported in last year's third quarter.\nWe experienced operating margin expansion within each of our reportable segments other than our U.S. Industrial Services segment, which is reporting an operating loss for the quarter and our U.K. Building Services segment, which was essentially flat period-over-period.\nSpecific quarterly performance by reporting segment is as follows: Our U.S. Electrical Construction segment operating income of $47.1 million increased $13.4 million from the comparable 2019 period.\nReported operating margin of 9.2% represents a 310 basis point improvement over last year's third quarter.\nThis improvement in both operating income dollars and operating margin is largely attributable to increased gross profit contribution from commercial market sector activities, inclusive of inclusive of numerous telecommunication construction projects.\nIn addition, operating income and operating margin of this segment benefited from favorable project closeouts within the transportation and institutional market sectors, which positively impacted quarterly operating margin in the current year by 70 basis points.\nThird quarter operating income of our U.S. Mechanical Construction Services segment of $80 million represents an $18.8 million increase from last year's quarter, while operating margin in the quarter of 9% and represents a 200 basis point improvement over 2019.\nDespite the impact of the COVID-19 pandemic, this segment has experienced increased gross profit from projects within the majority of the market sectors in which it operates.\nIn addition, a more favorable mix of work with within both the manufacturing and the commercial market sectors drove the improvement in quarterly operating margin.\nOur combined U.S. construction business is reporting a 9.1% operating margin and $127.1 million of operating income, which has increased from 2019's third quarter by $32.3 million or 34%.\nFor the third quarter of 2020, operating income and operating margin for our U.S. Building Services segment was $38.2 million and 6.9%, respectfully.\nThe performance of this segment represents an all-time quarterly record in terms of both operating income and operating margin.\nOperating income increased by $3.2 million over last year's third quarter, and operating margin improved by 30 basis points.\nThese increases were primarily due to increased gross profit and gross profit margin from this segment's commercial site-based services division.\nIn addition, this segment's results for the current quarter benefited from lower selling, general and administrative expenses due to cost-cutting measures enacted in response to the COVID-19 pandemic.\nOur U.S. industrial services operating loss of $9.8 million represents a decrease of $15.4 million compared to operating income of $5.6 million in last year's third quarter.\nThese conditions have resulted in reduced capital spending and the implementation of various cost-cutting measures by certain of our customers, which has resulted in a decrease in demand for the services provided by this segment.\nCompounding this reduced demand, and as I referenced during my revenue commentary, the Gulf Coast region has been impacted by numerous named storms during 2020's hurricane season, which resulted in the suspension of planned maintenance activities as our customers focused on storm preparation and recovery efforts.\nU.K. Building Services operating income of $5.3 million represents an approximately $600,000 increase over 2019's third quarter due to an increase in gross profit within the segment.\nOperating margin of 4.8% is slightly reduced from 2019's third quarter operating margin of 4.9%.\nWe are now on slide nine.\nAnd additional financial items of significance for the quarter not addressed on my previous slides are as follows: quarter three gross profit of $363.2 million or 16.5% of revenues is improved over last year's quarter by $27.2 million and 180 basis points of gross margin.\nWe experienced quarter-over-quarter improvement in gross profit dollars in all reportable segments other than our Industrial Services segment due to the unfavorable market conditions previously outlined.\nDiluted earnings per common share of $1.11 and compares to $1.45 per diluted share in last year's third quarter.\nAdjusting our record quarterly performance for the negative impact on our income tax rate resulting from the nondeductible portion of the noncash impairment charges recorded during the second quarter of this year, non-GAAP diluted earnings per share for the quarter ended September 30, 2020, and is $1.76, which favorably compares to last year's quarter by $0.31 or 21.4%.\nMy last comment on this slide is a continuation of my income tax rate commentary which, as you can see on the bottom of slide nine, is 54.7% for the quarter due to the nondeductibility of the majority of quarter two's noncash impairment charges.\nWith one quarter of 2020 remaining, I anticipate that our full year tax rate will be between 53% and 54%, which is a downward revision from the previous range provided on our quarter two call.\nWith my quarter commentary complete, let's now turn our attention to EMCOR's year-to-date results through September 30.\nRevenues of $6.52 billion, representing a decrease of $255.1 million or 3.8% and when compared to revenues of $6.77 billion in the corresponding prior year period.\nOur year-to-date results include $214.1 million of revenues attributable to businesses acquired, pertaining to the period of time that such businesses were not owned by EMCOR in the 2019 year-to-date period.\nExcluding the impact of businesses acquired, year-to-date revenues decreased organically 6.9%, primarily as a result of the significant revenue contraction experienced during quarter 2, given the containment and mitigation measures mandated by certain of our customers as well as numerous governmental authorities in response to COVID-19.\nYear-to-date gross profit of $1 billion is higher than the 2019 nine month period by $20.4 million or 2.1%.\nYear-to-date gross margin is 15.5% and which favorably compares to 2019's year-to-date gross margin of 14.6%.\nThe year-over-year gross margin improvement was largely driven by our combined U.S. Construction business.\nSelling, general and administrative expenses of $659 million represent 10.1% of revenues as compared to $652.5 million or 9.6% of revenues in the prior year period.\nYear-to-date 2020 includes $25.2 million of incremental SG&A, inclusive of intangible asset amortization pertaining to businesses acquired.\nExcluding such incremental cost, our SG&A has decreased on an organic basis, by approximately $18.7 million year-over-year.\nReported operating income for the first nine months of 2020 is $119.2 million, adjusting this amount to exclude the noncash impairment loss on goodwill, identifiable intangible assets and other long-lived assets recorded in the second quarter, results in non-GAAP operating income of $352 million for 2020's nine month period as compared to $338 million for the corresponding 2019 year-to-date period.\nThis adjusted non-GAAP operating income represents a $13.9 million or 4.1% improvement year-over-year.\nDiluted earnings per common share for the nine months ended September 30, 2020, is $0.96 when adjusting this amount for the impact of the noncash impairment charges previously mentioned, non-GAAP diluted earnings per share was $4.54, and as compared to $4.22 in last year's nine month period.\nThis represents a $0.32 or 7.6% improvement period-over-period.\nWe are now on slide 11.\nEMCOR's liquidity profile continues to improve as we just completed another quarter of strong cash flow generation, bringing our year-to-date operating cash flow to $546.8 million.\nOur operating cash flow has benefited from the effective management of working capital by our subsidiary leadership teams, coupled with the impact of certain government measures enacted in response to the COVID-19 pandemic.\nWhich allow for the deferral of the employer's portion of social security tax payments and the remission of value-added tax for our U.K. subsidiary.\nOn a year-to-date basis, these measures have favorably impacted operating cash flow by approximately $81 million.\nWith this strong operating cash flow, cash on hand has increased to $679.3 million, from the approximately $359 million on our year-end 2019 balance sheet and is the primary driver of the increase in our September 30 working capital balance.\nOther changes in key balance sheet positions of note are as follows: Goodwill has decreased since December 31, 2019, as a result of the noncash impairment charge recognized during the second quarter of 2020, partially offset by an increase in goodwill resulting from the businesses acquired during the 2020 year-to-date period.\nLargely as a result of $44.8 million of amortization expense recorded during the first nine months of this year.\nOur identifiable and tangible asset balance has decreased since December 31, 2019.\nSimilar to our goodwill balance, decrease was partially offset by incremental intangible assets recognized as a result of the acquisition of two businesses during the first nine months of this year.\nTotal debt has decreased by approximately $30 million since the end of 2019, reflecting our net financing activity during the year.\nAlthough not included on this slide due to the periods presented, EMCOR has paid down approximately $273 million of borrowings under its credit facility, inclusive of borrowings executed during 2020.\nAnd EMCOR's debt to capitalization ratio has decreased to 12.3% as of September 30.\nLastly, our stockholders' equity has decreased since December 2019 and as our share repurchase activity and dividend payments for the nine month period of 2020 have exceeded our net income due to the impairment loss recognized in the second quarter.\nDue to our strong cash flow performance, in concert with our available credit, EMCOR remains in a very strong position to take advantage of any market opportunities that may be present in future periods.\nWell, Mark, and that's what happens when we're in the third quarter, right?\nTotal RPOs at the end of the third quarter were a little over $4.5 billion, up $495 million or 12.3% when compared to the September 2019 level of $4 billion.\nRPOs, likewise, increased the same amount, $494 million for the first nine months of 2020.\nWith all this growth being organic, except for approximately $86 million relating to two acquisitions in the current 12-month period.\nTaken together, our Mechanical and Electrical Construction segment, RPOs have increased $409 million or 12.4% since the year ago period.\nSevenths growth is organic, with the balance being RPOs that came with our November '19 acquisition of BKI, a full-service mechanical contractor headquartered in the Atlanta area.\nI should note here that thus far in 2020, BKI has more than doubled its RPOs total in the first nine months of this year as they continue to win work, including projects in the data center, manufacturing and healthcare markets.\nThe integration of BKI has gone very well due to the exceptional team they have.\nThey really are a terrific team, and we're thrilled to have them on our team.\nBuilding Services segment RPOs increased in the quarter as this segment's small project, repair service work also continues to regain its footing.\nRemember, the small project work in this segment was the first to fill the effect of the pandemic as building operations simply shut down.\nWe are getting in there now as facilities open up and more and more building owners and tenants are looking for ways to increase their indoor air quality in their facilities.\nAnd I'll go a little deeper into IAQ on the next slide.\nProject bookings are nearly flat on a year-to-date basis, which is a pretty good recovery, considering the deep drop in bookings we had in April and May.\nOn the right side of this page, we show RPOs by market sector.\nSimilar to a quarter ago, all eight market sectors listed at year-over-year RPO increases, except for Manufacturing/Industrial, where we have just completed some major projects and are looking at reloading for additional.\nAnd we feel pretty good about that as we are in the midst of developing some some good prospects in the manufacturing sector as supply chains change, and we also are very strong in high-tech manufacturing.\nMany of these projects come in pieces versus all once into our backlog.\nCommercial project RPOs comprised our largest market sector at over 42% of total.\nThis is almost a 20% increase from the year-end, and it's really spurred by two things: really high-tech and data center projects it bears repeating.\nour industry has -- has adopted the safety and work protocols to keep projects progressing with a larger goal of keeping workers safe.\nOur protocols are working.\nThe industry keeps working and bidding opportunities continue in pretty much all sectors and geographic markets.\nSo I'm going to take the next two pages and cover on pages 13 and 14.\nAnd what I'm going to discuss is some markets and opportunities where as we move forward, we believe, have some resiliency for us to operate in.\nAnd I'm now going to turn to page 13, and it says future affects our markets.\nWe believe we have multiple pockets of resistance despite wider nonresidential uncertainty.\nLet's go first to data centers.\nThis has only gotten stronger through the pandemic.\nIt was strong already.\nAnd it demands our electrical, mechanical and fire protection demand across Mid-Atlantic, Pacific Northwest, Midwest and Southeast.\nWe've done a good job here, and we're one of the leaders, and we've also made some strategic acquisitions, especially in the last 15 months, not only in fire protection assets, but also key electrical contractors like we did in the Midwest and also in the Southeast, which is emblematic of our BKI acquisition.\nAnd of course, we built organic capability here and build off long-term success in data center markets, and we are able to build these hyperscale on time, on budget and with speed.\nIt's important to note here that there's always changes in the data center market.\nProjects get redesigned, they get moved.\nThey get delayed as they get redesigned, other ones get accelerated.\nThat was a routine course of business outside of the pandemic and really has little to do with the pandemic, in our case.\nOn the warehouse side, we continue to build out e-commerce supply chain, and we continue to see very strong demand on not only regular warehouses, we continue to see demand across cold storage.\nThis is especially true for our fire protection and sprinkler work.\nIn industrial manufacturing, we believe we are well positioned for electrical mechanical opportunities and millwright opportunities driven by the reshoring of supply chains to the Southeast and relocation from higher cost states and sites.\nWe do believe also that we'll have additional food processing opportunities.\nAnecdotally, we won at least three jobs in the last four months, which would have been headed either to Mexico or overseas that are now being built in the Southeast.\nOn the healthcare side, we continue to see demand for our work, electrical, mechanical, fire protection and then eventually service.\nHospitals are looking to retrofit.\nThey're looking to build new facilities.\nAnd they're looking to have more flexibility in their existing facilities and build new facilities.\nWe have grown backlog here.\nWe expect to continue to grow back on.\nNow, look, this can be episodic.\nThings come in and out on the big project side.\nBut the flip side of that is we're not doing as much service work as we typically have done in hospitals as they deal with the impacts of COO.\nLong term, we expect to do more retrofit work.\nPeople do things to be more flexible -- well think about it, we did a lot of work to create negative pressure environment through the pandemic in these hospitals.\nWe expect to continue to do that.\nBut -- and if you have a bigger casualty event, accidents, terrorist situations, they want to be able to do positive pressure.\nSo facilities are going to have to move between the 2.\nAnd that's all about airflow and the kinds of work we do.\nAnd then you're going to have to have enhanced Electrical Systems & Communication wiring in those facilities.\nAnd we're uniquely positioned to help with those.\nAnd we have great relationships with some of the biggest hospital systems in the country, and we helped them through the pandemic.\nWe helped them build some of their new facilities in the past, and we expect to do both in the future.\nAnd I think you're starting to see the impact of that in our backlog.\nOn the water and wastewater site side, this, we think, is a good long-term market for us, especially in Florida.\nAnd really there, they're looking for comprehensive construction services.\nAnd in water and wastewater, many times, we serve as a prime contractor, bringing all trades and activities together.\nMechanical Services, we believe, has been a good market for us for a long, long time.\nWe have a terrific business.\nMost of it rests in Building services some of our service operations rest in our Mechanical Construction segment.\nAnd you can see that in our 10-Q.\nWe see growing demand stepping from maintenance deferrals.\nWe think there's going to be a lot of retrofit opportunities.\nI'm going to cover both that and indoor air quality.\nAs we switch to page 14.\nEMCOR has been a leader for a long time as you look at block one of HVAC capabilities.\nHVAC is a big part of our business, and it can be up to one three or more of what we do in any given year.\nIf you look at it, we do new construction, of course, we can.\nWe could do big work.\nWe talked about that on some of those resilient markets on the page before, core, tenants fit out.\nWe're a great retrofit company.\nWe know how to do the energy retrofit work, we know how to engineer that energy retrofit work, and we know how to support and help all the ESCOs that are doing that energy retrofit work.\nThat equipment replacement, energy retrofit lighting upgrade, building control systems.\nOne of the things maybe we don't brag about enough is the capability that we have in that aftermarket of HVAC.\nWe're the leader there.\nAnd we are the largest independent controls contractor on top of everything else.\nAnd really what we seek to get to is building wellness, have the most efficient building, but have it be a place that's healthy.\nNow as you move to Block two indoor our air quality, let's think about this at a high level.\nReally the goal over the last 20 years.\nAnd I've seen this from an OEM.\nI've seen it from a service perspective.\nI've seen it from a new construction perspective, has been to take in outside out of the building.\nOutside air is inefficient, right?\nIn the summer with humidity, it causes an efficiency problem and the winter costs the same for obvious reasons.\nAnd so we've worked real hard to take outside air out.\nThat all went by the wayside in the middle of March.\nNow we're opening up air dampers that haven't been opened in a long time.\nAnd actually, buildings are going back to 25 CFM per person, and that's cubic feet per minute.\nAnd we had got that down to 15%.\nAnd we had to safe and productive ways to do that, like demand control ventilation.\nSo what are we doing now on indoor air quality?\nWell, a lot of it is, \"hey, you've got to give people peace of mind\", and you, as an owner, have to do everything possible to increase the wellness and indoor air quality of your building.\nSo how do you do that?\nYou do that through enhanced filtration.\nWe take things from a Merck 10 or 12 up to a 14 or 15.\nYou do that for UV Lamp Technology that gets better and better.\nAnd this stuff actually works.\nIt reduces surface contamination.\nAnd it increases airborne in activation, right?\nSo things pass-through the coil, pass across the air handler media.\nAnd as a result, you make a cleaner.\nNeedle 0.5 polar ionization, we're one of the leaders in the implementation of that technology.\nAnd as I talked about earlier, we spent a lot of time training on this all the way down through our technicians during the lockdown and the pandemic, and we were ready to go.\nThere's a recent case study here.\nThis is someone that has 240 buildings.\nMainly small packaged equipment.\nSo here, you have to attack it by getting into the mixing box.\nAnd how do you do that?\nYou do that through UV because what you're trying to do, is get the surface contamination gone through UV lights.\nWe'll do this across 240.\nWe'll do this in 90 sites.\nThe goal is to demonstrate to the employees and actually have it happen as the indoor air quality gets better.\nThis was a large multi-state corporation with lots of sites.\nAnd I've given a number that we thought it would be like a good medium-sized project.\nThis is actually much better than we thought it was going to be.\nIt's hard to quantify exactly what it will be, but it's something we can get in front of our customers with and help them drive productivity in their buildings by giving them a better workspace.\nNow one of the things you have to think about is indoor air quality and efficiency work across purposes with each other.\nI personally believe we've already had a good retrofit market.\nThat retro market is going to gain strength as we move through 2021 on the HVAC side.\nAnd again, EMCOR, being the largest independent air conditioning contractor with a great retrofit capability, we'll clearly be in a position to help our customers balance into our quality against efficiency.\nWith that, I'm going to turn to the last two pages, 15 and 16, and I'm going to close out here.\nClearly, we have done much better than we expected when we withdrew guidance in April.\nAnd then when we reinstated guidance with our second quarter earnings announcement, both of which we believe were the right thing to do.\nToday, we are raising our guidance for earnings per share from continuing operations.\nWe will move to $5.90 to $6.10 non-GAAP adjusted earnings per share and revenues of around $8.7 billion.\nIn providing this revised guidance, we have assumed the following operating environment: First, we remain an essential service in most cases.\nSecond, we continue to execute productively in this environment.\nThird, there are no significant shutdowns like we saw in March and April.\nAnd for us, that means our sites, our projects are crafts.\nFour, we expect to have continued strong performance from our Electrical and Mechanical Construction segments, Building Services and the U.K.\nWe still see pretty good opportunities that we are estimating and bidding and to date, we have seen no significant project deferrals outside of oil and gas, as Mark described it.\nNow on the note, nonresidential market may move downward in the fourth quarter or continue to sort of be mixed.\nWe do expect that decline to be in the mid-single digits as we move into 2021.\nThis is still a big market.\nAnd if you refer back to page 13, we have a lot of operating space in what we believe are resilient markets.\nFor industrial services, which is downstream, refining and petrochemical, for the most part, we do expect sequential improvement as we go from Q3 to Q4, but nothing significant for the balance of the year.\nAnd as of today, we do expect the first quarter of 2021 to be better than the fourth quarter of 2020.\nWe have some visibility, not as much as we would typically have at this time.\nHowever, we do not expect any significant contribution from this segment for the balance of the year.\nWhere we end up in this range now is largely a factor of job timing, completion and service demand.\nAs far as capital allocation, we will continue to return cash to shareholders for dividends and then we do expect to return to some level of share repurchase activity in the next few quarters.\nWe expect to continue to be a balanced capital allocator.\nWhat I'm really excited about is we are rebuilding our pipeline of potential acquisitions and expect to start executing that pipeline in early 2021.\nWe expect those acquisitions to be similar to the acquisitions that we executed from 2018 to 2020, which really was a terrific period for us to grow our company through acquisition.\nWe certainly have the balance sheet to support such growth in our company.\nAnd we, again, expect to remain balanced capital allocators.\n", "role": "user" }, { "content": "compname reports q3 earnings per share $1.11.\nq3 earnings per share $1.11.\nq3 revenue $2.2 billion versus refinitiv ibes estimate of $2.11 billion.\nsees fy 2020 non-gaap earnings per share $5.90 to $6.10.\nq3 non-gaap earnings per share $1.76.\nsees fy 2020 revenue about $8.7 billion.\nraising full-year 2020 guidance.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As we have navigated the last two years, we have learned to operate in highly uncertain and volatile environment.\nAnd we have done it with success on almost any metric.\nWe've had to accomplish our mission while keeping our people safe.\nOur company values of Mission First People always have served us extremely well throughout these unprecedented times.\nWe had an exceptional third quarter at EMCOR, especially against a very difficult comparison in the prior year.\nAs you may recall, in the third quarter of last year, we were bringing about a third of our company back to full operations.\nWe had projects poised and ready to resume or start, delay service that needed to be completed.\nAnd buildings, campuses and production facilities that we helped our customers reopen as they resumed operations.\nFurther, we had yet to bring back our full complement of staff that we need to sustain and build our operations.\nSaid simply, we had an abundance of work had all the materials and a lower cost base, as we were still returning to full operations after the extreme cost reductions we had taken in response to the pandemic.\nAgainst that backdrop in comparison for the third quarter of 2021, we were able to post $1.85 and earnings per diluted share, versus $1.76 of adjusted diluted earnings per share in the year ago period.\nWe grew revenues to $2.52 billion, with 14.5% overall revenue growth and 12.2% organic revenue growth.\nWe posted 5.4% operating income margins despite strong headwinds from supply chain issues and labor disruptions caused by the Delta Variant.\nI believe this is very good performance considering the operating conditions we faced in the quarter.\nWe grew remaining performance obligations or RPOs 18.7% from the year ago period to $5.38 billion.\nWe generated operating cash flow of $121 million, despite the strong organic revenue growth.\nAll-in-all, we had a very successful quarter that continues to show the strength and diversity of our business.\nBut more importantly, the outstanding leadership provided by our teams at the subsidiary, segment and corporate level.\nOur electrical and mechanical construction segments had excellent performance in the third quarter of 2021.\nBoth segments posted strong operating income margins, and had strong organic revenue growth.\nThrough careful planning on our large projects, and excellent supplier relationships we mitigated a lot of the supply chain disruptions facing our operations.\nHowever, we have seen cost increases of 10% to 20% and anticipate that such increases will continue in the near future.\nAnd that is only part of the issue, as we have seen lead times increased by two to three times their normal levels.\nOur success in the quarter points to the continued resiliency of our teams, the ability to navigate these issues, deliver for our customers and continue to keep our workforce productive and safe.\nWe continue to have a robot pipeline of data center, warehousing and healthcare projects.\nAnd we had strong bookings with our manufacturing clients in the quarter.\nBuilding Services had the most difficult comparison a quarter as a deep cost cuts taken at the height of the shutdown were most severe in the segment.\nWe still post a decent operating income marked as a 5% against the year ago period of 6.9%.\nHowever, we were most affected in this segment by supply chain issues and diminished productivity.\nAlthough demand for our retrofit project work is very strong, we had some issues with a synchronization of our supply chain with our labor planning, resulting in reduced productivity.\nTo mitigate these issues, it has become a common practice that daily communications on deliveries and price changes on our quick term project and service work.\nFurther, this segment also bears the brunt of the dollar per gallon increase in the fuel, which gasoline and diesel year-over-year due to its large fleet and this had an impact of 20 to 30 basis points on operating income margins.\nWe can pass some of this increase on our customers that had just repriced into our time and material rates in June.\nWe will do so again between now and January across the majority of our building services operations.\nThis is the second increase this year, which is not our usual practice of executing which is once a year, usually in June.\nDemand remained strong and we will continue to improve our planning over the next quarter or two.\nIndustrial Services continue to operate as we expected.\nWe improved on a year-over-year basis with respect to revenue and operating income.\nWe had some impact with respect to the storms in the Gulf Coast.\nBut that mainly just pushed out work to later in the year or into next year.\nAnd we did have some disruption to our shop work in Louisiana.\nDemand for our services continues to build.\nRefinery utilization is at a very high level.\nAnd we expect to and we expect to execute a better fourth quarter turnaround season this year versus the year ago period.\nWe also anticipate much improved demand as we exit the year and move into the first quarter of 2022.\nThe U.K. continues to execute well for its customers with double digit revenue growth and good operating income margins.\nDemand remained strong for our services.\nBut like in the United States, we are also battling supply chain issues for our quick term project work in the United Kingdom.\nWe'll leave the quarter with a pristine balance sheet, strong fundamentals and record RPOs.\nOver the next several slides I will augment Tony's opening commentary on EMCOR's third quarter, as well as provide a brief update on our year-to-date results through September 30.\nSo let's revisit and expand overview of EMCOR's third quarter performance.\nConsolidated revenues of $2.52 billion are up $320 million or 14.5% over Quarter 3, 2020 and represent a new all-time quarterly revenue record for EMCOR.\nEach of our reportable segments experienced quarter-over-quarter revenue growth.\nExcluding $50.3 million of revenues attributable to businesses acquired, pertaining to the time that such businesses are not owned by EMCOR and last year's quarter, revenues for the third quarter of 2021 increased nearly $270 million or a strong 12.2% when compared to the third quarter of 2020, which was still somewhat impacted by the effects of the COVID-19 pandemic.\nThe specifics of each reportable segment are as follows: United States Electrical Construction revenues of $527.9 million increased $55.9 million or 11.8% from 2020s third quarter.\nExcluding acquisition revenues within the segment of $29.5 million this segment's revenues grew organically 5.6% quarter-over-quarter.\nIncreased project activity within the commercial healthcare and institutional market sectors were the primary drivers of the period over period improvement.\nUnited States mechanical construction segment revenues of $999.6 million increased $108.1 million or 12.1% from Quarter 3, 2020.\nThe results of this segment represent a new quarterly revenue record.\nRevenue growth during the quarter was driven by increases within the manufacturing, healthcare and commercial market sectors.\nWith respect to the manufacturing market sector, we are in the early phases of construction on several food processing plants, which will accelerate further as we move into 2022.\nFrom a healthcare market sector perspective, there continues to be greater demand for our services, as we are engaged in a number of projects ranging from mechanical system retrofits to complete installations in both new and existing healthcare facilities.\nLastly, within the commercial market sector, we continue to see strong demand for data center project work given growth in digital storage and cloud computing across the United States.\nAnd we continue to assist our e-commerce customers with the build out of the warehouse and distribution network through both traditional mechanical as well as fire protection services.\nThird quarter revenues from EMCOR's combined United States construction business of $1.53 billion increased $164 million or 12%, with 9.9% of such revenue growth being organic.\nThis combined revenue performance eclipses the quarterly revenue record established by this group during the second quarter of this year.\nDespite this record revenue performance, each of our construction segments have increased the remaining performance obligations both year-over-year as well as sequentially.