doc
stringlengths 495
21.2k
| summaries
stringlengths 24
3.79k
| labels
stringlengths 5
303
|
|---|---|---|
For the second quarter, Hilltop reported net income of $99 million or $1.21 per diluted share.
Return on average assets for the period was 2.29% and return on average equity was 16.4%.
PlainsCapital Bank generated pre-tax income of $87 million compared to a pre-tax loss of $17 million in Q2 2020.
Improvements in the economic outlook and positive credit migration drove a $29 million reversal of provision, compared to a provision expense of $66 million in Q2 2020.
Strong deposit growth has continued with average interest-bearing deposits, excluding broker deposits and HilltopSecurities sweep deposits, increasing by 26% from Q2 2020.
This growth was partially offset by the planned run-off of approximately $858 million in broker deposits and the reduction in HilltopSecurities sweep deposits of approximately $690 million, as we optimize our liquidity sources and defend our net interest margin.
Total average bank loans declined modestly by 2% versus Q2 2020 as PPP loans have run off and commercial loan growth remains pressured.
PrimeLending had another solid quarter, generating $49 million in pre-tax income.
PrimeLending originated $5.9 billion in volume with a gain on sale margin on loans sold to third parties of 364 basis points.
Although, average mortgage interest rates declined year-over-year, refinance volumes decreased to 32% of total origination compared to 47% in Q2 2020.
As the third-party market for mortgage servicing has continued to improve, we have reduced our retained servicing to 25% of total mortgage loans sold during the quarter and executed an MSR sale of $32 million, reducing our MSR assets to $124 million.
In the second quarter, PrimeLending had a net gain of 11 loan officers that we believe could add incremental annual volume of nearly $300 million.
For HilltopSecurities, they generated $6.9 million of pre-tax income on net revenues of $94 million for a pre-tax margin of 7.3%.
The Structured Finance business was adversely impacted by mortgage market volatility in March and April and generated net revenue of $11.5 million, a decline of 75% from Q2 2020.
Moving to Page 4, Hilltop maintained strong capital with common equity tier 1 capital ratio of 20% at quarter end.
During the quarter, Hilltop returned $55 million to shareholders through dividends and share repurchases.
The $45 million in shares repurchased are part of the $75 million share authorization the Board granted in January.
This week, the Hilltop Board authorized an increase to the stock purchase program to $150 million, an increase of $75 million.
Factoring in shares repurchased made during the first half of 2021, Hilltop now has approximately $100 million of available capacity through the expiration of the program in January 2022.
Even with sizable capital distributions to shareholders over the past two years, including the opportunistic tender offer executed in 2020, our tangible book value per share has grown at a compound annual rate of 21%, because of the profitability of our unique business model.
I'll start on Page 5.
As Jeremy discussed, for the second quarter of 2021, Hilltop reported consolidated income attributable to common stockholders of $99 million, equating to $1.21 per diluted share.
Included in the second quarter results was a net reversal of provision for credit losses of $28.7 million, which included approximately $500,000 of net charge-offs in the quarter.
On Page 6, we've detailed the significant drivers to the change in allowance for credit losses for the period.
The impact of the improving economic outlook resulted in the release of $11 million of ACL during the second quarter.
The result of the improvements at the client level equated with net release of ACL of $17 million during the second quarter.
The combination of improved client performance and the improving macroeconomic inbound [Phonetic] outlook which were only modestly offset by net charge-offs resulted in allowance for credit losses for the period ending June 30 of $115 million or 1.51% of total loans.
Further, the coverage ratio of ACL to total loans increases to 1.86%.
Turning to Page 7, net interest income in the second quarter equated to $108 million, including $12.4 million of PPP-related interest and fee income as well as purchase accounting accretion.
Somewhat offsetting these items were higher loans held for sale yields resulting from higher overall mortgage rates, coupled with lower interest bearing deposit costs, which should continue to trend lower as expected, finishing the quarter down 9 basis points at 32 basis points.
Further, with funded loan growth continuing to be slower than we expected, we are increasing the level of one-to-four family loans we are retaining on the balance sheet to approximately $50 million to $75 million per month from the prior outlook of $30 million to $50 million per month.
To that end, we expect that NIM will maintain -- will remain pressured into the second half of 2021 moving lower toward 240 basis points and 250 basis points by year-end.
Turning to Page 8, total non-interest income for the second quarter of 2021 equated to $340 million.
Second quarter mortgage-related income and fees decreased by $99 million versus the second quarter of 2020, driven by lower origination volumes, declining gain on sale margins and lower lock volumes.
As it relates to gain on sale margins, we note in our key driver tables on lower right of the page, the gain on sale margin on loans fell 22 basis points versus the prior quarter.
For the second quarter, purchase mortgage volumes increased by $1.1 billion or 38.5%, while refinance volumes declined 43% or $1.4 billion versus the first quarter origination level.
We continue to expect the gain on sale margins for third-party sales will fall within the full year average range of 360 basis points and 385 basis points.
Other income declined by $37 million, driven primarily by declines in TBA lock volumes, volatility in market rates and volatile trading and fixed income capital markets.
Moving to Page 9, non-interest expenses decreased from the same period in the prior year by $27 million to $343 million.
The decline in expenses versus the prior year was driven by decline in variable compensation of approximately $35 million at HilltopSecurities and PrimeLending.
Moving to Page 10, end of period HFI loan equated to $7.6 billion.
We continue to expect full year average total loan growth, excluding PPP loans, will be within a range of zero to 3%.
As noted earlier, we are increasing the level of retention of one-to-four family loans originated in PrimeLending to between $50 million and $75 million per month.
During the second quarter of 2021, PrimeLending locked approximately $176 million loans to be retained by PlainsCapital over the coming months.
These loans had an average yield of 3.11% and an average FICO and LTV of 780% and 64%, respectively.
Turning to Page 11, second quarter credit trends continue to reflect the slow but steady recovery in the Texas economy as the reopening of businesses continues to provide for improved customer cash flows and fewer borrowers on active deferral programs.
As of June 30, we have approximately $76 million of loan on active deferral programs, down from $130 million at March 31.
Further, the allowance for credit losses to end-of-period loan ratio for the active deferral loan equates to 16.8% at June 30.
As is shown in the graph at the bottom right of the page, the allowance for credit loss coverage ratio, including both mortgage warehouse lending as well as PPP loans at the bank ended the second quarter at 1.64%.
Excluding mortgage warehouse and PPP loans, the bank's ACL to end-of-period loans HFI ratio equated to 1.86%.
Turning to Page 12, second quarter end-of-period total deposits were approximately $11.7 billion and remained stable with the first quarter 2021 levels.
While the overall balances were relatively unchanged, the mix of deposits continues to improve as brokered deposits declined approximately $300 million and non-interest-bearing deposits rose by approximately $200 million versus the first quarter 2021 levels.
At 6/30/21, Hilltop maintained $268 million of brokered deposits that have a blended yield of 31 basis points.
Turning to Page 13, in 2021, we continue to remain nimble as the pandemic evolves to ensure the safety of our teammates and our clients.
|
For the second quarter, Hilltop reported net income of $99 million or $1.21 per diluted share.
As Jeremy discussed, for the second quarter of 2021, Hilltop reported consolidated income attributable to common stockholders of $99 million, equating to $1.21 per diluted share.
|
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Today we reported earnings of $211 million, an increase of 87% over the second quarter.
Lower loan balances along with strong credit metrics and an improving yet uncertain economic path resulted in the allowance for credit losses remaining near 2% and a provision of $5 million.
Expenses are well controlled and included a $4 million increase in charitable contributions.
ROE returned to double-digits at nearly 11% and our book value per share grew to $53.78, the seventh consecutive quarterly increase.
On a full quarter average basis, loans decreased $1.5 billion in the third quarter.
The largest contributor was a $910 million drop in average National Dealer loans in conjunction with significant decline in dealer inventory levels in the second quarter, which have yet to recover.
Deposits continue to show strong broad-based growth with average balances increasing $4.5 billion, including $3.2 billion and non-interest-bearing deposits.
The resulting increase in liquidity drove our total average assets to a record $84.3 billion.
As expected, net interest income declined $13 million as lower interest rates had a $15 million impact.
Also, net charge-offs decreased only 26 basis points.
However, given the difficulty in predicting the path of economic recovery, our credit reserve remains at over $1 billion.
Of note, following robust activity in the second quarter, derivative income declined $10 million.
Our capital remained strong with an estimated CET1 of 10.3%.
Average loans decreased $1.5 billion, which compares favorably to results for the industry as indicated by the H8 data for large banks.
As Curt mentioned, National Dealer declined $910 million due to low inventory levels impacting floor plan loans.
This resulted in an increase of nearly $800 million in second quarter average balances.
Corporate banking line utilization has returned to pre-pandemic levels with average balances down nearly $500 million in the third quarter.
General middle market loans declined about $400 million, while deposits increased nearly $2 billion.
For the portfolio as a whole, line utilization decreased to 47% at period end.
Also, our Mortgage Banker business, which serves mortgage companies, was at an all time high, increasing over $300 million due to very robust refi and home sale activity.
Loan yields were 3.13%, a decrease of 13 basis points from the second quarter.
One month LIBOR, the rate we are most sensitive to, declined 19 basis points.
Deposits increased 7% or $4.5 billion to a new record of $68.8 billion, as shown on Slide 5.
Period end deposits increased over $700 million.
With strong deposit growth, our loan-to-deposit ratio decreased to 76%.
The average cost of interest-bearing deposits was 17 basis points, a decrease of nine basis points from the second quarter.
Our prudent management of relationship pricing in this low rate environment, our large proportion of non-interest-bearing deposits as well as the floating rate nature of our wholesale funding drove our total funding cost only 14 basis points for the quarter.
We added $1.75 billion in treasuries and $500 million in mortgage-backed securities.
In addition, we continue to reinvest prepays, which remained elevated at around $1 billion for the quarter.
Yields on recent purchases have been around 140 basis points.
The additional securities combined with lower rates on the replacement of prepays resulted in the yield on the portfolio declining to 2.13%.
Net interest income declined $13 million to $458 million and the net interest margin was 2.33%, a decline of 17 basis points relative to the second quarter.
The major factors were lower rates, which had a negative impact of $15 million or seven basis points in the margin, and the increase in excess liquidity reduced the margin by nine basis points.
Interest income on loans declined $26 million and reduced the margin 13 basis points.
Lower interest rates on loans alone had an impact of $21 million and 11 basis points in the margin.
Lower balances had a $14 million impact, and the mix shift in portfolio, including the full quarter of lower yielding PPP loans had a four basis point impact on the margin.
As discussed on the previous slide, we had lower yields and higher balances in our securities portfolio, which together had a $2 million and two basis point negative impact.
Higher deposits of the Fed added $1 million, but had a negative impact of nine basis points on the margin.
Deposit cost declined by $5 million and added three basis points to the margin, primarily a result of a prudent management of deposit pricing, as I previously mentioned.
Finally, with a reduction in balances and lower rates, wholesale funding cost declined by $9 million, adding four basis points to the margin.
We received the full quarter benefit of debt repayments we made in the second quarter, and we prepaid $750 million in FHLB advances in July and August.
Net charge-offs were $33 million or 26 basis points, including recoveries of $20 million.
Criticized loans remained relatively stable with an increase of only $27 million and comprised 6.5% of the total portfolio.
Non-performing loans remained low at 62 basis points, and the bulk of the $54 million increase in the third quarter was attributed to energy loans.
This combined with the reduction in loan balances, resulted in a slight decrease in our allowance for credit losses, which remains above $1 billion.
Our credit reserve ratio was 2.14%, excluding PPP loans.
Our credit reserve coverage for NPLs was strong at 3.2 times.
They decreased $251 million to $1.8 billion at quarter end and represent 3.5% of our total loans.
E&P loans make up nearly 80% of the energy portfolio.
And energy services, which is considered the riskiest segment, was only $46 million.
The allocation of reserves to energy loans remained above 10%.
While non-accrual loans increased, criticized loans decreased $102 million and net charge-offs decreased to $9 million.
Charge-offs are net of $14 million in recoveries, which are unlikely to repeat in the near-term.
With more than 40 years of serving this industry, we have deep expertise and remain focused on working with our energy customers as they navigate the cycle.
That aside, period end loans in the social distancing segment decreased $145 million or 5%.
As expected, criticized loans increased $102 million, yet remained manageable at 10% of the segment and non-accruals remained very low.
Similar to the social distancing segment, while loans decreased about $250 million, the criticized portion increased, yet non-accruals decreased and remained low.
Balances increased to $85 million and criticized and non-accrual loans were slightly higher.
Total deferrals at September 30 dropped only 70 basis points of total loans.
Non-interest income increased $5 million, as outlined on Slide 12.
Deposit service charges were up $5 million with increased cash management activity.
Also, card fees remained very strong and increased $3 million due to higher consumer volumes and merchant activity spurred by the economic stimulus as well as changes in customer behavior related to COVID.
Derivative income also included a $6 million unfavorable credit valuation adjustment compared to an unfavorable adjustment of $3 million in the second quarter.
Securities trading income decreased $2 million, but remained at an elevated level and reflects fair market adjustments for investments we hold related to our technology and life sciences business.
Deferred comp asset returns were $8 million, a $6 million increase from last quarter, which is offsetting non-interest expenses.
Salaries and benefits increased $8 million.
This included the increase in deferred comp of $6 million that I just mentioned as well as seasonally higher staff insurance.
Since early March, Comerica, together with Comerica Charitable Foundation, has distributed over $9 million to over 150 non-profit and other community service organizations.
Outside processing decreased $4 million, primarily related to lower PPP loan initiation volumes.
In addition, operational losses and legal-related costs declined $3 million.
Our capital levels remained strong, increasing to an estimated CET1 of 10.26%, as shown on Slide 14.
We were focused on maintaining our attractive dividend and deploying our capital to drive growth, while we maintain strong capital levels with the CET1 target of 10%.
As we've already absorbed the bulk of the effect from the decline in rates, we estimate the net effect of lower rates alone will be $5 million or less.
The impact from reduced loan balances, lower interest rates on loans and lower yields on securities is expected to be mostly offset by additional rate floors on loans, a decrease in deposit rates to an average of 14 basis points, as well as the full quarter benefit of third quarter actions to increase our securities portfolio and reduced wholesale borrowings.
Credit quality is expected to be solid with net charge-offs increasing from the low third quarter level, which did include strong recoveries.
Although the pace of the economic recovery remains uncertain, with our credit reserve at about 2% of loans in the third quarter, we believe we are well positioned to manage through it.
|
Today we reported earnings of $211 million, an increase of 87% over the second quarter.
Net interest income declined $13 million to $458 million and the net interest margin was 2.33%, a decline of 17 basis points relative to the second quarter.
That aside, period end loans in the social distancing segment decreased $145 million or 5%.
Credit quality is expected to be solid with net charge-offs increasing from the low third quarter level, which did include strong recoveries.
|
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
|
First, I am pleased to announce that we celebrated a significant milestone during the quarter when we crossed the 1,000 store threshold.
With regards to external growth, we are on pace to achieve record acquisition volume with over $1.7 billion of wholly owned acquisitions, either closed this year or currently under contract and expected to close by year-end.
This represents 115 additional stores and nearly 20% growth in our wholly owned portfolio.
These acquisitions represent a nice mix of both markets and maturity with roughly 1/3 still in lease-up and approximately 75% in the Sunbelt states.
Despite 1/3 in lease-up, we still expect the blended year one cap rate to be in the mid-four range as we remain focused on finding both strategic and FFO accretive opportunities.
Our third-party managed portfolio totaled 357 stores at quarter end and is proving to be the robust acquisition pipeline that we anticipated.
Specifically, 27 stores acquired this year were managed by Life Storage, representing 30% -- 36% of our closed acquisition volume so far this year.
And we continue to onboard additional managed stores at a rapid pace, including 30 in the third quarter alone as owners and developers are attracted to our operating performance and innovative technology platforms.
We have raised the midpoint of our estimated adjusted funds from operations per share to $4.94 this year, which would be a 24% growth over 2020.
We have also nearly doubled the upper end of our acquisition guidance from $1 billion to nearly $2 billion.
Last night, we reported adjusted quarterly funds from operations of $1.37 per share for the third quarter, an increase of 35.6% over the same quarter last year.
Third quarter same-store revenue accelerated significantly again to 17.4% year-over-year, up from 14.7% in the second quarter.
We remain highly occupied with average same-store occupancy up 220 basis points compared to the same quarter last year.
This elevated occupancy has allowed us to continue to be more aggressive with rates on new and existing customers, which has driven a significant increase in our in-place rates per square foot, which were up 14% year-over-year in the third quarter, representing substantial acceleration from the 8% in the second quarter and the 1% in the first quarter.
Same-store operating expenses grew only 3.5% for the quarter versus last year's third quarter.
The increases were partially offset by a 5% decrease in Internet marketing expenses and slightly lower payroll and benefits.
The net effect of the same-store revenue and expense performance was a 390 basis point expansion in net operating income margin to 70.7%, resulting in 24.3% year-over-year growth in same-store NOI for the third quarter.
Additionally, we increased our dividend 16% in October as we continue to share growth in FFO with our shareholders.
This increase follows our 4% dividend bump this past January, and the 7% growth in our dividend last year.
Specifically, we completed an underwritten public offering of common stock, generating approximately $350 million and issued an additional $130 million of common stock via our ATM program.
The company also issued roughly $90 million of preferred operating partnership units as part of the consideration for our portfolio acquisition during the quarter.
Finally, we issued $600 million of 10-year 2.4% senior unsecured notes that priced in late September and closed in early October.
Our net debt to recurring EBITDA ratio was 3.9 times at quarter end and 5.1 times following the completion of the notes offering in October.
Our debt service coverage increased to a healthy 6.3 times at September 30, and we had $500 million available on our line of credit at quarter end.
We have no significant debt maturities until April of 2024 when $175 million becomes due.
And our average debt maturity is 6.3 years.
Specifically, we expect same-store revenues to grow between 12.5% and 13.5%.
Excluding property taxes, we expect other expenses to increase between 1.75% and 2.75% while property taxes are expected to increase 6.75% to 7.75%.
The cumulative effect of these assumptions should result in 17% to 18% growth in same-store NOI.
We have also increased our anticipated acquisitions by $900 million to between $1.7 billion and $1.9 billion.
Based on these assumption changes, we anticipate an adjusted FFO per share for 2021 to be between $4.92 and $4.96.
|
Last night, we reported adjusted quarterly funds from operations of $1.37 per share for the third quarter, an increase of 35.6% over the same quarter last year.
|
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
For the second quarter of 2021, the partnership recorded net income of $166 million.
Adjusted EBITDA was $201 million compared to $182 million in the second quarter of 2020.
Volumes were 1.93 billion gallons, a sequential increase of approximately 10% from the first quarter as the reopening trend in the U.S. took off Q2.
Year-over-year volumes increased approximately 28%.
Fuel margin was $0.113 per gallon versus $0.135 per gallon in the second quarter of 2020, which Karl will hit on further in his remarks.
Total operating expenses in the second quarter were up slightly compared to the first quarter at $102 million versus $100 million and were up from $97 million in the second quarter of 2020.
Second quarter distributable cash flow as adjusted was $145 million, yielding a current quarter coverage ratio of 1.67 times and a trailing 12-month coverage ratio of 1.41 times consistent with our long-term target of 1.4 times.
On July 22, we declared an $0.8255 per unit distribution, the same as last quarter.
We continue to maintain a stable and secure distribution for our unitholders, which remains the #1 pillar behind our capital allocation strategy.
Leverage at the end of the quarter was 4.27 times, which we expect to continue to decline toward our 4.0 target as the year progresses.
For the full year 21, we expect adjusted EBITDA between $725 million and $765 million.
Operating expense guidance is unchanged at $440 million to $450 million.
We continue to expect maintenance capital of approximately $45 million and target growth capital expenditures of $150 million in 2021.
These assets have approximately 14.8 million barrels of storage and are accessed via pipeline, truck, rail and marine vessels.
We expect the $250 million purchase price to result in a sub seven times multiple on expected EBITDA, including synergies in the second year of ownership.
The Cato terminal is a gasoline and distillate terminal with 140,000 barrels of storage located in Salisbury, Maryland, and is accessed via truck and marine vessels.
We expect the $5.5 million purchase price to result in a sub-6 times multiple on expected EBITDA, including synergies in the second year of ownership.
Starting with volumes, we were up about 28% from last year, but the more relevant comparison continues to be performance relative to 2019.
Looking at it through that lens, we were down about 6% from 2019 volumes, meaningfully better than last quarter.
Even though prices rose another $0.25 per gallon or so in the second quarter, the increased volatility, coupled with our continual margin optimization strategies, resulted in our margins rebounding and returning to our full year 2021 guidance range.
As we look forward, I still feel confident that $0.11 to $0.12 per gallon fuel margin is appropriate for the full year 2021 as we expect similar volatility to persist in the commodity markets through the back half of the year.
Fuel volume grew roughly 10% versus the first quarter of this year, while our fuel margins remain very healthy.
|
We continue to expect maintenance capital of approximately $45 million and target growth capital expenditures of $150 million in 2021.
|
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
|
We generated revenue of $187.5 million during the second quarter of 2020 compared to $218.2 million during the second quarter of 2019.
The decrease was primarily attributable to softer demand in April related to the COVID-19 pandemic.
We've reported net income of $5.5 million or $0.17 per diluted share for the three months ended April 30, 2020 compared to a net loss of $24 million or $0.73 per diluted share during the three months ended April 30, 2019.
The net loss in the second quarter of 2019 was mainly due to a $30 million non-cash goodwill impairment in our North American Cabinet Components segment.
On an adjusted basis, net income was $6.4 million or $0.19 per diluted share during the second quarter of 2020 compared to $6.3 million or $0.19 per diluted share during the second quarter of 2019.
On an adjusted basis, EBITDA for the quarter was $21.8 million compared to $23.4 million during the same period of last year.
Moving on to cash flow and the balance sheet, cash provided by operating activities was $2.5 million for the six months ended April 30, 2020 compared to $143,000 for the six months ended April 30, 2019.
We now plan to spend between $20 million and $25 million this year and currently expect to generate $30 million to $35 million in free cash flow in the second half of the year.
As previously disclosed, we drew down our revolver by $50 million during the second quarter as a precautionary measure.
We have subsequently repaid the $50 million and do not expect to have to draw on our revolver again for the rest of the year.
Our balance sheet is strong, we have ample liquidity, and our leverage ratio of net debt to last 12 months adjusted EBITDA remained unchanged at 1.4 times as of April 30, 2020.
We will continue to focus on generating cash and paying down debt in the second half of the year, which should offset the decrease in forecasted EBITDA enough to keep our leverage ratio around 1.4 times for the remainder of the year.
Revenue declined 5.9% from prior year Q2, but we were seeing revenue growth prior to the impact from the pandemic.
In fact, revenue was trending 3.1% above prior-year levels for the first five months of our fiscal year.
However, revenue in April declined by approximately 25% year-over-year due to the impact from COVID-19.
In addition, SG&A reductions, lower medical expenses and lower incentive accruals, all favorably impacted results, and we were able to realize a margin expansion of approximately 100 basis points in this segment during the quarter.
Revenue in our European Fenestration segment decreased by 27.2% from prior year to $29.2 million, excluding foreign exchange impact.
Similar to our North American Fenestration segment, revenue was trending 2.4% above prior year levels for the first five months of our fiscal year.
However, largely due to the fact that the UK was shut down completely, revenue in April was down approximately 85% year-over-year.
Our North American Cabinet Components segment generated revenue of $50.7 million during the quarter, which was 19.4% less than prior year.
Revenue in April decreased by approximately 37% year-over-year.
After adjusting for the lost customer, revenue was down 14.6% for the quarter and 34% in April.
EBITDA was also impacted by a $1.8 million accrual for writing off a portion of the inventory associated with Chinese-sourced product for the customer that exited the cabinet business.
These moves, combined with the normal seasonality of our business, should allow us to generate $30 million to $35 million of free cash flow for the full year, basically all of which will be generated in the second half.
We currently anticipate Q3 revenue will be down by 20% to 25% year-over-year in North America and adjusted EBITDA margin will be down 350 basis points to 400 basis points.
For the third quarter in Europe, we currently expect revenue to decrease by 40% to 45% year-over-year with adjusted EBITDA margin contracting by 550 basis points to 600 basis points.
|
We generated revenue of $187.5 million during the second quarter of 2020 compared to $218.2 million during the second quarter of 2019.
The decrease was primarily attributable to softer demand in April related to the COVID-19 pandemic.
We've reported net income of $5.5 million or $0.17 per diluted share for the three months ended April 30, 2020 compared to a net loss of $24 million or $0.73 per diluted share during the three months ended April 30, 2019.
On an adjusted basis, net income was $6.4 million or $0.19 per diluted share during the second quarter of 2020 compared to $6.3 million or $0.19 per diluted share during the second quarter of 2019.
|
1
1
1
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
This is also captured in our recent Skills Revolution thought leadership series, Renew, Reskill and Redeploy, conducted across 26,000 employers in 40-plus countries.
In the fourth quarter, revenue was $5.1 billion, down 6% year-over-year in constant currency, a significant improvement from the 14% decline in the third quarter on the same basis.