\nUnited States Building Services Quarterly revenues of $632.5 million increased $75.9 million or 13.6%.\nExcluding acquisition revenues of $20.8 million the segment's revenues increased at 9.9% organically.\nRevenue gains were reported within our mobile mechanical services division due to increase project, service repair and maintenance activities.\nOur commercial site based services division as a result of new contract awards, and our government services division given an increase in indefinite delivery indefinite quantity project volumes.\nEMCOR's industrial services segment revenues of $232.2 million increased $60.7 million or 35.4% due to improve demand for both field and shop services, as we are beginning to see some resumption of maintenance and small capital spending in the energy sector.\nUnited Kingdom Building Services revenues of $129.5 million increased $19.4 million or 17.6% from last year's quarter.\nRevenue gains for the quarter resulted from the continuation of strong project demand from the segment's maintenance customers who previously deferred such work during 2020 as the result of the COVID-19 pandemic in the related prolonged U.K. government lockdown measures.\nAdditionally, the segment's revenues were positively impacted by $8 million, a favorable foreign exchange rate movements within the quarter.\nSelling, General, Administrative expenses of $243.9 million represent 9.7% of third quarter revenues and compared to $226.8 million or 10.3% of revenues in the year ago period.\nThe current year's quarter includes approximately $5.3 million of incremental expenses from businesses acquired, inclusive of intangible asset amortization, resulting in an organic quarter-over-quarter increase in SG&A of $11.9 million.\nConsistent with my commentary during our second quarter earnings call, the prior year period benefited from substantial cost reductions resulting from our actions taken in response to the COVID-19 pandemic.\nA significant percentage of such savings pertained to employment costs, including furloughs, headcount, reductions, and temporary salary reductions.\nConversely, EMCOR's considerable revenue growth in 2021 has necessitated an increase in headcount in the current year.\nAdditionally, our SG&A for the current period reflects an increase in healthcare costs, as the result of a normalization in the level of medical claims, as well as greater travel and entertainment expense due to a partial resumption of certain business activities by our workforce, when compared to the same timeframe in 2020.\nThe reduction in SG&A as a percentage of revenues as a result of the aforementioned increase in quarterly revenues without a commensurate increase in certain of our overhead costs, as we were able to successfully leverage our cost structure during this period of strong organic revenue growth.\nReported operating income for the quarter of $137.4 million or 5.4% of revenues, compares to operating income of $135.9 million or 6.2% of revenues in 2020's third quarter.\nThe 80 basis point reduction in operating margin loss due to reductions in gross profit margin within several reportable segments due to a less favorable revenue mix, which I will elaborate on during my individual segment commentary.\nDespite this reduction in quarter-over-quarter operating margin, EMCOR's $137.4 million of operating income represent a new third quarter record.\nSpecific quarterly performance by segment is as follows: Our U.S. Electrical Construction segment operating income of $44.1 million decreased $1.9 million from the comparable 2020 period.\nReported operating margin of 8.3% represents a reduction from the 9.7% margin reported in 2020's third quarter.\nThe decrease in both operating income and operating margin is due to a decline in gross profit within the commercial and transportation market sectors given a change in the composition of project work performed quarter-over-quarter.\nIn addition, and as disclosed in last year's third quarter, the results from the prior year period benefited from the settlement of final contract value on two projects, which favorably impacted this segments Q3, 2020 operating income and operating margin by $4.4 million and 70 basis points respectfully.\nThird quarter operating income for U.S. Mechanical Construction Services segment of $82.3 million represents a $2.3 million increase from last year's quarter, while operating margin of 8.2% represents an 80 basis point reduction from the 9% earned in 2020's 3rd quarter.\nFrom an operating margin perspective similar to our Electrical Construction segment the reduced profitability can be attributed to a less favorable mix of work during the quarter.\nMost notably, this segment experienced a decrease in gross profit margin within the manufacturing market sector, as the results for the period include increased revenues from certain large food processing projects, for which we are for which we are acting as the construction manager and carry lower than average gross profit margins when compared to our traditional subcontractor arrangements with our customers.\nFurther, the results for the year ago period benefited from the favorable close out of several manufacturing projects, which resulted in incremental operating margin contribution.\nTo be clear, the impacts within the quarter for both our Construction Segments relate to discrete projects or events.\nOur combined U.S. Construction business is reporting $126.4 million of operating income with an 8.3% operating margin.\nThis level of operating income represents a new third quarter record for our combined construction business.\nI would like to add that though below that of the prior year, the operating margins today in 2021 for each of our Electrical and Mechanical Construction segments exceed both their three year and five year average margins.\nOperating income for U.S. building services is $31.6 million or 5% of revenues.\nThis represents a reduction of $6.9 million and 190 basis points of operating margin quarter-over-quarter.\nGrowth and operating income within the segment's commercial site based and government services divisions was not enough to offset the clients within its mobile, mechanical and energy services divisions.\nAs I commented during last quarter's call, our Mobile Mechanical Services Division has a large number of fixed price capital projects currently in process, which traditionally have a lower gross profit margin profile than the segments call out service and small project work.\nIn addition, during the quarter, we experienced some productivity issues partially due to the delayed receipt of certain equipment and materials, which has impacted our profitability both in terms of dollars and margin.\nLastly, growth in the segment's SG&A expenses due to headcount additions to support revenue growth, as well as incremental amortization expense related to businesses acquired further compressed operating income and operating margin.\nOur U.S. Industrial Services segment operating loss of $3 million represents a $5.9 million improvement from the $8.9 million loss reported in 2020's 3rd quarter.\nDevelopment improvement, this segment continues to be impacted by difficult market conditions within the oil and gas industry.\nAdditionally, though, not as severe as in the prior year quarter, this segment experienced lost workdays due to both temporary plant and certain customer site closures, resulting from named storm activity in the Gulf Coast region during the 2021 quarter.\nU.K. Building Services operating income of $6.6 million or 5.1% of revenues represents an increase of $1.3 million and a 30 basis point improvement and operating margin quarter-over-quarter.\nApproximately $400,000 of this period-over-period improvement is due to positive foreign exchange movement, with the remainder attributable to an increase in project activity primarily within the commercial market sector.\nWe are now on slide nine.\nAdditional financial items of significance for the quarter not addressed in the previous slides are as follows: Quarter three gross profit of $381.3 million is higher than the comparable quarter by $18.2 million or 5%, gross margin of 15.1% as lower than the 16.5% and last year's third quarter due to the shift in revenue mix in each of our U.S. Electrical and Mechanical Construction segments as well as their U.S. building services segment as I just referenced during my segment operating income discussion.\nDiluted earnings per common share of $1.85 represents a new quarterly record for the company and compares to $1.11 per diluted share in last year's third quarter.\nAdjusting 2020's earnings per share for the negative impact and our prior year income tax rate resulting from the non-deductible portion of last year's non-cash impairment charges recorded during 2020 second quarter.\nNon-GAAP diluted earnings per share for the quarter ended September 30, 2020 was $1.76 when compared to our current quarter's performance, we are reporting a $0.09 or 5.1% quarter-over-quarter earnings per share improvement.\nWith my quarter commentary complete, I will touch on some high level highlights with respect to EMCOR's results for the first nine months of 2021.\nRevenues of $7.26 billion represent an increase of $747.8 million, or 11.5%, of which 9.4% of such revenue growth was generated by organic activities.\nOperating income of $387.8 million or 5.3% of revenues represents a significant increase from reported operating income for the first nine months of 2020 and a double digit increase from the corresponding adjusted non-GAAP operating income figure for that period.\nYear-to-date diluted earnings per share is $5.17 and represents an increase of approximately 14% over 2020's adjusted non-GAAP earnings per share for the nine month period.\nAlthough not shown on the slide, my last comment on our year-to-date results is with respect to operating cash flow.\nFor the first nine months of 2021, we have generated approximately $114 million of operating cash flow, which is well below 2020s record performance.\nAs I commented last quarter, our substantial organic revenue growth has required increased working capital investment.\nThis contrast to 2020 where for a large part of the year, we were liquidating our balance sheet due to the revenue declines resulting for the from the COVID-19 pandemic.\nFurther, it is important to note that last year's nine month operating cash flow was favorably impacted by $82.3 million due to government stimulus measures that allow for the deferral of certain tax payments in both the United States and the United Kingdom.\nAs previously communicated, my expectation for full year 2021 was operating cash flow in excess of $300 million.\nWith our upward revision in 2021 revenue expectations, I am still targeting the same level of operating cash flow performance, but it is possible that we may not eclipse the $300 million target should our working capital investment be greater than expected during the fourth quarter.\nEMCOR's balance sheet remains strong and liquid.\nCash on hand is down from year-end 2020 driven by cash used in financing activities are approximately $213 million, inclusive of $183 million used for the repurchase of our common stock and cash used in investing activities of $137.5 million, most notably due to payments for acquisitions that have cash acquired totaling approximately $114 million.\nThese uses of cash were partially offset by cash provided by operations of $114 million as I noted just a few moments ago.\nWorking capital has increased by nearly $20 million.\nIncreases in accounts receivable on contract assets resulting from our substantial organic revenue growth during the period were partially offset by the decrease in our cash balance just referenced as well as our increase in contract liabilities.\nThe increase in goodwill is predominantly a result of the five businesses acquired during the first nine months of this year.\nNet identifiable intangible assets increased by $19 million as the impact of additional intangible assets recognize the connection with the previously referenced acquisitions which was largely offset by $48 million of amortization expense during the year-to-date period.\nAs a reference point, on a full year basis we anticipate depreciation and amortization expense, including both depreciation of property, plant and equipment, as well as amortization of intangible assets to be approximately $112 million for 2021.\nTotal debt exclusive of operating lease liabilities is fairly consistent with that of December 2020.\nAnd EMCOR's debt-to-capitalization ratio has reduced to 11.4% from 11.9% at year-end, 2020.\nEMCOR remains well positioned to capitalize on available opportunities as our balance sheet, combined with the borrowing capacity available to us under our credit agreement provides us with great flexibility and pursuing numerous organic and strategic investments.\nI would like to give a call back to Tony, Tony?\nAnd I'm going to be on page 12 remaining performance obligations by segment and market sector.\nWe had another strong project bookings quarter here at EMCOR.\nEach of our five reporting segments are RPO growth year-over-year, while as we mentioned earlier, simultaneously increasing revenue over the same period.\nWe also saw RPO growth in seven of the eight market sectors in which we report.\nSo it's fair to say that we're currently seeing strong future demand across all of our segments and market sectors.\nWhile September 30, is a single point in time, and project certainly ebb and flow, we are well positioned moving into 2022.\nAs mentioned earlier, total company RPOs at the end of the third quarter were just under $5.4 billion, up $849 million or 18.7% when compared to the year ago level of $4.5 billion.\nOrganic RPO growth was strong 15.6%.\nYear-to-date for the nine months completed in 2021 total RPOs have increased $784 million, or just over 17%.\nThe strong booking activity across the company trends related to a book-to-bill ratio well over one, despite the company generating record revenues.\nOur two domestic construction segments experienced strong construction project growth in the quarter, with RPOs increasing $606 million or 16.5% from the same period last year.\nRPOs were lifted slightly by two Midwestern Electrical Construction Services acquisitions completed this year.\nBuilding Services or RPO levels increased 180 million or almost 29% from the year ago quarter, 142 million and 180 million was organic.\nWe continue to see widespread small and short duration project demand and believe this will remain active through the end of the year and into 2022 as workers returned to buildings, campuses, factories and institutional facilities across the country post COVID and as the Delta variant hopefully continues to subside.\nOur Industrial Services segments, our RPO increase of $53 million from September 2020.\nWork within our heat exchanger shops has been building and while still are lower than historical levels, pricing appears to be improving a bit.\nFurther, we continue to build capability, execute fixed price contract work, in both our electrical and mechanical trades in this segment.\nWhile this segment remains challenged due to macroeconomic forces, we are starting to see signs of increased activity, much as we expected as we move into 2022 and that is good news.\nIn summary, we continue to see strong momentum in our core markets and our scale, diversity of demand, and ability to pivot to more resilient sectors has allowed us to continue to have strong bookings in RPO growth, but also very strong organic revenue growth.\nI'm now going to finish our discussion on pages 15 and 16.\nWe are closing in on yet another record year performance at EMCOR despite a very difficult operating environment.\nAt the beginning of the year, we expected that margins would be under some pressure.\nBut we believe that we would have the necessary revenue growth to offset any margin compression.\nWe foresaw the supply chain issues, but quite frankly, they are worse than we expected.\nWe not only have seen increasing and volatile pricing, but lead times that extend through two to three times normal levels.\nEnergy prices, especially gasoline and diesel costs have increased by more than we anticipated.\nWe also expect COVID to be much less impactful than it was as a Delta variant caused disruption on some job sites and send some key supervision into quarantine.\nWorking in this challenging environment, we continue to deliver in a no excuses manner and execute well for our customers while keeping our employees safe.\nDespite such headwinds, we are raising our guidance.\nOur new guidance is diluted earnings per share of $6.95 to $7.15 and we now expect our revenues between $9.80 billion and $9.85 billion.\nAs we close on 2021, we do expect to continue to be challenged by supply chain and productivity issues.\nBut we will work through them as we are resilient.\nWe expect the non-residential market to show mid-single digit growth in 2021 and expect that momentum to continue into 2022.\nWe, like all large employers will have to navigate complying with the pending emergency temporary standard or ETS with respect to mandatory vaccination and testing and the executive order mandating vaccination on federal contracts.\nThe ETS has not been released and therefore the related costs to comply and the impact to our productivity are unknown.\nWe expect to energy generate additional operating cash flow in the fourth quarter.\nAnd we expect to continue to be balanced capital allocators.\nTo date into 2021, we have repurchased $183 million in EMCOR stock, paid $21 million in dividends and invested $114 million in acquisitions that will continue to position EMCOR for long term and sustained growth.\nOur board of directors just authorized a new and our largest share repurchase authorization of an additional $300 million.\nWe continue to have a very active acquisition pipeline.\n", "role": "user" }, { "content": "emcor group q3 revenue rose 14.5% to $2.52 billion.\nq3 earnings per share $1.85.\nq3 revenue rose 14.5 percent to $2.52 billion.\nsees fy earnings per share $6.95 to $7.15.\nsees fy revenue $9.8 billion to $9.85 billion.\nauthorizes additional $300 million share repurchase program.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 2020, we had a terrific year despite an extremely challenging operating environment.\nWe delivered extraordinary results through disciplined execution and resilience.\nI am extremely proud of our EMCOR team.\nI don't think any of us could have imagined this high level of performance when we started to understand the impact of COVID-19 on our operations in March of 2020.\nIn 2020, we had $8.8 billion in revenues and set records on an adjusted basis for earnings per diluted share of $6.40, operating income of $490 million and operating income margin of 5.6%.\nWe also had record operating cash flow of $806 million.\nMark's going to cover all the financials in much more detail and especially the key components of our cash flow performance in his financial commentary, inclusive of the fourth quarter and full year 2020 performance.\nWe delivered these stellar results because we have diversity and demand for our services.\nAnd we have end markets that have proved resilient and have provided us with opportunities to execute well for our customers.\nThese results are a testament to our skilled employees and our subsidiary, segment and corporate leadership, who kept focused and resolute through the ever-changing environment in 2020.\nAcross our company, we worked hard to keep our employees safe, and it was our number one priority throughout the year.\nWe innovated and found ways to maintain and even improve our productivity.\nWe became leaner and even more expeditious in our decision-making.\nAnd we're able to leverage technology to connect our leadership effectively to the front lines despite COVID-19 protocols.\nWe did not let obstacles become excuses.\nInstead, we overcame obstacles, and we delivered exceptional results.\nI now want to highlight some of our segment performance.\nOur Electrical Construction segment performed well with 8.4% operating income margins.\nDespite the disruptions in some of our operations from COVID-19 and due to shutdowns, we still posted outstanding results.\nThese results were driven by excellent execution in the commercial sector driven by data center and telecommunication and really excellent execution across all market sectors.\nWe've performed the work well and really innovated on the means, the methods and the scheduling so that we can not only keep our employees safe, but enhance our productivity.\nOur Mechanical Construction segment had an exceptional year by any measure.\nWe also had 8.4% operating income margins with exceptional performance across the commercial sector, again driven by telecommunications and data centers.\nAnd we also had strength in warehousing, manufacturing, water and wastewater and the healthcare end markets.\nWe showed great innovation through increased use of BIM or building information modeling and prefabrication and worked hard to keep our employees safe and productive.\nWe believe in both of our construction segments that we not only met, but we exceeded our customers' expectations.\nOur United States Building Services segment team showed grit and resilience as they faced the COVID-19 disruption in late March, April and May, with many of our customer sites not acceptable, bookings off as much as 40% in some of our subsidiary companies and in some of our product lines and a very cautious resumption of decision-making by our customers to allow us to resume service and projects.\nWe did rebound robustly from mid-June forward, and we're well prepared to execute project work for our customers that optimize their equipment and control systems, improve the wellness of their facilities through indoor air quality or IAQ solutions and sought to help our customers return to work safely and productively.\nWe also served as the boots on the ground for our customers to keep lightly occupied buildings, campuses and schools operational, functioning and safe over the past 10 months.\nWe are well positioned to keep serving our customers as they reopen and seek to make their building safe, efficient and productive for their employees.\nOur U.K. Building Services segment mirrored the performance of our U.S. Building Services segment.\nWe navigated the severe lockdown actions in the U.K. and continued to keep our customers productive, operational and able to conduct their businesses.\nWe also made organizational changes that enhanced our leaders' responsiveness by making our organization even flatter, more aligned and leaner, which has led to crisper and more efficient decision-making.\nOur U.K. team continues to win in the market as we have a culture of innovation and execution.\nAs you all know, our Industrial Services segment mostly serves the downstream oil and gas or refining and petrochemical markets.\nThese end markets had a severe dislocation of demand as planes stop flying and people stop driving.\nAnd this segment was also impacted at the beginning of the year with a disruption in the global oil and gas markets.\nWe cut costs aggressively and maintain profitability on an EBITDA basis.\nWe are well positioned with demand for our services returns, which is not likely to happen until the fourth quarter of this year.\nWe expect the larger, more sophisticated, well-capitalized service providers to emerge stronger.\nAnd yes, we are clearly one of them.\nWe exit 2020 with our remaining performance obligations or RPOs at an all-time high of $4.6 billion, 13.8% higher than the year-ago period.\nWe have very strong RPOs and are continuing to benefit from the very strong demand for data center construction, logistics and supply chain support, especially with our fire protection trade, healthcare, water and wastewater.\nAnd we expect manufacturing to be as strong also as 2021 progresses.\nWe expect to benefit from increasing demand for IAQ, that's indoor air quality, and building efficiency projects and solutions.\nWe depart 2020 with an exceptional balance sheet that allows us the room to grow and build for the future while continuing to return cash to our shareholders through dividends and share repurchases.\n2020 was an extraordinary year, and we performed exceptionally well, which is a real testament to our people, our subsidiary leaders, our segment staff and leadership and our corporate staff and leadership.\nI will now turn the discussion over to Mark.\nOver the next several slides, I will provide a detailed discussion of our fourth quarter results before moving to our full year performance, some of which Tony outlined during his opening commentary.\nSo let's discuss EMCOR's fourth quarter performance.\nConsolidated revenues of $2.3 billion in quarter four are down $122.4 million or 5.1% from 2019.\nOur fourth quarter results include $55.4 million of revenues attributable to businesses acquired pertaining to the period of time that such businesses were not owned by EMCOR in last year's fourth quarter.\nAcquisition revenues positively impacted both our United States Mechanical Construction and United States Building Services segments.\nExcluding the impact of businesses acquired, fourth quarter 2020 consolidated revenues decreased $177.9 million or 7.4% organically.\nOur segment performance was mixed within the quarter, with most of our reportable segments experiencing quarter-over-quarter organic revenue declines.\nIn general, we have seen reductions in revenues in those geographies or market sectors which are continuing to be most significantly impacted by the COVID-19 pandemic.\nHowever, when we consider the incremental revenue generated from our acquisitions, we were successful in generating fourth quarter revenue growth from three of our five reportable segments.\nSpecific segment revenue performance for the quarter is as follows: United States Electrical Construction segment revenues of $493.5 million decreased $71 million or 12.6% from quarter four 2019.\nRevenues declined across multiple market sectors due to the continuing impact of the COVID-19 pandemic, including the associated containment and mitigation measures as well as the curtailment of capital spending by some of our customers.\nConsistent with my third quarter commentary, this segment experienced a significant reduction in revenues from industrial project work within the manufacturing market sector, where certain of our electrical businesses perform services for both midstream and upstream oil and gas customers.\nAdditionally, the segment's operations that serve the metropolitan New York and California markets continue to face revenue headwinds as these geographies remain some of the most restrictive with regards to COVID protocols.\nUnited States Mechanical Construction segment revenues of $969.4 million increased $73.8 million or 8.2% from quarter four 2019.\nExcluding acquisition revenues of $24.2 million, the segment's revenues increased $49.6 million or 5.5% organically.\nRevenue growth within the quarter was broad based across most market sectors, with commercial and healthcare representing the most significant period-over-period increases.\nThese revenue gains were partially offset by a quarterly revenue decline in manufacturing market sector activity due to the completion or substantial completion of certain large projects during the early part of 2020.\nThis revenue performance represents an all-time quarterly record for our United States Mechanical Construction segment and surpasses the previous record set in 2019's fourth quarter.\nEMCOR's total domestic construction business fourth quarter revenues of $1.46 billion increased $2.7 million or less than 0.25%.\nUnited States Building Services revenues of $568.1 million increased $29.1 million or 5.4%.\nHowever, when excluding acquisition revenues of $31.2 million, this segment's quarterly revenues decreased $2.1 million or 40 basis points.\nRevenue gains within their mobile mechanical services division resulting from incremental contribution from acquired companies and their commercial site-based services division due to new contract awards or scope expansion on certain existing contracts were partially offset by a quarter-over-quarter revenue decline within the segment's energy services division due to reduced large project activity when compared to 2019's fourth quarter.\nConsistent with our United States Mechanical Construction Services segment, revenue performance within our United States Building Services segment represents an all-time quarterly record.\nUnited States Industrial Services revenues of $135.5 million decreased by $163.7 million or 54.7% as this segment continues to be impacted by the negative macroeconomic conditions and uncertainty within the markets in which it operates.\nCost control and cash preservation actions taken by customers of this segment have resulted in the suspension of capital spending programs and the curtailment of maintenance activity, which has severely impacted demand for our Industrial Service offerings.\nWith the rise in telecommuting and the various restrictions on travel in response to COVID-19, there have been significant reductions in both vehicle miles driven and airline miles traveled, which is further prolonging the weakened demand this segment has been experiencing since late quarter one of 2020.\nUnited Kingdom Building Services segment revenues of $115 million increased $9.4 million or 8.9% from last year's quarter.\nRevenue gains for the quarter resulted from strong project activity as well as incremental revenue from new contract awards.\nAdditionally, fourth quarter 2020 revenues were positively impacted by $2.9 million as a result of favorable foreign exchange rate movement in the period.\nSelling, general and administrative expenses of $244.6 million reflects an increase of $3.7 million from quarter four 2019.\nThe current period includes approximately $4.4 million of incremental expenses from businesses acquired, inclusive of intangible asset amortization, resulting in an organic quarter-over-quarter decrease of approximately $700,000.\nA reduction in salaries expense due to a decrease in head count necessitated by lower organic revenue as well as reduced travel and entertainment expenses due to a combination of cost-avoidance measures as well as restricted company travel were the primary reasons for the organic decline in SG&A.\nThese decreases were largely offset by an increase in quarterly incentive compensation expense due to EMCOR's actual operating performance exceeding its previously forecasted 2020 full year results.\nAs a percentage of revenues, selling, general and administrative expenses totaled 10.7% in quarter four 2020 versus 10% in the year-ago period.\nThe quarter-over-quarter increase can be attributed to the reduction in our consolidated quarterly revenues without a commensurate decrease in certain of our fixed overhead costs, including those of our Industrial Services segment as we do not deem the current operating environment to be permanent.\nOur assessment continues to be based on our evaluation of future market opportunities.\nAnd we expect to see some return to normalcy in industrial maintenance and capital spending when we ultimately move beyond the depressed demand caused by the COVID-19 pandemic.\nReported operating income for the quarter of $137.6 million represents a $14.7 million or 12% increase when compared to operating income of $122.9 million in last year's fourth quarter.\nThis operating income performance eclipses our previously established all-time quarterly record, which was achieved in 2020's third quarter.\nOur fourth quarter operating margin was 6%, which compares favorably to the 5.1% of operating margin reported in 2019's fourth quarter.\nWe experienced the operating margin expansion within each of our reportable segments other than our U.S. Industrial Services segment, which is reporting an operating loss for the fourth quarter and our U.K. Building Services segment, which achieved a consistent margin in each year's quarterly period.\nSpecific quarterly performance by reportable segment is as follows: our United States Electrical Construction segment had operating income of $43.4 million, which increased by $2.1 million from the comparable 2019 period.\nReported quarterly operating margin is 8.8% and represents a 150 basis point improvement over 2019's fourth quarter.\nThis increase in both operating income dollars and operating margin is largely attributable to increased gross profit contribution from commercial market sector activities, inclusive of numerous telecommunications construction projects.\nThese gross profit gains were partially offset by reduced gross profit contribution from the transportation and manufacturing market sectors due to both the closeout of projects in prior periods as well as the continued headwinds attributable to the COVID-19 pandemic.\nFourth quarter operating income of the United States Mechanical Construction Services segment of $100.4 million represents a $31.5 million increase from last year's quarter, while operating margin in the quarter of 10.4% represents a 270 basis point improvement over 2019.\nThis segment has continued to experience strength in the majority of the market sectors we serve, most notably demonstrated by increased gross profit contribution from project activity in the commercial, healthcare and institutional market sectors.\nIn addition, our Mechanical Construction segment experienced a more favorable mix of work than in the prior year and benefited from strong performance by our fire protection operations.\nOur combined U.S. construction business is reporting a 9.8% operating margin and $143.7 million of operating income, which has increased from 2019's fourth quarter by $33.5 million or 30.4%.\nOperating income for United States Building Services of $28 million represents a $3.8 million increase from last year's fourth quarter, and operating margin of 4.9% represents an improvement of 40 basis points when compared to the prior year.\nThis segment experienced improved gross profit performance from its mobile mechanical services division, inclusive of incremental contribution from acquired companies.\nIn addition, the segment continues to benefit from reduced levels of selling, general and administrative expenses due to cost-mitigation actions implemented in response to the COVID-19 pandemic.\nOur United States Industrial Services segment operating loss of $8.2 million represents a decline of $21.3 million, which compares to operating income of $13.1 million in last year's fourth quarter.\nThese conditions have resulted in considerable reductions in capital spending by certain of our customers, which has led to a decrease in demand for this segment's service offerings.\nThis environment was further exacerbated by an active hurricane season, which resulted in the suspension of planned maintenance activities that would have occurred during both quarters three and four of 2020.\nUnited Kingdom Building Services operating income of $4.2 million represents an increase of approximately $300,000 over quarter four of 2019.\nOperating margin was 3.7% for both quarter periods.\nWe are now on slide nine.\nAdditional financial items of significance for the quarter not previously addressed are as follows: quarter four gross profit of $383.9 million or 16.8% of revenues is improved over last year's quarter by $19.1 million and 160 basis points of gross margin.\nRestructuring expenses in 2020's fourth quarter pertain to the realignment of management resources within our combined U.S. construction operations.\nDiluted earnings per common share of $1.45 compares to $1.54 per diluted share in last year's fourth quarter.\nAdjusting our 2020 quarterly performance for the negative impact on our income tax rate resulting from the nondeductible portion of the noncash impairment charges recording -- recorded during the second quarter of 2020, non-GAAP diluted earnings per share for the quarter ended December 31, 2020, is $1.86, which favorably compares to last year's fourth quarter by $0.32 or nearly 21%.\nOur tax rate for quarter four of 2020 is 41.8%, which is significantly higher than the tax rate for the corresponding 2019 period due to the nondeductibility of the majority of the impairment charges just referenced.\nMy last comment on slide nine is with respect to our $259.5 million of operating cash flow in the quarter, which favorably compares to $178.8 million of operating cash flow in the year-ago period and reflects the continued effective management of working capital by our subsidiary leadership teams.\nOur operating cash flow was aided by the organic decline in revenues, which resulted in a contraction in accounts receivable.\nAdditionally, the deferral of the employer's portion of social security taxes in the United States benefited our cash flow by approximately $35.2 million during the fourth quarter of 2020.\nOn a full year basis, the social security tax deferrals, coupled with the deferral of value-added tax in the United Kingdom, has favorably impacted our 12-month operating cash flow by approximately $117.3 million.\nThese amounts will be repaid in 2021 and 2022.\nAnd obviously, we'll have the opposite effect on our operating cash flow in such future periods.\nWith the fourth quarter commentary complete, I will now augment Tony's introductory remarks on EMCOR's annual performance.\nConsolidated revenues of $8.8 billion represent a decrease of $377.6 million or 4.1% when compared to our record annual revenues in 2019 of $9.17 billion.\nOur year-to-date results include $269.6 million of revenues attributable to businesses acquired pertaining to the period of time that such businesses were not owned by EMCOR in the 2019 period.\nAcquisitions positively impacted each of our United States Electrical Construction, United States Mechanical Construction and the United States Building Services segments.\nExcluding the impact of businesses acquired, year-to-date revenues decreased organically 7.1%, primarily as a result of the significant revenue contraction experienced during quarter two as the majority of our operations were most significantly impacted by the COVID-19 pandemic during such period.\nIn addition, our annual revenues were negatively impacted by a decrease in demand for certain of our service offerings within our United States Electrical Construction services and United States Industrial Services segments as a result of the adverse conditions experienced within the oil and gas industry.\nDiscrete segment revenue performance for full year 2020 is as follows: United States Electrical Construction segment revenues of $1.97 billion decreased $243.2 million or 11% from 2019's $2.22 billion of revenues; acquisitions contributed $25.4 million of incremental revenues, resulting in an organic decline of $268.5 million or 12.1%.\nRevenue contraction within the majority of the market sectors in which we operate.\nMost notably, the commercial and manufacturing market sectors were the primary drivers of this year's year-over-year decrease.\nAs I mentioned in my commentary on our fourth quarter results, although this segment has a diverse geographic footprint, a number of its operating companies within both the metropolitan New York and California markets were severely impacted by COVID protocols, which resulted in a decrease in the number of short-duration project opportunities as well as various project delays.\nThese impacts, coupled with the completion or substantial completion of certain large projects in 2019, contributed to the decline in organic annual revenues.\nIn addition, and as previously referenced, certain of our operations in the segment which are exposed to the upstream and midstream oil and gas sector experienced a significant decline in demand in 2020.\nPartially offsetting these revenue reductions were increased revenues from project activities within the institutional and hospitality market sectors during the year.\nUnited States Mechanical Construction revenues of $3.49 billion increased $145.2 million or 4.3% compared to 2019.\nAcquisitions contributed $188.8 million of incremental revenues to the segment, which, when excluded, results in an organic revenue decline of $43.7 million or 1.3% from 2020.\nThis organic decrease can be largely attributed to reduced project volume within the manufacturing market sector with a heavy concentration in the food processing submarket sector as a result of the completion or substantial completion of certain large projects in 2019.\nSimilar to our United States Electrical Construction segment, this segment additionally experienced the negative effects of the COVID-19 pandemic, which resulted in a reduced number of short-duration project opportunities during calendar 2020.\nUnited States Building Services segment revenues of $2.11 billion increased $3.2 million or less than 0.5%.\nAcquisitions contributed $55.4 million of revenues, resulting in an organic revenue decline of 2.5% when compared to full year 2019.\nThe decrease in project and building controls activities within the segment's mobile mechanical services division, largely as a result of the impact of the COVID-19 pandemic, which resulted in the temporary closure of certain customers' facilities, coupled with the decrease in large project activity within the segment's energy services division were the primary contributors to such organic revenue reduction.\nIn addition, the segment experienced a decrease in revenues from its government services division as a result of the loss of certain contracts not renewed pursuant to rebid.\nThese revenue contractions were partially offset by increased customer demand for certain services aimed at improving the indoor air quality within their facilities as well as an increase in revenues within the segment's commercial site-based services division as a result of new contract awards and scope expansion on certain existing contracts.\nUnited States Industrial Services segment revenues of $797.5 million decreased $290.1 million or 26.7% from 2019's $1.09 billion of revenues.\nAt the risk of sounding repetitive, for most of 2020, the segment has been severely impacted by negative conditions and uncertainty within the markets in which it operates due to the dislocation between crude oil supply and demand resulting from COVID-19 and geopolitical tensions within OPEC.\nIn addition, during the back half of 2020, the segment experienced suspension and deferral maintenance in capital projects by its customers as a result of hurricane and tropical storm activity in the United States Gulf Coast region.\nRevenues of our United Kingdom Building Services segment for 2020 increased 1.7% to $430.6 million, primarily as a result of new maintenance contract awards within the commercial and institutional market sectors.\nRevenues were also favorably impacted by $2.3 million as a result of exchange rate movement in the pound sterling year-over-year.\nSelling, general and administrative expenses of $903.6 million represent 10.3% of revenues as compared to $893.5 million or 9.7% of revenues in 2019.\nFull year 2020 SG&A includes $29.6 million of incremental expenses, inclusive of intangible asset amortization pertaining to businesses acquired.\nExcluding such incremental amounts, our SG&A has decreased $19.4 million on an organic basis, primarily as a result of certain cost reductions resulting from our actions taken in response to the COVID-19 pandemic.\nAs referenced during my quarter commentary, the increase in SG&A as a percentage of revenues is a result of the organic decrease in our revenue without a commensurate decrease in certain of our fixed overhead costs as we do not deem the current operating environment to be permanent.\n2020's year-to-date operating income is $256.8 million.\nAdjusting this amount to exclude the noncash impairment loss on goodwill, identifiable intangible assets and other long-lived assets recorded in the second quarter, our non-GAAP operating income for the year was $489.6 million.\nThis compares to operating income of $460.9 million for full year 2019 and represents a $28.7 million or 6.2% improvement year-over-year.\nDespite the headwinds experienced in 2020, three of our five reportable segments achieved higher operating income and higher operating margins than that of the prior year.\nOf the two segments which did not, United States Building Services is reporting a modest decline of just over 1%, while our United States Industrial Services segment suffered a significant year-over-year reduction, resulting in an operating loss for 2020.\nWith regard to each segment's discrete performance, I will start with our electrical -- United States Electrical Construction segment.\nTheir 2020 operating income of $166.5 million represents an all-time segment record, and it is an increase of $4.8 million or 3% compared to the prior year.\nOperating margin for 2020 is 8.4%, which is 110 basis points higher than 2019.\nThis year-over-year improvement in operating income dollars was due to a reduction in selling, general and administrative expenses due to cost-control measures enacted during the course of 2020.\nThe increase in operating margin for the year was a result of an increase in gross profit margin given favorable project execution and a more profitable mix of work within this segment.\nThese improvements in gross profit margin were partially offset by an increase in the ratio of selling, general and administrative expenses to revenues as a result of the year-over-year revenue contraction within the Electrical Construction segment.\nUnited States Mechanical Construction operating income of $292.5 million increased $67.5 million or 30% over 2019 levels, and operating margin reached 8.4% versus 6.7% in the prior year.\nAcquired companies contributed incremental operating income of $9.3 million, inclusive of $12.7 million of amortization expense associated with identifiable intangible assets.\nThe increase in operating income for 2020 was primarily due to strong project performance throughout the year in the majority of the market sector served by this segment, resulting in an increase in annual gross profit.\nThe 170 basis point improvement in operating margin was also a result of our solid project execution and improved gross profit margin, most notably within the manufacturing and commercial market sectors.\nThese increases in gross profit and gross profit margin were partially offset by an increase in selling, general and administrative expenses, primarily as a result of an increase in incentive compensation expense due to the improved year-over-year operating performance for this segment.\nUnited States Building Services operating income for 2020 of $113.4 million declined by $1.3 million or 1.2% due to a reduction in year-over-year large project activity within the segment's energy services division as well as decreased project and building control opportunities within their mechanical services division due to both temporary closure and restricted access to certain customer facilities impacted by the COVID-19 pandemic.\nThese reductions were partially offset by incremental operating income contribution from companies acquired, which totaled $4.5 million, inclusive of $3.2 million of amortization expense associated with identifiable intangible assets.\nIn addition, this segment experienced increased gross profit resulting from greater demand for certain services aimed at improving indoor air quality as various customers made changes to their HVAC systems in advance of their employees returning to work as recommended by the Center for Disease Control.\nOperating margin of 5.4% was consistent with the prior year as a reduction in gross profit margin was offset by a decrease in the ratio of selling, general and administrative expenses to revenues due to certain cost-reduction measures taken during 2020.\nOur United States Industrial Services segment incurred an operating loss of $2.8 million for 2020 as compared to operating income of $44.3 million in 2019.\nThis segment implemented significant cost reductions during the year in an effort to mute the year-over-year decline.\nHowever, as previously discussed, this segment's overhead structure includes a significant investment in fixed infrastructure, including plant and equipment.\nAs we view current market conditions to be -- as to be temporary, that infrastructure is needed to respond to changes in demand patterns once they ultimately recover.\nOperating income of our United Kingdom Building Services segment of $20.7 million or 4.8% of revenues compares to operating income of $18.3 million or 4.3% of revenues in the prior year.\nThe $2.3 million improvement is largely due to an increase in gross profit from new maintenance contract awards, while the 50 basis point expansion in operating margin is attributable to both the increase in gross profit margin as well as a reduction in the ratio of selling and general and administrative expenses to revenues.\nSG&A of this segment benefited from various cost-control initiatives implemented by our U.K. team.\nWe are now on slide 12.\nAdditional key financial data on slide 12 not addressed during my full year commentary is as follows: year-to-date gross profit of $1.4 billion is greater than 2019's gross profit by $39.5 million, while gross margin of 15.9% is higher than last year's 14.8% by 110 basis points.\nTotal restructuring costs of $2.2 million are increased from 2019 due to actions taken during 2020 to both realign certain management functions as well as rightsize our cost structure in light of the revenue headwinds we faced.\nDiluted earnings per common share was $2.40 compared to $5.75 per diluted share a year ago.\nWhen adjusting this amount for the impact of the noncash impairment charges recorded in 2020 second quarter, non-GAAP diluted earnings per share of $6.40 as compared to the same $5.75 in last year's annual period.\nThis represents a $0.65 or 11.3% improvement year-over-year.\nWe are now on slide 13.\nAs outlined on this slide, EMCOR's liquidity profile remains strong despite the headwinds we faced during the course of 2020.\nOur cash balance has increased from $358.8 million at December 31, 2019, to $902.9 million at the end of 2020.\nOperating cash flow of $806.4 million, aided by the FICA and VAT cash tax deferrals previously referenced, was the primary driver of this increase.\nOperating cash flow was partially offset by cash used in investing activities of nearly $95 million, predominantly representing payments for acquisitions of businesses and capital expenditures as well as cash used in financing activities, which totaled $172 million and consisted of the repurchase of our common stock, net repayments under our credit facility and dividends paid to our stockholders.\nWorking capital has increased by over $236 million as a result of the increase in our cash balance, partially offset by a reduction in accounts receivable given the lower organic revenue during the period as well as an increase in contract liabilities due to advanced billing on certain long-term construction projects.\nOther changes in key balance sheet positions of note are as follows: goodwill has decreased since December 31, 2019, as a result of the noncash impairment charge recognized during the second quarter of 2020, partially offset by an increase in goodwill resulting from businesses acquired or purchase price adjustments made during the year.\nOur identifiable intangible asset balance has decreased since the end of last year largely due to $60 million of amortization expense recorded during 2020, which was partially offset by incremental intangible assets recognized as a result of the acquisition of three businesses during calendar 2020.\nTotal debt has decreased by $35.7 million since the end of 2019, reflecting our net financing activity during the year.\nAnd course, debt-to-capitalization ratio has decreased to 11.9% from 13.2% in the year-ago period.\nLastly, our stockholders' equity has decreased slightly since December 2019 as our net income was offset by share repurchases, dividend payments and postretirement plan liability adjustments made during 2020.\nOur balance sheet, in conjunction with the credit available to us, continues to put us in a position to invest in our business and achieve our strategic objectives as we look forward to 2021 and years beyond that.\nHey, Mark, that's a well-deserved drink of water.\nAnd year-end was always the toughest and we've been doing it a long time together.\nRemaining performance obligation or RPO by segment and market sector.\nI'll go through the numbers briefly and then go deeper to the market trends we are seeing.\nAs I stated in my remarks, total RPOs at the end of 2020 were a shade under $4.6 billion, up $559 million or 13.8% when compared to the year-ago level of $4.03 billion.\nThe strength of our RPO and the associated bidding activities surprised us a bit given the uncertainty of the pandemic, economic dislocation and disruptions for the year.\nHowever, as we have said in the past, during uncertain and challenging times, we have often seen a flight to quality and fiscally strong construction and service providers prosper.\nIt's still a little too early to tell by 2020 and now into 2021.\nIt sure looked like one of those times.\nI should probably repeat.\nMy mic wasn't on.\nSo I'm going to go on to page 14, remaining performance obligations by segment and market sector.\nLook, they're up $559 million or 13.8% for those that didn't hear it.\nAnd really, there's a flight to quality a lot of times when you move from 2020 into 2021, and this certainly looks like one of those times.\nOur domestic construction segments experienced strong project growth in 2020 with RPOs increasing $495 million or 15.2% since the end of 2019 as we continue -- and continue to see demand for electrical mechanical systems, both in new construction and retrofit projects.\nOur United States Building Services segment RPOs increased in the quarter as this segment's small project repair service work continue to rebound from its abrupt, almost hard stop at the beginning and the height of COVID-19.\nSome of this resumption is a return of regularly scheduled maintenance on mechanical systems and then the return of small project work.\nAnd some is focused, as you'd imagine, around modifications and improvements in IAQ, indoor air quality, which I will discuss in detail in a few slides.\nIt was quite a recovery from the March, April and May time frame when the segment was hit especially hard as described earlier, with bookings down 40% in many cases.\nOver on the right side of the page, we show RPOs by market sector.\nThroughout 2020, we experienced strong year-over-year growth in the commercial, healthcare and water and wastewater sectors.\nCommercial projects, which make up 41% of that total RPOs, increased $297 million or close to 19% for the year.\nAs we stated last quarter and continued to experience in the fourth quarter of this year, demand for hyper data -- scale data center construction has high demand, as does high-tech manufacturing, and warehousing and logistics also remain strong.\nWe are a nationwide leader in this section of the commercial market sector, and quite frankly, I don't see any letup in this activity anytime soon.\nWe are also in Part one design discussion on several large design build through process opportunities.\nFor the year, healthcare project RPOs increased $207 million or 56%.\nAnd water and wastewater project RPOs grew similar by 57% to $173 million.\nAs one might surmise, given the impact of the pandemic, healthcare as a sector of the nonresidential construction market is expected to be slightly higher in 2021 and likely better than that for us as our customers build new facilities and retrofit existing facilities.\nBy the way, RPOs in these three market sectors are at all-time highs for us since we transitioned to RPO reporting from backlog reporting in March of 2018.\nThe nonresidential market, as measured by the U.S. Census Bureau for put-in-place activity, remains a very large market, and it was roughly $800 billion at the end of December 31, 2020.\nIt's down 5% in 2020.\nHowever, it is not a uniform market, given its size and breadth and opportunities still exist.\nOn the next page, I will discuss how well-thought and patient capital allocation strategy has allowed this growth in our RPO base and growth to occur despite choppy and uncertain overall markets.\nAnd on nonresidential market, they decreased 5%.\nI'm now on page 15, capital allocation.\nWe have long had a major market presence in mechanical and electrical construction services and have continued to allocate capital to fill in the white space, either geographically or by adding capability in these important segments.\nFurther, we have used our capital to build leading capabilities in HVAC service, building controls and mechanical system retrofit.\nWe have built that capability and capacity through organic growth and acquisition in a sustained manner over many years.\nWe are also one of the country's leading life safety contractors.\nAnd this activity mostly resides in our mechanical, and that is the sprinkler fitters and electrical, fire alarm and security installation and upgrades and low-voltage systems construction segments.\nAgain, these capabilities were built over a long period of time through acquisition and organic investment.\nThese are concrete examples where we have built successful platforms that allow us to have the capability to serve a broad spectrum of customers with the right products and specialty trade capabilities.\nOur investment decisions and patience have allowed us to build and maintain capability through cycles and serve a diverse set of customer opportunities.\nWe have not only invested in over 20 acquisitions and we spent around $555 million on those acquisitions since 2017 until today, but we also have returned significant cash to our shareholders through share repurchases and dividends.\nI'm now on page 16, titled Resilient Markets.\nAs we discussed on the previous two pages, we have shown that we have very good diversity of demand at EMCOR, and we have used that capital to grow organically and through acquisition to allow us to build upon such diversity of demand and resiliency in our business.\nThis is not an accident, but it is a part of our long-term capital allocation strategy as discussed on the previous page.\nFor example, EMCOR's data center capabilities were built enhanced over a very long period of time.\nWe started building the largest data centers in the country for financial institutions and the original hosting providers almost 20 years ago.\nToday, we build data centers that are five times larger to seven times larger than these previous \"large data centers\".\nWe have continued to grow that capability over the last five years and expanded through organic investment or acquisition or a combination of both.\nWe are one of the leaders in the specialty contracting for these complex facilities.\nThat's all the electrical trades, mechanical trades and sprinkler fitters.\nData center construction is a good market for us, and we expect it to be for the foreseeable future.\nIt is also a growing part of our maintenance activities.\nWe have -- we are fortunate to have other markets that have shown resiliency.\nWe continue to support our customers' e-commerce growth primarily through our life safety services and the construction of large cold storage and other warehouse facilities as our customers transform their warehouse networks to allow for more fast-paced growth.\nWe continue to believe that we are very well positioned to support our customers as they build more resiliency into their supply chains by reshoring projects.\nWe also continue to see significant opportunity for large and small design-build food processing clients.\nHealth care is also a good market for us and has been for a very long period of time.\nThese are complex facilities that are seeking to become more flexible in the delivery of their care in the long term.\nWater and wastewater is a market that we believe will have significant opportunity for us and has significant opportunity for us today and also in the next three to five years, especially in Florida.\nAnd finally, as I have discussed previously, is our position as a leading HVAC services contractor.\nWe are in a compelling position to provide indoor air quality solutions and services.\nWe see very strong demand currently and expect this to continue over many years.\nWe have experienced and are continuing to experience strong demand for upgrading, enhancing HVAC and building control systems for both energy efficiency and flexibility of demand and use.\nThis has always been a good market for EMCOR for many years, and it spans all market sectors.\nAs discussed, serving these resilience markets is not by chance.\nWe've built this capability over many years, and we have some of the best field leadership, trade supervision and skilled trades people in the industry to execute in these markets.\nI'm now going to wrap this up on page 17 and 18.\nAs we enter 2021, we are still in the world of COVID-19 mitigation and restriction.\nThe oil and gas markets are still depressed, and the nonresidential market is expected to decline by another 3% to 5%.\nDespite that less-than-cheery backdrop, we expect to continue to perform well in 2020.\nWe expect revenues of $9.2 billion to $9.4 billion and expect to earn $6.20 to $6.70 in earnings per diluted share.\n2021 should be another year of outstanding performance.\nWe will have to execute very well to maintain the 2020 record levels of operating income margins of 8.4% in our Electrical and Mechanical Construction segments.\nWe do expect to increase revenues, which may help us mitigate this challenge.\nUnderlying this range are the following assumptions: our Industrial Services segment does not materially improve until the fourth quarter but gain strong momentum headed into 2020 as demand for refined products will continue to be challenged during 2021, especially through the end of the second quarter.\nThe nonresidential construction market will decline modestly.\nWe will continue to execute well in our more resilient rock market sectors to include manufacturing, commercial driven by data centers and logistics and warehousing, water and wastewater, energy retrofits and healthcare.\nOur end market diversity has been and continues to be a real strength of EMCOR.\nWe do not expect a more restrictive COVID-19 environment than what we are operating in today.\nWe do expect a more normal pre-COVID-19 operating environment to emerge as the year progresses.\nWe are operating near 100% capability on our jobs with no meaningful COVID-19-induced issues.\nOur leadership and trades people have learned how to work and even prosper under the COVID precautions.\nWe have learned to plan and execute, but always have the mindset that our employee safety comes first, which is nothing new or novel for us as it is one of our core values.\nWe expect to continue to help our customers improve their facilities' air quality with indoor air quality solutions, improve energy efficiency through replacement projects and optimizing their systems.\nAnd we are going to help them bring back their employees back to work with an improved piece of mind through our efforts.\nOur ability to move to the upper range of our earnings guidance range will depend on the following: the nonresidential market, especially our more resilient markets, are stronger than projected because the bounce back is faster as the U.S. and the U.K. normalizes from COVID-19 restrictions.\nOur refining and petrochemical customers begin to gain more comfort with improved demand for rerefined products and increase their scope for this year's work performed by us.\nOur momentum in indoor air quality and efficiency projects continues to not only increase but accelerates further, and our productivity stays strong as we transition to more normal operating conditions.\nI'm going to talk a little bit about what happened in Texas last week as we have a significant business in Texas.\nClearly, the power disruption in Texas last week affected not only EMCOR's business operations, customer sites, but also more importantly, our employees and their families.\nMany of our customers went to skeleton staff for three to five days, and many shut down operations almost completely.\nWe have mostly resumed operations in our Industrial Services and also our construction services and Building Service customer sites.\nWe will be there to help our customers complete their planned turnarounds, execute on planned maintenance and repairs related to the storm and to resume project work already under way or that was ready to start in the last few weeks.\nWe have may -- we may have work that was planned for the first quarter that will now extend into the second quarter that -- and it may have had more activity in the first quarter than it will now have.\nWe expect to continue to be balanced capital allocators as we have shown on the previous pages.\nWe have more capital to allocate in balance, but we know how to do that.\nAnd however, our guidance contemplates that we will continue to be disciplined allocators between organic growth investments, acquisitions, share repurchases and dividends.\n", "role": "user" }, { "content": "q4 earnings per share $1.45.\nq4 revenue $2.28 billion versus refinitiv ibes estimate of $2.2 billion.\nsees fy 2021 earnings per share $6.20 to $6.70.\nq4 non-gaap earnings per share $1.86.\nsees fy 2021 revenue $9.2 billion to $9.4 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: Before we begin, I'll cover two items.\nActual events or results could differ materially.\nCertain factors related to future expectations are or will be detailed in our fourth quarter and full-year 2020 financial results news release.\nReconciliations to the most directly comparable GAAP financial result -- financial measures and other associated disclosures, including a description of the excluded and adjusted items are available in the fourth quarter and full-year 2020 financial results news release, which can be found on our website.\nWe've had a strong recovery in the fourth quarter and robust performance for the full-year despite the challenges associated with COVID-19.