On a reported basis, we recorded an operating profit for the quarter of $138 million.
Excluding restructuring charges, operating profit was $151 million, down 24% in constant currency.
Reported operating profit margin was 2.7%, down 100 basis points from the prior year.
And after excluding restructuring, operating profit margin was 3%, down 70 basis points from the prior year.
Reported earnings per diluted share of $1.33 reflects the impact of restructuring charges.
Excluding the restructuring charges, our earnings per diluted share was $1.48 for the quarter, representing a decrease of 39% in constant currency.
Reported earnings per share for the year was $0.41.
Excluding restructuring charges and special items, earnings per share was $3.67 and represented a constant currency decrease of 53% year-over-year.
Revenues for the year decreased 14% in constant currency to $18 billion and reported operating profit was $188 million.
Excluding restructuring and special items, operating profit was $377 million, which represented a 48% constant currency decline year-over-year.
On a reported basis, our operating profit was $138 million.
Excluding restructuring charges, our operating profit was $151 million, representing a decline of 21% or a decline of 24% on a constant currency basis.
This resulted in an operating profit margin of 3% before restructuring charges, which was above the high end of our guidance.
After adjusting for the positive impact of currency of about 4%, our constant currency revenue declined about 6.5%, which rounds to 6% on a single-digit percentage basis.
As acquisition and billing days had no net effects, the organic days adjusted revenue decline was also about 6.5%.
This represented an improvement from the third quarter revenue decline of 15% on a similar basis and two consecutive quarters of significant improvement from the second quarter of 2020.
On a reported basis, earnings per share was $1.33, which included the restructuring charges of $12 million, which, including related tax impacts, represented a negative $0.15.
Excluding the restructuring charges, earnings per share was $1.48, which exceeded our guidance range.
Included within this result was improved operational performance of $0.38; better-than-expected foreign currency exchange rates, which added $0.03; a lower weighted average share count from share repurchases that added $0.02, offset by higher other expenses that had a negative impact of $0.05.
Our gross margin came in at 15.8%.
Underlying staffing margin contributed to a 40 basis points reduction.
The anniversary of the incremental fee-owned subsidies in France in October and the mix of higher seasonal year-end enterprise activity within the Manpower brand drove the overall additional year-over-year staffing margin decline from the third quarter result of down 20 basis points year-over-year.
A lower contribution from permanent recruitment also contributed 30 basis points of GP margin reduction.
10 basis points of increased gross profit margin from career transition growth within Right Management was offset by a 10 basis point decline driven by a higher mix of seasonal other nonstaffing activity.
During the quarter, the Manpower brand comprised 65% of gross profit, our Experis Professional business comprised 20% and Talent Solutions brand comprised 15%.
During the quarter, our Manpower brand reported an organic constant currency gross profit decrease of 11%.
This was an improvement from the 17% decline in the third quarter.
Gross profit in our Experis brand declined 14% year-over-year during the quarter on an organic constant currency basis, which represented an improvement from the 19% decline in the third quarter.
Organic gross profit crossed back over to growth in the quarter at 1% in constant currency year-over-year, which is an improvement from the 2% decline in the third quarter.
Our reported SG&A expense in the quarter was $661 million, including the restructuring charges of $12 million.
Excluding the restructuring charges, SG&A of $649 million represented a decrease of $19 million from the prior year.
This underlying decrease was driven by $40 million of operational cost reductions, a decrease of $2 million from net dispositions, partially offset by an increase of $22 million from currency changes.
On an organic constant currency basis, excluding restructuring, SG&A expenses decreased 6% year-over-year, which represented a very strong recovery against the 10% gross profit decline.
SG&A expenses as a percentage of revenue continued to improve sequentially and represented 12.8% in the fourth quarter, excluding restructuring.
The Americas segment comprised 20% of consolidated revenue.
Revenue in the quarter was $1 billion, a decrease of 3% in constant currency.
OUP was $48 million and OUP margin was 4.7%.
The U.S. is the largest country in the Americas segment, comprising 61% of segment revenues.
Revenues in the U.S. was $622 million, representing a decrease of 4% compared to the prior year.
Adjusting for franchise acquisitions, this represented a 5% decrease, which is a significant improvement from the 16% decline in the third quarter.
During the quarter, OUP for our U.S. business decreased 11% to $30 million.
OUP margin was 4.8%.
Within the U.S., the Manpower brand comprised 36% of gross profit during the quarter.
Revenue for the Manpower brand in the U.S. was down 2% when adjusted for days and franchise acquisitions, which reflects a material improvement from the 21% decline in the third quarter.
The Experis brand in the U.S. comprised 27% of gross profit in the quarter.
Within Experis in the U.S., IT skills comprised approximately 80% of revenues.
Revenues within our IT vertical within Experis U.S. declined 13% during the quarter and total Experis U.S. revenues declined 14% as the finance and engineering verticals experienced greater decreases.
Talent Solutions in the U.S. contributed 37% of gross profit and experienced revenue growth of 6% in the quarter.
Within Right Management in the U.S., revenues increased 8% year-over-year driven by career transition activity during the quarter.
Our Mexico operation experienced a revenue decline of 6% in constant currency in the quarter, representing an improvement from the 9% decline in the third quarter.
Mexico represented between 2.5% and 3% of our global revenues in 2020.
Revenue in Canada declined 10% in constant currency during the quarter.
This represented a slight improvement from the third quarter billing days adjusted revenue decline of 11%.
Revenue in the other countries within Americas crossed back over to growth with a 4% increase in constant currency, reflecting a significant improvement from the 6% decline in the third quarter.
Southern Europe revenue comprised 46% of consolidated revenue in the quarter.
Revenue in Southern Europe came in at $2.3 billion, a decrease of 7% in constant currency.
OUP, including restructuring costs, equaled $100 million.
Excluding restructuring costs, OUP decreased 25% from the prior year in constant currency and OUP margin was down 100 basis points.
The $4 million in restructuring costs represented France real estate optimization.
France revenue comprised 56% of the Southern Europe segment in the quarter and was down 11% from the prior year in constant currency.
OUP, including restructuring costs, was $62 million in the quarter.
Excluding restructuring costs, OUP was $66 million and OUP margin was 5%.
Revenue in Italy equaled $423 million in the quarter as Italy crossed back over to growth.
Revenues increased 3% in constant currency during the quarter, which was a significant improvement from the 12% days-adjusted decline in the third quarter.
OUP declined 25% year-over-year in constant currency to $24 million and OUP margin decreased 200 basis points to 5.6%.
Revenue increased 18% on a days-adjusted constant currency basis from the prior year in the quarter.
This represented a significant improvement from the 6% decrease in the third quarter.
Revenue in Switzerland decreased 14% on a days-adjusted constant currency basis from the prior year in the quarter.
This represents a slight decline from the 13% decrease in the third quarter as our Switzerland business did not experience the year-end seasonal increases that the other large markets in Southern Europe experienced.
Our Northern Europe segment comprised 22% of consolidated revenue in the quarter.
Revenue declined 11% in constant currency to $1.1 billion, representing a significant improvement from the 22% decline in the third quarter driven by the U.K. and the Netherlands.
OUP, including restructuring costs, represented $9 million.
Excluding restructuring costs, OUP was $18 million and OUP margin was 1.6%.
The $9 million in restructuring cost relates to Germany, where we restructured a majority-owned venture with a third-party partner.
Our largest market in Northern Europe segment is the U.K., which represented 36% of segment revenue in the quarter.
During the quarter, U.K. revenues decreased 7% in constant currency, which represented a significant improvement from the 22% decline in the third quarter.
In Germany, revenues declined 31% in constant currency adjusted for billing days in the fourth quarter, which did not represent a significant change from the 32% decline in the third quarter.
In the Nordics, revenues declined 6% on a days-adjusted constant currency basis.
On a days-adjusted constant currency basis, Norway experienced a decline of 6% and Sweden declined 4%.
Revenues in the Netherlands decreased 12% on a days-adjusted constant currency basis, which represents a significant improvement from the third quarter decline of 23%.
Belgium experienced a days-adjusted revenue decline of 25% in constant currency during the quarter, which also reflects improvement from the third quarter trend.
Revenue increased 9% in constant currency, which represents a significant improvement from the third quarter decrease of 5% in constant currency.
The Asia Pacific Middle East segment comprises 12% of total company revenue.
In the quarter, revenue decreased 1% in constant currency to $617 million.
OUP represented $18 million and OUP margin decreased 70 basis points year-over-year.
Revenue growth in Japan was up 5% on a constant currency basis, which represents a slight decrease from the 6% growth rate in the third quarter.
Revenues in Australia declined 2% in constant currency on a days-adjusted basis.
This represents an improvement from the 7% decline in the third quarter.
Revenue in other markets in Asia Pacific Middle East declined 7% in constant currency, also representing an improving trend from the third quarter.
Free cash flow equaled $886 million for the year.
During the fourth quarter, free cash flow equaled $201 million compared to $302 million in the prior year quarter.
At quarter end, days sales outstanding decreased by about 3.5 days to 54 days.
Capital expenditures represented $51 million during 2020.
During the fourth quarter, we purchased 2.5 million shares of stock for $201 million.
Our purchases for the full year totaled 3.4 million shares for $265 million.
As of December 31, we have 3.4 million shares remaining for repurchase under the six million share program approved in August of 2019.
As previously announced, we also increased the semiannual dividend paid in December 2020 by 7.3%.
Our balance sheet was strong at quarter end with cash of $1.57 billion and total debt of $1.12 billion, resulting in a net cash position of $443 million.
Our debt ratios remain comfortable at quarter end, with total gross debt to trailing 12 months adjusted EBITDA of 2.48 and total debt to total capitalization at 31%.
In addition, our revolving credit facility for $600 million remained unused.
On that basis, we are cautiously forecasting earnings per share for the first quarter to be in the range of $0.64 to $0.72, which includes a favorable impact from foreign currency of $0.07 per share.
Our constant currency revenue guidance range is between a decline of 4% to a decline of 6%.
The midpoint of our constant currency guidance is a decline of 5%.
At the midpoint, this would yield an organic days-adjusted rate of revenue decline of 3% for the first quarter, representing an ongoing improvement from the 6.5% decline in Q4.
We expect our operating profit margin during the first quarter to be down 50 basis points compared to the prior year, reflecting a third consecutive quarter of sequential improvement in the year-over-year rate of adjusted operating margin decline.
Regarding the effective tax rate, the government of France finalized their budget with the expected 50% reduction in the French business tax and a continuation of the corporate income tax reductions.
Combined, this serves to reduce our underlying effective tax rate by about 4%.
However, we will continue to have an elevated tax rate until we are closer to precrisis levels of pre-tax earnings and are estimating a full year 2021 effective tax rate of approximately 35%.
The effective tax rate in the first quarter will be slightly lower at 34% based on the inclusion of certain discrete items.
And we estimate our weighted average shares to be 56.2 million.
We have already implemented PowerSuite in our front office and in businesses across 17 countries, are in the process of implementation in another wave of businesses across 17 more countries.
Our B2C digital investments build off the success of Mon Manpower, our French associate app, which has had more than 1.3 million downloads, the most downloaded and the most highly rated in the French market.
In France, 1/3 of our applicants are sourced via the app with an average of 150,000 active users a month enjoying a full portfolio of B2C services, including on-demand access to current targeted assignment opportunities, time management and payroll technology and other services, including online carpooling.
|
In the fourth quarter, revenue was $5.1 billion, down 6% year-over-year in constant currency, a significant improvement from the 14% decline in the third quarter on the same basis.
Reported earnings per diluted share of $1.33 reflects the impact of restructuring charges.
Excluding the restructuring charges, our earnings per diluted share was $1.48 for the quarter, representing a decrease of 39% in constant currency.
On a reported basis, earnings per share was $1.33, which included the restructuring charges of $12 million, which, including related tax impacts, represented a negative $0.15.
Excluding the restructuring charges, earnings per share was $1.48, which exceeded our guidance range.
In addition, our revolving credit facility for $600 million remained unused.
On that basis, we are cautiously forecasting earnings per share for the first quarter to be in the range of $0.64 to $0.72, which includes a favorable impact from foreign currency of $0.07 per share.
|
0
1
0
0
0
0
1
1
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
|
We view our earnings per share for the year at approximately $9.30 and ROE excluding AOCI at 13%.
Based on our current views, we are poised to deliver 8% to 10% earnings per share growth of this level over the long term.
As we exited the fourth quarter, we generated at least a 12% return on new business in our current portfolio based on the forward curve across all our businesses.
As an example, during the fourth quarter, 99% of life policies were delivered electronically, nearly triple the prior year quarter.
In total, IVA sales were $5 billion for the year.
Based on our in-force VAs without living benefits and other non-guaranteed products represent 47% of total annuity account values.
We project sales begin the year consistent with the $2.5 billion run rate we have produced in recent quarters and build over the course of the year as we benefit from our 2020 product introductions as well as products we plan to add this year.
While economic and pandemic-related uncertainty weighed on most businesses this year, strong performance from our sales and retention teams drove a 6% increase in total deposits, including growth in both first year sales and recurring deposits along with our sixth consecutive year of positive net flows.
While for the full year, sales declined 6% as gains in disability were more than offset by decreases in life and dental.
Strong persistency of 87%, up 350 basis points in 2020 more than offset the lower sales, which led to a 4% increase in premiums for the full year.
We are taking action and based on focused pricing enhancements we began in 2020 along with expense initiatives, we expect continuous margin improvement over time building toward our 7% target.
Additionally, the alternative investment portfolio performed well in the quarter and for the full year generated an 11% annual return slightly above our long-term target.
And as I said earlier, we are poised to deliver 8% to 10% growth over the long term even in the current low interest rate environment.
Last night, we reported fourth quarter adjusted operating income of $346 million or $1.78 per share.
First, pandemic-related claims reduced earnings by approximately $187 million or $0.96 per share.
This included a $174 million mortality impact and $13 million from disability claims.
Second, results benefited from strong performance in the alternative investment portfolio relative to our targeted annual return of 10% boosting earnings by $73 million or $0.38 per share.
Third, there was unfavorable expense variability of $28 million or $0.13 per share in the other operations segment related mostly to elevated deferred compensation costs, resulting from the increase in Lincoln share price last quarter.
Finally, there was $20 million or $0.10 per share of favorable amortization levels in life insurance, which was largely offset by seasonal unfavorability in group protection.
Net income totaled $143 million or $0.74 per share as improvements in credit spreads drove a $240 million loss in the variable annuity non-performance risk.
Outside of this non-economic item, credit experience was excellent and the variable annuity hedge program performed exceptionally well with 100% effectiveness in the quarter.
Adjusted operating revenue increased 3% with operating revenue growth in each of our four business segments.
Average account values increased 9%.
Total G&A expenses net of amounts capitalized decreased 1% or 7% when excluding unfavorable expense variability in other operations.
The 1% decline, combined with operating revenue growth led to a 60 basis point improvement in the expense ratio.
And book value per share, excluding AOCI, stands at $71.59, an all-time high.
Operating income for the quarter was $289 million compared to $269 million in the prior year quarter.
Average account values of $151 billion increased 9% year-over-year and 5% on a sequential basis.
Additionally, end of period account values exceeded average values by 4%, providing a tailwind into the first quarter.
Base spreads excluding variable investment income were up 8 basis points from the year ago quarter, driven by active management of crediting rates and some quarterly noise.
G&A expenses net of amounts capitalized decreased 5% for the full year and quarter leading to a 60 basis point improvement in the expense ratio for the quarter.
Return metrics remained healthy in the quarter with return on assets coming in at 77 basis points and return on equity at 21.4%.
As the net amount at risk sources 70 basis points of account value for living benefits and the 34 basis points for death benefits.
Earnings grew in line with account values and excluding the unlocking, return on equity was very strong coming in at 21%.
Retirement plan services reported operating income of $49 million compared to $47 million in the prior year quarter.
Positive flows combined with favorable equity markets drove average account values up 10% over the prior year quarter.
G&A expenses net of amounts capitalized were flat compared to the prior year quarter and down 5% for the full year, driving a 140 basis point improvement in the expense ratio in 2020.
Base spreads excluding variable investment income compressed 28 basis points versus the prior year quarter.
We expect this to moderate and return to our more typical 10 to 15 basis point range in 2021.
The retirement business ended the year with strong results, including a 23 basis point ROA in the quarter with momentum in sales and expense management serving as positive drivers going forward.
We reported operating income of $144 million compared to $179 million in the prior year quarter.
This quarter's result included $113 million of pandemic-related mortality partly offset by $53 million of favorable alternative investment experience and the favorable amortization, I noted upfront.
Underlying earnings drivers continue to show growth with average account values up 6% and average life insurance in-force up 9% over the prior year.
G&A expenses net of amounts capitalized decreased 13% from the prior year quarter, leading to 140 basis point improvement in the expense ratio.
Base spreads declined 25 basis points compared to the prior year quarter due to a previously noted non-economic change in our crediting rate methodology.
We expect base spreads to return to our more typical 5 to 10 basis point rate of decline in 2021.
Group protection reported a loss from operations of $42 million compared to operating earnings of $54 million in the prior year quarter with the decrease driven mainly by pandemic-related claims.
Group earnings were impacted by a number of items during the quarter, including $74 million of claims related to the pandemic, $15 million to $20 million of seasonally higher fourth quarter disability claims and expenses and a slowdown in social security approval that negatively impacted results by $8 million, partly offset by $5 million of favorable alternative investment experience.
The reported total loss ratio was 87.8% in the quarter up 4.6 points sequentially.
This was driven in part by an increase in pandemic-related mortality and hospitalizations, which resulted in elevated claims, including $39 million of direct COVID-19 mortality, $13 million of direct COVID-19 disability and $22 million of excess mortality.
Excluding pandemic-related claims from both periods, the total loss ratio was 78.9%, up 3 percentage points sequentially as improvement in group life and dental were more than offset by an increase in the disability loss ratio.
G&A expenses net of amounts capitalized decreased 6% from the prior year quarter and 5% for the full year.
We ended the year with $10.3 billion of statutory surplus and an RBC ratio of 452%, which includes 23 percentage points from our non-economic goodwill associated with the Liberty acquisition that we expect will go away at the end of 2021.
Cash at the holding company stands at $754 million, above our $450 million target as we have pre-funded our $300 million 2022 debt maturity.
Additionally, we had a $500 million contingent capital facility earlier this year.
We resumed buybacks in the fourth quarter and deployed $50 million toward share repurchases.
As a result of our confidence in our capital position, we plan to increase our buyback to $100 million in the first quarter and we'll provide additional updates on our next earnings conference call.
And as a result, we reiterate our plan to grow earnings per share at an 8% to 10% rate over the long term.
|
Last night, we reported fourth quarter adjusted operating income of $346 million or $1.78 per share.
Net income totaled $143 million or $0.74 per share as improvements in credit spreads drove a $240 million loss in the variable annuity non-performance risk.
We resumed buybacks in the fourth quarter and deployed $50 million toward share repurchases.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
|
As a result, net sales for the second quarter were up 24% year-over-year.
Professional segment net sales increased 25%, continuing the growth trend for this segment and setting a new record.
Residential segment net sales for the second quarter were up 20% year-over-year, setting another record.
Professional earnings were up 57%, and Residential earnings grew 24%.
Year-to-date, we've paid down $100 million of debt, invested $107 million in share repurchases, and paid out $57 million in dividends.
We grew net sales by 23.6% to $1.15 billion.
Reported earnings per share was $1.31 per diluted share, up from $0.91 last year.
Adjusted earnings per share was $1.29 per diluted share, up from $0.92 in the prior year.
Professional segment net sales were up 25.3% to $828.4 million.
Professional segment earnings were up 57.3% to $167.1 million; and when expressed as a percent of net sales, increased 410 basis points to 20.2%.
Residential segment net sales were up 20.2% to $315 million.
Residential segment earnings were up 23.9% to $46 million; and when expressed as a percent of net sales, up 40 basis points to 14.6%.
We reported gross margin of 35.1%, an increase of 210 basis points from the prior year.
Adjusted gross margin was 35.1%, up 170 basis points.
SG&A expense as a percent of net sales decreased 10 basis points to 19.4%.
Operating earnings as a percent of net sales increased 220 basis points to 15.7%.
And adjusted operating earnings as a percent of net sales increased 170 basis points, also to 15.7%.
Interest expense was down $1.5 million to $7.1 million, driven by reduced debt and lower interest rates.
The reported effective tax rate was 19.8%, and the adjusted effective tax rate was 20.9%.
At the end of the second quarter, our liquidity remained consistent at $1.1 billion.
This included cash and cash equivalents of $500 million and full availability under our $600 million revolving credit facility.
Accounts receivable totaled $391.2 million, down 2.3% from a year ago, primarily driven by channel mix.
Inventory was down 12% from a year ago to $628.8 million, primarily as a result of increased demand.
Accounts payable increased 28.8% from last year to $421.7 million.
Year-to-date free cash flow was $292.4 million, with the conversion ratio of 115%.
We now expect net sales growth in the range of 12% to 15%, up from 6% to 8% previously.
Given our strong balance sheet and future growth expectation, we are increasing our estimated capital expenditures for the year to $130 million, up from $115 million.
Based on current visibility, we now expect full year adjusted earnings per share in the range of $3.45 to $3.55 per diluted share.
The city has an objective of zero emissions by 2030, and we are excited to partner with them in achieving this goal.
|
We grew net sales by 23.6% to $1.15 billion.
Reported earnings per share was $1.31 per diluted share, up from $0.91 last year.
Adjusted earnings per share was $1.29 per diluted share, up from $0.92 in the prior year.
Based on current visibility, we now expect full year adjusted earnings per share in the range of $3.45 to $3.55 per diluted share.
|
0
0
0
0
0
1
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
|
Net sales increased 15% with 9% volume growth, led by strength in Americas, in Europe, Middle East and Africa regions.
Adjusted EBITDA increased 1%, and margins were under pressure at 19.8% compared to 22.6% last year.
On a per-share basis, earnings of $0.79 were up $0.03 compared to last year.
We generated free cash flow of $102 million in the first six months of the year, which compared to $129 million in the first half of last year.
We are raising our full year sales and adjusted earnings per share outlook and reiterating our prior guidance for adjusted EBITDA and free cash flow.
Our organic sales target is built up in a historically stable packaging market that grows 1% to 3%.
We've been adding to this base with our innovations in automation, digital and sustainability to take us to an organic sales growth target of 3% to 5%.
Our operating leverage target is over 30%, which drives adjusted EBITDA growth to 5% to 7%.
We're targeting adjusting earnings-per-share growth of greater than 10% and free cash flow conversion of more than 50%.
We approved a new $1 billion share repurchase program and recently increased our dividend by 25%.
We are leading a dramatic shift to a touchless, automated environment for all customers, resulting in more than 30% growth in our SEE automation portfolio.
Bookings for AUTOBAG and auto box equipment were up more than 50% in the first half of the year, and we're investing more than $30 million in capacity expansion to help meet the strong demand for our equipment solutions.
In the first half of the year, equipment, systems and service sales were up 26% and accounted for 8% of our net sales.
We're on track to achieve approximately $425 million or 12% growth in 2021, of which more than $250 million will come from equipment and systems.
We're confident in our ability to exceed $500 million by 2025.
When you factor in a 3 times plus solutions multiplier, including growth in parts and service from the installed base and the flow-through of materials, this results in a $5 billion plus potential growth opportunity over the 10-year solutions life cycle.
We are making significant progress on our 2025 sustainability pledge with nearly 50% of our solutions already designed for recyclability.
Earlier this year, we established a net-zero carbon emissions goal across our operations by 2040.
Between 2012 and 2020, our greenhouse gas emissions intensity decreased by a remarkable 50%.
In the second quarter, net sales totaled $1.3 billion, up 15% as reported, up 11% in constant dollars.
Food was up 6% in constant dollars versus last year, and protective increased 20%.
EMEA and the Americas were both up double digits: EMEA up 16%; and the Americas up 13%.
In the second quarter, overall volume growth was up 9% on favorable price of 3%.
Food volumes were up 4%; with the Americas, up 7%; and EMEA up 2%.
This was offset by a 3% decline in APAC, largely related to Australia herd rebuilding.
Protective volumes were up 15%; with the Americas, up 13%; and EMEA up 36%, while APAC had a modest decline.
Q2 price was favorable 3%.
You can see that Protective had 5% in favorable pricing, and Food was 1% due to timing of pricing actions and formula pass-throughs.
We have implemented several price increases and expect 2021 price realization to be $275 million.
We delivered adjusted EBITDA of $263 million, up 1% compared to last year, and margins of 19.8%, down 280 basis points, reflecting the impact of the current inflationary environment and supply chain disruptions.
We are leveraging our higher volumes at 40% as we experienced a more favorable product mix.
Despite favorable pricing in the quarter, you can see how higher input costs weighed on our EBITDA performance with an unfavorable price/cost spread of $36 million.
Operational costs increased approximately $13 million relative to last year.
This was partially offset by $13 million in Reinvent SEE productivity benefits.
Adjusted earnings per share in Q2 was $0.79 compared to $0.76 in Q2 2020.
Our adjusted tax rate was 25.6%, reflecting a more favorable mix of foreign earnings.
Our weighted average diluted shares outstanding in the quarter were 153 million.
We exited the quarter with 150 million shares outstanding.
We have achieved $28 million of benefits in the first half of the year and remain on track to realize approximately $65 million in 2021.
In Q2, Food net sales of $737 million were up 6% on a constant dollar basis.
Cryovac Barrier Bags and pouches returned to growth, increasing approximately 10% and accounting for nearly 50% of the segment sales.
Sales in case-ready and roll stock retail applications, which accounts for just over 40% of segment sales, were down low single digits as supply disruptions impacted our results.
Equipment parts and sales -- and service sales, which accounts for 8% of the segment, were up nearly 40% in the quarter.
Adjusted EBITDA in Food of $158 million in Q2 declined 6% compared to last year with margins at 21.5%, down 360 basis points.
In constant dollars, net sales increased 20% to $592 million.
Industrial was up approximately 30% relative to last year when automobile and general manufacturers were forced to temporarily shut down their operations.
Fulfillment, which is largely driven by e-commerce growth, was up approximately 10% on a global basis, led by double-digit growth in automated equipment, inflatable solutions, paper and temperature assurance.
The $30 million investments in capacity that Ted referenced earlier will help us meet increased customer demands for automation equipment.
As a reminder, approximately 55% of our Protective sales are derived from industrial end markets and the remaining 45% from fulfillment and e-commerce.
Adjusted EBITDA of $107 million increased 17% from Q2 with margins at 18.1%, down 100 basis points versus last year.
In the first half of 2021, we generated $102 million of free cash flow.
With SEE Ventures, we have invested approximately $40 million in early stage disruptive technologies and business models that are expected to accelerate our strategy and innovation efforts.
We repurchased 6.1 million shares for $299 million during the first six months of 2021, reflecting confidence in our vision, strategy and execution.
And as Ted noted, today, we announced a new $1 billion share repurchase program, continuing our commitment to return value to shareholders.
During the second quarter, we also announced an increase to our quarterly cash dividend of 25%.
For net sales, we estimate $5.4 billion to $5.5 billion or 10% to 12% as-reported growth and 8% to 10% in constant dollars compared to our previously provided $5.25 billion to $5.35 billion range.
At the midpoint, the $150 million increase in constant dollar sales largely reflects additional pricing.
We continue to anticipate adjusted EBITDA to be in the range of $1.12 billion to $1.15 billion.
On a reported basis, adjusted EBITDA is expected to grow 7% to 9%.
We are raising our 2021 outlook for adjusted earnings per share to $3.45 to $3.60, and we continue to expect a 45-55 first half, second half percentage split.
Our outlook assumes 153 million average shares outstanding, one million reduction from our prior guidance, given share repurchases in the first half, and an adjusted effective tax rate of approximately 26%.
And lastly, our free cash flow outlook continues to be $520 million to $570 million.
There is no change to our outlook for 2021 capex of approximately $210 million and Reinvent SEE restructuring and associated payments of approximately $40 million.
We will continue to focus on 0 harm and protecting our people as the pandemic continues.
|
On a per-share basis, earnings of $0.79 were up $0.03 compared to last year.
We are raising our full year sales and adjusted earnings per share outlook and reiterating our prior guidance for adjusted EBITDA and free cash flow.
In the second quarter, net sales totaled $1.3 billion, up 15% as reported, up 11% in constant dollars.
Adjusted earnings per share in Q2 was $0.79 compared to $0.76 in Q2 2020.
For net sales, we estimate $5.4 billion to $5.5 billion or 10% to 12% as-reported growth and 8% to 10% in constant dollars compared to our previously provided $5.25 billion to $5.35 billion range.
We are raising our 2021 outlook for adjusted earnings per share to $3.45 to $3.60, and we continue to expect a 45-55 first half, second half percentage split.
|
0
0
1
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
1
0
0
0
0
|
Also note that both our adjusted results and full-year guidance exclude our build-to-print actuation product line that supported the 737 MAX program, as well as our German valves business, which was classified as held for sale in the fourth quarter.
Overall, we experienced a strong 14% increase in sales.
Our aerospace and defense markets improved 11%, while sales to our commercial markets increased 21% year-over-year.
Adjusted operating income improved 24%, while adjusted operating margins increased 120 basis points to 15.6%.
It's important to note that this strong performance was achieved while we continue to invest strategically with a $5 million incremental investment in research and development as compared to the prior year.
Based on our solid operational performance, adjusted diluted earnings per share was $1.56 in the second quarter, which was slightly above our expectations.
This reflects a strong 22% year-over-year growth rate, despite higher interest expense and a slightly higher tax rate, which were generally offset by the benefits of our consistent share repurchase activity.
We achieved 11% growth and generated a strong 1.1 times book-to-bill overall, as orders exceeded one-time sales within each of our three segments.
Of note, our results reflect strong commercial market orders, which serves 50% year-over-year and included a record quarter of order activity for our industrial vehicle products covering both on and off-highway markets.
Within our aerospace and defense markets, book-to-bill was 1.15.
Next, to our full-year 2021 adjusted guidance where we raised our sales, operating income, margin and diluted earnings per share.
Sales improved sharply year-over-year and this was led by a strong increase in demand of approximately 40% for industrial vehicle products to both on and off-highway markets.
Looking ahead to the second half of 2021, we expect an improved performance within this market, led by increased production of narrow-body aircraft, including the 737 and A320.
Adjusted operating income increased 138%, while adjusted operating margin increased 800 basis points to 15.7%, reflecting favorable absorption on higher sales and a dramatic recovery from last year's second quarter.
In the Defense Electronics segment, revenues increased 17% overall in the second quarter.
Segment operating performance included $4 million in incremental R&D investments, unfavorable mix and about $2 million in unfavorable FX.
In the Naval and Power segment, we continue to experience solid revenue growth for our naval nuclear propulsion equipment, principally supporting the CVN-80 and 81 aircraft carrier programs.
The segment's adjusted operating income increased 13%, while adjusted operating margin increased 30 basis points to 17.2% due to favorable absorption on higher sales and the savings generated by our prior restructuring actions.
To sum up the second-quarter results, overall, adjusted operating income increased 24%, which drove margin expansion of 120 basis points year-over-year.
I'll begin with our end-market sales outlook, where we continue to expect total Curtiss-Wright sales growth of 7% to 9%, of which 2% to 4% is organic.
Starting in Naval Defense, where our updated guidance ranges from flat to up 2%, driven by expectations for slightly higher CVN-81 aircraft carrier revenues and less of an offset in the timing of Virginia-class submarine revenues.
Our outlook for overall aerospace and defense market sales growth remains at 7% to 9%, which, as a reminder, positions Curtiss-Wright to once again grow our defense revenues faster than the base DoD budget.
In our commercial markets, our overall sales growth is unchanged at 6% to 8%, though we updated the growth rates in each of our end markets.
And as a result, we are now anticipating 1% to 3% growth in this market.
Next, in the general industrial market, based on the year-to-date performance and strong growth in orders for industrial vehicle products, we've raised our growth outlook to a new range of 15% to 17%.
We now expect the segment sales to grow 3% to 5%, and we've increased this segment's operating income guidance by $3 million to reflect the higher sales volumes.
With these changes, we're now projecting segment operating income to grow 17% to 21%, while operating margin is projected to range from 15.1% to 15.3% of 180 to 200 basis points, keeping us on track to exceed 2019 profitability levels this year.
First, based upon technology pursuits in our pipeline, we now expect to make an additional $2 million of strategic investments in R&D for a total of $8 million year-over-year to fuel future organic growth.
Next, in the Naval and Power segment, our guidance remains unchanged and we continue to expect 20 to 30 basis points of margin expansion on solid sales growth.
So, to summarize our full-year outlook, we expect 2021 adjusted operating income to grow 9% to 12% overall on 7% to 9% increase in total sales.
Operating margin is now expected to improve 40 to 50 basis points to 16.7% to 16.8%, reflecting strong profitability, as well as the benefits of our prior-year restructuring and ongoing companywide operational excellence initiatives.
Continuing with our 2021 financial outlook, where we have again increased our full-year adjusted diluted earnings per share guidance, at this time to a new range of $7.15 to $7.35, which reflects growth of 9% to 12%, in line with our growth in operating income.
Note that our guidance also includes the impacts of higher R&D investments, a higher tax rate, which is now projected to be 24% based upon a recent change in UK tax law and a reduction in our share count, driven by ongoing share repurchase activity.
Turning to our full-year free cash flow outlook, we've generated $31 million year to date.
And as we've seen historically, we typically generate roughly 90% or greater of our free cash flow in the second half of the year and we remain on track to achieve our full-year guidance of $330 million to $360 million.
The release reflected approximately 2% growth over the FY '21 enacted budget and was reasonably consistent with our expectations and plans.
The budget revealed continued strong support for the most critical U.S. naval platforms, including the CVN-80 and 81 aircraft carriers and the Columbia-class and Virginia-class submarines.
Despite cuts to the overall army budget, funding to upgrade Battlefield network is up 25% in the services FY '22 budget request to a total of $2.7 billion, which represents the single greatest increase among the Army's modernization priorities.
The recent vote by the Senate Armed Service Committee to authorize an additional $25 billion to the Pentagon's budget for FY '22 represents a 3% upside to the President's initial request and an overall increase of 5% above the current fiscal year.
We have good line of sight on achieving a 5% base sales growth CAGR, including PacStar, by the end of 2023.
As you saw in our updated guidance, we increased our 2021 R&D investment by another $2 million, reflecting a total of $12 million in incremental year-over-year spending.
Lastly, I wanted to reiterate that our target for a minimum earnings per share CAGR of 10% over the three-year period is likely to incorporate annual share repurchase activity above our current base level of $50 million annually.
Finally, with more management attention on M&A and a very full pipeline of opportunities, I feel very optimistic that we will have the opportunity to exceed 5% and approach the 10% sales targets as we find critical strategic acquisitions to bring into Curtiss-Wright.
We expect to generate a high single-digit growth rate in sales and 9% to 12% growth in both operating income and diluted earnings per share this year.
Our 2021 operating margin guidance now stands at 16.7% to 16.8%, including our incremental investments in R&D.
And we remain on track to continue to expand our margins to reach 17% in 2022.
|
Based on our solid operational performance, adjusted diluted earnings per share was $1.56 in the second quarter, which was slightly above our expectations.
Next, to our full-year 2021 adjusted guidance where we raised our sales, operating income, margin and diluted earnings per share.
|
0
0
0
0
0
1
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
These statements and any projections as to the company's future performance represent management's estimates for future results and speak only as of today, August 5, 2021.
For the second quarter of 2021, we're reporting $492 million in total revenues and diluted earnings per share of $0.75 a share, down 6% and 41%, respectively, compared to the prior year's second quarter, which, for the most part, was a pre-pandemic quarter.
Our results this quarter were primarily impacted by approximately $87 million of rental revenues we did not recognize in the quarter due to cash versus accrual basis revenue recognition and lease restructurings.
While we took delivery of about $1 billion in new aircraft in the second quarter, that was $200 million less than we originally anticipated, and 50% of these deliveries took place in the month of June, providing a minimal contribution to the full quarter, but providing long-term rental contribution thereafter.
We're pleased that our collection rate improved in the second quarter to 87% as compared to 84% in the first quarter and our lease utilization rate was strong at 99.7%.
Importantly, our net deferrals balance continues to decline to $115 million today -- as of today from $131 million as of early May when we last spoke, with now more than half of the deferrals granted to date having been repaid.
The decline in our deferrals balance contributed to the increase in our operating cash flow, which is up nearly 30% for the first six months of 2021 versus 2020.
Now as I highlighted earlier, revenues were impacted by $87 million from cash basis accounting and lease restructuring agreements.
$42 million of this quarter came from lessees on a cash basis where the lease receivables exceed the security package, and collection was not reasonably assured.
It's important to note that approximately 2/3 of the $42 million is attributable to one customer, Vietnam Airlines, where we have 12 young A321neos and four 787-10s on lease with one of those Neos being owned by one of our management vehicles.
The remaining $45 million of the $87 million was related to lease restructurings.
But consistent with the original expectations we shared with you months ago, our 737 and 787s remain at Aeromexico as these young aircraft combine the backbone of the airline fleet.
In fact, we have three more 737-9s yet to go in future delivery to Aeromexico.
Our lease placements remained strong with 90% -- 93% excuse me, of our order book placed on long-term leases for aircraft delivering through 2022 and 80% through 2023.
I want to remind all of you that ALC has $27.1 billion in rental commitments on our current fleet and forward order book placements.
Many of you probably read, in fact, about the European Green Deal Legislative Package known as "Fit for 55", which aims to cut 2030 net greenhouse gas emissions by 55% compared to 1990 levels.
An important proposal within this package is the integration of advanced sustainable aviation fuels, which can reduce emissions by up to 80% as compared to traditional jet fuel.
Looking ahead, although we have OEM contractual commitments to take delivery of 52 aircraft in the second half of 2021, you're all aware of Boeing's delivery pause on the 787.
As the commitment table in our 10-Q shows, we were scheduled to take delivery of 10 787s through the end of the year.
Given these OEM delays, we currently expect to take delivery of approximately 36 aircraft out of the 52 contracted aircraft stream, and that translates to approximately $1 billion of deliveries to occur in the third quarter and $1.6 billion to occur in the fourth quarter of 2021.
Reflecting this continued confidence, our Board of Directors has declared another dividend of $0.16 per share for the second quarter of 2021.
The first is in the developed versus emerging markets, with countries and regions with the highest incomes getting vaccinated as much as 30 times faster than those with the lowest income brackets.
In a study also conducted by IATA, 85% of the respondents agreed in some regard that they will not travel if there's a chance of quarantine at their destination.
Yet at the same time, 86% said we're willing to undergo COVID-19 test as part of the overall travel process.
Per IATA's latest release for June 2021, traffic industrywide domestic RPKs were down only 22% as compared to June of 2019.
Whereas international, they were down 81% versus June of 2019.
For example, in the United States, one of the most recently reported week, U.S. domestic passenger airline departures were down only 18% as compared to 2019 levels, whereas international was down 37%.
Similarly, in China, domestic traffic recorded an increase of 7% above January 2020 levels, whereas international flights were suppressed at nearly 70% below January 2020 levels.
And IATA forecasts that by the end of '23, we should be -- or could be at 105% of 2019 levels.
In the second quarter, we delivered new single-aisle 737 and A320, A321neo aircraft in Europe, Middle East and Latin America, and new wide-body aircraft to China, Europe and the United States.
In fact, as of the end of June, industry information indicates that 88%, I repeat, 88% of the aircraft under the age of five years were back in service.
And 78% of aircraft in the age range of five to 15 years old were in service, whereas only 63% of aircraft over the age of 15 were back in service.
United Airlines recently placed an order for over 270 Boeing MAX and Airbus A321neo aircraft, which will replace older aircraft in their fleet and lead to significant improvement in fuel efficiencies, reduction in carbon emissions as they strive to reduce greenhouse gas emissions, 100% by 2050.
You have also seen similar announcements on the tackling of sustainability initiatives by the utilization and purchase of new aircraft from airlines, including Korean Airlines, which committed to reducing greenhouse gas by introducing new generation aircraft like the 787-10.
Korean has a number of 787-10 aircraft delivery from ALC over the next several years.
Alaska Airlines also recently placed a direct order for a substantial number of new 737 aircraft to achieve better fuel efficiency, and the airline is also leasing 13 new 737-9 MAX aircraft from ALC with deliveries beginning in the fourth quarter of this year.
Over the past year, despite the pandemic, we have made over $3 billion in aircraft investments, which has benefited our revenue line.
However, as John mentioned, revenues in the quarter were negatively impacted by $87 million from lease restructuring agreements and cash basis accounting, of which $42 million came from lessees on a cash basis.
This compares to $49 million in the first quarter and $21 million in the fourth quarter of last year.
In total, our cash basis lessees represented 10.9% of the net book value of our fleet as of June 30, which compares to 15.3% in the first quarter of '21 with improvements stemming from the resolution we reached with Aeromexico.
As John mentioned, rental revenues were negatively impacted by $45 million in the second quarter, much of which was attributable to restructuring that took place in prior quarters.
Finally, as of today, our total deferrals net of repayments are $115 million, which is a 12% decline from $131 million we reported on our last call.
Repayment activity has continued with the total repayments aggregating $127 million or 52% of the gross deferrals granted.
This compares to $18.5 million in gains recognized from the sale of four aircraft and repurchase of $185 million in short-term debt maturities below par in the second quarter of 2020.
Our composite rate decreased to 2.9% from 3.2% in the second quarter of 2020.
We are dedicated to maintaining a investment-grade balance sheet, utilizing unsecured debt as a primary source of financing, and have over $24 billion in unencumbered assets at quarter end.
We ended the period with a debt-to-equity ratio of 2.5 times on a GAAP basis.
We raised $1.8 billion in debt capital during the second quarter, beginning with a $1.2 billion senior unsecured issuance at 1.875%, which represents a record low for our company for a 5-year issuance.
Additionally, we raised another $600 million of floating rate senior unsecured notes at LIBOR plus 35 basis points, which represents another record low for ALC.
|
For the second quarter of 2021, we're reporting $492 million in total revenues and diluted earnings per share of $0.75 a share, down 6% and 41%, respectively, compared to the prior year's second quarter, which, for the most part, was a pre-pandemic quarter.
|
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
After steep declines in the second quarter, third quarter sales were up 2% year-over-year on a constant currency basis and adjusted earnings per share grew 1%.
First, from a customer perspective, our largest segment, Pharma, was the primary growth driver in the quarter with 4% organic growth, followed by Industrial, which grew 3% and Academic and Government, which declined 7%.
From a product perspective, our Waters branded products and services grew 3% organically, while TA declined by 8% on a constant currency basis.
Services grew 4%, while consumables business grew approximately 7% organically, driven largely by pharma.
Moreover, our strong base of small molecules, which represents approximately 75% to 80% of pharmaceutical industry sales will benefit from the growth of CROs, oligonucleotides and mRNA therapeutics, as well as the increasing potential for repatriation of small molecule manufacturing.
We have a global footprint with 25% of our sales coming from China and India.
For example, there are thousands of Alliance Systems in service that are more than 20 years old and in need of an upgrade.
Second, approximately 20% of our consumable sales go through the e-commerce channel.
For many of our competitors, this number is over 50%.
In the third quarter, we recorded net sales of $594 million, an increase of approximately 2% in constant currency.
Currency translation increased sales growth by approximately 1%, resulting in sales growth of 3%, as reported.
In the quarter, sales into our pharmaceutical market increased 4%, sales into our industrial market increased 3%, while academic and governmental markets declined 7%.
Looking at our product line growth, our recurring revenue, which represents the combination of precision chemistry products and service revenue, increased by 5% in the quarter, but instrument sales declined 1%.
Industry revenues were up 7% in the third quarter, driven by strong pharma market growth.
On the service side of our business, revenues were up 4% as on-demand service bounced back to mid-single digit growth along with continued growth in service plan revenues within the Waters product line, bringing third quarter product sales down further.
Sales related to Waters branded products and services grew 3%, while sales of TA branded products and services declined 8%.
Combined LC Instrument platform sales and LC-MS Instrument platform sales were flat and TA's instrumentation system sales declined 10%.
Looking at our growth rates in the third quarter geographically and on a constant currency basis, sales in Asia were flat with China up 3%, sales in Americas grew 2% with U.S. growing 5%, and European sales grew 5%.
We are on-track to achieve cost savings of approximately $100 million for the year relative to our pre-COVID internal plan.
We achieved approximately 25% of our planned annual savings in the third quarter, bringing our year-to-date savings against our internal plan to 85%, with the majority recognized in the second quarter.
We expect to realize remaining 15% in the fourth quarter.
Returning to our third quarter non-GAAP financial performance, gross margin for the quarter was 55.8% compared to 58.2% in the third quarter of 2019, primarily as a result of unfavorable FX as well as fixed cost absorption and sales mix.
Moving down the third quarter P&L, operating expenses increased by approximately 1% on a constant currency basis and foreign currency translation increased operating expense growth by approximately 2% on a reported basis.
In the quarter, our effective operating tax rate was 15.8%, which was about flat for the prior year.
Net interest expense was $7 million, a decrease of about $1 million.
Our average share count came in at 62.3 million shares, a share count reduction of approximately 7% or about 4 million shares lower than in the third quarter of last year as a result of shares repurchased through the end of the first quarter of 2020, subsequent to which we paused the share repurchase program.
Our non-GAAP earnings per fully diluted share for the third quarter increased to $2.16 in comparison to $2.13 last year.
On a GAAP basis, our earnings per fully diluted share decreased to $2.03 compared to $2.07 last year.
In the third quarter of 2020, free cash flow grew 53% year-over-year to $190 million, after funding $28 million of capital expenditures.
Excluded from free cash flow was $7 million related to the investment in our Taunton precision chemistry operation and a $38 million transition tax payment related to 2017 U.S. Tax Reform.
In the third quarter, this resulted in $0.32 of each dollar of sales converted into free cash flow and $0.31 year-to-date.
Accounts receivable days sales outstanding came in at 76 days this quarter, down four days compared to the third quarter of last year and down 11 days from the second quarter.
Inventories decreased by $42 million in comparison to the prior year quarter, reflecting stronger revenue growth and revised production schedules.
We ended the quarter with cash and short-term investments of $397 million and debt of $1.6 billion on our balance sheet at the end of the quarter.
This resulted in a net debt position of $1.2 billion and a net debt-to-EBITDA ratio of about 1.6 times at the end of the third quarter.
We also have $1.2 billion available on our bank revolver for total available liquidity of $1.6 billion at the end of third quarter.
Our future capital structure target of approximately 2.5 times net debt-to-EBITDA remains unchanged, while our near-term focus is maintaining financial flexibility and variability in the macro environment.
We now expect full year operating expenses to be in the range of down 1% to flat year-over-year in constant currency.
For the full year, at current rates, currency translation is expected to be about neutral to sales growth to positively impact operating expense growth by less than 1 percentage point and to negatively impact earnings per share by about 3 percentage points.
For the full year, net interest expense is expected to be in the range of $38 million to $40 million primarily due to lower debt levels.
|
In the third quarter, we recorded net sales of $594 million, an increase of approximately 2% in constant currency.
Our non-GAAP earnings per fully diluted share for the third quarter increased to $2.16 in comparison to $2.13 last year.
On a GAAP basis, our earnings per fully diluted share decreased to $2.03 compared to $2.07 last year.
|
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
|
Total revenues grew 60.9% with organic growth of 7.6%.
As a result of the surge in the Delta variant, NIC's COVID-19-related revenues from TourHealth and pandemic unemployment initiatives were significantly above plan at $43.3 million.
NIC's core revenues grew 5% in the quarter.
Recurring revenues comprised over 80% of our quarterly revenues for the first time and were led by 183% growth in subscription revenues.
Excluding NIC revenues, subscription revenue growth was robust at 23.9%, reflecting our accelerating shift to the cloud.
We have now achieved greater than 20% subscription revenue growth in 55 of the last 63 quarters.
Software licenses and services revenues grew 13.9% or 2% excluding NIC.
As a result, our non-GAAP operating margin declined 330 basis points to 25.3%.
Excluding NIC's COVID initiative revenues and related costs, our non-GAAP operating margin was 26.8%.
Bookings reached a record high in the third quarter at approximately $601 million, more than double last year's third quarter.
Excluding NIC, bookings grew 51.9%, with the biggest contributor being the $63 million renewal of our fixed fee e-filing arrangement with the state of Illinois.
We signed agreements with the Virginia Department of Housing and Community Development valued at approximately $24 million to provide a digital and call center solution for tenant, landlord and third-party filing of rent relief program claims.
Our largest software deal in the quarter also came from NIC with $6.1 million SaaS contract with the West Virginia Division of Motor Vehicles for digital titling.
In addition to the SaaS fees, the agreement will generate estimated transaction revenue of more than $3 million per year.
The deals have a combined value of approximately $19 million.
Also for our iasWorld Property Tax and Appraisal solution, we signed SaaS arrangements with the regional municipality of Wood Buffalo in Alberta, Canada, valued at approximately $3.1 million.
Franklin County, Ohio, valued at approximately $3.5 million and Summit County, Ohio, which also includes our Data & Insights Solutions, valued at approximately $2.9 million.
Other major SaaS deals included a $4.5 million contract with Arlington Heights, Illinois for our ERP civic services and payment solutions and a $3.4 million contract with Bayer County, Texas for our Odyssey, SoftCode and Supervision Justice solutions.
Our largest perpetual license contract for the quarter was a $5.4 million contract to provide our MicroPact and entellitrak solution to manage COVID vaccination at stations for the U.S. Department of Justice.
We also signed a $2.5 million on-premises license contract with the Commonwealth of the Northern Mariana islands for our Munis ERP and Enterprise Asset Management, ExecuTime and Socrata solutions.
VendEngine is one of the fastest-growing technology companies in North America, operating in more than 230 counties and 32 states.
VendEngine and Arx have combined ARR of approximately $17.5 million and their additions further strengthen Tyler's Justice and Public Safety suites.
GAAP revenues for the quarter were $459.9 million, up 60.9%.
Non-GAAP revenues were $460.6 million, up 61.1%.
On an organic basis, GAAP and non-GAAP revenues grew 7.6% and 7.5%, respectively.
Software license revenues rose 13.7%.