\nI'm incredibly proud of how Eastman employees around the world responded to these challenges and stepped up to help us deliver in 2020.\nAnd here are some of the highlights.\nEarly in the year, we took quick and decisive action to adjust our operations to keep employees safe and preserve our operational integrity.\nWe shifted our financial forecast for prioritizing cash and liquidity given the uncertainties and we delivered another year of outstanding cash flow, our fourth consecutive year of cash flow greater than $1 billion.\nWhile we prioritized cash, our earnings performance was resilient, which is a testament to the tremendous investments we've made in our innovation portfolio and our overall business portfolio over the last decade, including enhancing our market development and commercial capabilities.\nAdditionally, we demonstrated we have diverse portfolio of businesses and end-markets, which gives us this ability.\nAs you know, we are committed to being a leader in the circular economy, we've accelerated progress and it's paying off with several wins across our portfolio, including Eastman being named as a Wall Street Journal Most Sustainably Managed Company of 2020.\nIn addition, in our 2020 Sustainability Report, we committed to the ambitious goals of reducing our Scope 1 and 2 greenhouse gas emissions by one-third by 2030 and achieving carbon neutrality by 2050.\nLooking forward to 2021, we entered this year with momentum from our record fourth quarter results, and we're seeing clear signs of recovery across many of our markets, including strong orders in January.\nThat said, visibility remains limited due to the continuing effects of COVID-19.\nThis means that we will continue to focus on what we can control.\nIn 2020, we meaningfully reduced capacity utilization as we aggressively managed inventory well beyond the decline in demand to maximize cash.\nAs a result, EBIT declined by about $100 million just related to this additional inventory actions we took.\nIf volume is flat in '21 compared with '20, we would have about a $100 million tailwind from this improved utilization as we go into this year or about $0.60 a share.\nLooking at our cost structure, you'll recall that we reduced costs by approximately $150 million in 2020 versus '19, and we estimate about $100 million of this was temporary.\nWe also took actions to accelerate our transformation program and we are on track to reduce costs in 2021 to offset the return of those temporary costs.\nAs a result, in 2021, we expect our cost structure to be about flat with compared -- when we compare it to 2020.\nOn top-line growth, we expect growth from three levers.\nFirst, we anticipate market to continue to improve relative to 2020, as we have seen in Q4 and in January.\nSecond, we continue to make progress with our innovation-driven growth model to grow faster than our underlying markets in many of our specialty products.\nThere are a number of examples of this across our portfolio in 2020 and we expect it to continue in '21.\nThird, we project a strong improvement in mix with recovery in these high-value markets and the innovation-driven growth of our premium products.\nSignificant portion of our headwinds in 2019 with the trade war as well as 2020 with COVID-19 were related to mix.\nAs growth in our specialty products accelerates in '21, improved mix will be a powerful driver of our earnings growth.\nWe've already seen this benefit in Q4 of '20 and expect it to accelerate through '21.\nThere are also headwinds, including the lack of visibility related to COVID-19 and other global macroeconomic uncertainties.\nIn addition, we're seeing costs for raw materials, energy and logistics rising, and have competitive pressures in a few products.\nWhen we put this together, we expect our '21 adjusted earnings per share will increase between 20% and 30% compared to 2020.\nThis means our expected '21 earnings per share will be well above 2019, which would further demonstrate the strength of our portfolio.\nWe anticipate a strong start to 2021 with adjusted earnings per share similar to the first quarter of '20.\nYou recall in the first quarter of 2020, our earnings per share was up 15% year-over-year, a very strong performance for our industry at that time.\nFinally, on cash, a high priority for Eastman, we expect '21 to be our fifth consecutive year of free cash flow above $1 billion.\nA moment ago I talked about our intention to be a leader in the circular economy, and as part of that commitment, today, we're announcing along with Tennessee Governor, Bill Lee, our plan to build one of the world's largest methanolysis facilities here in Kingsport.\nThrough methanolysis, this world-scale facility will convert waste plastic, polyester plastic that often ends up in landfill and waterways into durable products.\nOver the next two years, Eastman will invest approximately $250 million in the facility, which will support Eastman's commitment to addressing the global waste crisis and mitigating challenges created by climate change, while also creating value for shareholders.\nUsing the company's polyester renewal technology, this new facility will use 110 kmt [Phonetic] of plastic waste to produce premium high-quality specialty plastics made with recycled content.\nThis will not only reduce the company's use of fossil fuels feedstocks, but it will also reduce our greenhouse gas emissions by 20% to 30%.\nThis is incredibly exciting news and we're only just beginning.\nI'll close where I began with appreciation for the men and women of Eastman to make all this happen and do it with a bias for action, adaptability and optimism for the future.\nI share their optimism.\nThis is an exciting time for Eastman.\nOur strengths have never been clearer, and it gives me the confidence that we are well positioned to manage in this uncertain environment and deliver long-term attractive earnings growth and sustainable value creation for our owners and all of our stakeholders.\n", "role": "user" }, { "content": "eastman chemical co - expect 2021 adjusted earnings per share to be 20% to 30% higher than 2020 adjusted eps.\neastman chemical co - sees 2021 free cash flow to be greater than $1 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, I'm joined by President and Chief Executive Officer, Lal Karsanbhai; Senior Executive Vice President and Chief Financial Officer, Frank Dellaquila; and Executive Vice President and Chief Operating Officer, Ram Krishnan.\nPlease join me on Slide two.\nTurning to Slide three.\nI'd like to briefly highlight that Emerson has been publishing a corporate social responsibility report for many years now.\nWe have renamed the report The Emerson Environmental, Social and Governance Report and are excited to highlight all of the goals, momentum and global standards that our organization is working toward.\nIn particular, our environmental sustainability framework, greening of Emerson, by Emerson and with Emerson, captures our internal sustainability efforts, our enablement of our customer sustainability journeys through our products and solutions and our collaboration efforts with various sustainability stakeholders.\nI encourage you to review the document next month when it is published.\nI'd like to briefly mention our recent Emerson Exchange Virtual Series, which took place from November through March.\nEmerson Exchange is a chance for our customer base to interact with other users, industry experts and Emerson technology leaders.\nDespite the obvious in-person limitations of the pandemic, Emerson had a tremendously successful virtual engagement with customers, focusing on digital transformation, sustainability, technology and many other topics.\nThis virtual framework dramatically expanded the reach of this already very popular user event.\nDue to the success of the hybrid format, we will likely be adopting such a format going forward.\nMore details to follow as the time and place for the next Emerson Exchange event is finalized.\nOver to you, Lal.\nI would like to say a few things before passing it on to Frank.\nFirstly, to our global team, three things.\nThis was one that was delivered based on strong execution, which required agility and creativity as we jumped over a number of hurdles over the last three months.\nThe result was top-class profit leverage over 40% across our operations, well done by everyone.\nMomentum is building, and it's more broadly today and across a large number of our markets than it was three months ago.\nThis expansion across both platforms, now as the cycle expands, will enable us to make critical technology investments, building on our strong differentiation and customer relevance.\nYou energize me every day in the journey and on the journey that we're taking together.\nSecondly, I would like to recognize David Farr, who stepped -- whose Board service concluded today after more than 20 years.\nJim is a highly qualified independent director who is extremely passionate about people, culture and the future of Emerson.\nI look forward to working alongside Jim and our entire Board.\nFrank, over to you.\nWe had a strong quarter, and I'd like to take you through the highlights of that over the next several slides.\nThe strengthening recovery that Lal referred to in most of our end markets, combined with the benefits from our cost reset actions, drove strong operating performance and strong financial results in the second quarter.\nAdjusted earnings per share for the quarter was $0.97, ahead of our guidance midpoint of $0.89 and representing 9% growth versus the prior year.\nDemand strengthened significantly with sales ahead of expectations at 2% underlying growth and March orders toward the high end of expectations at 4% underlying growth.\nWithin that growth number for the orders, significantly, Automation Solutions continues its steady improvement in both orders and sales, while Commercial & Residential Solutions continues to experience robust demand across all its lines of business and in all geographies with 11% sales growth and 21% orders growth for the trailing three months through March.\nThe cost reset benefits for the program that we implemented almost two years ago are being realized as planned, driving adjusted segment EBIT growth of 15% and 150 basis points of increased margin to 19.1%.\nAdditionally, cash flow continues to be strong, up 37% year-over-year with free cash flow up nearly 50%.\nThis represents 125% conversion of net earnings.\nWe continue to execute on the remaining elements of our cost reset actions.\nWith the bulk of it behind us at this point, we initiated $21 million of additional restructuring in the quarter.\nPlease turn to the next slide, if you would, for comments on the EPS, the earnings per share bridge.\nOperational performance was very strong in the quarter, adding $0.14 to adjusted EPS.\nAs we guided in February, stock compensation was a significant headwind in the quarter due to the mark-to-market impact, which was caused by the difference in the share price at the end of last year's second quarter and this year's second quarter.\nOf course, you'll recall that last year, share prices in general were all severely depressed with the onset of COVID and we closed last year's second quarter at $48 versus $90 this year.\nAnd that headwind was within $0.01 of the guidance that we gave you in February.\nTax, currency and other miscellaneous items netted to about $0.04 of tailwind and a small impact from share repurchase.\nSo in total, again, adjusted earnings per share was $0.97 versus the guide of $0.89.\nPlease go to the next slide for comments on the P&L.\nSo as I mentioned, underlying sales growth exceeded expectations at 2% and it was 6% on a reported basis, including acquisitions and currency.\nGross profit slipped just a bit, 10 basis points, mainly due to business mix, given the growth in our Commercial & Residential Solutions business.\nSG&A increased by 10 basis points, but the real story here is that excluding the stock compensation impact, operationally, it was down 220 basis points, indicative of the magnitude of the cost reduction activity and the flow-through of the benefits.\nWe had very strong leverage on SG&A, and the spend was actually down year-over-year when you exclude the impact of the stock comp.\nAdjusted EBIT margin was 18.2%, and our effective tax rate was within one point of last year.\nShare count at 603 million.\nAnd again, adjusted earnings per share at $0.97.\nIf you please turn to the next slide, we'll talk about earnings and cash flow.\nAdjusted segment EBIT increased 15% with the margin increasing 150 basis points to 19.1%, as I said earlier.\nLeverage on the volume and cost reset benefits offset the material cost headwinds that we did see in the quarter.\nAgain, stock comp was nearly a $100 million headwind.\nIt was partially offset by some other corporate items.\nAdjusted pre-tax earnings were down 20 basis points to 17.3%, again, as the impact of the mark-to-market on the stock comp [Indecipherable].\nOperating cash flow was very strong, almost a record again at $807 million, up 37%.\nFree cash flow at $707 million was up 48%, driven by the strong earnings and favorable balance sheet items.\nLastly, trade working capital was down to 16.8% of sales as the impact and the distortions from the COVID-related volume decline are beginning to normalize and as the businesses do a good job managing inventory as we return to growth.\nPlease turn to the next slide, we'll go through Automation Solutions.\nOrders continue to turn upward here.\nWe were at negative 5% on a trailing three-month basis, making good progress, and we're on the trajectory that we have been mapping out for several months.\nUnderlying sales were above expectations at negative 2%, and we're encouraged to see the continued sequential improvement in order rates underpinning the sales.\nChina was very strong, and they were favorable comps, but also due to good strength in discrete, chemical and energy markets.\nOur demand in North America improved sequentially, but it did lag other world areas.\nHowever, there are noteworthy pockets of growth, very encouraging signs in both discrete, life science, food and beverage and power generation.\nImportantly, we also continue to see increasing KOB3 activity across our process automation customer base, driven by increased STOs and focused spend on opex and productivity.\nMargin in the platform increased 180 basis points of adjusted EBIT, 230 basis points at adjusted EBITDA driven by the cost reset savings.\nThe OSI integration continues to go well.\nThe expected synergies are being realized, and we are increasingly encouraged in validating the case that we made for the acquisition when we did it last October.\nBacklog is roughly flat sequentially at $5.3 billion, but it is up 14% year-to-date.\nPlease turn to the next slide, where we review Commercial & Residential Solutions.\nThe story here is very, very strong growth.\nOrders continue to strengthen with the March underlying trailing three-month rate at 21%.\nThe demand is primarily driven by ongoing strength in residential end markets, but significantly cold chain, professional tools and other commercial and industrial markets are also picking up and contributing to the growth.\nAll businesses in all regions were positive, indicative of the trend.\nStrong growth in China, over 50%, was attributable to commercial HVAC and cold chain demand in addition to the favorable comp.\nEurope grew 9% on the strength of continued demand for heat pumps and other energy-efficient sustainable solutions.\nMargins improved 40 basis points at the adjusted EBIT level.\nCost reduction benefits were somewhat offset by price/cost headwinds, which we'll discuss a little more when we cover the guidance.\nCommercial & Residential backlog has increased almost 60% year-to-date to about $1 billion.\nThis is about $400 million above what we would consider normal for this business.\nOperations are working through the significant challenges to meet strong customer demand across most of the businesses in this platform.\nPlease go to the next slide, and we'll talk about the updated guidance for the year.\nBased on the strength we see in orders, the increasing pace of business, we are very encouraged and we are improving our sales outlook for the year.\nWe now expect underlying sales in the range of 3% to 6% overall, with Automation Solutions roughly flat and Commercial & Residential up in the 12% to 14% range.\nThe stronger volume will drive improved profitability.\nWe now expect 17.5% adjusted EBIT margin for the entire enterprise.\nCash flow was also projected higher at $3.3 billion operating cash flow and $2.7 billion of free cash flow, an increase of $150 million.\nOur tax, capital spending, dividend, share repurchase assumptions remain as they were.\nWe're raising adjusted earnings per share guidance by $0.20 at the midpoint from $3.70 to $3.90, and we're tightening the range to plus or minus $0.05 from plus or minus $0.10.\nWe're doing this, increasing the guidance in the face of additional headwinds to profitability, because we're very encouraged by the underlying strength of the business and the read-through of the cost reset actions that the business has been working very diligently now for almost two years.\nThe additional headwinds, you can see in the margin there on the right of the slide, mainly $50 million more of unfavorable price/cost, driven by continuing increases in raw materials costs and about another $20 million of stock comp expense versus what we estimated back in February.\nThe speed and the magnitude of the price increases in key inputs, steel, copper, plastic resins is unprecedented.\nOperations are actively and effectively working to mitigate the margin impact through selected price and cost containment actions, and the good work that they're doing gives us the confidence to raise the guidance despite these increased headwinds.\nOn the plus side, we expect to retain about $10 million more in the year of the COVID-related savings than we previously estimated as basic activity like travel and everything that goes with it comes back in more slowly than we would have thought a couple of months ago.\nIf you please go to the next slide, I'll give you an update on orders.\nSo as I mentioned earlier, our underlying trailing three-month orders turned positive in the month of March at 4%.\nThis is consistent with the upper range of the guidance that we provided to you in February.\nIt's driven by ongoing strength in Commercial & Residential Solutions, as you can see, at 21%, and continued significant improvement in Automation Solutions as our global markets recover.\nAnd increasingly, we see improvement in our traditional process industries as well in North America.\nWe expect general demand to remain strong for the balance of the year.\nWe expect the Automation Solutions markets to accelerate through the second half and the Commercial & Residential HVAC demand will go up somewhat later in the year, but we would expect to see some of the other end markets, commercial, professional tools and such, recover to partially offset that tapering off in Commercial & Residential.\nSo all in all, we believe we have a good outlook for the second half of the year.\nIf you please go to the next slide, the underlying sales growth outlook.\nBased on what we see and the pace of the improvement in orders, for the second half, we see growth in the high single-digits range at about 7% to 11%, and that will drive the full year growth of 3% to 6%.\nWe expect net sales to be just a bit above $18 billion.\nI'll just cover a few charts here with the group.\nAgain, increased momentum turning to -- on Chart 15 here.\nFirst, on Automation Solutions, we are -- we were led through the recovery in the first half by our discrete and early cycle businesses within the platform.\nAnd essentially, what's occurred as we've navigated through the second quarter is a broader recovery in their -- in the mid-cycle elements of this platform.\nSo we see a return to growth in Q3, which is very positive after five down quarters in this business and continued demand in short cycle as well as the acceleration in the core process automation markets in the back half of the year, yielding a 4% to 8% range in the second half and a flat year guidance on sales.\nIf you turn to Page 16, I'll give you some color on what's going on in the world areas.\nPerhaps, before I do that though, I'll just paint it from a KOB perspective.\nKOB3 has been incredibly strong, both in our discrete spaces, but more interestingly, as we navigated the second quarter into our process spaces.\nFrank referenced the shutdown turnaround activity, which is up double -- mid-double -- teens for the year and the STO schedules are holding in full, honestly, as we go into the summer, into the fall season, which is very encouraging.\nThe site walk downs are up almost 50% year-over-year, also very encouraging.\nAnd of course, the long-term service agreements are up almost 40% across the world in the business.\nVery encouraging to see and really provides the fuel for the underlying activity we're seeing in the process space.\nOn a KOB1 basis, things are not completely stopped.\nObviously, we digested a significant LNG wave, but there's more activity on the horizon.\nWe've entered the feed stage on two very important projects: the Baltic LNG and the Golden Island BASF in China.\nThose are important opportunities for us in automation.\nAnd secondly, we were awarded the Sempra Costa Azul LNG project on the Pacific Coast, in the Baja Peninsula of Mexico, which has a significant value for us and was awarded and will be booked here in the third quarter.\nSo there is some activity.\nWe continue to engage on the KOB1.\nAnd as that starts to loosen up a little bit, I think we're very well positioned.\nThe tale of the tape, honestly, for the remainder of the year for this business is going to be the Americas.\nIt's going to be a significant swing from a down 16% first half to a second half in that 10% midpoint.\nAnd we'll see that, we saw that already as we entered April, and we'll continue to see that recovery, I think, as we go through the latter half of the year into 2022.\nEurope, an incredibly strong first half, driven by life sciences, activity around biofuels, the number of KOB2-type project awards, and we continue to see that strength, and I feel confident that, that strength will be there into the second half of the year.\nOf course, across all of this, the discrete environment has been very, very good into Asia, Europe and in North America, whether it's automotive, medical or semiconductor, and we expect that strength to remain there.\nSo overall, feeling much better about the second half here and feeling very good about how North America is shaping up for us in automation.\nTurning to Chart 17, some comments on Commercial & Residential.\nWhat a great year this team is having.\nAnd obviously, the beneficiaries of a tremendous residential cycle.\nMuch of it was driven by pandemic inventory levels -- pre-pandemic inventory levels, a prebuild in the cooling season that then we also benefited from a secular shift into suburbs and high family home construction and renovation.\nAll of that has led into incredible residential strength through the year.\nObviously, my expectation is that it starts to dampen as we get into the latter parts of the fiscal year.\nHowever, the mid-cycle professional tools, cold chain businesses are accelerating, and that's what we see here in this very balanced perspective for this business throughout 2021, and I'm very encouraged by what we're seeing in the later cycle pieces.\nOf course, we -- there's some good underlying technology evolutions as well that will impact the residential, be it the refrigerant changes or the heat pump moves in Europe, which are -- which will continue to drive good growth for the businesses.\nAnd then turning to Page 18.\nAgain, a very balanced picture here from a world area perspective.\nAnd overall, a strong second half with the commercial industrial segment of this business continuing to improve as the residential market start to taper, as I discussed.\nI think all the world areas should grow, again, in the low double-digit to mid-teen range as we go into the second half.\nIn the Americas, we are seeing residential demand remained strong in the near term and the commercial market is really starting to accelerate.\nAnd the cold chain piece, particularly, which is driven by transport and aftermarket, and then we see the tools momentum building in the professional channel.\nSo very encouraged by that.\nEurope, I mentioned heat pump activity.\nWe expect that to stay strong.\nAnd of course, a surge in construction should bolster our plumbing and electrical tools business.\nAnd then lastly, in Asia, China is the headline contributor to growth as some of you have already noted, and demand is driven by commercial air conditioning and cold chain solutions.\nSo with that, Pete, I'll turn it to Page 19, and we'll go to Q&A.\n", "role": "user" }, { "content": "compname reports q1 adjusted earnings per share $0.97.\nq2 adjusted earnings per share $0.97.\nexpect overall continued improvement in industrial and commercial demand over remainder of 2021.\nq2 net sales of $4.4 billion up 6%.\nexpect that residential demand will remain robust, but begin to taper in second half of year.\nsees fy 2021 net sales growth 6% - 9%.\nsees fy adjusted earnings per share $3.90 plus or minus $0.05.\nsees fy 2021 gaap earnings per share $3.60 plus or minus $0.05.\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: Today, I am joined by President and Chief Executive Officer Lal Karsanbhai, Chief Financial Officer Frank Dellaquila and Chief Operating Officer Ram Krishan.\nPlease join me on slide two.\nPlease take time to read the safe harbor statement and note on non-GAAP measures.\nFirst, Mike Train, our Chief Sustainability Officer, will be attending this year's United Nations Climate Change Conference, COP26, in Glasgow.\nMike will be a panelist at the adjacent Sustainable Innovation Forum, participating in two notable discussions.\nThe first discussion will be how to support small to medium enterprises to adopt net zero pathways; and the second, on supporting breakthrough innovation to green, hard-to-abate sectors.\nMike has worked this year to drive many greening of, by and with Emerson initiatives.\nOne notable greening -- green by example is in the recent announcement between BayoTech and Emerson to accelerate production of and distribution of low-cost, low-carbon hydrogen.\nIn the agreement, Emerson will deliver advanced automation technology, software and products in support of BayoTech building hundreds of fully autonomous hydrogen units to enable hydrogen fuel cell commercial trucking fleet and abatement projects in steel and cement.\nAnother exciting initiative is our $100 million commitment to corporate venture capital, Emerson Ventures, designed to accelerate innovation by providing insight into cutting-edge technologies that have the potential to solve real customer challenges.\nThe investment commitment will advance the development of disruptive, discrete automation solutions, environmentally sustainable technologies and industrial software in key industries.\nFinally, our investor conference historically has been in February.\nHowever, due to the recent announcement with AspenTech, we have decided to move our investor conference to May.\nIt will be located at the New York Stock Exchange on May 17, 2022.\n2021 was a phenomenal year for Emerson.\nIt developed very differently, obviously, than we planned a year ago.\nFor one, I was named CEO and brought a new value-creation agenda to the table.\nBut equally important, we operated in an environment which was both rewarding and challenging for the organization.\nThrough it all, our teams around the world did a fabulous job.\nI want to express my sincere gratitude to all the Emerson employees around the world.\n2021 was characterized by strong demand in our residential air conditioning business as well as our hybrid and discrete markets in automation.\nFurthermore, we have experienced a recovery in process automation markets.\nThe automation KOB three mix for 2021 was up two points to 59%.\nAnd Emerson's September three-month trailing orders were plus 16%.\nWe grew 5.3% underlying and leverage at 38% operationally, inclusive of a $140 million swing in our price/cost assumptions from November through to the end of the fiscal year.\nThe earnings quality of this company continues to be excellent with free cash flow conversion of 129%.\nThe fourth quarter, however, was challenged significantly by supply chain, logistics and labor challenges.\nAnd that is not dissimilar from anything you've heard before.\nThis was experienced in the form of material cost inflation, notably steel, electronics and resins, and lead time extensions.\nIn addition, we experienced logistics challenges in availability of lanes and costs.\nAnd lastly, U.S. manufacturing labor, which was characterized by higher turnover rates, absenteeism and overtime costs.\nIn the quarter, we missed sales by $175 million.\nAnd alongside a challenging price/cost environment in our climate business, it resulted in a negative $0.14 impact to earnings per share for the quarter and a $0.19 impact to 2021 EPS.\nHaving said that, the company grew 7% in the fourth quarter and had 19% operating leverage.\nTurning to 2022 and some initial thoughts.\nThe first half of the year will not look dissimilar from the fourth quarter with slight sequential improvement as we go to Q2.\nPrice/cost and supply chain challenges unwind in the second half of the year against the backdrop of continued strong demand.\nThe price/cost assumption in the year will be a positive $100 million for 2022.\nI'm very optimistic for 2022.\nThe operating environment has unpredictability, but it is significantly more stable than a year ago and demand is much stronger.\nThe residential A/C cycle will moderate as we go through 2022.\nHowever, we expect automation markets to continue to strengthen driven by digital transformation and modernizations, replacement in MRO markets and select LNG and sustainability-driven KOB one, most notably methane emissions reduction projects and carbon capture.\nI have confidence that we will deliver 30% incrementals on our underlying sales in 2022.\nThis addresses execution, and as you know, that's one of the three pillars we identified as a management team for accelerated value creation.\nWe have equally taken significant steps in our journey to modernize our culture and advance ESG initiatives.\nThe Board named Jim Turley as the company's Independent Chair of the Board, we named Mike Train as the company's first Chief Sustainability Officer, and we hired Elizabeth Adefioye as Emerson's first Chief People Officer.\nI'm very proud of the diversity targets we set for the enterprise, the changes to our long-term compensation and annual bonus structure to include ESG measures and the commitments we have made to accelerate greenhouse gas intensity reductions.\nLastly, turning to the portfolio.\nWe recently concluded a comprehensive portfolio review, which culminated in a two-day session with our Board of Directors in early October.\nWe left the meeting with a defined portfolio road map and pathways.\nThe key elements were as follows.\nFirstly, in terms of the portfolio today and how we are thinking about it.\nWe will continue to divest upstream oil and gas hardware assets.\nSecondly, we will action low-growth or commoditized businesses.\nAnd lastly, we will action disconnected assets.\nAll three of these actions will take place over time with intentionality, with patience and a keen awareness of cycles and meeting the value-creation proposition to our shareholders.\nSecondly, we identified four large, profitable, high-growth end markets, each with at least $20 billion of size and projected to grow higher than 4% a year into the future supported by macros.\nThe four end markets will be the hunting ground for our M&A activity.\nLastly, we defined two possible end states for the portfolio and the journey that we'll embark up and have embarked on.\nOne of the four markets is industrial software, a $60 billion segment that we identified growing at 9%.\nThe AspenTech transaction is an exciting step for Emerson and a very important transformational step for this corporation.\nAspenTech is one of the best-run industrial software companies in the space with highly differentiated technology and a phenomenal leadership team led by Antonio Pietri for who I have the greatest personal admiration.\nThe AspenTech company will be a highly diversified business with transmission and distribution as its largest served market and is uniquely positioned to enable our energy customers to transition to a lower-carbon future.\nI'm optimistic of the synergy opportunities that exist and believe the new AspenTech, which will be 55% owned by Emerson shareholders, will be a differentiated platform for future industrial software M&A.\nI'm very excited about this, as I hope you can tell.\nWe expect to close the transaction in the second quarter of 2022 following the completion and approval of the customary regulatory items.\nSo we're really pleased with the financial results for fiscal 2021.