Subscription revenues rose 183.3%.
Excluding the contribution from NIC, subscription revenues were still very strong, growing 23.9%.
We added 144 new subscription-based arrangements and converted 67 existing on-premises clients, representing approximately $84 million in total contract value.
In Q3 of last year, we added 114 new subscription-based arrangements and had 46 on-premises conversions, representing approximately $56 million in total contract value.
Subscription contract value comprised approximately 74% of total new software contract value signed this quarter compared to 47% in Q3 of last year, reflecting our ongoing shift to a cloud-first approach to sales.
The value weighted average term of new SaaS contracts this quarter was 3.4 years compared to 4.3 years last year.
Transaction-based revenues, which include NIC portal, payment processing and e-filing revenues and are included in subscriptions, were $171.2 million, up more than sixfold from last year.
E-filing revenues reached a new high of $17.4 million, up 15%.
Excluding NIC, Tyler's transaction-based revenues grew 24.3%.
For the third quarter, our annualized non-GAAP total recurring revenue, or ARR, was approximately $1.5 billion, up 79.2%.
Non-GAAP ARR for SaaS software arrangements for Q3 was approximately $330 million, up 24.7%.
Transaction-based ARR was approximately $685 million, up 639%.
And non-GAAP maintenance ARR was flat at approximately $471 million.
Our backlog at the end of the quarter was $1.77 billion, up 14.3%.
Because the vast majority of NIC's revenues are transaction-based, their backlog at quarter end was only $27 million.
Excluding the addition of NIC, Tyler's backlog grew 12.6%.
As Lynn noted, our bookings in the quarter were very robust at $601 million, up 105.7% and includes the transaction-based revenues of NIC.
On an organic basis, bookings were strong at approximately $444 million, up 51.9% fueled by the renewal of the State of Illinois fixed e-filling filing arrangement of approximately $63 million and the addition of the two Delaware appraisal deals totaling $19 million.
For the trailing 12 months, bookings were approximately $1.6 billion, up 31.3%.
And on an organic basis, were approximately $1.4 billion, up 10.8%.
Our software subscription bookings in the third quarter added $19 million in new annual recurring revenue.
Cash from operations and free cash flow were both record highs for the third quarter at $205.4 million and $192.8 million, respectively.
During the quarter, we repaid the outstanding balance of $65 million on our revolver and paid down $57.5 million on our term loans for a total debt reduction of $122.5 million.
We ended the quarter with total outstanding debt of $1.428 billion and cash and investments of $348.4 million, and net leverage of approximately 2.3 times trailing pro forma EBITDA.
We expect 2021 total GAAP revenues will be between $1.577 billion and $1.597 billion, and non-GAAP total revenues will be between $1.580 billion and $1.6 billion.
We expect total revenues will include approximately $72 million of COVID-related revenues from NIC's TourHealth and pandemic unemployment services that are expected to wind down in the first half of 2022.
We expect 2021 GAAP diluted earnings per share will be between $3.55 and $3.63 and may vary significantly due to the impact of stock incentive awards on the GAAP effective tax rate.
We expect 2021 non-GAAP diluted earnings per share will be between $6.94 and $7.02.
We have a current pipeline of more than 40 qualified sell-through opportunities with NIC's state enterprise market across multiple Tyler solutions and have identified Tyler sales opportunities leveraging NIC State Enterprise contracts, to speed up the time from award to contract.
We expect that the $350 billion of aid to state and local governments and $167 billion of aid to schools under the American Rescue Plan Act will provide a significant measure of relief to budget pressures faced by many of our clients and prospects and potentially provide a tailwind over the next two to three years.
I'd also like to express our deep appreciation to Matt for his tremendous leadership of our IT and hosting organization over the last 11 years and wish him the best in his retirement.
|
Non-GAAP revenues were $460.6 million, up 61.1%.
Our backlog at the end of the quarter was $1.77 billion, up 14.3%.
We expect 2021 total GAAP revenues will be between $1.577 billion and $1.597 billion, and non-GAAP total revenues will be between $1.580 billion and $1.6 billion.
We expect 2021 GAAP diluted earnings per share will be between $3.55 and $3.63 and may vary significantly due to the impact of stock incentive awards on the GAAP effective tax rate.
We expect 2021 non-GAAP diluted earnings per share will be between $6.94 and $7.02.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
1
0
1
1
0
0
0
|
Working together, we delivered strong operational and financial results, and we serve record peak customer loads, and we delivered quarter-over-quarter earnings that were up 21% compared to last year.
Our Board recently approved a 5.3% increase in our dividend, achieving 51 consecutive years of dividend increases.
Given our success in delivering strong operational, financial and regulatory performance in the second and third quarters, we're increasing the lower end of our 2021 earnings guidance range by $0.05 per share.
We're also maintaining our 2022 earnings guidance range, and we continue to target a 5% to 7% average earnings growth for 2023 through 2025, and at least 5% annual dividend growth.
We've reached a unanimous settlement agreement with all parties for our Colorado natural gas rate review that will provide $6.5 million in new annual revenue.
We have refreshed and increased our 2021 through 2025 capital investment program by $149 million, to a total of $3.2 billion.
In doing so, we firmed up nearly $300 million in projects that were placeholders in last quarter's forecast.
This $3.2 billion forecast includes incremental investment for the Ready Wyoming project.
For perspective, the peak demand day for Wyoming Electric increased from 192 megawatts in 2014 to 274 megawatts this past summer.
That's a 43% increase during that period.
In 2020, we already achieved a 30% reduction at our electric operations and a 33% reduction in our gas utility since 2005.
One of our defined steps to meet our 40% reduction goal by 2030 within our electric operations will be the conversion of our Neil Simpson II coal-fired power plant to natural gas.
For our natural gas utility, we expect to reach to 50% reduction by 2035.
We've been upgrading our fleet for nearly a decade, beginning with the retirement of 123 megawatts of four older coal-fired power plants in 2013 and 2014.
Since that time, we've added 282 megawatts of owned wind generation and another 132 megawatts of wind energy through power purchase agreements with a number of other renewable projects in flight.
Also, our year-to-date Net Promoter Score through mid-October was approximately 64, an improvement from 60 in 2020 and notable improvement from a score of 42 four years ago.
I'm pleased to report we were named for the second consecutive year to Achievers 50 Most Engaged Workplaces.
We survey our employees about every 18 months to understand how we're doing and how we can improve as a team.
We delivered earnings per share of $0.70 compared to $0.58 in Q3 2020, a 21% increase.
On a consolidated basis, weather was not a major driver of earnings compared to normal, but was unfavorable compared to Q3 2020, which experienced a $0.05 benefit compared to normal.
The main drivers compared to last year were $1.5 million of gross margin improvement from new rates and riders, $2.8 million of increased margin from customer growth and higher usage per customer, especially in our electric utilities, and $4.8 million mark-to-market gains for both wholesale energy and natural gas commodity contracts.
At the end of September, we had more than $500 million of available liquidity on our revolving credit facility.
And in August, we issued $600 million of notes due in 2024.
The weighted average length of recovery we requested in our regulatory plans is 3.7 years.
New debt and deferred recovery of fuel cost for Winter Storm Uri temporarily increased our debt to total capitalization ratio to 62% at the end of March, and it remained at that level through the end of September.
During the third quarter, we issued $23 million through our at-the-market equity offering program for a total of $63 million year-to-date.
We expect to issue a total of $100 million to $120 million in both 2021 and 2022.
Last week, we delivered on our dividend growth target with our Board approving a 5.3% increase in our quarterly dividend.
For 2021, the quarterly dividend achieved 51 consecutive years of dividend increases, one of the longest track records in our industry and a record we're quite proud of.
Over the last five years, we have increased our dividend at an average annual rate of 6.4%, and we anticipate increasing our dividend by more than 5% annually through 2025, while maintaining our 50% to 60% payout ratio.
|
We delivered earnings per share of $0.70 compared to $0.58 in Q3 2020, a 21% increase.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
|
Regarding our Q1 performance, our revenues were $4.14 billion, and our adjusted EBIT margin was 8%.
Book-to-bill for the quarter was 1.12.
This 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.
Our 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.
The 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.
75% of our leadership team is now new to DXC and bringing in talent based on their personal credibility as talent follows talent.
We mentioned during our investor call that nearly 50% of our vice presidents across the company are new to DXC within the last 22 months.
This quarter, we rewarded high performance by paying annual bonuses that benefited roughly 45,000 of our colleagues.
In Q2, we are planning merit increases that will benefit roughly 77,000 of our colleagues.
These levers have helped us expand our margin going from 7.5% last quarter to 8% this quarter.
The 1.12 book-to-bill that we delivered this quarter is evidence that our plan is working.
In Q1, 57% of our bookings were new work and 43% were renewals.
Our 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.
This momentum and success in the market gives us confidence that we will deliver another book-to-bill of 1.0 or greater in Q2.
GAAP revenue was $4.14 billion, $10 million higher than the top end of our guidance range.
Adjusted EBIT margin was 8% in the quarter, an improvement of 380 basis points as compared to the prior quarter.
In 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.
Our 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.
Restructuring and TSI expenses were $76 million, down 58% from prior year.
Free cash flow was a use of cash of $304 million, as compared to a use of cash of $106 million in the prior year.
Starting 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%.
This is a 40% improvement from the prior quarter.
Adjusted EBIT margin expanded 380 basis points.
Excluding the impact of dispositions, margin expanded almost 600 basis points.
Revenue was $1.9 billion in the quarter.
Organic revenue growth was positive 2% as compared to prior year.
In 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.
GBS segment profit was $272 million with a 14.4% profit rate, up 450 basis points from the prior year.
GBS bookings for the quarter were $2.4 billion for a book-to-bill of 1.29.
Revenue was $2.3 billion, down 9.1% year over year on an organic basis.
GIS segment profit was $131 million with a profit margin of 5.8%, a 480-basis-point margin improvement over the prior-year quarter.
GIS bookings were $2.2 billion for a book-to-bill of 0.97, compared to 0.77 in the prior year.
Analytics and engineering revenues were $482 million, up 12.9% as compared to prior year.
We continue to see high demand for our offerings with a book-to-bill of 1.32 in the quarter.
Applications also continued to demonstrate solid progress with revenue of $1.246 billion, growing organically almost 1%.
Applications also continues its strong book-to-bill at 1.32.
Business process services revenues were $118 million, down 13% compared to the prior-year quarter with a book-to-bill of 1.13.
Cloud and security revenue was $549 million, up 4.9% as compared to the prior year.
Book-to-bill was 0.85 the quarter.
IT outsourcing revenue was $1.13 billion, down 9% as compared to prior year.
To put this decline in perspective, last year, this business declined almost 20% year over year.
Modern workplace revenues were $577 million, down 19.7% as compared to prior year.
Book-to-bill was 1.0 in the quarter.
We 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.
We 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.
Further, we have reached our targeted debt level of $5 billion with relatively low maturities through FY '24.
First-quarter cash flow from operations totaled an outflow of $29 million.
Free cash flow for the quarter was negative $304 million.
We remain on track to deliver our full-year free cash flow guidance of $500 million.
We are encouraged by our almost 50% year-over-year interest expense reduction.
During the quarter, we paid $88 million to draw to conclusion a long-standing $3 billion take-or-pay contract for IT hardware.
Additionally, 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.
We 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.
As 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.
Lastly, we terminated our German AR securitization program, negatively impacting cash flow by $114 million for the quarter.
During 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.
Our 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.
Revenues between $4.08 billion and $4.13 billion.
This translates into organic revenue declines of down 1% to down 3%.
Adjusted EBIT margins of 8% to 8.4%.
Non-GAAP diluted earnings per share in the range of $0.80 to $0.84.
As 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.
We 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%.
As noted on Slides 23 and 24, we are reaffirming our FY '22 and longer-term guidance.
We expect our progress in driving a book-to-bill of over 1.0 to continue.
|
Our 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.
GAAP revenue was $4.14 billion, $10 million higher than the top end of our guidance range.
In 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.
Our 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.
Non-GAAP diluted earnings per share in the range of $0.80 to $0.84.
|
0
0
0
1
0
0
0
0
0
0
0
0
0
0
1
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
|
We delivered a same-store sales increase of almost 19% to the third quarter last year, with notable growth acceleration in October.
1, our distinctive portfolio of banners; two, our connected commerce presence; three, data analytics capability; four, financial flexibility; and five, scale.
For example, we've made significant progress differentiating our banner value propositions with distinctive marketing campaigns and unique product assortments, delivering 14% sales growth in bridal and over 30% growth in fashion.
Our expected cumulative four-year savings is now over $400 million through the end of fiscal '22.
One example of how we're doing this is our data-driven labor model that enables us to dynamically plan staffing needs; store-by-store, hour-by-hour, delivering a 75% improvement in productivity compared to this time two years ago.
And we've improved inventory turns 50% by defining our product assortment more precisely by banner and by providing a much broader range of fulfillment options.
Our research indicates that roughly 25% of shoppers finished their holiday shopping before Black Friday this year, up from 17% a year ago.
And we've expanded curbside delivery to more than 800 stores.
We're offering ship from store at 1,850 stores, five times more than last year.
And we're offering buy online pick up in store at 2,100 locations.
This year, we're building on that foundation, increasing the capacity of our distribution centers again, nearly 25% more than last year, and adding a nationwide fleet of local distribution centers with our ship-from-store capability.
We've seen a 60% decrease in new employee turnover during their first two months at a time when turnover continues to top the headlines across retail.
In fact, a jewelry consultant with at least one year of tenure achieves on average, 60% more sales than a new team member.
While both appeal to bridal customers, almost 30% of New Zales customers are on a self-purchase journey, up 400 basis points compared to two years ago, and 64% of new Kay customers are on a milestone or gifting journey to celebrate special moments in the lives of those they love, which is 700 points higher than two years ago.
We just launched this line at the end of September, and it has already delivered more than $2 million in merchandise sales ahead of expectations.
James Allen is our digital bridal mega store, the company that continues to pioneer the way that customers shop for engagement rings online, setting new standards for custom design and selection with over 300,000 natural and lab-created diamonds.
This portfolio is designed not only to give accessible luxury customers a wide range of options but also to compete even more effectively with independent jewelers who make up more than 65% of the specialty jewelry category, and it's beginning to work as the integrated mix we've envisioned.
Jared's average transaction value this quarter was up 35% versus the third quarter two years ago through increased custom design and higher quality merchandise that includes larger stones and precious metals like platinum.
James Allen had 50% more customer transactions this quarter than two years ago, again, demonstrating our ability to attract and close highly discriminating bridal customers online.
And Diamonds Direct offers customers a differentiated accessible luxury experience, which is currently generating a median annualized revenue of approximately $18.5 million per store over the last 12 months.
We remain confident that our services strategy is a $1 billion opportunity on Signet's path to $9 billion in total revenue.
In addition, we've simplified our ESA offerings, which, along with these other improvements, has helped us nearly triple our attachment rate online compared to this time two years ago and has lifted our overall attachment rate across channels by 60 basis points.
We're micro-targeting customers using populations of 3,000 or fewer people.
Significantly, this year, 90% of our team share that they feel a sense of pride in what we are accomplishing and 82% believe wholeheartedly that Signet is a great place to work.
Second, we achieved a trailing 12-month leverage ratio of 2.1 times.
In Q3, we achieved total sales of $1.5 billion, growth of approximately $237 million over last year.
Compared to two years ago, sales are up $350 million with few -- with 423 fewer stores.
So substantially, all merchandise categories and banners demonstrated growth supported by a roughly 50% increase in advertising to strategically drive earlier shopping and reduce reliance on traditional fourth quarter profitability.
We delivered approximately $576 million this quarter in gross margin or 37.4% of sales.
This is a 380 basis point improvement to last year, and a 630 basis point improvement to two years ago.
Moving on, SG&A was approximately $471 million or 30.6% of sales.
This rate is 70 basis points higher versus a year ago from investments in both advertising and labor as we anniversary the reopening of stores after the COVID shutdown.
Compared to two years ago, we leveraged 380 basis points.
We leveraged 300 basis points, reflecting changes in our cost structure.
Non-GAAP operating profit was $105 million compared to $46.8 million last year and a loss of $29.3 million two years ago.
Third quarter non-GAAP diluted earnings per share of $1.43 compares to the prior year of $0.11 and a non-GAAP loss per share of $0.76 two years ago.
Looking deeper into our financial health, overall liquidity of $2.7 billion includes $1.5 billion of cash at quarter end.
Working capital efficiency improved approximately 40% to last year, net of cash through strategic reduction of inventory, collaboration with vendors on payment terms, and the sale of our in-house receivables.
We ended the quarter at $2.1 billion.
Even with a 15% increase in holiday receipts compared to last year, inventory was down $26 million and sell-down and clearance inventory was lower by roughly 14 points.
The cumulative result of these actions was a 50% improvement in inventory turn to last year.
As a result, consignment inventory was lower by $315 million, which has effectively doubled its productivity over the last two years.
The $2.7 billion of liquidity at quarter end supports our capital priorities.
We continue to expect capital expenditures in the range of $190 million to $200 million for fiscal '22.
As mentioned earlier, the trailing 12-month adjusted leverage ratio of 2.1 times is nearly half that of pre-pandemic levels.
We reinstated our common dividend earlier this year and this quarter, we repurchased for approximately $41 million.
We have roughly $185 million remaining under the current share repurchase authorization.
We expect fourth quarter total sales in the range of $2.4 billion to $2.48 billion and same-store sales in the range of 6% to 9%.
We expect non-GAAP EBIT of $280 million to $317 million.
Lastly, we have raised cost savings expectations for fiscal '22 to $100 million to $115 million.
For fiscal '22, we expect approximately 75 closures across the fleet and 85 openings, primarily in highly productive Banter by piercing Pagoda format.
|
One example of how we're doing this is our data-driven labor model that enables us to dynamically plan staffing needs; store-by-store, hour-by-hour, delivering a 75% improvement in productivity compared to this time two years ago.
In Q3, we achieved total sales of $1.5 billion, growth of approximately $237 million over last year.
Third quarter non-GAAP diluted earnings per share of $1.43 compares to the prior year of $0.11 and a non-GAAP loss per share of $0.76 two years ago.
Looking deeper into our financial health, overall liquidity of $2.7 billion includes $1.5 billion of cash at quarter end.
We reinstated our common dividend earlier this year and this quarter, we repurchased for approximately $41 million.
For fiscal '22, we expect approximately 75 closures across the fleet and 85 openings, primarily in highly productive Banter by piercing Pagoda format.
|
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
0
1
0
0
0
0
1
|
Baxter delivered third quarter sales growth of 9% on a reported basis, 7% at a constant currency and 6% operationally.
On the bottom line, third quarter adjusted earnings per share were $1.02, up 23% and exceeded our third quarter guidance.
Looking at performance by business, growth was led by BioPharma Solutions which advanced 45% at constant currency rates.
Medication Delivery grew at 11% constant currency, reflecting the improved rate of U.S. hospital admissions in new infusion pump contract with a large health system in the U.S. and increased demand for Baxter's small volume parenterals.
With respect to our NOVUM IQ 510(k) submission, we are continuing to work with the FDA to address their questions on our submission.
In Pharmaceuticals, 7% constant currency growth reflects the benefit of our acquisition of specified rights outside the U.S. to Caelyx and Doxil.
Adjusting results for the acquisition, operational growth rose 1%.
A $1.5 million foundation grant is helping fund the multifaceted 3-year program.
Third quarter 2021 global sales of $3.2 billion, advanced 9% on a reported basis, 7% on a constant currency basis and 6% operationally.
Sales growth this quarter reflects the benefit from revenues associated with the manufacturing of COVID vaccines, strength in medication delivery and OUS sales of Caelyx and Doxil, which totaled approximately $32 million in the quarter.
On the bottom line, adjusted earnings increased 23% and to $1.02 per share, exceeding our guidance range, driven by a favorable product mix, primarily from better-than-expected sales of Acute Therapies and BioPharma Solutions as well as disciplined operational execution.
Sales in the Americas increased 7% on both the constant currency and operational basis.
Sales in Europe, Middle East and Africa grew 7% on a constant currency basis and 3% operationally.
And sales in our Asia Pacific region advanced 8% on both a constant currency and operational basis.
Global sales for Renal Care were $981 million increased 1% on a constant currency basis.
We continue to monitor the impact of excess mortality among ESRD patients and delays in new patient diagnosis resulting from the pandemic and expect the market to return to pre-COVID growth rates over the next 12 to 24 months.
Medication delivery of $747 million increased 11% on a constant currency basis.
During the quarter, we estimate that U.S. hospital admissions were down approximately 4% compared to pre-COVID levels, a significant improvement from the same quarter last year, which saw U.S. admissions down approximately [Technical Issues] versus pre-Covid levels.
Pharmaceutical sales of $589 million advanced 7% on a constant currency basis and 1% operationally.
This growth was partially offset by declines in our U.S. business related to lower surgical procedures and a government order of approximately $20 million in Q3 2020.
Moving to Clinical Nutrition, total sales were $244 million, increasing 3% on a constant currency basis.
Sales in Advanced Surgery were $249 million, increasing 5% on a constant currency basis.
This growth was partially offset by performance in the U.S. with surgical procedures estimated at 95% of pre-COVID levels, a sequential and year-over-year decline in surgical procedure volumes due to the impact of the Delta variant and staff shortages.
Sales in our Acute Therapies business were $185 million, advancing 3% on a constant currency basis and were favorable to our expectations.
BioPharma Solutions sales in the quarter were $206 million, representing growth of 45% on a constant currency basis, reflecting incremental sales related to the manufacturing of COVID vaccines, which totaled more than $50 million in the quarter.
Our adjusted gross margin of 44% increased by 140 basis points over the prior year, reflecting a favorable product mix and operational improvements in manufacturing.
Adjusted SG&A of $640 million increased 11% as compared to the prior year period and was favorable to expectations, driven by disciplined expense management, which more than offset increased supply chain and logistics expenses recognized in the quarter.
Adjusted R&D spending in the quarter of $129 million increased 6% versus the prior year period.
This improvement in gross margin, coupled with the continued opex management resulted in an adjusted operating margin in the quarter of 20.2%, an increase of 100 basis points versus the prior year.
Adjusted net interest expense totaled $32 million in the quarter and other nonoperating expense was $12 million in the quarter.
The adjusted tax rate in the quarter was 14.8%, a decrease over the prior year, driven primarily by a favorable change in earnings mix.
And as previously mentioned, adjusted earnings of $1.02 per diluted share exceeded our guidance of $0.93 to $0.95 per diluted share.
With respect to cash flow, year-to-date, we've generated $1.5 billion in operating cash flow.
Free cash flow totaled over $1 billion and represented growth of nearly 50% as compared to the prior year period.
For full year 2021, we expect global sales growth of 7% to 8% on a reported basis, 5% to 6% on a constant currency basis and 4% to 5% on an operational basis.
This assumes a benefit of approximately 100 basis points to both reported and constant currency revenue growth for the acquisition of Caelyx/Doxil and over 200 basis points of positive top line impact from foreign exchange on reported growth.
Moving down the P&L, we now expect adjusted operating margin to expand more than 60 basis points.
For the year, we now expect an adjusted tax rate of 16.5% to 17% and a full year diluted average share count of approximately 510 million shares.
Based on these factors, we now expect 2021 adjusted earnings, excluding special items, of $3.58 to $3.62 per diluted share.
For the fourth quarter of 2021, we expect global sales growth of 3% to 4% on a reported basis, 4% to 5% on a constant currency basis and 3% to 4% on an operational basis.
And we expect adjusted earnings, excluding special items, of $1 to $1.04 per diluted share.
|
Third quarter 2021 global sales of $3.2 billion, advanced 9% on a reported basis, 7% on a constant currency basis and 6% operationally.
For full year 2021, we expect global sales growth of 7% to 8% on a reported basis, 5% to 6% on a constant currency basis and 4% to 5% on an operational basis.
Based on these factors, we now expect 2021 adjusted earnings, excluding special items, of $3.58 to $3.62 per diluted share.
And we expect adjusted earnings, excluding special items, of $1 to $1.04 per diluted share.
|
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
1
0
1
|
We achieved 3% in combined sales growth, or 1% in currency-neutral basis, compared to the first quarter of 2020.
Also because of our change to a fiscal calendar rather than a traditional 4-4-5 calendar, we have had less -- two days less in first quarter.
If we were to normalize for that, our combined currency-neutral growth in the first quarter would also have been approximately 3%.
And on a two-year average basis, to factor in our strong 7% year-ago comparison, growth would be strong at approximately 5%.
Our adjusted operating EBITDA margin improved by 30 basis points, reflecting our team's diligent execution of our cost management strategy.
For the first quarter, our leverage ratio was 4.3 times.
The fruit preparation business contributed approximately $70 million to IFF's Nourish segment pro forma sales in 2020.
We continued to see healthy performance across our Asian markets, achieving a 6% increase in combined currency-neutral sales, primarily driven by double-digit growth in China and India.
In Latin America, we saw an 11% increase in overall sales for the region with growth primarily driven by local currency sales.
COVID-19 and related ongoing restrictions continue to heavily impact Western and Central Europe, which has resulted in challenges across the entire EMEA region and a 5% decline in overall sales.
Our largest group, Nourish, achieved combined currency-neutral sales growth of 1%, led by robust performance in Flavors.
Scent continued its strong performance, achieving combined currency-neutral sales growth of 5%, the largest growth driver across our four divisions, led by continued strengths in Consumer Fragrances, double-digit growth in Cosmetic Actives, and a strong rebound in Fine Fragrance.
For our Pharma Solutions division, we achieved combined currency-neutral sales growth of 3%, with continued strong performance across the entire division and all sub-categories.
For Health & Bioscience division, combined currency-neutral sales decreased 3% against a strong double-digit year-ago comparison.
On the revenue synergies front, we have a robust pipeline of projects, including both cross-selling and integrated solutions, that we expect will accelerate our ability to meet our $20 million synergy target this year.
We are confident in our ability to meet our three-year run rate synergy target of $400 million.
We expect these cost savings to increase over the course of the year, putting us well on track to meet our $45 million cost synergy target in the full year 2021, and our year three run rate cost synergy target of $300 million.
In the first quarter, IFF generated $2.5 billion in sales, a 3% combined year-over-year increase, including foreign exchange benefits, or up 1% on a currency-neutral basis, primarily led by strong performances in our Scent and Pharma Solutions divisions.
Meanwhile, our aggressive cost management program led by headcounts and other expense reductions, enabled us to improve RSA to sales by 120 basis points and deliver year-on-year adjusted operating EBITDA growth of 4%.
As an aside, Q1 2020 was our most difficult comp with 7% combined currency-neutral sales growth and strong adjusted operating EBITDA growth.
IFF also delivered adjusted earnings per share, excluding amortization of $1.60 for the first quarter.
Nourish sales totaled $1.3 billion for the quarter, representing 1% growth on a combined currency-neutral basis.
Adjusted operating EBITDA grew 6%, with a 60 basis point margin expansion led by strong cost management.
As Andreas noted, H&B had a combined currency-neutral sales decline of 3%, but this was against a robust 11% positive year-over-year comparison.
It should be noted that on the two-year average basis, currency neutral growth was solid at 4%.
Adjusted operating EBITDA was also pressured and operating margin declined by 70 basis points, primarily driven by lower segment volumes and higher raw material and logistics costs.
Microbial Control & Grain Processing were also impacted by continued pre-COVID cycling, which impacted H&B's overall growth by approximately 5 percentage points.
Our Scent division generated $569 million in total sales, representing 5% combined currency-neutral growth against a strong 7% growth in the year-ago period as well.
On a two-year basis, growth is exceptional at approximately 6%.
Adjusted operating EBITDA improved 8% with a 70 basis point margin expansion predominantly driven by volume growth across the entire segment, as well as favorable mix from Fine Fragrance recovery and continued productivity.
Pharma Solutions delivered $162 million in net sales, representing 3% in combined currency-neutral growth while adjusted operating EBITDA grew 2%.
Taken in the context of the 11% growth in the prior-year period, growth is impressive on a two-year basis -- average basis at approximately 7%.
As you will see, our operating cash flow was very strong at $358 million.
A large part of our Q1 success came from core working capital, where we generated $193 million, a great job by our global team and a great outcome.
In the first quarter, capex was approximately $93 million or 3.5% of sales, up from last Q1's combined comparative $76 million or 2.6% of sales.
Free cash flow generation was, therefore, strong $265 million, and we distributed $82 million in dividends to our shareholders.
Our leverage, which is net debt divided by credit adjusted EBITDA ended at 4.3 times, as Andreas noted back on Slide 6.
This is ahead of our expectation of 4.5 times first quarter post-merger leverage.
Legacy IFF generated $520 million of free cash flow in 2020 and combined, we expect to generate $1 billion in 2021.
In 2021, we will invest more in legacy N&B production capacity to meet expected strong future demand, but will only be slightly above our original full-year capex projection of approximately 4.5% of sales.
The dividend payment this year will be -- this quarter will be $197 million reflecting our higher post-merger share count.
And we remain on track to meet our long-term deleveraging target of 3 times net debt to credit adjusted EBITDA in 24 months to 36 months from deal close.
On a combined basis, IFF generated $10.6 billion of revenue for the full year 2020, with currency neutral growth of approximately 2%.
And our combined adjusted operating EBITDA margin for 2020 was approximately 22%.
Please remember that combined includes 11 months of N&B and 12 months of IFF in 2020 and 2021.
In our fourth quarter conference call in February, we gave initial pro forma guidance, which assume the full 12 months of IFF and N&B, in order to be directly comparable to our previously provided S-4.
Moving forward, to be more aligned with actual results and reporting, we are transitioning to guiding on 11 months of N&B, which excludes January and 12 months of IFF in the 2021 year, in light of the merger completing on Feb.
Also, please note that in January 2021, N&B's actual sales were approximately $507 million and adjusted operating EBITDA was $107 million.
We have, therefore, increased our sales expectation for 2021 to be approximately $11.25 billion in combined revenues, or plus 6% growth with an approximately 23% adjusted operating EBITDA margin.
We are optimistic that for the full second quarter, revenue growth including currency benefit should be in the high-single-digits range, with an adjusted EBITDA margin also around 23%.
And the 21.5% is broadly in line with our early expectations.
The equivalent for heritage IFF on a similar basis for the full-year 2020 was approximately 18.5%.
|
IFF also delivered adjusted earnings per share, excluding amortization of $1.60 for the first quarter.
Please remember that combined includes 11 months of N&B and 12 months of IFF in 2020 and 2021.
We have, therefore, increased our sales expectation for 2021 to be approximately $11.25 billion in combined revenues, or plus 6% growth with an approximately 23% adjusted operating EBITDA margin.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
1
0
0
0
|
If you set aside the $38 million of operating EBITDA contribution from ADS and the $60 million fuel tax credit benefit in the fourth quarter of '19 versus 2020, our legacy WM operating EBITDA grew 4% versus Q4 of 2019.
This was our seventh consecutive quarter to generate operating EBITDA of more than $1 billion, showcasing the strength and consistency of our business.
As with the third quarter, our fourth-quarter operating EBITDA margin was impressively strong at 28.1% when you consider that it included 50 basis points of dilution from ADS.
For the full year, 2020 matched our highest annual operating EBITDA margin of 28.4%.
And excluding ADS, we set a new record with 2020 operating EBITDA margin of more than 28.5%.
As a result, we anticipate overall operating EBITDA growth between 10 and 13 and a half percent in 2021.
As expected, legacy Waste Management collection and disposal volumes improved sequentially in the fourth quarter from a decline of 5.5% in the third quarter to a decline of 2.7% in the fourth.
Fourth-quarter MSW volume grew 1.2% and C&D volume, excluding hurricane cleanup, grew 1.8%, both strong indicators of continued economic recovery.
Collection and disposal yield was 2.3% in the fourth quarter, and core price was 3.2%.
Adjusted for the impact of lower volume, core price would have been 3.8%.
Our residential yield improved 60 basis points to 3.7% in the fourth quarter compared to the same period in 2019 and was up again sequentially from 3.5% in the third quarter.
Residential volumes declined 1.4% as we shed business that does not meet our return requirements.
Overall, our actions to improve the residential line of business in 2020 resulted in $40 million of operating EBITDA benefit, and we expect this to carry forward into 2021.
In the post-collection business, fourth quarter landfill core price was 3.3% and transfer station core price was 3.1%, demonstrating our continued pricing discipline in these key lines of business.
Operating costs were 61.5% of revenue in the fourth quarter compared to 60.2% in the fourth quarter of 2019.
In the quarter, as expected, the ADS acquisition increased operating expense as a percentage of revenue by 40 basis points.
Aside from these impacts, operating costs as a percentage of revenue improved 60 basis points, demonstrating that we are laser-focused on cost control and continue to benefit from a lower cost structure.
As an example, commercial yards and industrial halls declined between 5% and 6% during the fourth quarter, yet overtime decreased in the range of 15% to 18%, and we see additional opportunities.
We expect organic revenue growth from yield and volume in the collection and disposal business of between four and four and a half percent and overall revenue growth between 10.75% and 11.25% during 2021.
We expect to achieve between $50 million and $60 million in synergies during 2021.
Combined with the $10 million to $15 million of annualized synergies already achieved in the fourth quarter, our run rate synergies exiting 2021 is expected to be between $60 million and $75 million.
We estimate that our onetime cost to achieve these synergies will be $50 million in 2021.
We expect continued improvement in recycling from our fee-for-service model, improved operating cost structure at new MRFs and stable demand for recycled materials, which, together, provide a tailwind of between $40 million and $50 million to 2021 operating EBITDA.
We also expect an incremental $10 million of year-over-year contribution from our renewable energy business from the sale of RINs as pricing for those credits has increased over the last several months.
Excluding $25 million of SG&A for the ADS business, SG&A improved by $56 million in 2020 to 10.2% of revenue, a 10-basis-point improvement over 2019.
Fourth quarter capital spending was $394 million, and that included $29 million of capital to support [Inaudible] ADS and about $30 million of capital that we intentionally pulled forward given the strong recovery in our operations during the third and fourth quarters.
2020 capital spending was $1.632 billion.
Waste Management generated free cash flow of $2.656 billion in 2020.
After-tax proceeds from the divestitures of ADS and Waste Management businesses to GFL were $691 million.
These proceeds were partially offset by after-tax transaction and advisory costs to support the acquisition of $117 million.
Normalizing for these two items, 2020 free cash flow was $2.082 billion.
This result demonstrates the resilient nature of our business and the strength of capital discipline as we nearly achieved our original 2020 free cash flow guidance of $2.15 billion despite the impact of COVID-19.
Given the strong result, at the end of 2020, we were positioned to forgo relief provided by the CARES Act, and we elected to pay approximately $120 million of payroll taxes that we had planned to defer.
As we repay that amount in 2021 and 2022, as anticipated, 2020 free cash flow, excluding the ADS impact I mentioned, would have been about $2.2 billion for the year, which is better than we expected at the end of the third quarter.
In the fourth quarter, we used our free cash flow to pay $231 million in dividend.
For the full year, we returned $1.33 billion to shareholders, comprised of $927 million in dividends and $402 million in share repurchases.
In November, we issued $2.5 billion of senior notes at an extremely attractive pre-tax weighted average cost of less than one and a half percent.
2021 cash interest savings are expected to be more than $90 million.
Fourth quarter total debt-to-EBITDA of 3.19 times and forecasted leverage ratios are both well within the financial covenants of our revolving credit facilities.
As John mentioned, we anticipate 10.75% to 11.25% revenue growth in the year ahead with solid organic growth in the collection and disposal business of between four and four and a half percent.
This underpins our 2021 operating EBITDA guidance of $4.75 million and $4.9 million.
We expect this strong earnings growth to drive free cash flow of between $2.25 billion and $2.35 billion.
Capital expenditures are expected to be between $1.78 billion and $1.88 billion in 2021.
Excluding about $90 million of capital planned to support the ADS integration, this expectation is in line with our long-term capital spend as a percentage of revenue target of nine and a half to 10 and a half percent even while we step up our investments in CSD.
We expect our dividend payments to be about $975 million in 2021.
Given our focus on the ADS integration, we expect tuck-in acquisitions to be on the lower end of our typical range of $100 million to $200 million.
With more than $1 billion remaining from our free cash flow guidance, we plan to allocate that to a combination of debt repayment, share repurchases and the high-return, sustainability-focused, capital investment opportunities I described earlier.
|
We expect organic revenue growth from yield and volume in the collection and disposal business of between four and four and a half percent and overall revenue growth between 10.75% and 11.25% during 2021.
As John mentioned, we anticipate 10.75% to 11.25% revenue growth in the year ahead with solid organic growth in the collection and disposal business of between four and four and a half percent.
This underpins our 2021 operating EBITDA guidance of $4.75 million and $4.9 million.
Capital expenditures are expected to be between $1.78 billion and $1.88 billion in 2021.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
0
1
0
0
0
0
|
It's also been a strong foundation for how we serve our customers and helped us through the challenges of the last 18 months.
This building is a great asset for Grainger and will continue to ramp capacity through the next 18 months.
Based on our internal scenario planning, we thought that potential adjustments in Q2 would fall somewhere between $45 million and $50 million, while we couldn't predict precisely how far the demand curve would fall or when.
As a result of the sudden weakening of demand, we had more pandemic inventory remaining than expected, and we took a $63 million adjustment, about $15 million more than our internal scenario planning.
We achieved strong organic daily sales growth of 15% for the company on a constant currency basis within our guided range.
When compared to 2019, Q2 was up about 14% on a daily organic basis, a positive indicator of our strong performance and recovery beyond the pandemic.
Our High-Touch Solutions North America segment grew 12.7% on a daily constant currency basis.
Looking at the two-year average in the second quarter of 2021, we drove approximately 275 basis points of average market outgrowth.
We remain very confident in our ability to grow 300 to 400 basis points faster than the market on an ongoing basis.
The Endless Assortment model had another impressive quarter with 23.9% daily sales growth on a constant currency basis, fueled by strong customer acquisition.
Lastly, we generated $269 million in operating cash flow and achieved strong ROIC of 29.2%.
First, our SG&A was $790 million, in line with the guided range provided on our first quarter call.
This resulted in total company operating margin of 10.4%, down 70 basis points compared to the prior year.
Excluding the impact of the $15 million incremental inventory adjustment, GP would have been roughly flat sequentially and operating margin would have been 10.9%.
The resulting earnings per share would have been around $4.50.
We continue to see a robust recovery with daily sales up 13.7% compared to the second quarter of 2020 and up 9.5% compared to the second quarter of 2019.
For the segment, GP finished the quarter at 36.9%, down 125 basis points versus the prior year.
I think it's important to note that without the $63 million of inventory adjustment, GP would have been up 125 basis points year-over-year.
This 250 basis point swing demonstrates that our underlying GP rate would have otherwise been a healthy 39.4%.
SG&A in the segment ramped as expected to $640 million, lapping the lowest point of SG&A spend in the second quarter of 2020.
Canada continued to make solid progress and expanded operating margin approximately 315 basis points year-over-year.
Accordingly, pandemic sales declined approximately 28% versus 2020.
However, that's an impressive 27% increase versus 2019.
We estimate July 2021 will be down about 28% over July 2020, in line with what we saw in the second quarter of this year.
During the quarter, we grew 31% versus 2020 and up 7% versus 2019.
We estimate that for the month of July 2021, non-pandemic sales growth of about 22%.
As it relates to pandemic product mix, while we expected it to taper off to near pre-pandemic levels to about 20% by year-end, we're seeing this happen more quickly now at about 22% of sales.
In total, our U.S. High-Touch Solutions business is up about 12% for the second quarter of 2021 and up 10% over 2019.
At this time, the market declined between 14% and 15% and we saw outsized share gains of roughly 1,200 basis points.
MRO market grew between 18.5% and 19.5%.
The U.S. High-Touch business grew 12.4%, about 650 basis points lower than the market.
To normalize for the volatility, we calculated the two-year average share gain to be 275 basis points over the market.
As I previously noted, our U.S. High-Touch business is up 10% over 2019.
As previously discussed, our second quarter GP decline resulted from the $63 million inventory adjustment.
This adjustment lowered U.S. GP by 270 basis points.
Without this, our underlying U.S. GP rate is 39.8% in the second quarter.
We're doing everything within our control to exit the year with a Q4 GP rate at or above the Q1 2020 levels or 40.1%.
Daily sales increased 23% or 23.9% on a constant currency basis, driven by continued strength in new customer acquisitions at both Zoro and MonotaRO as well as growth of larger enterprise customers in MonotaRO.
GP expanded 75 basis points year-over-year driven by positive trends at both businesses, and operating margin finished up 95 basis points over the prior year.
In local currency and using Japan's local selling days, which occasionally differ from U.S. selling days, MonotaRO's daily sales grew 16.7% with GP finishing the quarter at 26.4%, 25 basis points above the prior year.
Operating margin decreased 15 basis points to 12% as they continue to ramp up operations at the Ibaraki DC.
Switching to Zoro U.S., daily sales grew 32.6% as it laps its softest quarter of 2020.
Zoro GP grew 95 basis points to 31.5% and achieved 320 basis points of operating margin expansion through substantial SG&A leverage in the quarter.
Both MonotaRO and Zoro have shown progress and are up over 20% over the second quarter last year.
At the end of the second quarter of 2021, we had a total of 7.5 million SKUs available online, close to our goal of eight million for the year.
For the third quarter, on a total company level, we expect our revenue growth to be between 10% and 11% on a daily organic basis.
We believe any material pandemic-related inventory adjustments are complete, and we expect GP to be up between 100 and 120 basis points year-over-year and to improve sequentially.
SG&A is anticipated to fall between $805 million and $815 million as we continue to invest in marketing and wages in the DCs to remain competitive.
We just set a new goal last year to reduce the absolute Scope one and two greenhouse gas emissions by 30% by 2030.
We now offer more than 100,000 environmentally friendly products.
|
Our High-Touch Solutions North America segment grew 12.7% on a daily constant currency basis.
|
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
This was especially true for public cloud ARR, which exceeded $100 million.
Public cloud ARR of $106 million at the end of 2020 was a 165% increase from the prior year.
We signed a long-term agreement at a Fortune 100 insurer, as it modernizes its IT infrastructure, less competitive win against several cloud native vendors came after the customer recognized that Teradata provides significantly higher value and quality at significantly lower cost than others.
Our customer selected Teradata for unsurpassed workload management capabilities, platform ability and ability to reliably and securely execute company's more than 26 million queries per day.
A Fortune 50 healthcare company selected to Teradata on AWS to continue to run its business intelligence reporting and analytics for claims, case management and provider efficiency.
We will be investing 75% of all R&D spends or over $200 million in fiscal 2021 in our cloud initiatives.
Todd brings to Teradata more than 25 years of experience in global sales, marketing, channel and operations at large multinational technology organizations, including most recently at Apple and previously with Oracle, Rackspace and Microsoft.
We ended the year with $1.587 billion in ARR, which was 11% growth year-over-year at the beginning of the year, delivered $86 million.
And -- the $1.58 7 billion of ARR breaks down as follows; $960 million represents subscription and cloud ARR.
Public Cloud ARR totaled $106 million at the end of 2020, which was a 165% increase from the end of 2019.
The remaining subscription amount of $854 million represents on premises and private cloud subscriptions in grew 30% year-over-year.
The remaining ARR balance of $627 million represents; maintenance, software upgrade rights and other ARR down 14% year-over-year, and reflects our strategic move to subscription and the cloud.
In Q4, we generated $383 million in recurring revenue, which was above our guidance range of $371 million to $373 million and represented 9% growth year-over-year.
Consulting revenues declined 27% year-over-year, as expected, as we continue to refocus our Consulting business on higher margins engagements that also drive increased software consumption within our customer base.
Total gross margin came in at 59.3%, up 610 basis points a year-over-year.
Cost savings of about $6 million from the actions announced during our Q3 2020 earnings call aided our gross margin in the fourth quarter, and will also benefit our gross margin dollars in 2021.
Recurring revenue gross margins was 17.5%, up 190 basis points from the fourth quarter of 2019 and up 10 basis points sequentially.
Consulting gross margin was 8.4% versus 14.9% in the fourth quarter of 2019.
Turning to operating expenses, total operating expenses were up 4% year-over-year.
On our Q3 earnings call, we disclosed that the restructuring efforts we announced were expected to result in expense reduction between $80 million to $90 million on an annualized basis.
As an update, the actions taken resulted in approximately $80 million of total cost savings.
Of this amount, approximately $12 million benefited operating income in the fourth quarter.
Turning to earnings per share, earnings per share of $0.38 exceeded our guidance range of $0.23 to $0.25 provided last quarter.
We cleanly beat expectations as we generated about $0.09 from better than expected revenue growth and about $0.08 of earnings per share from the cost actions discussed on the Q3 earnings call, partially offset by the primarily lower consulting margins and higher incentive planning expenses as previously mentioned.
Free cash flow in the fourth quarter was $45 million, which contributed to full year free cash flow of $216 million, well ahead of the annual free cash flow guidance of $150 million we provided at the beginning of the year.
As a reminder, we expected to make cash payments of approximately $75 million related to the restructuring actions that we discussed during our Q3 earnings call, of which approximately $15 million were expected in the fourth quarter.
Our current forecast for total cash usage is now approximately $65 million, down $10 million from the prior estimate.
Of the $65 million, $23 million was paid in the fourth quarter.
The remaining $42 million is expected to be paid during 2021.
After reclassifying managed services and third-party software ARR, total AAR was $1.425 billion at the end of 2020 which still grew over 11% year-over-year.
And it consisted of the following $917 million of subscription and cloud related ARR, which increased 38% from the end of the prior year with public cloud ARR of $106 million of this total and $508 million of maintenance and software upgrade rights related ARR, which decreased 17% as expected, due to our shift to a subscription model.
With that said, our 2021 annual guidance, which considers the week is expected to grow total ARR is anticipated to grow in the mid to high single-digit percentage range year-over-year.
We anticipate total revenue to grow in the low single-digit percentage range year-over-year.
Non-GAAP earnings per share are expected to be in the range of a $1.50 to $1.58 which would be about 18% year-over-year growth at the midpoint and we expect free cash flow of at least $250 million.
And we also expect recurring revenue gross margins to be in the low 70% range.
Perpetual another gross margin is expected to be in the mid 20% range and consulting gross margin to be in the low teens percentage range.
We expect to improve operating margins by 100 to 150 basis points as we continue to drive efficiencies in our operating model to drive profitable growth, while increasing our investment in cloud sales and R&D capabilities.
As previously discussed, the majority of the $80 million of expected annual run rate cost savings are being reinvested back into R&D and go to market, cloud initiatives.
However on a net basis, we anticipate 5 to 10 said some benefit to 2021 EPS.
The free cash flow guide, I mentioned, reflection is reduced by the $42 million of restructuring cash payments previously discussed.
We anticipate approximately $27 million of the $42 million being paid during the first quarter.
We expect our non-GAAP effective tax rate to be approximately 23% for the full year and assume $112 million fully diluted shares outstanding.
They cloudy are is expected to grow 155% or more from the $44 million in Q1, 2020 probably cloud ARR or about 10 million to 15 million increase sequentially from the end of 2020.
|
This was especially true for public cloud ARR, which exceeded $100 million.
Public cloud ARR of $106 million at the end of 2020 was a 165% increase from the prior year.
We signed a long-term agreement at a Fortune 100 insurer, as it modernizes its IT infrastructure, less competitive win against several cloud native vendors came after the customer recognized that Teradata provides significantly higher value and quality at significantly lower cost than others.
We ended the year with $1.587 billion in ARR, which was 11% growth year-over-year at the beginning of the year, delivered $86 million.
Public Cloud ARR totaled $106 million at the end of 2020, which was a 165% increase from the end of 2019.
In Q4, we generated $383 million in recurring revenue, which was above our guidance range of $371 million to $373 million and represented 9% growth year-over-year.
Turning to earnings per share, earnings per share of $0.38 exceeded our guidance range of $0.23 to $0.25 provided last quarter.
After reclassifying managed services and third-party software ARR, total AAR was $1.425 billion at the end of 2020 which still grew over 11% year-over-year.
With that said, our 2021 annual guidance, which considers the week is expected to grow total ARR is anticipated to grow in the mid to high single-digit percentage range year-over-year.
We anticipate total revenue to grow in the low single-digit percentage range year-over-year.
Non-GAAP earnings per share are expected to be in the range of a $1.50 to $1.58 which would be about 18% year-over-year growth at the midpoint and we expect free cash flow of at least $250 million.
We expect to improve operating margins by 100 to 150 basis points as we continue to drive efficiencies in our operating model to drive profitable growth, while increasing our investment in cloud sales and R&D capabilities.
|
1
1
1
0
0
0
0
1
0
1
0
0
1
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
1
0
1
1
1
0
0
1
0
0
0
0
0
0
|
Due to their hard work and dedication, we achieve net sales growth of 6% despite store closures in many of our international territories, and the shutdown of California salons in January.
The combination of strong consumer demand and the effectiveness of our promotional strategy, allowed us to maintain solid gross margins above our target level of 50% in the quarter.
We ended Q2 with a strong liquidity position, including $408 million of cash on the balance sheet, and zero balance outstanding our $600 million ABL credit facility.
Subsequent to the close of the quarter, we fully repaid the outstanding balance on our 5.5% senior notes due 2023, making further progress toward our goal of bringing our leverage ratio close to 2.5 times by the end of fiscal 2021.
Color increased 27% and vivid colors grew by 53% at Sally US and Canada versus the prior year.
Then it continued to be an important driver and represented 27% of our total color sales for Sally US and Canada in the quarter.
In addition, BSG also saw strengthen in the color category, which was up 17% versus the prior year.
Other categories also performed well, with nails up 20% and hair care up 9% at Sally US and Canada, and hair care up 16% at BSG.
Our e-commerce business was also an important growth driver, delivering of sales increase up 56% versus a year ago.
For the second quarter, approximately 40% of our e-commerce sales for Sally US and Canada were fulfilled by our stores, which speaks to the value of our large store portfolio when combined with our enhanced digital capabilities.
The initial test will consist of approximately 90 stores, roughly 70 Sally Beauty and 20 BSG locations, and will be spread across the country to provide us with a range of learnings in various markets.