\nAs Lal said, we ended the year with a great deal of uncertainty and far exceeded the expectations we had at the beginning of the year.\nThe underlying demand environment developed much as we thought it would.\nThere was continued strength in global discrete and hybrid automation markets, and the North America process markets began to gain momentum later in the year.\nThe global demand in our commercial/residential markets was strong and broad based, particularly in the U.S. residential air conditioning market, and it far exceeded the expectations that we had going into the year.\nOur operations team successfully worked through labor and supply chain issues, particularly toward the end of the year, and delivered strong results that we're able to report to you today.\nToward the end of the year, the intensifying combination of rising material costs, supply chain challenges and labor constraints in the U.S. did begin to weigh on sales volume and profitability.\nWe've worked through that in the fourth quarter.\nWe will continue to work through that in the first half of fiscal 2022.\nDespite these fourth quarter challenges, we're pleased to report that we achieved the key financial targets that we committed to you in August regarding underlying growth, adjusted EBIT margin, adjusted earnings per share and cash flow, and you can see all of that in the table.\nThis was achieved in the face of an unexpected increase in key raw materials, mainly steel and copper, that resulted in an unfavorable price/cost swing of $140 million during the year versus the expectation and the guidance that we gave you a year ago.\nWe're very grateful for the extraordinary effort of our operations teams at every level and the manufacturing employees who made this happen under some of the most challenging conditions that we have seen.\nThis slide highlights our strong 2021 results.\nThe continued recovery in our end markets drove strong full year underlying growth of more than 5%.\nNet sales were up 9% year-over-year, including a one point impact from acquisitions, mainly OSI, which closed at the beginning of the fiscal year.\nAdjusted segment EBIT benefited from strong leverage in operations, 38%, as Lal just mentioned, and adjusted EBIT from underlying volume and the benefit of cost reset actions that were begun two years ago.\nThese cost reductions more than offset price/cost headwinds, which, as I said, were $140 million versus our expectation at the beginning of the year, and the supplies chain challenges that raised costs and reduced availability.\nCash flow was robust, up 18% year-over-year attributable to the strong earnings growth and working capital efficiency.\nFree cash flow conversion of net earnings was 129%.\nAdjusted earnings per share was $4.10, exceeding our guide by $0.03 at the midpoint and up 19% for the year.\nAutomation Solutions grew -- underlying growth was flat year-over-year.\nGrowth turned positive in the second half driven by strong discrete and hybrid markets, while the later-cycle process automation markets delivered sequential improvement as we moved through the year.\nAdjusted EBIT increased 230 basis points due to the strong leverage driven by cost reset benefits.\nCommercial & Residential saw exceptional growth, up 6% underlying year-over-year due to broad strength across the residential and commercial markets with mid-teens growth in all world areas.\nAdjusted EBIT increased 20 basis points versus prior year.\nPrice/cost headwinds worsened in the second half, particularly in the fourth quarter, as we anticipated on the call in August, but were offset for the full year by strong underlying leverage and spending restraints.\nOperational performance was strong throughout the year, adding $0.59 to adjusted EPS, overcoming a $0.19 headwind from supply chain and $90 million of unfavorable price/cost.\nOperations leveraged at more than 35% on volume and cost actions.\nNonoperating items contributed $0.02 in that, overcoming a significant headwind from the stock comp mark-to-market accounting.\nShare repurchase totaled $500 million, as we guided, and added about $0.03.\nIn total, adjusted earnings per share was $4.10, as I said, an increase of 19%.\nRegarding the fourth quarter, strong end market demand drove underlying growth of 7% with net sales up 9%.\nThis growth was achieved despite a $175 million impact from supply chain, logistics and labor constraints that affected both platforms in somewhat different ways.\nAdjusted segment EBIT dropped 10 basis points, reflecting a 200 basis point impact from supply chain volume constraints across the company and from the increasingly negative price/cost headwind in commercial/residential.\nFree cash flow declined 39% mainly due to higher working capital to support the growth versus the prior year.\nAdjusted earnings per share was $1.21, exceeding the guidance midpoint by $0.03 and up 10% and versus the prior year.\nAutomation Solutions underlying sales were up 3% with strong recovery in the Americas, particularly in the power generation and chemical markets, partially offset by declines in other world areas.\nSales were reduced by about $125 million or four points due to supply chain constraints.\nOur backlog was up 16% year-to-date and now sits at $5.4 billion, $100 million less than at the end of the third quarter.\nTypically, our backlog would reduce more in Q4.\nHowever, due to strong orders and supply chain constraints, backlog remains elevated above the levels we would otherwise have expected.\nStrong leverage and cost reductions drove a 170 basis point improvement in adjusted EBIT.\nCommercial & Residential underlying sales increased 13% and driven by continued strength in North America residential HVAC and home products as well as heat pump demand in Europe.\nSales were reduced by about $50 million or three points due to supply chain constraints, which, together with sharply increasing material cost headwinds, which were expected, perhaps a little worse than we expected in August but are expected, drove a 340 basis points decline in adjusted EBIT.\nClearly, as you can see, the operating environment is a challenge as commodity inflation, electronic supply, logistics constraints and labor availability continues to impact our global operations.\nNet material inflation headwinds accelerated through fiscal 2021, as you can see on the chart, primarily driven by steel prices, with majority of the impact being felt by our Climate Technologies business.\nNorth American cold-rolled steel pricing increased once again in October, extending the streak of monthly price increases to 14 months.\nHowever, the magnitude of the increases have declined in recent months, and more importantly, hot-rolled steel prices dropped around $20 a ton in October, a positive sign for us.\nWe do anticipate steel prices to start to flatten out over the next few months and net material inflation to peak in the first half of fiscal 2022.\nWe continue to stay focused and diligent on our pricing plans by executing on our contractual material pass-through agreements, surcharges for freight and more aggressive annual general price increases.\nWe remain confident that price/cost will turn green and will be a strong positive for the second half of fiscal 2022.\nOur current plans indicate that price/cost will be approximately a $100 million tailwind for the fiscal year.\nTurning to the next slide.\nOn the commodity front, while steel prices are at elevated levels today, as I mentioned earlier, they are showing some signs of flattening, providing optimism that we will see North American cold-rolled steel prices start to decline in the coming months.\nPlastic resin prices have remained elevated due to high price, inelastic demand and weather-related supply challenges.\nCopper prices have also surged as of late, but our hedge positions will dampen the impact to the fiscal year.\nNow while COVID-related restrictions are improving in Southeast Asia, capacity at key electronic suppliers remains constrained.\nSeveral key component suppliers have extended lead times and pushed out delivery forecasts, which has increased shortages and decommits to our EMS suppliers.\nFurthermore, we are closely watching the impact of industrial power outages in China, which have become a common occurrence at manufacturers and has led to an increase in silicon prices.\nFor us, electronic shortages are impacting multiple business units in both platforms, and supply is expected to remain a challenge into fiscal 2022.\nExtended logistics lead times, particularly on ocean freight, has had an impact on our global operations, port congestion in the U.S., weather and COVID-related disruptions in China being the key drivers.\nThese dynamics are highlighting how critical regionalization is even on lower-variation parts and components, and the work we have done over the past many years to regionalize are clearly proving the importance of this strategy.\nThis is exemplified by several of our businesses with strong regional supply bases which have performed very well and avoided expensive airfreight and significant expediting costs.\nFinally, hiring and retention challenges continue in many of our U.S. plants, predominantly in the Midwest, as competition for available labor is intense.\nHigh levels of turnover and absenteeism in these locations have impacted productivity and driven increased overtime.\nNow on slide 12, despite the unprecedented challenges, our supply chain and operations teams have worked tirelessly to continue to meet the needs of our global customers.\nMany creative solutions are being implemented on a real-time basis to ensure continuity of materials supply to our global plants and availability of freight lines to make our shipment commitments.\nOur teams have leveraged strong supplier relationships, utilized prequalified alternate sources, leveraged contractual agreements and stepped in to assist our suppliers where needed.\nOur regional manufacturing footprint and the enhanced resiliency of our supply network through multi-sourcing that we spent years developing has certainly been an advantage for us in these challenging times.\nAccelerated actions around hiring and production shifts to plants with stable workforces has ensured we continue to meet our customers' needs.\nMany of our global plants are producing at record levels as our disciplined investments in factory automation have allowed us to unlock additional capacity to combat labor availability challenges.\nAnd looking forward to 2022, demand continues to be strong across both of the platforms.\nThe trailing three-month orders for Automation Solutions were up 20% versus the prior year driven, as I said prior, by continued automation investments in discrete and hybrid markets, and we believe that will continue into 2022, and, of course, the strengthening of the process automation spend.\nWhile KOB two and KOB three drove most of the orders growth in 2021, the new infrastructure bookings for LNG and decarbonization will improve, I believe, through 2022, providing further upside.\nIncreased site access will drive increased walkdown and shutdown turnaround activity in the business.\nTo give you perspective, 2021 walkdowns were up 50% year-over-year with more than 5,000 globally, with each walkdown driving substantial KOB three pull-through.\nShutdown turnaround bookings were up -- for -- in 2021 10% year-over-year driven by strong spring season that extended into the early summer.\n2022 shutdown turnaround outage activity spend is expected to be up mid-single digits, led by chemicals and refining, leading to high single-digit bookings growth.\nTurning to Commercial & Residential Solutions.\nThe U.S. and Europe order rates continue to be strong heading into 2022, while Asia has begun to moderate.\nOverall, the trailing three-month orders were 9% in September.\nAnd thinking a little bit further into 2022, many of our key climate technologies end markets will continue to have momentum, including aftermarket refrigeration, commercial HVAC, food retail and foodservice driven by new store builds and quick service restaurants and residential heat pumps.\nTurning to slide 15.\nLooking ahead to 2022, it will be a year characterized by strong underlying demand and an improving operating environment.\nThe late-cycle process automation business will continue its recovery with mid-single-digit annual growth.\nMeanwhile, discrete and hybrid momentum will endure with high single-digit and mid-single-digit growth, respectively.\nGrowth will moderate in residential markets as demand stabilizes, but improving commercial and industrial environments will benefit Commercial & Residential Solutions.\nDecarbonization and sustainability projects, as noted earlier, will provide further growth opportunities as budgets get allocated toward these projects.\nBased on this macro landscape, we believe -- we continue to expect demand to be strong in 2022.\nSupply chain and price/cost headwinds continue through the first half, pressuring first quarter leverage but turn to significant tailwinds in the second half and end positive in the year.\nThe team has done a significant amount of work progressing our restructuring programs.\nEmerson's 2021 adjusted EBITDA of 23.1% surpassed our previous record.\nOver 90% of our restructuring spend communicated in our investor conference is complete, and over 70% of the savings have been realized with remaining longer-term facility projects left to be completed.\nGreat work as a team.\nSo given this landscape, we expect underlying sales growth of 6% to 8% in 2022 and net sales growth of 4% to 6%.\nUnderlying sales growth for Automation Solutions will be 6% to 8%, while Commercial & Residential Solutions will be 6% to 9%.\nAs Ram discussed, we expect price/cost to turn into tailwind for the year of approximately $100 million.\n$150 million of restructuring activities includes the minimal remaining spend on our cost reset program and additional programs, including footprint activities, that have been identified and are planned in the fiscal year.\nHistorically, our adjusted earnings per share excludes restructuring and other items like first year purchasing accounting in the calculation.\nLooking at the 2021 column of the bridge to the right, our prior adjusted earnings per share of $4.10 increases to $4.51 when removing the impact of intangibles amortization expense of $0.41.\nFor 2022, the amortization expense is expected to be approximately $0.42 driven by -- driving, excuse me, our adjusted earnings per share to between $4.82 and $4.97.\nPlease note that all guidance does not include the impact of the AspenTech transaction, which is expected to close, as I said earlier, in the second quarter of calendar year 2022.\nTurning to slide 17.\nWe expect a first quarter 2022 underlying sales growth of 7% to 9% with broad underlying strength across Automation Solutions and Commercial & Residential Solutions.\nAutomation Solutions will experience underlying sales growth in the mid to high single digits, while Commercial & Residential Solutions underlying sales growth will be in the high single digits to low double-digit range.\nAdjusted earnings per share is expected to be between $0.98 and $1.02.\nAmortization for the quarter is expected to be roughly $0.10.\n", "role": "user" }, { "content": "sees fy 2022 adjusted earnings per share $4.82 to $4.97 .\nemerson - fourth quarter net sales were $4.9 billion up 9 percent from the year prior.\nemerson - expect that 2022 will be characterized by strong underlying demand.\nemerson sees q1 adjusted earnings per share $0.98 to $1.02.\nemerson - sees 2022 net sales growth 5% to 7%.\nemerson - sees 2022 adjusted earnings per share $4.82 to $4.97.\nemerson - qtrly adjusted eps, which excludes restructuring and first year purchase accounting charges, was $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: In addition, a slide deck providing detailed financial results for the quarter is also posted on our website.\nThis quarter, e-commerce data is not included in our category overview due to a restatement of the external validate.\nOur team has moved with speed to address the ongoing challenges of operating in this environment, while continuing to focus on keeping each other healthy and safe.\nAs I will talk about in a moment, while the pandemic-driven demand is the main story, we remain focused on our business strategies to ensure that we are well positioned as the pandemic subsides.\nLeading with innovation, operating with excellence, and driving productivity are the keys to our success both now and into the future.\nLooking at the results for the quarter, we maintained our top line momentum with strong sales across categories and markets around the world, resulting in organic sales growth of 12.7% with battery up 11% and auto care up 27%, globally.\nWe delivered adjusted gross margin of 40.7% as we were able to meet the demand while incurring lower incremental costs than we did last quarter.\nThis combination of strong top line growth and improving margins resulted in adjusted earnings-per-share growth of 38% and adjusted EBITDA growth of 17%.\nWe were also able to take advantage of low interest rates to refinance a portion of our debt, which will result in significantly reduced interest expense going forward.\nWe are off to a solid start for the fiscal year.\nWith lower interest expenses due to the refinancing, we are increasing our outlook for the full year adjusted earnings per share to a new range of $3.10 to $3.40.\nIn a few minutes, Tim will provide more detail on the results for the quarter as well as our view for the full year.\nLet me start with category trends where we continue to see strong consumer demand.\nAs Jackie mentioned earlier, our category data this quarter does not include e-commerce due to an external database restatement.\nGlobally, battery category value was up 6.9% and we continue to see consumers purchasing batteries for immediate use.\nConsumers have increased the number of devices they own as well as their usage of those devices.\nWith a gain of 2.5 share points, Energizer is growing faster than the category, driven by distribution gains in the U.S. and in international markets, including Canada, France, Korea and the UK.\nWith auto care, the U.S. category grew more than 10% as a result of changes in consumer behavior, including an increased focus on cleaning and disinfecting as well as an increase in do-it-yourself activities.\nDuring the quarter, Energizer's auto care share was flat.\nOf note during the quarter, we did see strong growth in non-measured channels, including e-commerce, home center and international markets.\nIn auto care, we are meeting the needs of consumers by rolling out innovation and strengthening our product pipeline.\nWe recently launched an Armor All disinfectant, as consumers are more focused than ever on keeping their cars clean and disinfected.\nWe also acquired a small formulations business which to-date has primarily commercialized household disinfectants.\nThe robust portfolio of innovative cleaning, disinfecting and odor-eliminating formulations we've acquired is an extremely attractive addition to our R&D pipeline and is expected to enhance our leadership in auto care.\nIn looking at e-commerce, while we don't have consumption data this quarter, based on our sales, we continue to see solid e-commerce performance versus prior period.\nOur investments and ongoing focus are paying off and positioning us to lead well into the future.\nIf we take a step back, the pandemic-driven demand in our categories has been and for the foreseeable future, will continue to be the main story, and while our priority will be to successfully navigate a very complicated operating environment in order to meet this elevated demand efficiently, we are also undertaking initiatives to emerge from this period poised for growth in the future.\nAs we are nearing completion of our integration efforts, including the recent bolt-on acquisitions, we are also undertaking several initiatives to modernize our core operational capabilities.\nLet me take a moment to provide an update on these initiatives.\nDespite the challenges of this past year, our integration activities for the battery and auto care acquisitions have continued and are scheduled for completion by the end of 2021.\nIn the first quarter, we realized $20 million in synergies and we remain on track to achieve $40 million to $45 million in 2021 and to deliver more than $100 million in total synergies.\nWe also closed on the acquisition of an Indonesian battery plant, which contributed significantly to our ability to meet the strong demand during the quarter and will enable further efficiencies in the future.\nIn addition to the integration activities, we have launched several significant projects to modernize our core, as the pandemic related shifts have shown very clearly we must become a more digitally advanced organization in order to ensure we can meet the demands of the consumer in a rapidly changing operating environment.\nWe are transforming our global product supply organization by moving to an end-to-end category structure, which will create greater agility within each category and closer connections to customers and consumers.\nWe are also investing in our business planning tools and supply planning analytics to provide more predictive insights, which are needed for today's environment.\nThe end result will be a product supplier organization that is better equipped to capitalize on opportunities while also enhancing our ability to navigate disruption.\nThese efforts are already paying off as we were able to meet the continued elevated demand, especially in batteries with lower-than-expected COVID-related costs.\nThis project will continue to be important in the near-term to meet demand and in the medium-term to take better advantage of opportunities across our business.\nWe are also investing in more advanced data and analytics capabilities, which will enable us to better detect and understand in near real-time, impacts to the business, from shift in consumer behavior and macroeconomic events, such as mix shifts in markets or products.\nArmed with the most recent data and insights, our commercial and marketing teams can respond and more effectively connect with consumers and drive growth in our business.\nThese projects as well as other smaller ones will enhance our ability to operate more effectively and will also drive out costs from the business.\nWe are committed to the efficient lower cost operating model you have seen from us in the past, while being equally committed to ensuring we have the flexibility to invest in opportunities to drive future growth.\nWe believe these initiatives will allow us to do both.\nOur strategic priorities of leading with innovation, operating with excellence and driving productivity have served us well as we navigated the pandemic and they will remain critical going forward.\nHowever, 2020 also provided significant insight that will enable Energizer to emerge as a stronger, more resilient and dynamic company.\nThe pandemic reminded us that consumers are at the heart of what we do.\nFundamentally, it was consumer behavior that drove disruption.\nAs their habits and routines changed, they gravitated to trusted brands and engage with our categories in new and different ways.\nThey accelerated the changes in how they consume information and ultimately how they shop.\nOur consumer insights, combined with our powerhouse brands, enable us to create value, for our retail partners by ensuring we are there to meet consumers where they are going.\nRemaining consumer focused, investing in our brands and ensuring we can adapt at the speed in the marketplace are the keys to our success in the future.\nWe will leverage the best attributes of a large scaled organization with the mentality of a start-up, where small teams are unleashed to focus on critical initiatives.\nWith that, I will now turn things over to Tim, who will provide more details about our financial performance for the quarter, including our refinancing efforts, capital allocation and our outlook for the fiscal year.\nAs Mark indicated, our organic revenue growth of 12.7% coupled with cost controls and favorable currency tailwinds resulted in strong adjusted earnings per share of $1.17, adjusted EBITDA of $192 million and adjusted free cash flow of $90 million.\nTaking a deeper look at the top line, both our Americas and International segments grew organically more than 12% with batteries up 11% and auto care up more than 27%.\nAs Mark mentioned, the categories in which we compete continued to experience elevated demand.\nIn addition, our organic sales growth also benefited from distribution gains that began last summer as well as some shifting of shipments between quarters.\nFinally, the growth we are seeing this year is off of prior-year first quarter organic sales decline of 3.4%.\nAdjusted gross margin decreased 110 basis points versus the prior year to 40.7%, although this represented a sequential improvement versus the last quarter.\nGross margin was impacted primarily by incremental COVID costs of approximately $12 million, largely related to air freight, fines and penalties and personal protection equipment necessary to meet the sustained elevated demand, end channel customer and product mix as well as increased operating costs resulted from increased tariffs associated with higher volumes, commodity cost and transportation cost, consistent with inflationary trends in the global market.\nPartially offsetting these impacts to gross margin, the first quarter benefited from synergies of $13 million and favorable currency exchange rates.\nAs we exit the first quarter, we believe the incremental COVID costs from air freight and fines and penalties over the remainder of the year will significantly diminish.\nHowever, like many other companies, we anticipate additional cost pressures from increased tariffs, commodities and transportation to impact us over the remainder of the year and we have includes these items in our outlook.\nA&P as a percent of net sales was 5.8% versus 6.4% in the prior year, due primarily to the strong top line growth experienced in the current quarter.\nConsistent with our priorities, we continue and invest, on an absolute dollar basis, in A&P to support our brands with total A&P up $3 million or 6%.\nExcluding acquisition and integration cost, SG&A as a percent of net sales was 13.4% versus 15.1% in the prior year.\nThis was primarily due to the elevated sales experienced in the current quarter.\nOn an absolute dollar basis, adjusted SG&A increased $2.7 million, driven in part by higher overheads associated with the top line sales growth and the timing of costs partially offset by synergies of $7 million and lower travel expense due to COVID.\nAs Mark mentioned, we realized $20 million of synergies in the quarter with $13 million in cost of goods sold and $7 million in SG&A.\nFor the full year, we continue to expect to realize $40 million to $45 million of incremental synergies.\nIn total, we have recognized nearly $90 million since we completed the battery and auto care acquisitions and remain on track to realize in excess of $100 million by the end of fiscal 2021.\nWe also took advantage of accommodating debt markets to refinance our existing short-term secured debt and our 2027 unsecured bonds with a new $1.2 billion term loan.\nBased on the new all-in interest rates, we anticipate annualized interest savings of roughly $25 million with about $19 million to be realized over the remainder of fiscal 2021.\nWe also amended certain covenants in our credit agreement, which will create additional capacity and flexibility in our debt capital structure.\nOur net debt to credit defined EBITDA at the end of the quarter was 4.6 times, reflecting improved EBITDA performance and debt pay down during the quarter of $80 million, excluding refinancing activities.\nAt the end of the quarter, our total debt was approximately $3.4 billion, with nearly 85% now at fixed rates and an all-in cost of debt of approximately 4.3%.\nAnd finally, we continue to drive shareholder returns through our balanced approach to capital allocation, by investing in our business through innovation, brand-building activities and the projects we mentioned earlier to modernize our core and drive cost out of the business, delivering a quarterly cash dividend of $27 million; repurchasing 500,000 shares for $21 million, representing an average price of $42.61; paying down $80 million of debt excluding refinancing activity; and finally, completing two bolt-on acquisitions.\nAs a result of our strong organic growth in the first quarter and the interest expense savings from the refinancing we undertook in December, we are updating our full year fiscal 2021 outlook for the following key metrics.\nNet sales growth is expected to be at the upper end of the range of 2% to 4%, driven in large part by continued elevated battery demand in North America and favorable currency impacts.\nAdjusted gross margin rate is expected to be essentially flat on a year-over-year basis in line with our previously provided outlook.\nAdjusted EBITDA is expected to be at the upper end of our previously provided range of $600 million to $630 million and free cash flow of $325 million to $350 million remains unchanged due to working capital requirements, in particular, inventory, as we look to rebuild safety stock.\nAdjusted earnings per share is now expected to be in the range of $3.10 to $3.40.\nI would also like to provide a reminder regarding the quarterly phasing for the remainder of 2021.\nBeginning late in our second quarter of 2020 and through today, we have seen elevated demand for both battery and auto care products due to the impacts of COVID.\nIn 2021, we expect to continue to see net sales growth until we lap those elevated demand, at which point, we will likely start to see year-over-year declines in net sales as we approach a more normalized level of demand.\nWe expect this will begin to occur toward the end of the second quarter in battery and late in the third quarter in auto care.\nWith respect to gross margin rates, we expect them to remain consistent throughout the year.\nThe gross margin rate in this quarter was better than our expectations due to lower than expected COVID costs, the timing of the realization of synergies and the impact of favorable foreign currencies.\nWhile we are increasing components of our outlook for the full year, there remains a great deal of uncertainty over the balance of the fiscal year with respect to the pandemic and related macro factor and impacts, including currencies, commodities and transportation costs.\nWe have addressed the items that are within our control and continue to improve our execution.\nActions that we have taken, include continuing to drive increased distribution with strong organic growth across all categories and geographies; improving supply chains surety with expanded capacity and significantly reducing incremental COVID cost by the end of the first quarter; and finally, refinancing more than half of our debt portfolio over the past seven months through the accommodative debt markets.\nWe remain confident that continued focus on our strategic priorities and our balanced approach to capital allocation will allow us to deliver long-term shareholder value.\nIn the midst of a very uncertain operating environment, we will focus on meeting the demands of today, while building the capabilities we will need to succeed in the post-pandemic period.\nOur operating performance in the first quarter is a testament to the efforts of our colleagues around the world to make, ship and deliver the products that our consumers need during this time.\n", "role": "user" }, { "content": "energizer holdings sees fy adjusted earnings per share $3.10 to $3.40.\nsees fy adjusted earnings per share $3.10 to $3.40.\nq1 adjusted earnings per share $1.17 from continuing operations.\norganic net sales increased 12.7%, or $93.3 million, in first fiscal quarter.\nenergizer holdings sees 2021 outlook for revenue growth and adjusted ebitda to the high end of previously disclosed outlook 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 addition, a slide deck providing detailed financial results for the quarter is also posted on our website.\nThis quarter e-commerce data is not included in our category overview as the data is not currently available.\nIt is uncertain when that data will become available in the future.\nToday, I am pleased to share our second quarter 2021 results, which build on the momentum from our first quarter as we benefited from elevated demand, expanded distribution and strong execution, all of which led to robust earnings growth.\nAs we look specifically at the results for the quarter, we maintained top line momentum with organic sales of 12.7% with strong sales across categories and markets around the globe.\nWe were able to meet that demand while also demonstrating improved cost control and delivering synergies, which partially offset the inflationary headwinds from transportation, tariffs and product input costs.