We expect to be leveraging all of our new capabilities and tools in service of our core mission to recruit and retain color customers, and we expect to bring our debt leverage ratio closer to our target of 2.5 times.
We are pleased to see adoption rates rising on our most profitable fulfillment option, focus, which accounted for 20% of Sally US and Canada's total e-commerce sales during Q2, up from 11% in the prior quarter.
Ship from store represented an additional 20% of Sally US and Canada's total e-commerce sales for the quarter.
In Q2 purchases from our loyalty members at Sally US and Canada exceeded 72% of sales total sales and BSG US surpassed 7% of total sales.
Net sales were up 6.3% versus prior year.
And same store sales increased 6.5%.
Our global e-commerce business remains strong with consolidated sales up 56% on a year over year basis.
From a gross profit perspective, we continue to deliver margins in line with our 50% plus target levels.
Second quarter gross margin came in at 50.4%, up 110 basis points to last year.
Adjusted Gross margin was 51.2% and excludes a $7 million, writedown of PPE inventory.
In addition to the $7 million writedown, we also made the decision to donate approximately $31 million of PPE inventory that will be disseminated to organizations in need during the second half of fiscal 2021.
SG&A expense totaled $391 million.
That includes the PPE donation of $31.2 million, partially offset by $2.2 million of Canadian wage and rent subsidy credits.
On an adjusted basis, SG&A decreased by approximately $6 million, reflecting lower advertising and field labor costs, and our focus on expense control while pandemic headwinds persist.
As a percentage of sales, adjusted SG&A improved by 320 basis points, coming in at 39.1%.
In Q2, adjusted operating margin expanded by 510 basis points to 12.1%.
Adjusted EBITDA increased 55% to $141 million, and adjusted diluted earnings per share more than doubled to $0.57.
Moving to segment results at Sally Beauty same store sales increased 4.9%.
The combination of strong sales and gross margin expansion drove a significant increase in segment operating margin, which expanded 750 basis points to 18.4%.
We also delivered strong e-commerce sales at Sally, up 46% versus a year ago.
In our BSG segment, same store sales increased 9.9%, reflecting a strong rebound as restrictions ease coupled with higher operating capacity in salon and the reopening of California salons in February.
E-commerce remained strong posting growth at 68% on a year-over-year basis.
Excluding the write down of PPE inventory, gross margin was approximately flat to last year, and operating margin expanded 80 basis points to 12.5%.
We ended the quarter with $408 million of cash on the balance sheet and a zero balance on our $600 million revolving line of credit.
Inventory at quarter in totaled $950 million, essentially flat to last year, inclusive of the $31 million in PPE inventory that we expect to donate by fiscal year end.
Looking at the balance of the year, we expect to close this fiscal year with inventory in the low 900.
We generated strong cash flow from operations of $93 million in Q2 and capital expenditures totaled $12 million, putting free cash flow at $81 million.
At the end of the quarter, our net debt leverage ratio stood at 2.34.
For comparison purposes, the leverage ratio that we often say, as defined in our loan agreements, where the impact of cash on hand is capped at $100 million for net debt calculation purposes was 2.95.
Given our strong liquidity position, subsequent to the end of the quarter we fully repaid the outstanding balance of $197 million on our 5.5% unsecured notes.
We expect to continue utilizing excess cash to deleverage the balance sheet, with the goal of bringing our leverage ratio closer to 2.5 times this year.
We expect the business to generate strong cash flow from operations of more than $100 million in the second half of this fiscal year.
Keep in mind that net sales were down 28% in Q3 of last year, which reflected significant pandemic impacts in store closures globally.
We expect net sales growth of 35% to 40% in Q3 of this year, reflecting strengthening consumer demand in the US, partially offset by ongoing choppiness from pandemic headwinds in international markets.
For perspective in Q4 of 2020, net sales were down less than 1%, as restrictions lifted in store and salon reopenings took hold.
|
And same store sales increased 6.5%.
Adjusted EBITDA increased 55% to $141 million, and adjusted diluted earnings per share more than doubled to $0.57.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Our GAAP earnings were $0.65 per diluted share for the third quarter, and our GAAP book value increased 4.7% in the quarter to $12 per share at September 30th.
This contributes to an overall year-to-date increase in our GAAP book value of 21% despite having raised our dividend each quarter of the year thus far.
When combined our GAAP book value growth in dividends paid resulted in a 27% economic return to shareholders year-to-date.
While we've generated strong earnings thus far this year, we've done so with record amounts of cash on hand, putting $557 million at September 30.
We generated a record $4.7 billion of lock volume during the quarter, making quick work of our prior record of $4.6 million two quarters earlier.
Overall, locks were up 22% versus the second quarter, 59% of which were on purchase money loans, an important statement about the quality of our pipeline and our sellers, given the benchmark rates during the quarter hit lows not seen since February.
And now the current mortgage rates are approximately 30 basis points higher versus the lows of Q3.
It is a helpful reminder that we have locked choice loans with over 100 different sellers thus far this year, important groundwork that we believe will bear fruit as we head into next year.
The depth of our distribution channels was another highlight during the quarter, as we sold $2.4 billion of loans alongside our securitization activities.
Our third quarter issuance, Sequoia 2021-6 was $449 million in size and executed well inside competing transactions marketed during a similar period.
In fact, liquid mortgages also acting as DLA on our most recent Sequoia securitization, which closed in October and is backed by $407 million of jumbo residential loans.
Rapid funding through which we provide accelerated settlement timelines for sellers, recently eclipsed $1 billion in purchases since program inception one year ago.
The third quarter was also another high point for CoreVest our business purpose lending platform, the third quarter $639 million in fundings were the highest since late 2019 and reflected a consistent balance between single family rental and bridge SFR fundings totaled $394 million, up 26% from the second quarter.
Production deposition does the price and SFR securitization in early October, backed by approximately $304 million in loans and CoreVests 19th securitization overall.
The transaction creates $300 million of financing capacity of which we sold liabilities representing 90% of the capital structure.
Procuring additional leverage on a non-recourse, non-marginal basis at a cost of funds of less than 2.5% on the issued bonds.
Importantly, the transaction was structured with a 30 month reinvestment period for loan payoffs.
As third quarter fundings total $245 million, an increase of 14% from the second quarter.
Our investment portfolio remained in step with our operating progress and continue to generate strong returns with our securities book appreciating in value by approximately 15 % [Phonetic] during the third quarter, and our bridge portfolio helping to drive net interest income higher.
Of the $34 trillion in total estimated US home value that we mapped out and invest today, approximately $23 trillion is in home equity, either backing existing debt or held for cash by a growing cohort of zero LTV borrowers, while Point and others have made progress and unlocking a small portion of this value.
We report a GAAP earnings of $0.65 per diluted share, representing a 27% annualized return on equity for the quarter, which significantly outpaced our dividends.
As a result, book value increased $0.54 or 4.7% to $12 per share on the quarter.
We delivered our third consecutive dividend increase of 17% to $0.21 per share ahead of market expectations.
We have consistently generated annualized economic returns in excess of 20% over the last five quarters.
On a combined basis, our operating businesses generated an annualized after-tax operating return of 31% in Q3.
They utilized roughly 450 million of average capital or 30% of our total allocated capital that produced two-thirds of our adjusted revenue for the quarter.
As a reminder, these earnings can be retained in the business, driving the differential between the nearly 5% increase in book value and 2% increase contributed from the investment portfolio.
The residential mortgage banking team generated a 26% after tax operating return on capital during the quarter.
Income from mortgage banking activities net was 12 million higher than the second quarter as loan purchase commitments of $3.3 billion increased 20% from the second quarter, and our gross margins improved approximately 25 basis points, which is above the high end of our historical range.
We saw continued strength from our business purpose mortgage banking operations, which delivered a 43% after-tax operating return on capital.
Aside from this, BPL mortgage banking results benefited from a 22% increase in funding volume, as well as strong execution on the securitizations completed in the quarter.
Following the $95 million of investment fair value changes we booked through the second quarter.
We had another $26 million in Q3 from further improvement in credit performance and spread tightening, particularly in our third-party reperforming loan and retain for best securities.
Separately, during the quarter, we settled call rights on to Sequoia securitization, acquiring 66 million of season jumbo loans at par, which had a small benefit to book value.
Looking ahead, net of our third quarter gains, there remains potential upside of roughly $3 per share in our portfolio through a combination of accretable market discount and call REITs that we control.
We estimate $1.2 billion of loans can become callable across capital and Sequoia through the end of 2022.
REIT taxable income increased to $0.14 per share from $0.11 in the second quarter due to higher net interest income.
Our taxable REIT subsidiaries earned $0.32 per share in Q3 up from $0.27 in Q2.
Our balance sheet and funding profile remain in excellent shape with unrestricted cash of $557 million, which equates to over 75% of our outstanding marginable debt.
We also had investable capital of $350 million to deploy into new investments.
During the quarter, we added $350 million of financing capacity to support growth of our operating platform.
We also completed the bridge securitization and a new $100 million non-marketable term financing collateralized by retain capital securities in our investment portfolio, each of those which contributed roughly -- to a roughly 20 basis point reduction in the cost of funds of our business purpose lending segment.
Our recourse leverage was unchanged at 2.2 times, as we incurred additional warehouse borrowings to finance higher loan inventories, while rotating certain financings into non-recourse debt and experiencing appreciation of our equity base.
During the third quarter, we maintain cost per loan for our residential mortgage banking operations of 28 basis points, compared with our historical average of 35 basis points during 2013 to 2019.
|
Our GAAP earnings were $0.65 per diluted share for the third quarter, and our GAAP book value increased 4.7% in the quarter to $12 per share at September 30th.
We report a GAAP earnings of $0.65 per diluted share, representing a 27% annualized return on equity for the quarter, which significantly outpaced our dividends.
|
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Yesterday, we reported record earnings of $1.06 a share compared with $0.67 in the prior year's quarter and $0.94 sequentially.
Revenue was a record $154.3 million for the quarter compared with $111.4 million in the prior year's quarter and $144.4 million sequentially.
Our implied effective fee rate was 57.5 basis points in the third quarter compared with 58 basis points in the second quarter.
Excluding performance fees, our third quarter implied effective fee rate would have been 57.3 basis points compared with 57 basis points in the second quarter.
Operating income was a record $70.4 million in the third quarter compared with $44.2 million in the prior year's quarter and $62.6 million sequentially; and our operating margin increased to a record 45.6% from 43.4% last quarter.
Expenses increased 2.6% compared with the second quarter, primarily due to higher compensation and benefits, distribution and service fees and G&A.
The compensation to revenue ratio, which included a cumulative adjustment to lower the incentive compensation accrual was 33.19% for the third quarter and is now 34.5% for the trailing nine months.
Our effective tax rate, which was 25.93% for the quarter, included a cumulative adjustment to bring the rate to 26.5% for the trailing nine months.
Our firm liquidity totaled $241 million at quarter-end compared with $185.6 million last quarter and we continued to be debt free.
Total assets under management were $97.3 billion at September 30, an increase of $1 billion or 1% from June 30.
The increase was due to net inflows of $1.3 billion and market appreciation of $469 million, partially offset by distributions of $718 million.
Advisory accounts, which ended the quarter with $22.8 billion of assets under management had net outflows of $311 million during the quarter.
We recorded $1.1 billion of inflows, the majority of which were from existing accounts.
Offsetting these inflows were $1 billion of outflows from an unexpected account termination after a client decided to eliminate its allocation to multi-start real assets as well as $300 million of client rebalancings.
Japan Subadvisory had net outflows of $52 million during the quarter, compared with net outflows of $272 million during the second quarter.
Distributions from these portfolios totaled $295 million compared with $309 million last quarter.
Subadvisory, excluding Japan, had net outflows of $253 million, primarily from a client that decided to convert its global listed infrastructure portfolio to passive.
Open-end funds, which ended the quarter with a record $45.6 billion of assets under management had net inflows of $2 billion during the quarter.
Distributions totaled $276 million, $225 million of which was reinvested.
Given our double-digit year-over-year growth in assets under management, revenue and operating income, driven by our leading organic growth and strong investment performance, we reduced the compensation to revenue ratio from the previous quarter's guidance of 35.25% by 75 basis points to 34.5%.
All things being equal, we expect our compensation to revenue ratio for the fourth quarter to remain at 34.5%.
We now project that our G&A will increase by about 9% from the $42.6 million we recorded in 2020.
And finally, we expect that our effective tax rate will remain at approximately 26.5%.
The third quarter felt like a transitory phase in the markets with the S&P 500 up 0.6% and low dispersion across sub-sector performance.
Reflecting that, commodities reached a seven-year high and were up 7% in the quarter, one of the top-performing asset classes.
The commodities rally has been broad-based with spot prices positive year-to-date for 80% of commodities.
Looking at our performance scorecard, in the third quarter and for the last 12 months, eight of nine core strategies outperformed their benchmarks.
Measured by AUM, 79% of our portfolios are outperforming benchmarks on a one-year basis compared with 99% last quarter.
On a three and five-year basis, 100% of AUM is outperforming.
The one-year figure declined primarily due to global real estate, where our batting average declined from 99% last quarter to 25% in Q3.
U.S. real estate returned 0.2% in the quarter and we outperformed in all of our sub strategies.
Year-to-date, U.S. real estate is up 21.6%, outperforming the S&P 500's 15.9%.
So far in 2021, $13 billion has flowed into REIT, mutual funds and ETFs, the largest inflow since 2014.
REITs have outperformed by nearly 400 basis points annually for over 40 years, while providing liquidity.
Global real estate returned negative 0.7% in the quarter.
Global listed infrastructure returned negative 0.25% in the quarter and we outperformed in all of our sub-strategies.
The dry powder amassed by private equity infrastructure managers reached a record $300 billion and provides fuel for our investment thesis that private equity capital will find its way into the listed markets to buy companies and assets with the latest example being the announced privatization of Sydney airport.
Preferred securities returned 0.6% for our core strategy and 0.2% for our low duration strategy.
Preferreds continue to look attractive in the fixed income world with yields of 4.8% for investment-grade preferreds in our core strategy and 4.2% for our low duration strategy.
For context, corporate bonds yield 2.25%, municipals yield 1.75% and high-yield yields 4.75%.
The benchmark for our multi-strategy real assets portfolio returned 1% in the quarter and we outperformed.
Over the past year, the real assets portfolio returned 32.5% compared with the S&P 500 at 30%.
September CPI increased 5.4% year-over-year and the core CPI was also up 4%.
In a surprise announcement, the Social Security Administration last week disclosed that future payments will be increased by 5.9%, the largest such increase in over 40 years.
Consumer spending surged 11.9% in the second quarter and 13.9% in the month of September.
Rent is a key category as it makes up over 30% of CPI.
Tenant rent jumped 0.5% in September which was the biggest monthly increase in 20 years.
Owners' equivalent rent, which is the accepted measure of what homeowners would pay if they had to rent their homes rose 0.4%, the most since 2006.
According to the New York Fed, consumers' median inflation expectations for the next three years is 4.2%.
At the risk of being repetitive and with the benefit of strong, absolute and relative returns from our real asset strategies, we achieved record AUM of $97.3 billion and over $100 billion intra-quarter; record open-end fund AUM of $45.6 billion and $1.3 billion of net inflows in the quarter.
As has been the case, recently, the wealth channel led the way with $2 billion of net inflows, representing 18% organic growth and our third best quarter on record.
From a product standpoint, we saw strength in preferred security strategies, which generated net inflows of $1.1 billion, and in real estate which had net inflows of $755 million.
In the advisory channel, due to a planned design change, we had an unexpected $1 billion termination of a high performing multi-strategy real asset portfolio, which resulted in $311 million of net outflows in the quarter.
Gross inflows remained strong, totaling $1.1 billion with U.S. real estate accounting for over two-thirds of that amount.
The pipeline of awarded but unfunded mandates is at $900 million and we recorded $550 million of mandates, which were both won and funded in the quarter, our second best result on record.
Japan Subadvisory net outflows were $52 million pre-distributions and totaled $347 million, including distributions.
Subadvisory ex-Japan had net outflows of $253 million as well, primarily driven by the termination of an offshore global listed infrastructure portfolio and modest outflows elsewhere.
We did bring on a new $83 million global real estate mandate in the quarter.
|
Yesterday, we reported record earnings of $1.06 a share compared with $0.67 in the prior year's quarter and $0.94 sequentially.
|
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Today, we announced third-quarter reported earnings of $0.37 per share.
Third-quarter earnings from ongoing operations were $0.58 per share compared with $0.61 per share a year ago.
I'll note that the lower earnings, compared to last year include $0.02 of lower volumes in the U.K., which will recover in future periods.
And $0.01 due to the timing of our estimated federal income tax computation, which will reverse in Q4.
And in Pennsylvania, during Q3, we reached the $1 million mark for customer outages avoided as a result of our investments in automated power restoration technology.
We've maintained a strong liquidity position of over $4 billion.
As a result, we've narrowed our forecast range to $2.40 to $2.50 per share from the prior range of $2.40 to $2.60 per share.
We expect the provisional ruling will be one that Ofgem studies closely as it nears its decision on the RIIO-2 final determinations for the gas and electric transmission sectors and ultimately for the electric distribution sector.
As we've shared previously, PPL has set a goal to reduce its carbon emissions by at least 80% by 2050.
In July, the company earned a top score of 100% on the 2020 Disability Equality Index, the nation's most comprehensive annual benchmarking tool for disability inclusion.
First, I would like to highlight that the estimated impact of COVID on our third-quarter results was about $0.04 per share, which was primarily due to lower sales volumes in the U.K. and lower demand revenue in Kentucky.
This is less than the $0.06 impact we experienced during the second quarter, primarily due to the improving electricity demand that Vince mentioned earlier in his remarks.
During the third quarter, we experienced a $0.02 unfavorable variance due to weather compared to the third quarter of 2019, primarily in Kentucky.
Weather in the third quarter of 2020 was about $0.01 favorable overall compared to plan, primarily due to stronger load in Pennsylvania versus normal due to the warmer conditions in July.
In terms of dilution, during the third quarter, we continued to recognize the impact of the November 2019 draw on our equity forward contracts, which resulted in dilution of about $0.03 per share for the quarter.
Excluding these items, our U.K.-regulated segment earnings increased by $0.01 per share compared to a year ago.
earnings results include higher foreign currency exchange rates, compared to the prior period, with Q3 2020 average rates of $1.54 per pound, compared to $1.26 per pound in Q3 2019, and lower interest expense, primarily due to lower interest on index-linked debt.
Segment earnings were $0.02 per share higher than our comparable results in Q3 2019.
Results at corporate and other were $0.01 per share lower compared to a year ago, driven primarily by higher income taxes due to timing, which is expected to reverse in the fourth quarter.
In Pennsylvania, demand improved from about an 11% decline in C&I load in the second quarter to a 4% decline during Q3 compared to a year ago.
Our Kentucky segment reported about a 7% C&I load decline during Q3, compared to the greater than 14% decline we saw last quarter versus the prior year.
Finally, in the U.K., C&I load improved to about a 14% decline in the third quarter, compared to a 20% decline that we experienced last quarter versus a year ago as government restrictions put in place in late March were further eased throughout the month of July.
We experienced a $0.10 per share impact to the end of the third quarter.
The remaining $0.03 is primarily from lower demand in Kentucky, and we have been able to offset the majority of that through effective cost management.
|
Today, we announced third-quarter reported earnings of $0.37 per share.
Third-quarter earnings from ongoing operations were $0.58 per share compared with $0.61 per share a year ago.
As a result, we've narrowed our forecast range to $2.40 to $2.50 per share from the prior range of $2.40 to $2.60 per share.
|
1
1
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
We will start on page 3 with recent highlights and first I'd just say we had a terrific quarter and we're significantly increasing our full year guidance as you saw.
Q1 adjusted earnings per share of $1.44 were solid 15% percent increase year-over-year and 18% above the midpoint of our guidance.
Our Q1 revenues of $4.7 billion were up 0.5% organically, which was well above the high end of our guidance range of down 3%.
We also posted a Q1 record for segment margins of 17.7%.
And looking at our incrementals, we generated $73 million of higher profits despite having $97 million of lower revenues.
Our adjusted operating cash flow increased by 42% and our adjusted free cash flow increased by 62%.
And finally, we recently announced the agreement to acquire 50% of Jiangsu YiNeng meaning electric's busway business in China, an important part of our growth strategy for the Asia Pacific region.
They make cost-effective circuit breakers and contactors and that give us access to Tier 2 and Tier 3 markets in Asia Pacific.
And finally, last week we were pleased to announce the agreement to acquire 50% of Jiangsu YiNeng electric busway business in China.
Moving to page 5, we summarize our Q1 financial results and I'll just note a couple of points here.
First, acquisitions increased sales by 1% but this was more than offset by the divestiture of Lighting which reduced sales by 5.5%.
Second, segment margins of $831 million were 10% above prior year and this is despite a 2% decline in total revenue.
And lastly, our adjusted earnings of 577 million, up 12% and when combined with our lower share count, we delivered a 15% increase in our adjusted EPS.
Turning to page 6, you see the results for our Electrical Americas segment.
Revenues were up 2% organically driven by strength in data centers, residential and utility markets which offset weakness in industrial and commercial markets.
The acquisition of Tripp Lite and PDI added 2% of revenues while the divestiture of Lighting reduced revenues by 14%.
Operating margins, as you can see, increased sharply, up 330 basis points to 20.5%, a quarterly record.
And as you can see, profits were $24 million higher on significantly lower revenues.
We're also pleased with the 11% orders growth in the quarter.
Our backlog was actually up 23% versus last year and due to ongoing strength in once again data center and residential markets.
Next on page 7, we show the results for our Electrical Global segment.
We posted a 5% organic growth with 5% favorable impact from currency largely due to the weaker dollar.
We also delivered 250 basis point increase in operating margins and posted a new Q1 record of 17%.
Our incremental margins in the segment were also strong, more than 40% and were also driven by good cost control measures, saving from actions taken from our multi-year restructuring program.
Orders grew 7% in the quarter, and like sales, the primary contributors to the growth came from data centers, residential and utility markets.
And I say dragged down by the earlier COVID-related declines, orders declined 12% -- 5% on a rolling 12 month basis.
And lastly here, our backlog was up 17% versus last year, driven by the same three end markets.
Moving to page 8, we summarize our Hydraulics segment.
Revenues increased 11% with strong 9% organic growth and 2% positive currency impact.
Operating margin stepped up significantly to 15%, a 420 basis point improvement over last year.
And our Q1 orders were also very strong, up 53% driven primarily by strength in mobile equipment markets.
Turning to page 9, we have the financial results for our Aerospace segment.
Revenues were down 24%, including 26% organic decline driven by the continued downturn in commercial aviation.
Currency, as you can see, added 2% to revenues.
And as you can also see, operating margins were down 310 basis points to 18.5%, down, but still at very attractive levels overall.
Our team, I give them a lot of credit, they moved quickly to flex the business and we're able to really deliver better than normal decrementals margins of approximately 30%.
Orders were down 36% on a rolling 12-month basis, once again due to the ongoing downturn in commercial aerospace markets.
However, I would add on a sequential basis, we are starting to see some improvement as orders were up 14% from Q4.
Next on page 10, we show the results of our Vehicle segment.
As you can see, revenues increased 9% and were much stronger than anticipated.
Just is a point of reference here, NAFTA Class 8 production was up some 12%.
Operating margins also improved significantly here to 17.3%, another quarterly record and a 380 basis point increase with incremental margins of nearly 60%.
And despite volumes that were still below pre-pandemic levels, this business is approaching our target segment margins of 18%.
Turning to page 11, we summarize our eMobility segment.
Here, revenues increased 15%, 13% organic and 2% from currency.
Operating margins were a negative 8.4% as we continued to invest heavily in R&D.
This award represents $33 million in material revenue sales and we hope to be awarded additional vehicle platforms using the same technology.
We now expect overall Eaton organic growth to be up 7% to 9% and this is up from 4% to 6% previously.
Vehicle has increased by 600 basis points.
Electrical Global has increased by 400 basis points and all other segments have increased by 300 basis points.
Moving to page 13, we show our updated segment margin guidance for the year where we're also significantly increasing our guidance.
For Eaton overall, we're increasing segment margins by 50 basis points at the midpoint with a range of 17.8% to 18.3% and we've raised our margin guidance in each of our segments with the exception of Aerospace and eMobility which are unchanged.
And on page 14, we have the balance of our 2021 guidance.
We're raising our full year adjusted earnings per share by $0.50 to $5.90 to $6.30, a midpoint of $6.10 and this is a 9% increase over our prior guidance and a 24% increase over 2020.
With our recent M&A activities, we now expect a net 4% headwind from acquisitions and divestitures, down from our prior outlook of 8%.
I'd say it's also worth noting here that our segment margin guidance of 18.1% to 18.5% is 190 basis point increase at the midpoint over 2020 and will be an all-time record.
It's also, just as a point of reference, above our pre-pandemic margins of 17.6% which we posted in 2019, which was also an all-time record.
So we're off to a strong start and I'd say well on our way to achieve our longer-term target of getting to 21% segment margins.
We expect to be between $1.45 and $1.55 on earnings for organic revenue to be up 24% to 28% and for segment margins to come in between 17.5% and 17.9%.