\nOur adjusted earnings per share were $0.77, more than double the prior-year, driven by strong organic sales growth, synergy realization, favorable currencies and lower interest expense.\nGiven our performance in the first half, we are increasing our full fiscal year outlook to the following.\nNet sales growth to 5% to 7% adjusted earnings per share to a new range of $3.30 to $3.50 and adjusted EBITDA to a new range of $620 million to $640 million.\nTim will provide more information on both the quarterly results and the revised outlook in a moment.\nTurning to category trends.\nConsumer demand in our categories remains elevated.\nAs a reminder, the category data I'm about to provide does not include e-commerce, as Jackie indicated in our opening comments.\nStarting with batteries, few changes in consumer behavior that have emerged since the beginning of COVID drove the battery category globally.\nFirst, an increase in the number of devices on per household; and second, an increase in the amount of time devices are being used, which has led to more frequent battery replacement.\nDuring the three months ending February, our brands grew faster than the category and we gained 2.1 share points globally as we benefited from the previously discussed distribution gains.\nIn the most recent four weeks through March, in markets like the U.S., Australia and the UK, the category experienced year-over-year declines as we lapped the initial spike in COVID related buy.\nWe anticipated these year-over-year declines, including a 13.9% decline in the U.S. during that four-week timeframe.\nHowever, if you look at those same markets on a two-year basis, there is robust growth when compared to the pre-pandemic levels.\nIn the U.S., for example, the category was up 14.1% for that four-week period when you compare 2019 to 2021.\nAcross both the most recent four weeks and the two-year basis, Energizer significantly outpaced the category.\nLooking at the U.S. AutoCare category, in the 13 weeks through February, we saw a healthy category growth of 7.4% as the category experienced both an increase in household penetration and existing consumer spending more on cleaning and maintaining their cars.\nGiven the seasonality of our portfolio, the cold weather and the short-term constraints on our wipes supply which have recently been resolved, Energizer lag category growth in the U.S. Similar to batteries, we are seeing category growth in the latest four weeks and on a two-year basis with Energizer outpacing the category.\nFinally, while we don't have e-commerce category data this quarter, our net sales have increased 70% across our combined portfolio, a reflection of our investments and ongoing focus which are paying off and positioning us to lead well into the future.\nThe environment remains dynamic and we can't predict the impact of vaccines, the virus variance or the resulting consumer habits.\nHowever, in surveys with consumers, many expect their pandemic influence habits to continue, including the increased use of devices such as home health and home office equipment as well as increased focus on their auto cleaning habits.\nDuring the quarter, we faced inflationary headwinds from transportation, tariffs and input costs.\nHowever, we were able to offset a significant portion of these through the delivery of synergies.\nAs we look to the future, we do not believe that these costs are transitory and have initiated productivity and revenue management efforts to offset them.\nOur revenue management efforts are focused in three main areas.\nChannel and mix management across our markets, brands and pack sizes, including leveraging the breadth of our strong battery brands from premium to value.\nResetting our promotional framework, including the frequency and depth of promotion and price increases based on a longer-term outlook of product input costs, our innovation pipeline and currency impacts.\nAs an example of this work, we've recently announced price increases in the U.S. in our AutoCare portfolio to offset the headwinds we are experiencing.\nGoing forward, we will evaluate a number of factors including macroeconomic conditions, product input costs, transportation costs, market dynamics, innovation and currency to assess the need for additional pricing actions across the balance of our portfolio.\nOur internal initiatives designed to reshape our organization and to ensure we are poised for future growth are all progressing well.\nSpecifically, we are on track to deliver over $120 million in synergies by the end of fiscal 2021, a portion of which is being reinvested in the business through innovation and brand building activities.\nWe have significantly increased production in the Indonesian plant that we acquired in the first quarter, which provides us with a source of high-quality products at lower costs.\nWe have built an impressive innovation pipeline for our AutoCare business and have advanced our international growth plans with International AutoCare organic growth for the second quarter at 24%.\nOur global product supply team has made significant strides in reshaping our network, which we expect will result in greater efficiency, effectiveness and supply chain resiliency.\nAnd finally, we have launched project to advance our organization's data and analytics capabilities, creating a seamless data flow which starts with the consumer and ease its way through our organization in a more automated manner, will ensure that we are positioned to meet the demands of consumers in a rapidly changing operating environment.\nWith that, I will now turn things over to Tim who will dive deeper into our financial performance for the quarter and provide more details about our updated outlook for the fiscal year.\nAs Mark touched on, as we crossed the halfway mark for the fiscal year, we are pleased with our continued momentum.\nOur organic revenue growth of 12.7% combined with synergy realization, cost controls, lower interest expense and favorable currency headwinds resulted in strong adjusted earnings per share of $0.77, up more than double the prior-year second quarter and adjusted EBITDA of $148 million, up 20% compared to the prior year.\nTaking a deeper look at the organic revenue growth.\nWe maintained our top line momentum with strong sales across all of our categories and geographies.\nBoth of our segments showed organic growth with the Americas up nearly 16% and International up 6%, and our Battery and Auto Care businesses grew benefiting from elevated demand and distribution gains that began last summer.\nAdjusted gross margin decreased 110 basis points versus the prior year to 40.5% in line with our adjusted gross margin reported in the first quarter.\nThis was impacted primarily by increased operating costs that resulted from higher tariffs associated with source product to meet elevated demand, transportation, labor and product input cost, all consistent with inflationary trends in the global market.\nAdditionally, our gross margin was negatively impacted by the lower margin profile associated with recent distribution gains and acquisitions, synergies of $14.2 million and favorable impacts from currency exchange rates partially offset these negative impacts.\nAs Mark mentioned, we do expect inflationary headwinds over the balance of the current year and into next year.\nAt the present time, we are essentially fully hedged on a commodity costs for fiscal year 2021.\nLooking beyond this year, we will continue to take actions to offset the impact of these headwinds through continuous improvement efforts and pricing actions.\nA&P as a percent of sales was 4% relatively flat compared with the prior year's second quarter.\nConsistent with our priorities, we invested on an absolute dollar basis in A&P to support our brands and innovation with total A&P spending of $4 million or 19% over the prior year.\nExcluding acquisition and integration costs, SG&A as a percent of net sales was 16.7% versus 18.4% in the prior year, primarily the result of elevated sales experienced in the current year.\nOn an absolute dollar basis, adjusted SG&A increased $6 million in part because of the higher overheads associated with our top line sales growth and foreign exchange rate impacts.\nWe realized nearly $20 million in synergies this quarter, bringing the total for that first half of 2021 to $40 million.\nSince our Battery and Auto Care acquisitions were completed, we have recognized approximately $109 million of synergies, exceeding our initial targets and we expect to realize an additional $10 million to $15 million over the balance of the year.\nAs I mentioned last quarter, we've taken advantage of favorable debt markets and refinanced a significant portion of our debt over the last 12 months.\nWe expect these refinancings to contribute to a $30 million reduction in our 2021 interest expense, of which $8 million was realized in the second quarter.\nAt the end of the quarter, our total debt was approximately $3.5 billion or 4.8 times net debt to credit defined EBITDA, with nearly 80% at fixed interest rates and an all-in cost of debt of 4.2%.\nAs a result of our strong organic growth in the first half of the fiscal year, we are updating our full year fiscal 2021 outlook for the following key metrics.\nNet sales growth is now expected to be between 5% to 7%, owing in large part to a prolonged elevated battery demand in North America and favorable currency impacts.\nAdjusted gross margin rate is expected to be essentially flat on a year-over-year basis in line with our previously provided outlook.\nAdjusted earnings per share is now expected to be in the range of $3.30 to $3.50.\nAdjusted EBITDA is expected to be in the range of $620 million to $640 million.\nAnd finally, adjusted free cash flow is expected to be at the low end of our previously provided range of $325 million to $350 million due to working capital requirements, mostly related to inventory as we look to rebuild safety stocks.\nThe revised net sales outlook provided for the full year reflects a low-single digit decline over the balance of the year consistent with our prior outlook.\nWe began lapping elevated COVID-related battery demand late in the second quarter and we will lap the favorable impacts of weather on our AutoCare business, particularly in refrigerants in the third and fourth quarter.\nWith respect to gross margin rates, we expect them to remain roughly flat throughout the balance of the year as synergies and the impacts of favorable currency offset inflationary cost pressures and mix shifts.\nWe will also benefit over the rest of the year as our gross margin in the third and fourth quarter of 2020 was burdened with one-time COVID-related costs of $9 million and $19 million, respectively.\nAs we turn to the second half of the year, we expect to build on the momentum from the strong first half by executing on our strategic priorities to deliver the full year outlook.\nWe have had a great first half of fiscal 2021, which is a testament to the efforts of our colleagues around the world to make, ship and deliver the products that our consumers need during this time.\nWe are focused on winning the day by staying focused on the consumer and delivering for our customers, all while building the foundation to win in the future.\n", "role": "user" }, { "content": "sees fy adjusted earnings per share $3.30 to $3.50 including items.\nq2 adjusted earnings per share $0.77 from continuing operations.\nsees fy sales up 5 to 7 percent.\nincreased full year outlook to 5% to 7% net sales growth.\nsees full year adjusted earnings per share $3.30 to $3.50.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During the call, we will discuss our results for the fourth quarter and fiscal 2021 as well as our outlook for fiscal 2022.\nIn addition, a slide deck providing detailed financial results for the quarter is also posted on our website.\nDespite operating in what remains an incredibly volatile environment, we delivered on our previously provided 2021 outlook for net sales, synergies, adjusted earnings per share and adjusted EBITDA.\n2021 was our sixth consecutive year of organic revenue growth behind elevated demand and distribution gains.\nThis top line growth, combined with synergies we achieved from the Spectrum acquisition and interest expense savings translated into strong adjusted earnings per share and EBITDA growth.\nIn a few moments John will provide details on the fourth quarter and full year.\nHowever, before he does some key headlines from our fiscal 2021 performance.\nFor the first time our Company exceeded $3 billion in net sales.\nWe also maintained top line momentum with organic sales growth of 7.3% including growth of nearly 17% in our auto care business.\nOur battery and auto care businesses benefited from elevated demand and distribution gains in North America.\nAuto care further benefited from the expansion in our international markets, reaching $100 million in sales in those markets for the full year.\nWe also delivered synergies of $62 million for the year, resulting in total synergies from the Spectrum acquisition in excess of $130 million, 30% higher than our initial estimate.\nAnd we continue to invest in our brands, resulting in strong brand preference globally.\nWith more consumers selecting our battery brand, we gained 2.2 share point in the last 12 months.\nThis performance is a tribute to our team and their resiliency.\nSince the beginning of the pandemic, we have consistently adapted in real-time to ensure business continuity and repositioned Energizer for the future.\nThe hard work of our global colleagues to produce and deliver products to our customers and consumers in a time of heightened demand and significant disruption has been impressive to witness on a daily basis.\nIn a moment, I will provide headlines for our 2022 outlook.\nHowever, before I do I want to provide an update on a few key topics that will set the stage for the future.\nFirst, our categories remain healthy and are showing solid growth when compared to pre-pandemic levels and we expect the consumer behaviors supporting that demand will continue for the foreseeable future.\nSpecifically in batteries, there are two drivers.\nDevices owned per household are up mid single digits in the US and an increase in the amount of time those devices are being used.\nConsequently, consumers are using more batteries, which has resulted in new buying patterns versus a year ago, including increased purchase frequency and spending per trip.\nAs a result, on a two-year stack basis without e-commerce, the global battery category has grown by 2.9% in value and 3.7% in volume.\nIn the near term, we will see the category decline as it did in the three months ending August 2021 where it was down 6.9% in value and 5.3% in volume due to comping elevated demand from a year ago.\nHowever, as we look to the long term, we anticipate the category to experience flat to low single-digit growth, albeit on a higher base as the category has increased in size due to consumers' behavior during the pandemic.\nWithin the category, our iconic brands remain well positioned.\nOur brands outpaced the category, resulting in a 2.2 share point gain versus last year as we increased distribution in the US and internationally with share gains in those markets representing 70% of our total battery revenues.\nTurning to the auto care category.\nOver the last five years the auto care category has shown consistent growth, a trend that continued in the latest 13 weeks with category value up 3.5% versus year ago and 16.3% versus 2019.\nThe growth is being driven by consumers continuing the do-it-yourself behaviors established during the pandemic, including higher levels of cleaning and renewed interest in car care as a hobby, a higher number of cars in the car park and an increase in the age of vehicles given the shortage of new vehicles and the recovery in miles driven given the increase in personal travel.\nAll of this increased US household penetration to nearly 75% with the resulting buy rate that is up 20% as consumers are buying the category more frequently and spending more per trip.\nAs we look ahead, we anticipate the auto care category will settle in at low single-digit growth once it has cycled through the COVID-related demand.\nIn the US, we continue to be the market leader in this large and growing category driven by our Armor All brand, which continues to have positive momentum due to the strength of our innovation and brand-building activities.\nAs I mentioned earlier, our efforts to leverage our geographic footprint and expand our auto care brands internationally are proving successful.\nWhile the categories are showing resilience, the macro environment in which we are operating is volatile, which leads me to the next important topic around operating costs.\nCosts related to commodities, transportation and labor, continue to rise.\nWe saw a significant escalation in these costs during the fourth quarter and we expect these headwinds to continue throughout 2022, resulting in over $140 million of increased input costs versus 2021.\nIn order to mitigate the impact of these costs, we have executed or planned pricing against roughly 85% of our business.\nIn addition to raising prices to cover input cost inflation, we have also strategically redefined our battery pricing architecture to reestablish relative value across pack sizes, resulting in a progressive rate increase on larger pack sizes.\nCurrently, we are exploring the opportunity for additional pricing opportunities across our business.\nWe expect these pricing actions, improved mix management and cost reduction initiatives to partially offset the impact on our gross margin rate.\nAs you all know, in addition to the challenges companies are experiencing related to increased costs, the global supply chain network is under pressure from increased demand and pandemic-related disruption.\nEarlier this year, we made the decision to proactively build inventory to ensure we have product for the peak battery selling season and upcoming auto care resets.\nThe change is in response to both the potential for supply disruption we have seen in recent quarters and the higher level of in-transit inventory versus historical levels due to shipping delays and port congestion.\nAs such, our inventory at the end of fiscal '21 was up 42% versus the prior year.\nThis action has given us flexibility to avoid disruption and ensure we service our customers as reliably as possible in this environment.\nWith that backdrop, I'll turn to a high-level overview of our 2022 outlook.\nThe two headwinds I mentioned earlier, the decline in demand to more normalized level and inflationary cost trends have impacted our outlook.\nIn fiscal 2022 organic sales will be roughly flat with auto care growth and pricing actions across our businesses, offset by volume declines in battery as we comp prior year elevated demand in the first half of the year.\nDespite our cost reduction initiatives and pricing actions, we expect to see gross margin rate erode, given the escalating costs resulting in year-over-year declines in EBITDA and EPS.\nGiven the macro environment, we are proactively exploring additional options to reduce our costs, enhance our mix as well as evaluate additional pricing to further offset these cost headwinds.\nI will provide a more detailed summary of the quarterly financial results and then the highlights for fiscal 2021 before turning to our 2022 outlook.\nAs a reminder, we have posted a slide deck highlighting our key financial metrics on our website.\nFor the quarter reported revenue grew 40 basis points with organic revenue down less than 1% versus 6% organic growth in the prior-year quarter.\nRobust demand and distribution gains in auto care delivered a 11.5% growth in the quarter, which offset the expected decline in battery.\nWe expect these difficult comparisons in batteries to continue for the first half of 2022.\nAdjusted gross margin decreased 70 basis points to 37.7%.\nThe combination of $9 million in synergy benefits and the elimination of $19 million of COVID-related costs from the prior year did not fully offset inflationary cost pressures related to commodities, transportation and labor.\nIn addition category mix impacted our gross margin as our lower margin auto care business achieved significant growth relative to battery in the quarter.\nExcluding acquisition and integration costs, SG&A as a percent of net sales was 14.3% versus 15.6% in the prior year.\nThe absolute dollar decrease of $9.4 million was driven primarily by a reduction in compensation costs.\nIn the quarter, we realized $9 million in synergies, bringing the total for 2021 to $62 million.\nWe have delivered over $130 million of synergies related to our battery and auto care acquisitions, well exceeding our initial targets.\nInterest expense was $13.4 million lower than the prior-year quarter as we are benefiting from significant refinancing activity over the past 18 months.\nDuring the fourth quarter, we entered into a $75 million accelerated share repurchase program.\nApproximately 1.5 million shares were delivered in fiscal 2021 and we expect another 400,000 shares to be delivered in the first quarter of fiscal '22, bringing the total number of shares repurchased under the ASR program to approximately 1.9 million.\nNow turning to the highlights for fiscal 2021.\nAs Mark mentioned, we delivered our full-year 2021 outlook for revenue, adjusted EBITDA and adjusted EPS.\nNet sales grew 10.1%, including organic sales up 7.3% as we experienced robust growth in both the Americas and International and across all three product categories, batteries, auto care and lighting products.\nAdjusted gross margin was down 100 basis points, as higher input costs were partially offset by synergies and the reduction of COVID-related costs incurred in 2020.\nInterest expense, benefiting from significant refinancing activity, decreased $33 million.\nAdjusted earnings per share increased 51% to $3.48 as higher sales, synergies and lower interest expense more than offset the higher input costs.\nAnd adjusted EBITDA increased 10%.\nAt the end of 2021, our net debt was approximately $3.2 billion or 5.1 times net debt to credit defined EBITDA with nearly 85% at fixed interest rates, no near-term maturities and an all-in cost of debt below 4%.\nOur adjusted free cash flow for 2021 was $203.5 million.\nThe decline versus the prior year primarily reflects working capital investments as we proactively invested in incremental inventory given the continued volatility in the global supply network and uncertainty around product sourcing, transportation and labor availability.\nNow turning to our fiscal 2022 outlook.\nAs Mark discussed, our categories remain healthy and are showing solid growth when compared to pre-pandemic levels.\nAs we enter fiscal 2022, we are benefiting from significant pricing actions.\nHowever, input costs continue to rise.\nThe outlook we are providing for next year reflects pricing actions that we have executed or planned as well as the assumption that our input costs remain at current levels for the full year.\nOrganic revenue is expected to be roughly flat with auto care growth and pricing actions across 85% of our businesses, offset by declines in battery as we comp prior year elevated demand in the first two fiscal quarters.\nWe also expect reported revenue will be negatively impacted by foreign currency headwinds of $20 million to $25 million at current rates.\nAs we have talked about for the last couple of quarters, input costs including raw materials, labor and transportation costs, are rising rapidly and supply chain networks continue to be stressed.\nLast quarter I highlighted the potential for an additional 100 basis points of gross margin headwinds in 2022 if input costs did not improve.\nAnd as of today, the trends have worsened.\nWhile we expect the absolute dollar amount of these rising costs to be offset by the pricing actions and cost reduction efforts that our team has undertaken, we now project gross margin headwinds of approximately 150 basis points, based on current rates and assumptions.\nThese inflationary cost pressures, combined with the anticipated volume declines in battery in the first half of the year, are expected to result in adjusted earnings per share in the range of $3 to $3.30 and adjusted EBITDA in the range of $560 million to $590 million.\nAs we look at our capital allocation priorities during this volatile macro environment, we will continue to invest in our businesses and brands for the long term while returning cash to shareholders and paying down debt.\nWhile 2021 was a solid year for Energizer and one that we are proud of, our focus today is on moving forward and working to further mitigate the cost headwinds we are facing while ensuring our products are available to consumers around the world.\n", "role": "user" }, { "content": "expect reported revenue will be negatively impacted by foreign currency headwinds of $20 million to $25 million at current rates for fiscal year 2022.\nfor the fourth fiscal quarter, strong auto care performance drove net sales growth.\nsees fy 2022 adjusted earnings per share in range of $3.00 to $3.30.\nsees 2022 organic revenue to be roughly flat.\nenergizer holdings - current operating environment remains very volatile.\nwill remain focused on offsetting headwinds through additional pricing and cost reduction opportunities in fiscal 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: In addition, we will also be presenting certain non-GAAP financial measures.\nWe delivered solid first quarter results due to robust demand for our products and services in each of our business segments.\nOrders over the last three weeks or 12 weeks, excuse me, are 25% higher than the same period F '20 pre COVID.\nWe reported first quarter fiscal 2021 adjusted earnings of $1.25 per diluted share, a 36% increase over the first quarter of last year.\nOur Motive Power business generated strong revenue and earnings growth, while our Specialty business continued its positive momentum, fueled by accelerating demand for our transportation products.\nDespite challenges in the supply chain, Energy Systems began its rebound from a challenging fourth quarter, driven by growing demand and a variety of end markets, including mid spectrum 5G, broadband and utility markets.\nSimilar to other industrial companies, we are facing some challenges in the wake of the world's steepest economic recovery as businesses reopen and competition for labor, materials and transportations remains fierce.\nWhile we are seeing unprecedented demand growth, we have experienced constraints in our ability to bring on new employees necessary to keep up with demand.\nFreight and tariffs continues to be a source of cost pressure, along with a variety of other components, including resins and semiconductor.\nOur team has responded well to these short-term challenges and we expect to see steady improvements in the supply chain as we work to mitigate its impact by identifying alternative sourcing methods and further leveraging our global footprint to align supply with demand.\nAs these temporary issues unwind, we will benefit from the strong market momentum.\nI'd now like to provide a little more color on some of our key markets.\nLet's start with our largest segment, Energy Systems, which saw a modest improvement from the prior quarter, growing revenue by more than $22 million and generating a nearly $4 million gain in operating income versus Q4.\nDemand for our Energy Systems' products remains strong, with order intake from one of our larger telecom customers picking up after a slow Q4 that was driven by 5G radio availability, labor and permitting challenges.\nBroadband orders continue to improve and are expected to accelerate dramatically as the California Public Utilities Commission public safety grid shutdown extended network backward -- backup programs roll forward.\nWhile the market is displaying positive momentum, Energy Systems continues to experience drags in three primary areas.\nFirst, we have seen higher tariffs and freight costs as our efforts to move contract manufacturing out of China closer to home is slowed by COVID versus our plan.\nAlso, container shipping rates are in an unprecedented fourfold from historical rates and expedited fees are common.\nDelayed sales due to supply chain challenges, including semiconductors, continue to constrain our top line and gross margins due to a lack of capacity for higher margin cable power supplies, DC power plants, and Thin Plate Pure Lead products.\nSecond, we have incurred additional engineering costs to support our Touch-Safe collaboration with Corning as well advancing -- as well as advancing our lithium offerings and the other NPIs supporting 5G and renewables from which revenue will begin to accelerate in the second half of this fiscal year.\nOur investment in R&D will also accelerate during the calendar year to advance the DC fast charging initiative that will benefit our next fiscal year.\nThese investments will position us to be a significant participant in these new mega market trends.\nThird, the ES group has been more heavily burdened with the ramp up of the integration inefficiencies of the NorthStar acquisition.\nAs noted prior, this integration and expansion is roughly nine months behind schedule due to COVID.\nDespite the short-term cost pressures, we remain committed to TPPL expansion and cost improvements to handle the rapidly expanding TPPL demand in all lines of business.\nDriven by sound underlying demand, we expect the Energy Systems business to continue its upward trajectory with the full opportunity set to be unleashed as these COVID-related supply chain headwinds subside.\nOur Motive Power business was a bright spot during the quarter.\nDespite some lingering supply chain constraints, we returned to the historically higher end of our return on sales for this business.\nOur backlog is now at historic levels and our NexSys TPPL along with recently released lithium variance continues to gain market acceptance.\nWe anticipate normal seasonality over the summer holiday months.\nWhile lift truck industry order statistics remain exceptionally high, we are being mindful of OEM supply limitations.\nWe are confident they're -- we are well positioned to benefit from a steady recovery throughout the balance of the fiscal year.\nThe restructuring of our Hagen, Germany facility remains ahead of schedule in regards to cost and timing, with most of the cost savings yet to be realized.\nWe will further evaluate our global footprint to ensure we can meet strong current order patterns and continue to extract savings with further standardization of our legacy product offerings and other business transformation initiatives.\nOur Specialty business contributed another strong quarter to our overall results despite the NorthStar-related cost drag I mentioned earlier.\nAs the high-speed line and other productivity capacity enhancements are installed in our TPPL factories, we will enjoy lower costs and increased capacity in our second half results.\nDemand in our transportation business remains exceptional, buoyed by significant incremental revenue that we are positioned to win as additional Springfield capacity comes online.\nUS transportation grew rapidly from the year ago quarter and our backlog remains at record levels.\nWe expect continued strong demand for the remainder of the calendar year from the US economic recovery.\nWe delivered exceptional results in aerospace and defense, as all of our markets were strong including tactical vehicles and munitions.\nMunitions recorded several key wins based on our industry-leading technology that provides 40% extended life in thermal batteries.\nWe will have doubled this business since the acquisition in just five years.\nPositive recent conversations with several large customers, combined with the US source lithium initiatives the Biden administration is highlighting in their infrastructure legislation, gives us great confidence in the future growth opportunities in many of our businesses.\nAs you all know, we announced our battery energy storage system plus DC fast charge initiative in the fourth fiscal quarter, which remains on track regarding product development and performance all while this tremendous market opportunity continues to grow.\nOur goal is to deliver an EV charger that charges any electric passenger car as fast as the car can handle, reducing the process from hours to minutes.\nBy using a large stationary battery to quickly charge the EVs, we can dramatically reduce system installation costs at many sites, including the size of the AC transformer and high voltage cabling from the utility interconnect, as well as the opportunity to provide optimized energy usage and emergency backup power.\nFeedback from our potential launch customer has been very positive, both on the speed of the development and level of software maturity, and we will continue to provide updates on this exciting initiative as we move forward.\nAlthough we expect to continue to face some supply chain disruptions in the near term, the fundamentals of our business are stronger than ever with global demand for our products and services growing by the day.\nThe massive 5G build out is getting underway and will provide a strong multi-year tailwind for EnerSys.\nThin Plate Pure Lead demand is growing rapidly in all lines of business, and the launch of best-in-class modular lithium systems in Motive Power and Energy Systems further enhances our market-leading positions.\nLastly, a large bipartisan infrastructure bill is moving through Congress with additional bills being discussed, which could provide another catalyst for EnerSys in areas such as the electric grid, EV charging, and the rural build out of high-speed broadband.\nI'd like to close by recapping our strategic initiatives, which remain unchanged.\nOne, to accelerate higher margin maintenance free Motive Power sales with NexSys iON and NexSys PURE.\nTwo, to grow the portfolio of products in our Energy Systems business, particularly in telecom, with fully integrated DC power systems and small cell site powering solutions, which will accelerate our growth in 5G, as well as the addition of our battery energy storage system plus DC fast charging initiative.\nThree, to increase Thin Plate Pure Lead capacity, particularly for transportation market share in our Specialty business.\nAnd finally, four, to reduce waste through the continued rollout of our EnerSys operating system.\nWe will continue to execute on each of these initiatives and look forward to providing you updates on our progress in the quarters ahead.\nWith that, I'll now ask Mike to provide further information on our first quarter results and go forward guidance.\nI am starting with Slide 11.\nOur first quarter net sales increased 16% over the prior year to $815 million due to a 12% increase from volume and 4% from currency gains.\nOn a line of business basis, our first quarter net sales in Energy Systems were up 5% to $371 million; Specialty was up 21% to $108 million; and Motive Power revenues were up 28% to $336 million.\nMotive Power's growth was mostly from 22% in organic volume and 5% in currency improvements.\nThe prior year Motive Power first quarter revenues were impacted significantly by the pandemic, with a 24% decrease in revenue.\nOur Motive Power revenues for Q1 are now comparable to the first quarter of two years ago.\nEnergy Systems at a 3% increase from volume and a 3% improvement from currency, net of a 1% decrease in pricing.\nSpecialty at 18% in volume improvements along with 2% positive currency and 1% in pricing.\nWe had no impact from acquisitions in the quarter.\nOn a geographical basis, net sales for the Americas were up 13% year-over-year to $557 million with the 12% more volume and 1% in currency; EMEA was up 27% to $201 million from 18% volume, 10% improvement in currency, less 1% in pricing; Asia was up 3% at $57 million on 9% currency improvements, less 6% volume decline.\nOn a sequential basis, first quarter net sales were flat to the fourth quarter.\nOn a line of business basis, Specialty decreased 19% from a very strong Q4 due to resin shortages, which are largely behind us; Motive Power was up 1% as it rebounds from the pandemic; and Energy Systems was up 6% from organic volume.\nOn a geographical basis, Americas and EMEA were relatively flat, while Asia was up 5%.\nNow a few comments about our adjusted consolidated earnings performance.\nAs you know, we utilize certain non-GAAP measures in analyzing our Company's operating performance, specifically excluding highlighted items.\nAccordingly, my following comments concerning operating earnings and my later comments concerning diluted earnings per share exclude all highlighted items.\nOn a year-over-year basis, adjusted consolidated operating earnings in the first quarter increased approximately $14 million to $75 million, with the operating margin up 50 basis points.\nOn a sequential basis, our first quarter operating earnings dollars declined $3 million from $78 million, while the OE margin dropped 40 basis points to 9.2%, primarily due to Energy Systems results, which Dave has addressed.\nOperating expenses, when excluding highlighted items, were at 14.5% of sales for the first quarter compared to 16.1% in the prior year, as our revenue growth exceeded our spending.\nOn a substantial -- excuse me, sequential basis, our operating expenses declined $1 million and 10 basis points.\nExcluded from operating expenses recorded on a GAAP basis in Q1, our pre-tax charges of $14 million, primarily related to $6 million in Alpha and NorthStar amortization of intangibles and $8 million in restructuring charges for the previously announced closure of our flooded Motive Power manufacturing site in Hagen, Germany.\nExcluding those charges, our Motive Power business generated operating earnings of 15.1% or 470 basis points higher than the 10.4% in the first quarter of last year due to easing of pandemic-related restrictions and demand, coupled with ongoing OpEx restraint.\nThe OE dollars for Motive Power decreased over 20 -- excuse me, increased over $23 million from the prior year.\nOn a sequential basis, Motive Power's first quarter OE decreased 50 basis points from the 15.6% margin posted in the fourth quarter due to higher lead and other input costs.\nEnergy Systems operating performance percentage of 3.5% was down from last year's 8%, although it improved from last quarter's 2.6%.\nOE dollars decreased $15 million from the prior year, however, it increased $4 million from the prior quarter on higher volume.\nThe cost of higher tariffs, freight, materials and manufacturing costs continues to create headwinds.\nSpecialty operating earnings percentage of 10.6% was up from last year's 6.5% on higher volume, but down from last quarter's 13.2%.\nOE dollars increased $6 million from the prior year, but declined $6 million from a strong fourth quarter on lower revenue.\nPlease move to Slide 14.\nAs previously reflected on Slide 13, our first quarter adjusted consolidated operating earnings of $75 million was an increase of $14 million or 23% from the prior year.\nOur adjusted consolidated net earnings of $54.4 million was $15 million higher than the prior year.\nThe improvement in adjusted net earnings reflects primarily the rise in operating earnings along with lower interest expense and a small currency gain.\nOur adjusted effective income tax rate of 18% for the first quarter was slightly lower than the prior year's rate of 21% and lower than the prior quarter's rate of 19%.\nDiscrete tax items caused most of these variations.\nWe have made no adjustments for any proposed changes in taxation announced recently.\nFirst quarter earnings per share increased 36% to $1.25, which was the top of our guidance range.\nWe expect our weighted average shares for the first quarter -- excuse me, second quarter fiscal '22 to remain relatively constant with approximately 43.5 million outstanding.\nAs a reminder, we now have over $55 million in share buybacks authorized, and we purchased nearly $32 million recently.\nThis recent buyback reflects the return to our normal pattern of removing the dilutive impact of our stock comp program.\nLast week, we also announced our quarterly dividend, which remained unchanged from prior levels.\nOur balance sheet remains strong and positions us well to navigate the current economic environment.\nWe have $406 million of cash on hand, and our credit agreement leverage ratio was 1.95 times levered, which allows over $600 million in additional borrowing capacity.\nLast month, we extended and amended our credit facility on favorable terms, which is now in place through 2026.\nWe expect our leverage to remain near 2.0 times in fiscal 2022.\nWe spent $26 million on our Hagen restructuring along with $46 million in inventory growth to support higher backlogs.\nAnd as a result, our cash flow from operations was negative $48 million in the first quarter as we expected.\nThe balance bits [Phonetic] from the Hagen, Germany restructuring started in Q1 and we should exit the year with a $20 million annual run rate.\nCapital expenditures of $16 million were in line with our prior guidance.\nOur capex expectation for fiscal 2022 is $100 million and reflects major investment programs in lithium battery development and continued expansion of our TPPL capacity, including the NorthStar integration.\nWe anticipate our gross profit rate to remain near 24% in Q2 of fiscal 2022.\nAs Dave has described, we believe all three of our lines of business find their products in high demand.\nNear-term supply challenges are restricting our ability to execute fully on these opportunities.\nOur guidance range of $1.03 to $1.13 for our second fiscal quarter of FY '22 reflects the impact of these challenges along with the normal seasonality of Q2 and the added investments in product development and personnel.\n", "role": "user" }, { "content": "sees q2 adjusted earnings per share $1.03 to $1.13.\nq1'22 backlog growth of $157m.\nqtrly adjusted earnings per share $1.25.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: In addition, we will also be presenting certain non-GAAP financial measures.\nThen I will take a step back and provide an update on how we're tracking against the strategic initiatives we laid out at our 2019 Investor Day a little more than a year ago.\nAs we entered our second quarter, the COVID-19 pandemic continued to disrupt economic activity unevenly in markets around the world.\nHowever, we began to see a rebound from the viruses impact on our business throughout the period and actually exited the quarter with [Technical Issues] very close to pre-pandemic levels.\nThe US and Chinese motive power markets have recovered much faster than Western Europe, while Energy Systems and Specialty were less impacted by COVID.\nWe continue to build on the cost reductions we instituted early in the first quarter, while always staying ready to flex operations backup in response to demand recovery.\nAs you may recall, our model allows us to quickly adjust our capex and opex without impacting our revenue growth objectives or our quality of service.\nMany of the opex initiatives we have put in place will enable us to maintain an improved level of operational efficiency with our new global line of business alignment even as the demand ramps up.\nAll of our major facilities remain open and we continue to prioritize the safety of our employees as COVID cases rise around the world.\nDespite the ongoing headwinds caused by COVID-19, the diversified nature of our business was evident during the quarter as we reported solid second quarter fiscal 2021 adjusted earnings of $1 per diluted share.\nOur Specialty segment was particularly strong, especially in the transportation portion of our business.\nEnergy Systems turned in a solid quarter with the beginnings of 5G uptick becoming apparent.\nAnd while our Motive Power business still lagged Q2 prior year overall, our maintenance free TPPL NexSys PURE products have continued to outperform.\nIt appears that the COVID market disruption is accelerating our customers' interest in our new dual chemistry NexSys products.\nThis conversion to maintenance free combined with the lingering impact of COVID in Europe and our overall productivity improvements drove our decision to close our legacy flooded Motive Power factory in hog in Hagen, Germany.\nDue to improving business conditions and our streamlined cost structure, we generated exceptionally strong cash flow during the quarter, enabling an incremental $86 million in net debt reduction to achieve debt leverage of just under 2.1 times.\nWe did this while still investing in the business.\nI'd now like to provide a little more color on some of our key markets.\nOur largest segment, Energy Systems performed well during the quarter, despite the impact of the pandemic.\nIn the Americas, we saw growing momentum throughout the second quarter with improved order rates for broadband and continued robust demand for battery systems, particularly on the telecom front.\nCombined EMEA and APAC delivered double-digit year-over-year revenue growth.\nGlobal telecom carriers remain committed to investing in their networks to increase capacity and reliability.\nIn the Americas, the completion of the T-Mobile merger has led to large purchases for our cabinets, batteries and electronics, as a complete system for their 5G ramp up.\nIn addition to the direct benefits of the merger the mandated DISH spin off presents a significant opportunity for EnerSys in the quarters ahead as this fourth quarter nationwide provider looks to build their own 5G network.\nThe broadband business continues to be a story of short-term pain that will inevitably lead to exciting long-term growth for EnerSys.\nThe COVID induced work and school from home policies have stressed all broadband networks and resulted in the MSOs focusing near-term network capex on capacity augmentation over longer term network hardening programs.\nThere is no denying that the reallocation of budgets has negatively impacted our business over this period.\nHowever, there is a clear light at the end of the tunnel as two of our largest broadband customers have recently begun allocating increased capex to network powering and we have seen improved order rates in Power Project approvals, driving an upcoming recovery for our broadband segment.\nFactoring in this positive trend along with the industries clear need for long-term network power infrastructure to support increased 5G power consumption.\nWe expect the broadband business to transition from a headwind to a tailwind in the near future.\nAs noted earlier, our new maintenance free NexSys products are being well received in the market.\nI am pleased to say we have started the launch of our NexSys iON lithium motive power batteries and are in the early stages of testing and validation globally with key forklift OEMs. We have also initiated pre-launch end-user site demonstrations globally with very positive results in several large accounts.\nOur sales team is focusing the NexSys iON products on the portions of the market with the most demanding duty cycles.\nFor example, we trialed NexSys iON at a Carpet Mill that runs their fork trucks nearly 24/7, where there is very little time to recharge the batteries.\nThe increased capacity and excellent charge acceptance of NexSys iON allowed the customer to keep running while charging only during breaks.\nThe new third-generation TPPL motive power pack is also progressing on schedule, with respect to the high-speed line commissioning.\nAnd we've -- as we've discussed previously, this new product family will be using large format carbon enhanced TPPL batteries coupled with a match battery management system.\nThe carbon additive when controlled correctly will provide the user with a significant increase in energy throughput resulting in longer life.\nFurther, the addition of a battery management system integrated with the vehicles and the chargers will allow the same experience as our lithium family of products.\nThe third segment of our business Specialty, had another outstanding quarter particularly in light of the ongoing impact of COVID.\nOur results in this segment are being driven by our success in transportation where our backlog remains strong and over the road new truck demand is improving.\nThe automotive aftermarket business was very strong in the quarter following several recent contract wins, along with continued success and retail channels with distributors such as NAPA.\nWe have continued to increase EnerSys's market share in the transportation sector by leveraging our technology platform with TPPL.\nOur defense business improved sequentially in the second quarter as our thermal products continue to win more awards.\nOur ongoing expansion of these thermal products used in munitions also continues to progress.\nThe majority of these programs have capitalized on our industry-leading cobalt disulfide battery technology that provides lighter weight and extended operating times for applications in air and missile defense, air to ground weapons, and hypersonics.\nOur satellite business continues to shine as well.\nNow that I've given you a brief overview of our second quarter results and the prevailing trends in each of our business segments.\nI wanted to take a look back at the strategic initiatives we outlined in our October 2019 Investor Day, which very much remain our core areas of focus today and we are seeing excellent progress in each of these.\nAs a reminder, they include the following global initiatives.\nOne, growing the portfolio of products in our Energy Systems business, particularly in telecom with fully integrated DC power systems and small cell side powering solutions, which will accelerate our revenue growth from 5G.\nTwo, accelerating higher margin maintenance free Motive Power sales with NexSys iON and PURE.\nThree, increasing transportation market share in our specialty business; and fourth, reducing waste through continued rollout of our EnerSys Operating System.\nOur acquisition of the Alpha Technologies Group two years ago created the only fully integrated AC and DC power supply and energy storage provider for broadband telecom in energy storage systems.\nIt positioned EnerSys to provide a single source solution for fiber connectivity enclosures, small cell power, power conversion, power distribution, and energy storage back up with a nationwide engineer furnish and install organization to turnkey and maintain the project.\nThe opportunity we initially saw in office coming to fruition as large customers expanded their spending patterns from just batteries to EnerSys's complete systems offering.\nWe expect this trend to continue in the quarters ahead.\nAT&T opportunities are improving for us as they deploy 5G infrastructure for macro and RAN sites, while our strategic collaboration with Corning to speed 5G deployment through a next generation touch safe line powering system for small cells is advancing.\nThis collaboration will leverage Corning's industry leading fiber, cable and connectivity expertise and EnerSys's Technology leadership in their remote powering solutions.\nIt has been endorsed by one of our largest telecom customers.\nWe are excited by this opportunity in all of the actions we are seeing on the 5G front, to help you better understand the impact it is already having on our business.\nIt is worth noting that we have already seen $50 million of 5G-related revenue lift during this year, which we believe is only the tip of the iceberg for this long-term growth driver.\nUnfortunately, the 5G benefit was masked by the reallocated capex spending from our larger broadband customers during the quarter as discussed earlier.\nWe remain more excited and bullish than ever about the longer term impact 5G will have on our business, especially with the new technologies we are deploying to assist our customers in this mega trend.\nAs a result, we are projecting steady 6% plus CAGAR of Energy Systems sales over the next five years.\nOur next strategic initiative maintenance free Motive Power is well on track to our five-year plan.\nIn the quarter for example, while Americas flooded lead acid battery sales were down 25% year-on-year; Americas Motive Power TPPL NexSys sales were up 25% in the same period.\nAs this trend continues and demand resumes, maintenance free will comprise a larger portion of our Motive Power revenue and the higher gross profit margins will have an even more dramatic impact on our profitability.\nWe are now estimating that our maintenance free NexSys offerings will grow to be the majority of our battery business by fiscal year '25.\nWe are pleased to say that the next generation initiatives growing transportation market share in the Specialty segment has been a resounding success over the past 12 months.\nThe transportation business in the America's continues to improve as we see signs -- as we sign up new customers for ODYSSEY TPPL products in the premium automotive and trucking spaces.\nWhile still impacted by shutdowns from COVID, we grew our Transportation business by 64% this quarter with the integration of NorthStar and are currently limited only by TPPL capacity that will increase dramatically when the high speed line is fully operational.\nWe are well positioned to capitalize on the strong backlog and ongoing demand for our long-term -- and our -- as our long-term transportation sales outlook matches our planned capacity over the next five years.\nAt this point the integration of NorthStar is nearly complete, ODYSSEY branded automotive products are now being produced in NorthStar factories and our new high-speed line is proceeding through its commissioning in the newest plant with commercial revenue expected before the end of this calendar year.\nNorthStar factors report to a TPPL global leadership team to more effectively share best business practices with our three other TPPL factories.\nManaging TPPL under one global team has been critical to our ability to integrate NorthStar and increase production capacity in such a short period of time.\nDespite completing the integration, however, we've been hampered by under absorption at our factories due to COVID, as well as the inefficiencies inherent in all start-ups.\nThese inefficiencies include the time necessary to hire new people and train them on new products and systems.\nThis was more challenging in a period when many government incentives paid them to stay unemployed.\nThese short-term manufacturing inefficiencies have masked other areas of operational improvement, which will contribute to shareholder value in years to come.\nWhile we are clearly on the right track and beginning to see the benefits of each of these initiatives, we estimate COVID-19 has delayed our progress against our Investor Day model by three to four quarters.\nWith that in mind, during his portion of the call, Mike will provide an update on the plan we laid out during Investor Day.\nI'd like to conclude by saying that despite the challenges we've continued to confront with the pandemic, I am very proud of how our team has operated in this new environment.\nLooking ahead, we are extremely excited by the accelerated 5G build out and the significant opportunity for our industry-leading TPPL product provide us customers continue to seek a maintenance free solution to their critical power needs.\nWith that, I'll now ask Mike to provide further information on our second quarter results and go forward guidance.\nHowever, I am starting with Slide nine.\nOur second quarter net sales decreased 7% over the prior year to $708 million, due to an 11% decrease from volume, a 1% decrease in pricing, net of 1% increase from currency and a 4% increase from acquisitions.\nOn a line of business basis, our second quarter net sales in Motive Power were down 21% to $264 million and Energy System net sales were down 1% at $341 million, while Specialty increased 24% in the second quarter to $104 million.\nMotive Power suffered a 21% decline in volume, due to the pandemic and a 1% decline in price, net of a 1% increase in FX.\nEnergy Systems had a 4% increase from the NorthStar acquisition and a 1% improvement from currency offset by decreases of 1% and 5% in pricing and volume respectively.\nSpecialty had 17% from the NorthStar acquisition less 9% in volume improvements and 1% increase from FX, net of a 3% decline in price and mix.\nOn a geographical basis, net sales for the Americas were down 8% year-over-year to $481 million with an 11% volume drop and a 1% price decline, net of a 4% increase from acquisitions, offset by 1% decrease from currency.\nEMEA had a 6% -- was down 6% to $172 million on 13% volume and 2% price declines with 5% improvements in currency and 4% from acquisitions, while Asia was up 3% to $56 million, due primarily to currency.\nPlease now refer to Slide 10.\nOn a sequential basis, second quarter net sales, were up slightly, compared to the first quarter driven by translation improvements.\nOn a line of business basis, specialty increased 17% with NorthStar starting to contribute its capacity for transportation sales, while Motive Power was flat and Energy Systems was down 4% on soft broadband revenues.\nOn a geographic basis, Americas were down 2%, EMEA was up 8%, while Asia was up 1%.\nNow few comments about our adjusted consolidated operating earnings performance.\nAs you know, we utilize certain non-GAAP measures in analyzing our company's operating performance, specifically excluding highlighted items.\nAccordingly my following comments concerning operating earnings and my later comments concerning diluted earnings per share excluded all highlighted items.\nOn a year-over-year basis, adjusted consolidated operating earnings in the second quarter decreased approximately $9 million to $66 million with the operating margin down 50 basis points.\nLower commodity cost and operating expenses were not enough to offset the volume declines and higher manufacturing costs.\nHowever, on a sequential basis, our second quarter operating earnings improved 70 basis points to 9.35%.\nOperating expenses when excluding highlighted items were at 15.7% of sales for the second quarter, compared to 16.1% in the prior year as we reduced our spending by $11 million year-over-year and nearly $3 million sequentially.\nExcluded from operating expenses recorded on a GAAP basis in Q2, our pre-tax charges of $11 million, primarily related to $6 million in Alpha and NorthStar amortization and $3 million in restructuring charges.\nExcluding those charges, our Motive Power business segment achieved an operating earnings percentage of 9.2%, which was 120 basis points lower than the 10.4% in the second quarter of last year, due to the 21% lower volume mentioned earlier in driving a $11 million drop in operating earnings.\nOn a sequential basis Motive Power's second quarter OE also dropped to 120 basis points from the 10.4% margin posted in the first quarter, due primarily to the reduction of $2.3 million in recovery on business interruption proceeds from the $3.8 million in Q1, down to $1.5 million.\nThe recovery on our business interruption claim from the Richmond fire has nearly concluded as has most of the reconstruction of the facility.\nWe received $5 million in April, which was reflected in last fiscal year's fourth quarter results.\nWe received another $4 million in May, which was recorded in the first quarter of fiscal '21 and we received over $1 million in July, which are reflected in Q2's results.\nWe expect to collect another $2 million on the matter, bringing the total recovered to nearly $13 million.\nOverall, the claim including property loss and cleanup along with the business recovery, totaled approximately $45 million.\nEnergy Systems operating earnings percentage of 8.8% was up from last year's 8.6% and up from last quarter's 8%.\nOE dollars decreased $0.5 million from the prior year primarily from lower operating expenses and increased $2 million from the prior quarter on lower commodity costs and operating expenses.\nSpecialty operating earnings percentage of 11.4% was down from last year's 12.3%, but up from last quarter's 6.5%.\nOE dollars decreased nearly $2 million from the prior year on higher volume -- excuse me, they increased nearly $2 million from the prior year on higher volume and increased $6 million from the prior quarter on higher volume and lower manufacturing variances.\nPlease move to Slide 12.\nAs previously reflected on Slide 11, our second quarter adjusted consolidated operating earnings of $66 million was a decrease in $9 million or 12% from the prior year.\nOur adjusted consolidated net earnings of $43 million was nearly $10 million lower than the prior year.\nThe decline in adjusted net earnings reflect the decline in operating earnings, as well as a $4 million foreign currency loss, primarily on unfavorable exchange rates for intercompany balances.\nOur adjusted effective income tax rate of 17% for the second quarter was lower than the prior year's rate of 18% and lower than the prior quarter's rate of 21%.\nDiscrete tax items caused most of these variations.\nFiscal 2019s full-year tax rate was 17%, while our fiscal 2020 tax rate was just below 18%, which is consistent with our expectations for fiscal 2021.\nEPS decreased 19% to $1 on lower net earnings.\nWe expect our third fiscal quarter of 2021 to remain near the $43.1 million of weighted average shares outstanding in the second quarter.\nAs a reminder, we still have nearly $50 million of share buybacks authorized, but have no immediate plans to execute any repurchases with perhaps the exception of the modest annual repurchase made to offset employee stock dilution.\nOur recently announced dividend remains unchanged.\nWe have included our year-to-date results on Slides 13 and 14 for your information, but I do not intend to cover these in detail.\nOur balance sheet remains strong and well positioned for us to navigate the current economic environment.\nWe now have nearly $414 million of cash on hand and our credit agreement leverage ratio is now 2.1 times, which allows over $600 million in additional borrowing capacity.\nWe expect our leverage to remain below 2.5 times in fiscal 2021.\nWe generated over $87 million in free cash flow in the second fiscal quarter of 2021.\nOur first half free cash flow generation was very strong at $177 million.\nOur receivable collections also remained very good with our DSO matching its historical low.\nCapital expenditures of $40 million were at our expectations for the first half of the fiscal year.\nOur capex expectation for fiscal '21 of approximately $65 million to $70 million has expanded slightly as the economic outlook has improved.\nOur major investment programs, those being lithium battery development continued expansion of our TPPL capacity, including the NorthStar integration.\nThe installation of our high-speed line and the transition of NorthStar products for the European market to our French factory are all progressing as planned.\nOur high-speed line is being commissioned this month and should soon commence operations.\nEven with these investments, we've had retained the agility to flex our manufacturing footprint as needed.\nOur decision announced last night to close our Hagen, Germany facility after nearly 25-years of group ownership reflects our assessment that; one, the transition of maintenance free solutions for forklifts; two, the collective oversupply of flooded batteries for forklifts in EMEA along with; three, the continued slump in demand from the pandemic and other market conditions.\nIt was the decision we struggled with given the strength of the workforce and our lengthy ownership of that facility.\nIt will cost in excess of $80 million with 75% being cash charges for severance, decommissioning, cleaning and closing open contracts with vendors, but it should payback in under four years and we can handle all expected demand from our other existing factories.\nWe anticipate our gross profit rate to remain near 25% in Q3 of fiscal '21, as the lower utilization in some of our factories over the July to September months will not hit our P&L until this third fiscal period, which we are now in.\nWe expect expanding margins thereafter.\nAs we had previously mentioned, we recently took the time to refresh our outlook from that provided on our Investor Day last fall.\nAs Dave mentioned, we still feel the core of our expectations remain intact beyond the nine to 12 month delay due to the pandemic in reaching our previously provided target for an additional $300 million in incremental adjusted net earnings.\nWe believe the most profound updates are that; number one, the conversion to maintenance free solutions for Motive Power is progressing faster than initially expected, thus precipitating the closure of our Motive Power factory in Hagen, Germany.\nNumber two, our increased confidence in our solutions for the 5G build out.\nNumber three, stronger-than-expected demand in the automotive aftermarket.\nNumber four, our planned TPPL capacity expansions will still satisfy our projected needs; and five, our performance in this recession has been as we predicted on Investor Day, if a recession were to occur.\nAs Dave described, we believe Motive Power markets are recovering, while our Energy Systems and Specialty markets continue to have bright prospects.\nWith some of the uncertainty from our elections in the pandemic behind us, we currently feel we have enough visibility to provide a guidance range of $1.17 to $1.21 in our third fiscal quarter.\n", "role": "user" }, { "content": "sees q3 adjusted earnings per share $1.17 to $1.23.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Before we get started, I would like to wish everybody a happy Veterans Day.\nIn addition, we will also be presenting certain non-GAAP financial measures, particularly concerning our adjusted consolidated operating earnings performance and our adjusted diluted earnings per share, which excludes certain highlighted items.\nOur second quarter results reflected a combination of record market demand across all of our segments, with Q2 '22 orders 36% higher than the same period pre-COVID fiscal year '20, but accompanied by continued inflation and supply chain challenges.\nWe reported second quarter adjusted earnings of $1.01 per diluted share, which was a slight increase over the second quarter of last year.