And if I could, just finally, on page 15, I'll wrap up with a kind of high-level summary of why we think Eaton remains an attractive long-term investment and I begin with first, our intelligent power management strategy really does position us to capitalize on these key secular growth trends that we've talked about for the last couple of years, electrification, energy transition and digitalization.
We're reaffirming our view that 4% to 6% outlook looks very much in hand.
This accelerated growth plus our, what I call, proven ability to deliver margin expansion will allow us to deliver on average 11% to 13% earnings per share growth per year over the next five years.
|
Q1 adjusted earnings per share of $1.44 were solid 15% percent increase year-over-year and 18% above the midpoint of our guidance.
Just is a point of reference here, NAFTA Class 8 production was up some 12%.
We're raising our full year adjusted earnings per share by $0.50 to $5.90 to $6.30, a midpoint of $6.10 and this is a 9% increase over our prior guidance and a 24% increase over 2020.
With our recent M&A activities, we now expect a net 4% headwind from acquisitions and divestitures, down from our prior outlook of 8%.
|
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
|
I also want to take a moment to tank Pat Dugan for his nearly 20 years of service to Wabtec.
Total sales for the quarter were $1.9 billion driven by growing demand in freight services and components but offset by continued weakness in the North America OE end market.
Adjusted operating margin was 17% driven by strong mix and productivity, ongoing lean initiatives and cost actions.
Total cash flow from operations was $244 million this takes year-to-date cash from operations to $759 million versus $458 million a year ago.
Cash conversion for the year is at 103%.
Finally, we ended third quarter with adjusted earnings per share of $1.14 up 20% year-over-year.
Today, we're also pleased to share that we have achieved our $250 million synergy run rate, a full-year earlier than expected at the time of the GE Transportation acquisition.
About 21% of the North American railcar fleet remains in storage a slight improvement from the previous quarter and in line with pre-COVID levels.
We forecast the railcar built this year will be in the neighborhood of 30,000 cars.
An example of this is our Green Friction technology which drastically reduces brake emissions by up to 90% an incredible milestone and significantly improving the quality of the air in our metros.
We're also leading the change to create a safer and more efficient rail network; a great example of this and a solution of growing interest among Class 1 customers is Trip Optimizer Zero-to-Zero.
These advanced technology allows an operator to autonomously start a train from 0 miles per hour and stop it using software integrated with positive train control.
It builds on Trip Optimizer's proven performance which has saved railroads more than 400 million gallons of fuel since inception and reduces emissions by over 500,000 tons per year.
In Freight Services, we want a significant long-term service contract as well as an order for 100 locomotive modernizations in North America.
We believe that our enterprise revenues were to 2% to 3% lower than they would have been without the supply chain disruptions and that the majority of these lower revenues represent delayed sales, not lost sales.
First, commodity inflation; where markets year-over-year are up more than 200% for steel, 94% for aluminum and roughly 40% for copper.
The second area of impact is elevated freight and logistics costs, which in many cases are up over 3 times to 4 times from pre-COVID levels.
We estimate that cost increases in the third quarter are in the range of $15 million to $20 million.
We had good operational and financial performance during the quarter, sales for the third quarter were $1.91 billion, which reflects a 2.2% increase versus the prior year.
For the quarter adjusted operating income was $325 million which was up 10.6% versus the prior year.
Most notably, we delivered margin expansion in both our segments, up 1.3 percentage points on a consolidated basis.
As Rafael stated during the quarter, we achieved our goal of $50 million of synergy run rate a significant milestone delivered a full year earlier than originally forecasted.
Looking at some of the detailed line items for the third quarter; adjusted SG&A was $257 million which was up $16.1 million from the prior year due to the normalization of certain expenses, higher incentive compensation and employee benefit costs and the acquisition of Nordco.
For the full year, we expect SG&A to be about 12.25% of sales, adjusted SG&A excludes $12 million of restructuring and transition expenses, of which most was allocated to further optimize our European footprint.
Our 2021 investment in technology, which includes engineering expense remains at 67% of sales.
Amortization expense was $72.5 million and our adjusted effective tax rate during the quarter was 24.8%, bringing our year-to-date adjusted effective tax rate to 25.8%.
For the full year, we still expect an effective tax rate of about 26% excluding discrete items.
In the third quarter, GAAP earnings per diluted share were $0.69 and adjusted earnings per diluted share were $1.14 up 20% versus prior year.
Across the Freight segment, total sales increased 4.7% from last year to $1.3 billion, primarily driven by continued strong growth at our services and component businesses.
In terms of product lines, equipment sales were down 5.7% year-over-year due to fewer locomotive deliveries this quarter versus last year and no new locomotive deliveries in North America, partially offset by strong mining sales.
In line with an improved outlook for rail, our services sales grew a robust 13.6% versus last year.
Excluding Nordco, organic sales for the third quarter were up 6.1%.
Digital Electronics sales were down 3.6% year-over-year driven by delays in purchase decisions due to economic and cost uncertainties as well as chip shortages.
Component sales continued to show recovery and were up 6.7% year-over-year driven by demand for railcar components and recovery in industrial end markets.
Shifting to operating income for the segment; Freight segment adjusted operating income was $266 million for an adjusted margin of 20.6%, up 1.7 percentage points versus the prior year.
Finally, segment backlog was $18.2 billion, up $375 million from the prior quarter and the broad multiyear order momentum that Rafael discussed across the segment.
Turning to Slide 11, across our Transit segment sales decreased 2.5% year-over-year to $612 million.
Adjusted segment operating income was $77 million, which resulted in an adjusted operating margin of 12.5%, up 50 basis points versus prior year.
For the year, we remain committed to deliver about 100 basis points of margin improvement for the segment and the team continues to take aggressive action to mitigate rising costs and supply chain disruption, which will pressure the pace of near term margin improvement.
Finally Transit segment backlog for the quarter was $3.6 billion, which was flat with the prior quarter after adjusting for the negative effect of foreign exchange.
We generated $244 million of operating cash flow during the quarter, bringing year-to-date cash flow generated to over $759 million.
During the quarter, total capex was $23 million bringing year-to-date capex to $78.5 million.
In 2021, we now expect capex to be approximately $120 million.
This is $20 million lower than our previous guidance as the team judiciously manages every dollar of spend.
Our adjusted net leverage ratio at the end of the third quarter was 2.6 times and our liquidity is robust at $1.62 billion.
Also during the quarter we returned capital to shareholders, repurchasing $199 million of shares.
We expect sales of $7.9 billion to $8.05 billion and adjusted earnings per share to be between $4.20 and $4.30 per share.
We expect cash flow conversion to remain greater than 90% resulting in strong cash generation of about $1 billion for the full year.
|
Finally, we ended third quarter with adjusted earnings per share of $1.14 up 20% year-over-year.
We had good operational and financial performance during the quarter, sales for the third quarter were $1.91 billion, which reflects a 2.2% increase versus the prior year.
In the third quarter, GAAP earnings per diluted share were $0.69 and adjusted earnings per diluted share were $1.14 up 20% versus prior year.
We expect sales of $7.9 billion to $8.05 billion and adjusted earnings per share to be between $4.20 and $4.30 per share.
|
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
|
IDACORP's 2020 fourth quarter earnings per diluted share were $0.74, a decrease of $0.19 per share over the last year's record fourth quarter.
IDACORP's earnings per diluted share for the full year 2020 were $4.69, an increase of $0.08 per diluted share from 2019.
Today, we also issued our full year 2021 IDACORP earnings guidance estimate to be in the range of $4.60 to $4.80 per diluted share with our expectation that Idaho Power will not need to utilize in 2021 any of the additional tax credits that are available to support earnings in Idaho under its regulatory settlement stipulation.
Our nearly 2,000 employees were challenged daily as we continued to carry out our mission as an essential service provider.
And our reliability numbers remained among the best in the industry as we capitalized on 99.96% of the time.
We're pleased to continue to share the successes of the company with our owners by increasing IDACORP's quarterly common stock dividend again in 2020 from $0.67 to $0.71 per share, marking our 9th consecutive year with an increase to the dividend.
According to U.S. News & World Report and the United States Census Bureau, Idaho was once again the fastest growing state in the country during 2020 and Idaho Power's customer base grew 2.7%.
A national study by United Van Lines also ranked Boise as the number 3 metropolitan area for inbound moves during 2020.
Idaho Power now serves more than 587,000 customers and we view the reliable, affordable, clean energy our company provides as an important factor in continuing to attract the business and residential customers to Southern Idaho and Eastern Oregon.
It does not seem that long ago that we crossed the 500,000 customer mark.
On Slide 9, you'll see the highlighted notable milestones, including the announcement of a 240,000 square foot True West Beef facility, the opening of Amazon's 2.5 million square foot fulfillment center and the announcement of a 90,050,000 square foot expansion to an existing Lamb Weston potato processing plant.
Moody's predicts sustained economic growth going forward after experiencing a GDP decrease of 1.7% in 2020 with Moody's forecast calls for growth of 6.1% in 2021 and 6.8% in 2022.
Unemployment within Idaho Power's service area is at 4.7%, an increase over recent years, but still well below the 6.7% reported at the national level.
As I mentioned earlier, IDACORP was pleased to announce a dividend increase of 6% this past fall.
Going forward, management expects to recommend the Board of Directors future annual increases in the dividend of 5% or more with the intent of keeping the company within our target payout ratio of between 60% and 70% of sustainable IDACORP earnings.
Idaho Power's goal to achieve a 100% clean energy by 2045 fits well into our overall strategy as we expected to meet the new investment in system improvements that will enhance the customer experience.
Idaho Power has previously ended its participation in 1 unit at the North Valmy coal-fired plants in Nevada at the end of 2019.
Our most recent integrated resource plant calls for a full exit from coal-fired generation by 2030.
Last quarter, we stated Idaho Power did not plan to file a general rate case in Idaho or Oregon in the next 12 months.
We expect to spend approximately $47 million in incremental WMP and wildfire-related O&M expenses and $35 million in incremental capital expenses over the next five years.
First up on the table is our strengthening customer growth of 2.7%, which added $14 million to operating income.
Higher usage per residential and irrigation customer of 1% and 11% respectively more than offset the negative used impacts of the pandemic, which contributed to decreased commercial and industrial sales volumes by a respective 4% and 1% during the year.
The net result was a relatively modest $0.9 million increase in overall usage per customer.
Also on the table you will see that the increase in residential sales was offset by a $1 million decrease in fixed cost adjustment revenues.
Next, changes in net power supply expenses led to a $2.6 million decrease in retail revenues per megawatt hour largely due to fewer opportunities processed in sales than in the prior year.
Transmission wheeling-related revenues also decreased $2.2 million primarily due to a 13% decline in Idaho Power's open access transmission tariff rate in October of 2019.
This decrease was partially offset by an increase in wheeling volumes this past summer related to warmer weather in the Southwest, U.S. and California as well as roughly 10% increase in tariff rate beginning October 1 of 2020.
Next on the table, other operating and maintenance expenses decreased by $3.7 million.
Finally, our higher pre-tax earnings led to an increase in income tax expense of $2.1 million this quarter.
The changes collectively resulted in an increase to Idaho Power's net income of $8.8 million.
IDACORP's full year net income for 2020 was a net $4.5 million higher than 2019.
Cash flows from operations were about $22 million higher than the prior year.
At this time, we do not anticipate issuing additional equity in 2000 -- or in 2021 other than nominal amounts under our compensation plans.
As we did last year, Idaho Power contributed $40 million to its pension plan during 2021, which would be above its required contribution.
We currently expect IDACORP's 2021 earnings to be in the range of $4.60 and $4.80 per diluted share.
At or above the midpoint of this guidance range, IDACORP would achieve its 14th consecutive year of growth in earnings per share, which approaches a 5% cumulative average growth over the past five years.
Our strong, consistent financial results and sustained cost management efforts during the past decade have preserved the full $45 million of tax credits available to support our current Idaho jurisdictional return on equity support level of 9.4% under our regulatory stipulation and we plan to continue our efforts to preserve as many of those credits as we can going forward.
Our full year O&M expense guidance is expected to be in the range of $345 million to $355 million.
Our capex spending is expected to increase to the range of $320 million to $330 million, and our expectation of hydropower generation is expected to be in the range of 6 to 8 million megawatt hours, the upper end of which could be close to our normal annual generation over the past 30 years.
We now expect our capital expenditures over the next five years to approach $2 billion and it shows roughly at 7% compound average growth over our previous five-year plan.
|
IDACORP's 2020 fourth quarter earnings per diluted share were $0.74, a decrease of $0.19 per share over the last year's record fourth quarter.
Today, we also issued our full year 2021 IDACORP earnings guidance estimate to be in the range of $4.60 to $4.80 per diluted share with our expectation that Idaho Power will not need to utilize in 2021 any of the additional tax credits that are available to support earnings in Idaho under its regulatory settlement stipulation.
We currently expect IDACORP's 2021 earnings to be in the range of $4.60 and $4.80 per diluted share.
|
1
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
|
We delivered a meaningful 5% net organic sales growth in the quarter across all our markets.
We are ahead of our 100 to 200 basis point organic sales growth goal for the first half of 2021, expect to be at or above the high end of that range for the full-year.
Adjusted EBITDA in the second quarter was $248 million.
Importantly, EBITDA was positively impacted by $15 million of improved volume mix related to net organic sales growth and $36 million of favorable net performance.
The solid execution was however offset by $67 million of accelerated inflation across the broad basket of commodities.
This included Paperboard price increases across all 3 substrates as well as positive modification of other business terms.
One example is our move to shift freight recovery and contracts where we are responsible for product delivery costs to 4 openers per year.
Our foodservice business increased sales by 22% year-over-year as consumer mobility picked up well food, beverage and consumer sales improved a healthy 4% year-over-year.
The transaction brings together 2 highly innovative workforces serving diverse a complementary customer sets.
It is important to reiterate that we are fully committed to utilizing our significant cash flow generation to reduce leverage back to our targeted 2.5 to 3 times range.
We intend to be back to targeted levels within 24 months following the close of the acquisition.
Innovation and new product development continue across our 3 growth platforms as we rollout packaging solutions designed to address retailer and producer calls for fiber-based packaging alternatives.
When we pull 98% of the fiber, can be recovered and used to make other recycled products.
We continue to push forward with our sustainability journey and OptiCycle fits squarely with our ESG commitment to decrease our LDPE usage by 40% by 2025.
We remain confident in $100 million of incremental EBITDA for this investment once it's fully implemented and expect to capture the first $50 million of additional EBITDA in 2022.
Realization of our pricing initiatives will be on full display over the next 2 quarters and then into 2022.
The right hand of the slide shows pricing that has been successfully implemented and recognized and it's flowing through our contracts over the coming 6 months.
We expect approximately $120 million of pricing in the second half of 2021, which is intended to address the negative price cost spread experienced in the first half of 2021.
The recovery occurring in just 6 months clearly demonstrates more constructive pricing dynamics inherent in our model.
Implemented and recognized pricing will yield a cumulative $400 million over the 2021 and 2022 time horizon, as we actively address commodity input cost inflation.
Moving to Slide 10, focused on key financial highlights in the second quarter of 2021, net sales increased 8% from the prior year to $1.7 million driven by 5% net organic sales growth.
Importantly, we are known organic volume growth, which positively impacted EBITDA performance by $15 million and we generated, of a favorable $36 million in net performance.
AF&PA industry operating rates increased sequentially with SBS and CRB at 95% and 98% respectively at the end of the second quarter.
Our CUK operating rate was over 95%, reflective of the continued strong demand environment.
AF&PA Second quarter data also reflected continued declines and industry inventory levels with balances at multi-year logs, backlogs increased from the previous quarter and all three substrates we're an 8 plus weeks at quarter end.
On Slide 12 and 13, you will see our year-over-year revenue and EBITDA waterfalls.
Net sales increased $126 million very solid 8% in the second quarter of 2021.
Strong growth was driven by $76 million of higher volume mix resulting from 5% organic sales growth of $14 million in pricing and $36 million of favorable foreign exchange.
Adjusted EBITDA decreased $12 million to $248 million in the second quarter versus the prior year period.
Adjusted EBITDA benefited from $14 million in price $15 million in volume mix, $36 million in improved net productivity and $4 million from favorable foreign exchange.
Adjusted EBITDA was unfavorably impacted by $67 million of commodity input cost inflation and $14 million of labor benefits and other inflation.
We ended the quarter with net leverage of 3.7 times.
As we previously shared, leverage is currently above our long-term target of 2.5 to 3 times as we execute on critical investments to achieve our Vision 2025 goals.
We have clear line of sight to the cash flow generation required to drive leverage down to our targeted levels of 2.5 to 3 times within 24 months following the close of the AR Packaging transaction.
We have a substantial total liquidity with $1.9 billion available as of the end of the second quarter.
In July, we raised approximately $530 million to support our acquisition activity at very effective interest rates below 2%, $250 million was raised in a 7-year floating rate term loan from the farm credit system in a similar structure to the farm credit loan we raised earlier this year.
Turning now to guidance on slide 14 and 15.
2021 adjusted EBITDA is projected to be in a range of 1.0-8 to $1.2 billion.
Implemented price initiatives are expected to yield a material price cost recovery benefit to EBITDA in the second half of the year in a range of $80 to $120 million compared to the first half.
The Americraft acquisition closed on July 1 and is expected to provide an incremental $15 million to the second half adjusted EBITDA.
Turning back to the cash flow guidance on slide 14, we anticipate a range of $175 to $225 million for the year.
As we look through 2022, we remain committed to capital expenditures, returning to a more normalized range of $450 million and look forward to generating significant cash flow as we earn on the investments we've made to materially improve the profitability of the company.
For reference, $450 million in capital expenditures, estimated in 2022 includes both the AR Packaging and Americraft acquisitions.
Conclusion of the partnership with IP, return ownership interest of the partnership back to 100%.
|
We delivered a meaningful 5% net organic sales growth in the quarter across all our markets.
Moving to Slide 10, focused on key financial highlights in the second quarter of 2021, net sales increased 8% from the prior year to $1.7 million driven by 5% net organic sales growth.
Strong growth was driven by $76 million of higher volume mix resulting from 5% organic sales growth of $14 million in pricing and $36 million of favorable foreign exchange.
We have a substantial total liquidity with $1.9 billion available as of the end of the second quarter.
|
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
1
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
|
As previously announced on January 1, I assumed the role of Executive Chair after 12 years as CEO.
And the more than 35 years that I've been with the company, I am extremely proud of what we have accomplished as the leader in the outlet industry.
While the last 11 months' have been challenging for our company, the positive traffic, rent collections and liquidity trends that Steve mentioned are all indicators that our business is stabilizing and our shoppers are quickly returning to our open-air outlet shopping centers.
Our year end consolidated portfolio occupancy was 91.9% despite having recaptured almost 8% of the square footage in our portfolio during the year due to bankruptcies and brandwide retailer restructurings.
The percentage of occupied stores that are open rapidly accelerated post mandate and currently stands at 99%.
Our strong rent collections at 95% of fourth quarter build rents and better than expected deferred rent collections to date demonstrate that the strategy was successful, where we permitted concessions, we negotiated landlord-friendly amendments that resulted in a value for value exchange that strengthened our portfolio.
We also took a closer look at expenses and we're able to quickly devise a plan that resulted in almost $18 million in cost reductions over the last nine months of 2020.
In the fourth quarter, shopper traffic rebounded to approximately 90% of prior year levels, rising to more than 95% during the month of January.
Fourth quarter Core FFO available to common shareholders was $0.54 per share compared to $0.59 per share in the fourth quarter of 2019.
Same-Center NOI for the consolidated portfolio decreased $7.8 million for the quarter, primarily reflecting the rent modifications and store closings from the recent bankruptcies and brandwide restructurings, including an additional 317,000 square feet recaptured during the quarter.
Included in Same-Center NOI for the quarter or write-offs of approximately $3.1 million related to the fourth quarter build rents.
The write-offs were offset by the reversal of approximately $3.5 million in reserves related to rents previously deferred or under negotiation as a result of better-than-expected collections, leaving a net benefit of approximately $400,000.
In addition, we recognized a $1.1 million charge to core FFO related to the write-off of straight-line rents, which are not included in Same-Center NOI.
Through the end of January, we had collected 95% of fourth quarter rents build.
As of January 31, our second quarter improved to 63% of build rents from 43%.
Third quarter improved to 91% from 89% and 57% of deferred rents had been collected, nearly half of which represented prepayments.
We collected 90% of the deferred rents that were due in January.
Core FFO for the quarter was positively impacted by the recognition of lease termination fees totaling $4.1 million, which was significantly elevated over the prior year amount of approximately $100,000.
With the improvements in rent collections, the ongoing focus on cost controls and a prudent approach to capital allocation, we had over $680 million of available liquidity, including over $80 million of cash and $600 million of unused capacity on our lines of credit as of the end of January.
Given the improved rent collections and our ample liquidity position, our Board declared a dividend of $0.1775 per share, which was paid last week to holders of record on January 29.
In light of this backdrop, we expect core FFO per share for 2021 to be between $1.47 and $1.57 per share.
This guidance assumes there are no further government mandated shutdowns and assumes lease termination fees decrease by $9 million to $10 million or $0.09 to $0.10 per share, from the elevated level we recognized in 2020.
Currently, we expect to recapture approximately 200,000 square feet due to bankruptcies and brandwide restructurings during 2021, most of which we expect will occur during the first half of the year.
We expect a combined annual recurring capital expenditures and second generation tenant allowances of approximately $40 million to $45 million for 2021.
|
Our strong rent collections at 95% of fourth quarter build rents and better than expected deferred rent collections to date demonstrate that the strategy was successful, where we permitted concessions, we negotiated landlord-friendly amendments that resulted in a value for value exchange that strengthened our portfolio.
In the fourth quarter, shopper traffic rebounded to approximately 90% of prior year levels, rising to more than 95% during the month of January.
Fourth quarter Core FFO available to common shareholders was $0.54 per share compared to $0.59 per share in the fourth quarter of 2019.
Through the end of January, we had collected 95% of fourth quarter rents build.
With the improvements in rent collections, the ongoing focus on cost controls and a prudent approach to capital allocation, we had over $680 million of available liquidity, including over $80 million of cash and $600 million of unused capacity on our lines of credit as of the end of January.
|
0
0
0
0
0
1
0
1
1
0
0
0
0
1
0
0
0
0
1
0
0
0
0
0
|
I'd also like to offer some thoughts and perspective on the company's performance through the last recession in the 2008 to 2009 time frame and why we expect this experience to be very different.
By and large, our people have been responsible, open-minded and supportive of our efforts to remain open and constructive during the past 60 days.
Wabash National's backlog ended the first quarter at approximately $1 billion after registering $1.1 billion at the end of 2019.
This is much less than the 20% decline that is seen in the broader industry over the same time period.
Understand that Wabash National has really been reacting to the pandemic in only the last 60 days, and those actions that we take will be seen in future periods.
On a consolidated basis, first-quarter revenue was $387 million, with consolidated new trailer shipments of approximately 9,150 units during the quarter.
First-quarter gross margin was 9.5% of sales, while operating income came in a loss of $110 million due to noncash goodwill impairment charges.
Operating income on a non-GAAP adjusted basis was a loss of $2.9 million.
Given the uncertainty of the current environment, we recorded noncash goodwill impairment charges totaling $107 million relating to the acquisitions of the Walker Group and Supreme Industries.
Finally, for the quarter, GAAP net income was a loss of $106.6 million or negative $2.01 per diluted share.
On a non-GAAP adjusted basis, net income was a loss of $2.3 million or negative $0.04 per share.
In rough numbers, it's fair to say that our cost structure is highly variable with material cost of 60% and direct labor equating to another 10-plus percent.
So in total, I'd like to think of our total cost base is approximately 75% to 80% variable.
Additionally, we have temporarily but significantly reduced fixed costs in the second quarter by executing a two-week, companywide furlough that incorporated 90% of all salaried employees.
Our liquidity or cash plus available borrowings as of March 31 was $277 million with $155 million of cash and $122 million of availability on our revolving credit facility.
In March of this year, we proactively drew $45 million from the revolver to bolster our cash balance.
Our modeling suggested a $45 million revolver pool covered the worst case we could envision, which is to say, we do not expect to tap our revolving credit facility again in 2020, but it is further liquidity that remains available to us.
We are targeting a 50% reduction from our previous guidance to approximately $20 million in spend and stand ready to reduce further as required.
With regard to capital allocation during the first quarter, we invested $6.3 million in capital projects, paid our quarterly dividend of $4.5 million and repurchased $8.9 million of shares prior to the pandemic.
The balance stands at just $135 million, and we expect to look to refinance this instrument in the next year.
The only potential financial covenant in place is on our revolving credit facility, which dictates a minimum fixed charge coverage ratio of one to one when excess availability on the revolver is less than 10% of the total facility.
With the uniquely severe nature of this crisis, it seems like the 2008 to 2009 time period will provide the most relevant comparison.
First and foremost, in early 2008, the company did not have the cash or liquidity balance that it enjoys today.
|
Wabash National's backlog ended the first quarter at approximately $1 billion after registering $1.1 billion at the end of 2019.
On a consolidated basis, first-quarter revenue was $387 million, with consolidated new trailer shipments of approximately 9,150 units during the quarter.
Finally, for the quarter, GAAP net income was a loss of $106.6 million or negative $2.01 per diluted share.