\nOur Motive Power and Specialty businesses delivered better than expected results, while Energy Systems continue to be disproportionately impacted by its Asia-sourced supply chain.\nStrong demand led to our quarter end backlog reaching an all-time record exceeding $1 billion, which is more than double normalized levels.\nThe backlog growth primarily occurred in our Energy Systems and Specialty lines of business and is indicative of extremely robust end market demand over and above the COVID recovery.\nLet me take a minute to provide you some added color of the current economic environment.\nAs has been a common theme among most industrial companies this earnings cycle, we are facing a number of challenges in the wake of the global economic recovery as businesses aggressively compete for labor, materials and transportation, all while still navigating isolated COVID disruptions.\nThe trend we saw in Q1 has continued with nearly $20 million of sequential cost increases in freight, wages, lead, non-lead commodities and semiconductors.\nOur team continues to take aggressive actions to mitigate these pressures, including the implementation of additional price increases, resourcing of materials and engineering redesigns.\nAs these issues stabilize, our financial results will more fully reflect our record backlog, enhanced profitability and across-the-board demand for our products.\nI'd now like to provide a little more color on some of our key markets.\nLet's start with our largest segment, Energy Systems, which continues to see robust demand with Q2 '22 order rates increasing over 50% compared to pre-COVID Q2 '20.\nWe saw exceptionally strong demand in 5G mid spectrum and broadband.\nWe also received our first orders from the California Public Utilities' Public Safety Grid Shutdown Extended Network Backup Program.\nShipments for these orders are expected to ramp in Q3, Q4 and into fiscal year 2023.\nIn addition, we believe these programs may be extended to other states presenting another opportunity for future growth.\nCountering the strong demand is the fact that Energy Systems has our longest and most complicated supply chain, which was therefore the hardest hit by the macroeconomic environment in the quarter.\nThe Energy Systems price recapture cycle is longer due to the project nature of this business while working through the contractual obligations of its lengthy backlog.\nAs a result, in Q2, ongoing pricing actions lagged inflation and were largely offset by mix with more service revenue offsetting higher margin electronics orders that could not be shipped or could not be delivered due to chip shortages.\nTariff mitigation strategies, including our efforts to move contract manufacturing out of China and closer to home, continue to be slowed by semiconductor availability.\nFreight costs for Energy Systems alone rose sequentially an additional $6 million in the quarter, doubling the prior year level.\nWhile Energy Systems' operating earnings this quarter were disappointing, market demand and macro trends, combined with additional price increases and the resourcing of electronics, still point to an extremely positive long-term path for the business.\nHowever, due to the current state of the global supply chain, especially availability of semiconductors, our third quarter will remain challenged.\nThat said, as many of our commodities' inflation trends appear to have peaked, we are confident our price recapture initiatives will catch up in the near future.\nDespite the challenges we noted in our Energy Systems business, one of EnerSys' core strengths is our diversification.\nOur Motive Power business continued its positive momentum during the quarter outperforming both top-line and profitability expectations as demand returned to pre-COVID levels.\nRevenue decreased $15 million from Q1 due to the traditional European summer holidays.\nNevertheless, we believe this business has not yet reached its full potential as our OEM customers' demand has been hampered by their ability to secure chips.\nMargins improved as a result of price and mix improvements as well as ongoing opex efficiencies with Motive Power enjoying nearly 20% higher operating earnings than the same pre-COVID period in F '20.\nOur NexSys TPPL and recently released lithium variants continue to generate enthusiasm in the market.\nIn addition, the restructuring of our Hagen Germany facility nears completion ahead of schedule on cost and timing, with savings beginning to be realized.\nWe will also continue to extract additional savings with further standardization of our legacy product offering and other business transformation initiatives.\nWe remain well positioned to benefit from a steady recovery in this business throughout the balance of the fiscal year.\nSimilar to Motive, our Specialty business delivered a solid quarter.\nA&D is performing well and demand in the transportation business remains extremely strong, slowed [Phonetic] only by TPPL supply constraints in Americas and Europe.\nWe expect very robust transportation growth in Q3 as a result of our focus on aligning capacity with demand and our belief that the truck market will continue its growth into calendar year '22 as a result of the improving economic -- improving economy and their anticipation that chip shortages will improve.\nOur Thin Plate Pure Lead production capacity continues to grow and we will exit the fiscal year at our planned run rate of $1.2 billion per year.\nThe financial performance for TPPL manufacturing has been under significant pressure all year long with COVID-related staffing and supply chain shortages hampering productivity.\nWe expect significant reductions in manufacturing variances next fiscal year as the supply chain issues slowly subside.\nReduced manufacturing variances combined with a record backlog and continued strong demand signals from our transportation customers gives us immense confidence in the future of our Specialty business.\nOur product road map is one of the most exciting areas of our business as the technology advancement of our product pipeline has been long in the making, but well worth the wait.\nWe have fully launched 11 lithium variants for Motive Power Group and continue to expand our product portfolio.\nWe have received OEM approvals and the family has successfully completed, all witness to our testing.\nThe demand for lithium products throughout our Energy Systems Group also continues to grow.\nIn addition to the lithium portion of the California PUC success mentioned earlier, telecom and residential home energy products are all performing well on UL tests.\nProgress on the development of the TouchSafe product with Corning continues to go well.\nCustomer plans for their high-frequency networks using this solution are accelerating.\nLast but certainly not least, our EV fast charge and storage initiative is quickly moving forward.\nFeedback from our potential launch partner customer has been very positive, including speed and development as well as the level of software maturity.\nWe should see our first revenue for this product next fiscal year.\nEV charging is a key focus of the recently passed Infrastructure Bill.\nLooking ahead, our near-term challenges revolve around addressing global supply chain issues as well as rising commodity and labor costs and shortages.\nWe are actively working to mitigate these pressures through incremental price increases, alternative sourcing, engineering redesigns and aggressive hiring actions.\nWe will remain nimble as we adjust to the changing environment.\nDespite these hurdles, there is a lot about EnerSys to generate real excitement.\nCurrent demand for our products is greater than I can ever remember, fueled by a massive 5G build-out and high growth categories such as transportation.\nOur future growth opportunities include significant investments in rural broadband, high frequency small cell deployment, EV charging, home energy storage, transportation market share growth, increased defense allocations and material handling OEMs returning to normalized levels.\nWe will continue to execute on our strategic initiatives and look forward to providing you updates on our progress in the quarters ahead.\nWith that, I'll now ask Mike to provide further information on our second quarter results and go-forward guidance.\nI am starting with Slide 10.\nOur second quarter net sales increased 12% over the prior year to $791 million due to an 11% increase from volume and 1% from price, net of mix.\nOn a line of business basis, our second quarter net sales in Energy Systems were up 9% to $370 million, Specialty was down 3% to $101 million and Motive Power revenues were up 22% to $321 million.\nMotive Power's improvement was mostly from 20% growth in organic volume and 2% improvement from pricing.\nThe prior year Motive Power second quarter revenues were significantly impacted by the pandemic, resulting in a 21% decrease in organic volume.\nOur Motive Power revenues for H1 of this year, however, are comparable to the pre-pandemic levels of two years ago.\nEnergy Systems had a 9% increase from volume as well as 1% improvement from FX, but had a 1% decrease in price after including negative mix.\nSpecialty had a 5% pricing improvement that was offset by an 8% erosion in volume due largely to delayed shipments.\nWe had no impact on revenue from acquisitions in the quarter.\nOn a geographical basis, net sales for the Americas were up 14% year-over-year to $550 million, with 14% more volume.\nEMEA was up 5% to $180 million from a 3% increase in volume and 2% in pricing.\nAsia was up 10% at $661 million on 7% more volume and 3% currency improvements.\nOn a sequential basis, moving to Slide 11, our second quarter net sales were down 3% from the first quarter, largely due to the normal vacation holidays in Europe and supply chain shortages.\nOn a line of business basis, Specialty decreased 6% with supply constraints pushing out order fulfillments into Q3.\nMotive Power was down 5% due to the European holiday season previously mentioned and EMEA was flat -- excuse me, Energy Systems was flat.\nOn a geographical basis, Americas was also relatively flat and Asia revenues were up 8%, while EMEA was down 11% mostly from lower volumes.\nOn a year-over-year basis, adjusted consolidated operating earnings in the second quarter decreased approximately $5 million to $61 million with the operating margin down 160 basis points.\nOn a sequential basis, our second quarter operating earnings dollars eroded $14 million from $75 million, while the OE margin decreased 150 basis points to 7.8%, primarily due to the persistent supply chain headwinds and inflation in Energy Systems, which Dave has addressed.\nOperating expenses, when excluding highlighted items, were at 14% of sales for the second quarter compared to 15.7% in the prior year and 16.1% from two years ago as our revenue growth exceeded our spending growth and we have maintained a more efficient operating leverage.\nOn a sequential basis, our operating expenses were relatively flat.\nExcluded from operating expenses recorded on a GAAP basis in Q2 are pre-tax charges of approximately $12 million related to $6 million in Alpha and NorthStar amortizations and $4 million in restructuring charges from the previously announced closure of our flooded Motive Power manufacturing site in Hagen, Germany.\nExcluding those charges, our Motive Power business generated operating earnings of $41 million or 12.8%, which was 370 basis points higher than the 9.2% in the second quarter of last year due to strong demand and easing of pandemic-related restrictions, favorable mix from maintenance-free growth and ongoing opex constraint or restraint.\nOperating earnings dollars for Motive Power increased over $17 million from the prior year and $6 million from two years ago.\nOn a sequential basis, Motive Power's second quarter OE decreased 220 basis points from the 15.1% margin posted in the first quarter due to the vacation season volume decline noted earlier, along with higher lead and other input costs.\nEnergy Systems operating earnings percentage of 2.3% was down from last year's 8.8% and the prior quarter's 3.5%.\nOE dollars of $9 million were $5 million below last quarter and $22 million below prior year.\nThe cost from higher freight, tariffs and materials caused the OE erosion with unfavorable mix from supply shortages offsetting the lagging pricing improvement realization.\nSpecialty operating earnings percentage of 11.8% was up from last quarter's 10.6% and last year's 11.4%.\nOE dollars were largely flat sequentially and year-on-year, driving the margin improvement from improving pricing was the lower sales volume.\nPlease move to Slide 13.\nAs previously reflected on Slide 12, our second quarter adjusted consolidated operating earnings of $61 million was a decrease of $5 million or 7% from the prior year.\nOur adjusted consolidated net earnings of $44 million was in line with prior year but $11 million lower than the prior quarter.\nOur adjusted net earnings reflect the changes in operating earnings along with the lower adjusted tax rate.\nOur adjusted effective income tax rate of 16% for the second quarter was slightly below the prior year's rate of 17% and lower than the prior quarter's rate of 18%.\nDiscrete tax items caused most of these variations.\nSecond quarter earnings per share rose slightly year-over-year to $1.01, although it was slightly below the bottom of our guidance range.\nWe expect our weighted average shares in the third fiscal quarter of 2022 to be approximately 42.5 million versus the 43.3 million in the second quarter.\nOur Board of Directors also recently renewed the $100 million share buyback authorization we had in place over the last two years that was completed with these recent October purchases.\nLast week, we also announced our quarterly dividend, which remains unchanged from prior levels.\nSlides 14 and 15 reflect the year-to-date results and are provided for your reference, but I don't intend to cover these at this time.\nOur balance sheet remains strong and positions us well to navigate the current economic environment.\nWe have $408 million of cash on hand and our credit agreement leverage ratio is now at 2.0 times, which allows nearly $550 million in additional borrowing capacity.\nIn July, we extended and amended our credit facility on favorable terms, which now is in place through 2026.\nWe expect our leverage ratio to remain between 2.0 and 2.5 times in fiscal 2022.\nOur year-to-date cash flow from operations was a negative $66 million.\nIncluded in that amount was $28 million in spending on the previously announced restructuring of our Hagen, Germany Motive Power Plant, which is in the second quarters -- which in the second quarter started delivering on cost savings that should exceed $20 million annually.\nThe negative operating cash flow was also due to our inventory expanding $123 million to meet rising revenues as well as from higher input costs and transit times, along with the other inefficiencies induced by supply chain disruptions.\nCapital expenditures of $35 million were in line with our prior guidance.\nOur capex expectation for fiscal 2022 remains approximately $100 million and reflects major investment programs in lithium battery development and our continued expansion of our TPPL capacity.\nWe anticipate our gross profit rate to remain near 22% in Q3 of fiscal 2022.\nAs Dave has described, all three of our lines of business find their products in high demand.\nNear-term supply challenges are restricting our ability to execute fully on these opportunities.\nAs a result, our guidance range of $0.96 to $1.06 in our third fiscal quarter of 2022 reflects the impact of these supply chain challenges, which we continue to see as temporary.\nPlease move to Slide 17.\nOn a longer-term basis, we recently renewed -- or reviewed our updated five-year plan with our Board of Directors.\nWe remain confident that our top-line growth and overall profitability goals are still achievable with respect to the final years' deliverables.\nHowever, those targets, as previously communicated, will take an additional year to be achieved compared to our Investor Day model in reflection of the delays the pandemic and supply chain challenges have had not only on our own progress but that of our customers and their broader markets.\nAfter more than 25 years with the company and 12 years as Chief Financial Officer, Mike has announced his intention to retire at the end of this fiscal year.\nWhile we will miss his wisdom and experience, we are very confident that Andy Funk is the right person to fill this role and help EnerSys complete its transition from a battery maker to a world-class energy systems leader.\n", "role": "user" }, { "content": "sees q3 adjusted earnings per share $0.96 to $1.06.\nqtrly non-gaap earnings per share $1.01.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 a list of factors which could affect our future results, including our earnings estimates.\nIn addition, we will also be presenting certain non-GAAP financial measures.\nOur third quarter reflected strong demand for our products and services, with order trends accelerating during the period.\nThe strength of our business was even more impressive considering the ongoing headwinds created by the COVID-19 pandemic, which continued to disrupt economic activity around the world.\nWe've been able to maintain cohesion throughout the EnerSys workforce despite a number of positive, symptomatic and close contact cases among our employee base.\nThose cases can lead to disruption in daily production schedules as workers are sent home in order to comply with COVID-19 protocols.\nEnerSys continues to emphasize social distancing, hygiene, the use of masks and reminding our employees to follow the same guidelines in their personal activities, which has helped to mitigate the impact compared to many companies, but we have not been immune.\nDespite the ongoing challenges caused by COVID-19, the demand for EnerSys products was clear during the period as we reported strong third quarter fiscal '21 adjusted earnings of $1.27 per diluted share, which included a $0.10 benefit from the settlement of our claim related to the September 29 fire in our Richmond, Kentucky facility less $0.03 per share in foreign currency losses.\nEnergy Systems benefited from telecom driven 5G growth in the Americas and our motive power business saw marked revenue and earnings improvement over the second fiscal quarter.\nOur specialty segment continued its positive momentum in our third quarter, bolstered by our growing transportation backlog.\nI'd now like to provide a little more color on some of our key markets.\nBut before I begin, I would like to comment on how many of our customers across all of our lines of business have signaled increasing demand and alerted us to be ready.\nThere seems to be pent-up demand which should accelerate near-term growth.\nOur largest segment, Energy Systems, has struggled in recent quarters from slow broadband orders.\nThe MSOs had focused on increasing node capacity for their work-from-home demand.\nThose MSOs have now resumed strong orders for our products, which increased their networks power capacity.\nEven more encouraging, MSO participation in recent wireless spectrum auctions and their enunciation of their intention to carry their 5G and 4G traffic on their own networks validates the broadband growth assumptions of our Alpha acquisition strategy.\nTelecom 5G growth is also accelerating in the Americas, confirming their commitment to invest in their networks to increase capacity and reliability.\nOur 5G small cell powering project collaboration with Corning is progressing even better than we had hoped.\nIn this quarter, we believe the network investment in 5G has, for the first time, surpassed the existing 4G network spend.\nIt is also encouraging to see data center markets improving.\nIn addition to our traditional businesses, renewable energy markets continue to expand with incredible opportunities for storage applications.\nThe new administration has clearly focused on this emerging market.\nWe plan to respond by updating our product offering using the same modular approach from our other lines of business.\nWe will share more specifics with you on how we will participate in renewable energy storage and EV charging in coming calls.\nWhen you consider forklifts, we are currently the leader in charging electric vehicles globally, and this technology is easily transferred.\nLastly, we are beginning to see the positive impact of the global alignment of the Energy Systems organization as we leverage regional expertise and key account development.\nOur motive power business showed considerable improvement in the period compared to the second quarter, delivering higher sequential revenue and operating earnings.\nOur order rates have surpassed the pre-COVID levels of a year ago despite sporadic pandemic-related restrictions, particularly in EMEA.\nThe Hagen, Germany restructuring is ahead of schedule and forecasted to beat its budget.\nAlthough those restructuring benefits have not yet impacted our earnings, they will grow in magnitude throughout calendar year 2021, reaching nearly a $20 million annual run rate by the end of fiscal year 2022.\nAnother exciting development is the launch of our NexSys iON lithium motive power batteries.\nSeveral OEMs continue to accelerate their adoption of this chemistry, and our sales team is focusing efforts for NexSys iON products on the portions of the market with the most demanding duty cycles.\nThe third segment of our business, Specialty, maintained its positive momentum with another strong quarter, which was slowed only by the ongoing impact of COVID on our capacity ramp, thereby delaying our ability to meet surging demand.\nOur transportation backlog continued to grow as we added a significant number of customers to the ODYSSEY channels.\nWe currently are working with nearly every major player in the aftermarket distribution channel, along with many key truck OEMs and fleet operators.\nTPPL gained further traction in the quarter.\nThe high-speed line is up and running, and we are adding a second shift to our Springfield plant and bringing on additional oxide and pasting capacity.\nWe're also encouraged by several new awards in our aerospace and defense business.\nBefore wrapping up, I'd like to take a minute to talk about some exciting advancements we've made on the technology front.\nWe mentioned our lithium launch for motive power.\nOur customers have begun to order our new NexSys iON products, and initial customer feedback is very positive.\nWe have also achieved our first OEM approval and continue to work with other material handling manufacturers.\nThe demand for fully integrated products has significantly increased for our Energy Systems group.\nTo ensure necessary product development keeps up with the market's pace of change, we are aggressively hiring engineers.\nOur emphasis is on telecom, home and industrial energy storage.\nMoreover, we are accelerating the development of high-voltage electric vehicle fast-charging stations using batteries to speed the process.\nA considerable number of the building blocks have already been developed for our material handling program, allowing extension into these new markets with substantial growth potential.\nOur ability to stay on the cutting-edge of new technology development, while continuing to leverage core lead acid products, will further enhance our competitive edge in the quarters and years ahead.\nIn conclusion, I continue to be humbled by our employees' ability deliver in the face of the ongoing global pandemic, quickly adapting to unforeseen challenges by remaining focused on delivering the products and services our customers have come to expect.\nOur overall strategy remains unchanged: one, to accelerate higher-margin maintenance-free motive power sales with NexSys iON and NexSys PURE; two, to grow the portfolio of products in our Energy Systems business, particularly in telecom, with fully integrated DC power systems and small cell site powering solutions which will accelerate our growth from 5G; three, to increase transportation market share in our Specialty business; and finally, to reduce waste through the continued rollout of our EnerSys operating system.\nAs we continue to execute on each of these initiatives, the strength of the EnerSys platform and our position as the global leader in stored energy solutions will drive additional long-term value for our shareholders for years to come.\nWith that, I'll now ask Mike to provide further information on our third quarter results and fourth quarter guidance.\nI am starting with slide eight.\nOur third quarter net sales decreased 2% over the prior year to $751 million due to a 3% decrease from volume, net of a 1% increase from currency.\nOn a line of business basis, our third quarter net sales in the motive power were down 4% to $304 million, while Energy Systems net sales were down 2% at $337 million, while specialty increased 7% in the third quarter to $109 million.\nMotive power suffered a 5% decline in volume due to the pandemic, net of a 1% increase in FX.\nEnergy Systems had a 4% decrease from volume, net of a 2% improvement from currency.\nSpecialty added 6% in volume improvements and 1% increase from currency.\nThere were no notable changes in pricing, and we had no impact from acquisitions.\nOn a geographical basis, net sales for the Americas were down 1% year-over-year to $499 million, with a 1-point decrease from currency.\nEMEA was down 4% to $194 million on a 9% volume decline, net of a 5% improvement in currency, while Asia was flat at $58 million.\nPlease now refer to slide nine.\nOn a sequential basis, third quarter net sales were up 6% compared to the second quarter, driven by volume improvements.\nOn a line of business basis, Specialty increased 5%, with NorthStar continuing to contribute its capacity for transportation sales.\nAnd motive power was up 15% as it rebounds from the pandemic, while Energy Systems was down 1%.\nOn a geographical basis, Americas was up 4%, EMEA was up 13% and Asia was up 4%.\nNow a few comments about our adjusted consolidated earnings performance.\nAs you know, we utilize certain non-GAAP measures in analyzing our company's operating performance, specifically excluding the highlighted items.\nAccordingly, my following comments concerning operating earnings and my later comments concerning diluted earnings per share exclude all highlighted items.\nOn a year-over-year basis, adjusted consolidated operating earnings in the third quarter increased approximately $15 million to $78 million, with the operating margin up 210 basis points.\nOn a sequential basis, our third quarter operating earnings improved $12 million or 110 basis points to 10.4%.\nWe settled our claim for the Richmond fire, which was -- which resulted in a $6 million benefit in the quarter.\n$4 million was a gain on the replacement of equipment reflected in operating expenses from the property policy, while $2 million was a final recovery on the business interruption policy and is credited to cost of sales.\nOperating expenses when excluding highlighted items were at 14.8% of sales for the third quarter compared to $16.4 million in the prior year as we reduced our spending by $15 million year-over-year and by 100 basis points sequentially.\nExcluded from operating expenses recorded on a GAAP basis in Q3, our pre-tax charges of $22 million, primarily related to $6 million in Alpha and NorthStar amortization and $12 million in restructuring charges for the previously announced closure of our flooded motive power manufacturing site in Hagen, Germany.\nExcluding those charges, our motive power business achieved operating earnings of 13.3% or 330 basis points higher than the 10% in the third quarter of last year, due primarily to the insurance claim recovery of $6 million described earlier.\nOn a sequential basis, motive power's third quarter OE also increased 420 basis points from the 9.2% posted in the second quarter, due primarily to sequential increases of nearly $5 million in recovery of the business interruption and other proceeds from the Richmond fire.\nOE dollars for motive power increased nearly $9 million from the prior year despite lower volume due to its lower operating expenses and $6 million in insurance recovery, while OE increased $16 million from the prior quarter on higher volume and $5 million for more in insurance recovery.\nThe Richmond fire damage which has since been repaired or replaced and now a more capable, safer facility is in operation.\nPlease see our 10-Q for more specifics on cash received and the related accounting.\nMeanwhile, Energy Systems operating earnings percentage of 7.4% was up from last year's 6.3%, but down from last quarter's 8.8%.\nOE dollars increased $3 million from the prior year, primarily from lower operating expenses, but decreased $5 million from the prior quarter on lower volume and higher operating expenses.\nSpecialty operating earnings percentage of 11.9% was up from last year's 10.1% and up from last quarter's 11.4%.\nOE dollars increased nearly $3 million from the prior year on higher volume and lower operating expenses while increasing $1 million from the prior quarter on higher volume.\nPlease move to slide 11.\nAs previously reflected on slide 10, our third quarter adjusted consolidated operating earnings of $78 million was an increase of $15 million or 23% from the prior year.\nOur adjusted consolidated net earnings of $55 million was nearly $11 million higher than the prior year.\nImprovements in the adjusted net earnings reflect the rise in operating earnings, net $3 million in foreign currency losses, primarily on unfavorable rate changes on intercompany borrowings.\nOur adjusted effective tax rate of 17% for the third quarter was slightly higher than the prior year's rate of 16%, but in line with the prior quarter's rate of 17%.\nDiscrete tax items caused most of these variations.\nFiscal 2019's full year rate was 17%, while our fiscal 2020 rate was 18%, which is consistent with our current expectations for fiscal 2021.\nEPS increased 22% to $1.27 on higher net earnings.\nWe expect our final quarter of fiscal 2021 to increase slightly -- the outstanding shares to it increased slightly from the third quarter as higher share prices increased dilution from employee stock programs.\nAs a reminder, we still have nearly $50 million of share buybacks authorized, but have no immediate plans to execute any repurchases with perhaps the exception of the modest annual repurchase made to offset employee stock plan dilution.\nOur recently announced dividend remains unchanged.\nWe have also included our year-to-date results on slides 12 and 13 for your information, but I do not intend to cover these in detail.\nOur balance sheet remains strong, and we are well-positioned for us to navigate the current economic environment.\nWe now have nearly $489 million of cash on hand, and our credit agreement leverage ratio is below 2.0 times, which allows over $600 million in committed additional borrowing capacity.\nWe expect our leverage ratio to remain below 2.0 times for the balance of fiscal 2021.\nWe generated over $218 million in free cash flow through three quarters of fiscal 2021.\nOur Q3 free cash flow generation was very strong at $41 million despite the drag of rising working capital from increased revenue.\nCapital expenditures year-to-date of $54 million were at our expectations.\nOur capital expectation for fiscal 2021 of $75 million has expanded again slightly as the economic outlook improved.\nOur major investment programs, those being: the lithium battery development; continued expansion of our TPPL capacity, including the NorthStar integration; the integration of our high-speed line and the transition in NorthStar products for European markets to our French factory are all progressing as planned.\nOur high-speed line has completed its commissioning and is expanding to a second shift this month.\nEven with these investments, we have also retained the agility to flex our manufacturing footprint as needed.\nOur closure announced last November of our Hagan, Germany facility has progressed better than our expectations in terms of speed and cost.\nSo we believe we will begin enjoying about half of the expected $20 million per year of savings next fiscal year, with the full benefit thereafter.\nWe anticipate our gross profit rate to remain near 25% in Q4 of fiscal 2021 as lower utilization in some of our factories over the holidays and from enhanced COVID restrictions will impact our P&L in Q4.\nWe have initiated price increases in our fourth quarter to mitigate the rising costs of many of our non-led inputs, which should maintain our margins.\nAs David has described, we believe motive power markets are recovering, while our Energy Systems and Specialty markets continue to have bright prospects.\nWith some of the uncertainty from our election and the pandemic behind us, we currently feel we have enough visibility to provide guidance in the range of $1.25 to $1.31 in our fourth fiscal quarter.\n", "role": "user" }, { "content": "qtrly adjusted earnings per share $1.27.\n", "role": "assistant" } ]