On a non-GAAP adjusted basis, net income was a loss of $2.3 million or negative $0.04 per share.
Our liquidity or cash plus available borrowings as of March 31 was $277 million with $155 million of cash and $122 million of availability on our revolving credit facility.
|
0
0
1
0
0
1
0
0
0
1
1
0
0
0
1
0
0
0
0
0
0
0
0
|
I'm pleased to report that we had a very good third quarter where we exceeded our top line expectations and delivered a very strong bottom line, reporting adjusted earnings per share of $0.58 versus $0.22 last year.
In the quarter, we more than doubled our adjusted operating profit and achieved an adjusted operating margin of 9.7%, which represents a 600 basis points expansion versus last year.
It's worth noting that we delivered strong earnings on an 8% decrease in revenues for the period.
This proved to be a great strategy and represented a revenue increase in the period for Europe of about $50 million.
Total Q3 revenues for Europe increased 16% and operating profit exceeded $51 million delivering a margin expansion of 900 basis points for the period.
We managed our balance sheet well and ended the period with cash and equivalents of $365 million and inventories 24% below last year's levels.
Let me just confirm today that we still believe that the opportunities we had identified to expand operating margins by 500 basis points are still intact.
Elevating the customers' perception of our brand starts with our product; product in our business has always been and continues to be king; offering a consistent line of product across all markets is a very ambitious goal when you have a global presence that reaches nearly 100 countries.
apparel resulted in a style reduction of 38% and this is after expanding the offering with multiple colors per stall, for e-commerce that represented a 7% increase of product choices online.
As an example for next summer in Europe, we planned an SKU reduction in stores of about 35% and then SKU expansion online of 9%.
We also made significant progress with our Customer 360 project.
We plan to complete the full implementation of the Customer 360 solution by the end of next year.
started 40 years ago, the company has always adapted its business very effectively to the challenges presented by the market, the environment and new customer preferences.
So today is my one-year anniversary at Guess?
Third quarter revenues were $569 million, down 8% in US dollars and 10% in constant currency.
The biggest driver in our improvement versus last quarter was wholesale in Europe, which was up 39% in constant currency versus last year.
In retail store comps in the US and Canada were down 23% in constant currency in line with Q2 as momentum in the US was offset by softening in Canada, due to traffic declines as a result of the pandemic.
Store comps were down 18% in Europe in constant currency, we have strong momentum was tempered in the last week of the quarter by shutdowns, due to the second wave of the pandemic.
Store comps were down 17% in Asia in constant currency, driven by strengthening in China and Korea.
Our e-commerce business in North America and Europe was up 19% for the quarter, an improvement from up 9% in Q2, driven by momentum in Europe.
Our Americas wholesale business was down 34% in constant currency, still under pressure from the deceleration in demand, but improving each quarter.
Licensing revenues also improved versus Q2, down 12% in Q3.
Gross margin for the quarter was 42.1%, 480 basis points higher than prior year.
Our product margin increased by 200 basis points this quarter, primarily as a result of higher IMU, as well as lower promotions.
Occupancy rate decreased 280 basis points as a result of business mix and rent relief.
This quarter we booked roughly $8 million in rent credits for fully negotiated rent relief deals, mostly in Europe.
Adjusted SG&A for the quarter was $184 million, compared to $206 million in the prior year, a decrease of $22 million.
Adjusted operating profit for the third quarter was $55 million, a 140% more than the operating profit in Q3 last year of $23 million.
Our third quarter adjusted tax rate was 16%, down from 24% last year, driven by the mix of statutory earnings.
Inventories were $393 million, down 24% in US dollars and 25% in constant currency versus last year.
We ended the third quarter with $365 million in cash versus $110 million in the prior year, and we had an incremental $260 million in borrowing capacity.
Capital expenditures for the first nine months of the year were $12 million, significantly lower than what we spent in the same period of the prior year.
Free cash flow for the first nine months of the year was an inflow of $83 million, an increase of $162 million versus an outflow of $79 million last year.
In addition, last year's outflow included the non-recurring payment of the $46 million European Commission fine.
We expect fourth quarter revenues to be down in the low to mid-20s to prior year.
Well, at the height of the closures in November, we had over 200 stores closed, more than half of these have reopened and we expect further openings in the coming days.
Given the expected level of revenue, the seasonality of our business, as well as the mix, we expect SG&A as a percent of sales to delever by approximately 400 basis points versus the prior year.
|
I'm pleased to report that we had a very good third quarter where we exceeded our top line expectations and delivered a very strong bottom line, reporting adjusted earnings per share of $0.58 versus $0.22 last year.
So today is my one-year anniversary at Guess?
Store comps were down 18% in Europe in constant currency, we have strong momentum was tempered in the last week of the quarter by shutdowns, due to the second wave of the pandemic.
Capital expenditures for the first nine months of the year were $12 million, significantly lower than what we spent in the same period of the prior year.
We expect fourth quarter revenues to be down in the low to mid-20s to prior year.
|
1
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
1
0
0
|
OSG's vessels were employed at healthy charter rates for close to 100% of available days during the first quarter, with only eight of a total of 1,916 available days seeing vessels idle without employment.
The Energy Information Agency reports refinery runs in the US in recent weeks at less than 70% of capacity and transportation fuel demand at levels ranging from 15% to 60% below normal levels.
Over the past four weeks, motor gasoline consumption has averaged 5.5 million barrels per day, a 40% decline from year ago levels.
Jet fuel consumption declined to levels 60% below year ago levels, as passenger flights in the US operated close to 96% below their normal capacity.
Even an anticipated swift recovery in gasoline consumption in the United States should leave year-end levels at an expected 1.5 million barrels per day below normal.
Our newly acquired subsidiary, Alaska Tanker Company, has seen the odd impact of sky-high international rates, where last week, a cargo of ANS crude was sold to China and shipped on the Alaskan Navigator, a highly unusual move, but one enabled by the fact that the TCE rate on the Navigator was $100,000 per day lower and that of an equivalent international Suezmax tanker.
Three of the biggest oil explorers in the United States, ExxonMobil, Chevron and Conocophillips, have announced plans to curb as much as 660,000 barrels a day of combined American output by the end of June.
Across the country, crude production by oil companies has already tumbled about 1 million barrels per day since mid-March and could fall more than 2 million barrels per day by the end of the year.
OSG's 21 vessel US Flag fleet consists of three crude oil tankers operating in the Alaskan crude oil trade, one conventional ATB, two lightering ATBs, three shuttle tankers, 10 MR tankers and two non-Jones Act MR tankers that participate in the US Maritime Security Program.
During the first quarter, we purchased three Alaskan tankers capable of carrying approximately 1.3 million barrels of oil each.
Additionally, we acquired a 62.5% interest of our partners in Alaskan Tanker Company.
As a result, we now own 100% of ATC.
We financed these transactions with a $54 million loan.
The loan bears interest at 4.43% fixed rate, maturing in March 2025 and has a 12-year amortization schedule.
In late March, we also completed the financing of the OSG 204, our barge currently under construction in Oregon.
We drew $28 million of this loan at closing.
This loan has a five year maturity and amortizes also over 12 years.
Our first quarter TCE revenues grew $14.3 million or 17%, when compared to the first quarter of 2019.
Sequentially, TCE revenues were up $3.3 million from the fourth quarter.
Adjusted EBITDA was $52.8 million for the quarter, a $29.2 million increase from the first quarter of 2019.
This termination of a preexisting relationship resulted in a $19.2 million net non-cash gain.
Excluding this gain, we experienced almost a 43% increase in adjusted EBITDA from the first quarter of 2019.
Excluding the $3.2 million of annual earnings, which is recorded in the fourth quarter when it's earned from ATC, our adjusted EBITDA sequentially increased by $3.2 million.
Although the mix of vessels changed, we operated 21 vessels for the full quarter of 2020 and 2019.
Looking at our TCE revenues on a more granular basis, our lightering business TCE revenues sequentially increased $2.3 million from the fourth quarter of 2019.
The OSG 350 operated under time charter in the first quarter of 2020, compared to primarily spot market activity during the fourth quarter.
Effective day rates for both the OSG 350 and 351 increased, due to higher utilization and increases in contracted rates.
The TCE revenues from our rebuilt ATBs increased $1.3 million, due to increases in the rate environment.
Our non-Jones Act tankers recorded a $2.7 million decrease in TCE revenues during the quarter, when compared to the fourth quarter of 2019, this is due to the reduction in the Government of Israel voyages that we had from Q4.
We operated under international time charters for 182 days, maintaining the effective utilization of our vessels by reducing the number of days of spot market exposure.
Our Jones Act tanker fleet TCE revenues decreased $1 million from the fourth quarter to $69.1 million in the first quarter of 2020.
Looking at year-over-year changes, lightering revenues were down $700,000 in comparison to the first quarter of 2019.
ATB revenues declined from $7.5 million to $4.8 million, compared to the first quarter due to the decreased number of operating vessels.
The non-Jones Act tanker revenues increased from $3.7 million to $7.3 million, driven by the addition of the Gulf Coast and Sun Coast.
Conventional tanker TCE revenues increased $10.7 million.
Additionally, our three Alaskan tankers added on March 12 contributed $3.4 million in TCE revenues for the 19 days they were in our fleet.
This continues to be true as we have been successful in generating business for the OSG 350 in the Gulf of Mexico.
Vessel operating contribution, which is defined as TCE revenues less vessel operating expenses and charter hire expenses increased $10.8 million or 39% from Q1 2019 to $38.8 million in the current quarter.
The largest contributor to the increase was the $10 million contribution, the vessel operating contribution from our conventional Jones Act tankers.
The overall increase in operating contribution also reflects the addition of 3 tankers and the late quarter acquisition of Alaskan tankers, all partially offset by the reduction of our rebuilt ATBs.
The Alaskan tankers provided $1.9 million of operating contribution after they entered our fleet.
Vessel operating contribution from our niche market activities decreased $900,000, resulting from an increase in dry dock-related off-hire days.
Sequentially, vessel operating contribution increased $3.4 million from Q4 2019.
Anyway, first quarter 2020 adjusted EBITDA $52.8 million, compared to fourth quarter adjusted EBITDA of $33.7 million.
The fourth quarter included our annual profit distribution of $3.2 million from ATC.
First quarter adjusted EBITDA increased $29.2 million from $23.6 million in Q1 2019.
Net income for the first quarter of 2020 was $25.1 million, compared to net income of $3.2 million in the first quarter of 2019.
Non-operationally, $15 million of the increased earnings came from recognition of the previously described gain.
We estimate, which includes the three recently acquired Alaskan tankers that our investment will be $43.8 million in dry dock expenses and $16.1 million for ballast water treatment systems in 2020.
We will experience approximately $20 million in lost revenue for the full-year, resulting from 377 off-hire days.
At the end of the first quarter, we had $5.1 million of progress payments remaining on the OSG 204 and $20.1 million of progress payments on the OSG 205.
As previously discussed, we financed the OSG 204 during the quarter and all remaining payments will be funded from this loan.
OSG's equity in the OSG 204 will be approximately $17.7 million upon delivery.
We anticipate obtaining similar financing for the OSG 205.
In 2020, if we were to achieve an average TCE rate of 62,000 across the 10 AMSC vessels, there would be no profit sharing.
The minimum average rate required to result in a profit-sharing obligation in 2020 is $69,000 per day.
This would create an aggregate payout of approximately $300,000.
Given the assumptions used, profit sharing payout would be $8 million.
The minimum average rate necessary to achieve any level of profit share in 2022 would be $61,000.
Again, using the assumptions here, the profit sharing earned in 2023 would be $14 million.
We began 2020 with total cash of $42 million, including $200,000 of restricted cash.
During the first quarter of 2020, we generated $53 million of adjusted EBITDA.
During the quarter, we issued $81 million net of issuance costs of new debt to finance the Alaskan transaction in the OSG 204.
We extended net of cash received $17 million for the acquisition.
The $19 million adjustment is to remove the effect of the non-cash gain we've discussed.
We expended $3 million on dry-docking and improvements to our vessels.
We invested $21 million in new vessel construction and other capex.
We also incurred $6 million in interest expense and made debt repayments of $8 million.
The result, we ended the quarter with $102 million of cash, including $20.1 million of restricted cash.
Continuing our discussion of cash and liquidity, as we mentioned on the previous slide, we have $102 million of cash at March 31, 2020, including $20.1 million of restricted cash.
Our total debt was $450 million.
This represents a net increase of $75 million in outstanding indebtedness since December 2019.
A $325 million term loan has an annual amortization requirement of $25 million or $6.25 million per quarter.
With $367 million of equity, our net debt-to-equity ratio is 1 times.
In order to support the sale process, we established a $20 million escrow that could be used to prepay a portion of that loan, if it were not sold within 90 days.
We've contracted employment covering 95% of available operating days during the current quarter and 86% of available operating days for the balance of the year.
For the second quarter, we expect to achieve time charter equivalent earnings of $100 million.
Taken together with our first quarter results, this should put us squarely on track to be within the range of $395 million to $400 million of time charter equivalent earnings on an annualized basis through the first half of this year.
Similarly, we expect consolidated adjusted EBITDA through the first half of the year, excluding the effects of this quarter's gain related to the ATC transaction accounting to reach $60 million, a level which again tracks closely with our full year expectations provided during our last call.
Including the ATC transaction accounting, overall EBITDA for the first half of this year should exceed $80 million.
Another domestic yard, Marinette Marine Corporation, was recently awarded a contract to design and produce the next-generation of up to 10 guided-missile frigates.
|
Non-operationally, $15 million of the increased earnings came from recognition of the previously described gain.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Since 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.
In addition, these investments include the one-time bonus we announced today, totaling approximately $17 million, which will impact nearly 90,000 hourly team members.
Beginning Monday, every hourly team member, tipped and non-tipped, will earn at least $10 per hour, inclusive of tip income.
Additionally, we are committed to raising that amount to $11 per hour in January 2022 and to $12 per hour in January 2023.
In 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%.
For example, at LongHorn Steakhouse, the number of total items with less than 1% preference is down to eight from more than 25 pre-COVID.
Third, we continue to deploy technology to improve the guest experience and build on the progress we have made over the last 12 months.
In fact, during the quarter, nearly 19% of total sales were digital transactions.
Further, 50% of all guest checks were settled digitally, either online or on our tabletop tablets or via mobile pay.
For example, across Darden, our hourly labor productivity has improved by over 20%, with some brands improving by well over 30% such as Cheddar's.
Year-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%.
When Cheddar's reaches 100% of the pre-COVID sales, we expect their restaurant level margins to be well in the high teens.
As 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.
For the third quarter, total sales were $1.73 billion, a decrease of 26.1%.
Same restaurant sales decreased 26.7%.
EBITDA was $236 million, and diluted net earnings per share from continuing operations were $0.98.
Food and beverage expenses were 80 basis points higher than last year, primarily driven by investments in food quality and mix.
Restaurant labor was 20 basis points higher.
As Gene mentioned, we invested approximately $17 million in team member bonuses this quarter.
Excluding the team member bonuses, restaurant labor would have been 80 basis points favorable to last year.
The favorability to last year was driven by hourly labor improvement of 280 basis points due to efficiencies gained from operational simplifications Rick discussed.
Restaurant expense per operating week was 16% lower than last year, driven by lower workers' compensation, utilities, repairs and maintenance expense.
Restaurant expense as a percent of sales was 250 basis points higher than last year due to sales deleverage.
Marketing spend was $52 million lower than last year, with total marketing 200 basis points favorable to last year.
This all resulted in restaurant level EBITDA margin of 18.4%, only 150 basis points below last year.
Excluding the one-time hourly team member bonus, restaurant level EBITDA margin would have been even stronger at 19.4%.
We impaired one Yard House restaurant this quarter, resulting in a non-cash impairment charge of $3 million.
We finalized the legal recovery during the quarter, resulting in favorability of $16 million.
This favorability was partially offset by $8.8 million of mark-to-market expense on our deferred compensation.
Excluding these two items, G&A would have been $86 million this quarter.
Our hedge reduced income tax expense by $7.2 million, resulting in a net reduction to earnings after-tax this quarter of $1.6 million.
Our effective tax rate of 2.3% this quarter was unusually low due to two factors.
First, the tax benefit from the deferred compensation hedge I just mentioned reduced the tax rate by 5 percentage points.
Second, the stock option exercises this quarter drove approximately $7 million of excess tax benefit, reducing the tax rate by 4.8 percentage points.
After adjusting for these factors, our normalized effective tax rate for the third quarter would have been 12.1%.
We generated over $240 million of free cash flow this quarter, ending the third quarter with over $990 million in cash.
Therefore, we will return to our 50% to 60% dividend payout target applied to future earnings to determine our dividend.
To that end, the Board declared a quarterly cash dividend of $0.88 per share, matching our pre-COVID dividend level.
The 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.
And finally, today we announced a new share repurchase authorization of $500 million which replaces all previous authorizations.
As of today we have 99% of our dining rooms open with some capacity.
Taking 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.
We'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.
We 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.
We expect total capital spending between $350 million and $400 million and open approximately 35 new restaurants in fiscal '22.
We also anticipate an effective tax rate in the range of 12% to 13% for fiscal '22.
|
For the third quarter, total sales were $1.73 billion, a decrease of 26.1%.
EBITDA was $236 million, and diluted net earnings per share from continuing operations were $0.98.
And finally, today we announced a new share repurchase authorization of $500 million which replaces all previous authorizations.
Taking 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.
We'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.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
1
0
0
0
|
The key takeaways from our third quarter 2021 results are: total company net sales of $338 million were up 16%.
Industrial Division net sales of $219 million, were up 12%, Agricultural Division net sales of $119 million, were up 25%.
Operating income of $30 million was down 3%, net income of $17.5 million or $1.49 per diluted share was down 13%, adjusted net income of $18.9 million or $1.59 per diluted share was down 8%.
Adjusted EBITDA was flat to the prior year third quarter and remained up 7% from full year 2020.
Total debt outstanding was reduced by $20.7 million during the third quarter and was down 21% from the prior year third quarter.
Our -- and our backlog increased to $645 million, which is up 154% over the prior year third quarter.
Third quarter 2021 net sales of $338 million, was 16% higher than the prior year third quarter.
Industrial Division third quarter 2021 net sales of $219 million, represented 12% increase from the prior year third quarter.
Agricultural Division third quarter 2021 sales were $119 million, up 25% from the prior year third quarter.
Gross margin for the third quarter of 2021 was $86.3 million or 25.5% of net sales compared to $78.6 million or 27% of net sales in the prior year third quarter.
Operating income for the third quarter of 2021 was $30 million or 8.9% of net sales, which was down 3% from the prior year quarter.
Net income for the third quarter 2021 of $17.5 million or $1.40 per diluted share was down 13% from the prior year third quarter.
If we exclude from the current year quarter, $1.4 million of after-tax charges stemming from accelerated stock award vesting related to the retirement of our former CEO as well as Morbark inventory step-up expense from the prior year quarter, third quarter adjusted net income of $18.9 million, was down 8% from the prior year result, while income before taxes was up $0.3 million over the prior year third quarter, mainly due to lower interest expense.
Net income was lower due to an income tax provision for stock-based compensation in anticipation of a 28% full year effective income tax rate as well as the non-deductibility of compensation expenses related to the retirement of our former CEO.
Third quarter 2021 adjusted EBITDA was flat to the prior year third quarter adjusted result as trailing 12 month adjusted EBITDA of $155.3 million remained flat to the trailing 12-month results that we reported at the end of the second quarter 2021.
This remains 7% above the adjusted 2020 EBITDA.
During the third quarter of 2021, we continued to delever the balance sheet by further reducing debt $20.7 million on the flat adjusted EBITDA performance.
We ended the third quarter of 2021 with a record high order backlog of $645 million which was an increase of 154% over the prior year third quarter.
Total company net sales of $338 million were up 16%, Industrial Division net sales of $219 million were up 12%, Agricultural Division net sales of $119 million were up 25%, operating income of $30 million was down 3%, net income of $17.5 million or $1.49 per diluted share was down 13%, adjusted net income of $18.9 million or $1.59 per diluted share was down 8%, adjusted EBITDA was flat to the prior year third quarter, but remained up 7% from full year 2020, total outstanding debt was reduced by $20.7 million and was down 21% from the prior year third quarter and our backlog increased to $645 million, up 154% over the prior year third quarter.
The increased pace of order bookings brought our backlog to a new all-time record of $645 million by the end of the quarter.
When the supply chain is significantly disrupted as we experienced broadly in the third quarter, our workforce is less productive as they have to shift production priorities frequently based on what products can be completed with the materials on hand.
Our effective tax rate in the third quarter was 37% compared to 27% in the third quarter of 2020.
The higher tax rate was primarily the result of a provision for stock-based compensation and an anticipation of a full year 2021 tax rate of 28%.
|
The key takeaways from our third quarter 2021 results are: total company net sales of $338 million were up 16%.
Operating income of $30 million was down 3%, net income of $17.5 million or $1.49 per diluted share was down 13%, adjusted net income of $18.9 million or $1.59 per diluted share was down 8%.
Our -- and our backlog increased to $645 million, which is up 154% over the prior year third quarter.
Total company net sales of $338 million were up 16%, Industrial Division net sales of $219 million were up 12%, Agricultural Division net sales of $119 million were up 25%, operating income of $30 million was down 3%, net income of $17.5 million or $1.49 per diluted share was down 13%, adjusted net income of $18.9 million or $1.59 per diluted share was down 8%, adjusted EBITDA was flat to the prior year third quarter, but remained up 7% from full year 2020, total outstanding debt was reduced by $20.7 million and was down 21% from the prior year third quarter and our backlog increased to $645 million, up 154% over the prior year third quarter.
When the supply chain is significantly disrupted as we experienced broadly in the third quarter, our workforce is less productive as they have to shift production priorities frequently based on what products can be completed with the materials on hand.
|
1
0
1
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
0
0
|
During the second quarter we delivered worldwide reported net sales of $1.6 billion, growth of 15% compared to the prior year.
All three of our core product categories grew double-digits, led by the Energy, Sports and Fitness category, which increased 45% compared to the prior year.
All of our regions, except China, experienced net sales growth in the quarter with four of our six regions increasing by more than 20%.
For the third quarter we are guiding reported net sales to be in the range of down 1% to up 5%.
For the full year, we expect net sales growth to be within a range of 8.5% to 12.5% compared to the prior year.
For the full-year 2021, we expect to generate between $875 million and $935 million of adjusted EBITDA, which highlights the ongoing profitability and underpins the cash flow generation of our business.
The North America region grew by 7% in the quarter, primarily driven by continued strong momentum in the US.
However, the two-year stack growth rate of 47% in the US accelerated compared to last quarter's two-year stack.
Over the first half of the year, we have had an increase of over 2,000 Nutrition Club locations in the US, with the total club count now exceeding 11,000.
The Asia Pacific region had another quarter of powerful growth, up 38% compared to the prior year.
The region had notable strength in Vietnam, which grew 60%, Malaysia, which was up 45%, Taiwan, which increased 21% and South Korea, which returned to growth with a 19% increase.
Our Indian business grew 93% this quarter compared to Q2 of 2020.
The EMEA region set a second straight quarterly net sales record with year-over-year growth of 22%.
Strong performances continued to be seen in markets such as Turkey, which was up 63%, Italy, which grew 38%, Belgium, which was up 25%, and Spain, which increased 21% in the quarter.
The United Kingdom delivered 24% growth, which was on top of a challenging comparison of 73% growth experienced in Q2 of 2020.
Although combined new distributor and preferred customer numbers are lower than the peak of Q2 2020, we had significant growth of 56% compared to the more normalized 2019 comparison period.
We have also seen a 27% year-over-year increase in the number of active supervisors, which reflects the continued strength of the EMEA business over the past 18 months and helped drive the record performance.
Mexico grew 23% in the quarter, its first quarter of double-digit growth since 2013.
Additionally, the South and Central American region grew 23% in the quarter.
The region was led by Chile, which grew over 200%, Bolivia, which was up 58%, Guatemala, which increased 57%, and Peru, which was up 20% compared to the prior year.
The preferred customer program is now live in 25 markets around the world.
These markets represent approximately 70% of our total net sales.
Now returning to China, in China net sales declined 16% compared to the second quarter of 2020.
China represented approximately 11% of global net sales and just under 6% of global volume in the second quarter.
Through the first half of the year, approximately 50% of our business was transacted through our recently launched digital platforms.
Second quarter net sales of $1.6 billion represents an increase of 15% on a reported basis compared to the second quarter in 2020.
The growth was broad-based as over 50 of our markets grew by double-digits or more.
We had net sales growth in four of our five largest markets, consisting of the US, which grew 6%, China, which was down 16%, India, up 93%, Mexico, up 23% and Vietnam up 60%.
Currency was a tailwind to net sales in the quarter, representing a benefit of approximately 520 basis points, excluding Venezuela.
Reported gross margin for the second quarter of 79.2% decreased by approximately 60 basis points compared to the prior year period.
Second quarter 2021 reported an adjusted SG&A as a percentage of net sales were 32.6% and 32.9%, respectively.
Excluding China member payments, adjusted SG&A as a percentage of net sales was 26.6%, approximately 30 basis points unfavorable compared to the second quarter of 2020.
For the second quarter, we reported net income of approximately $144.2 million or $1.31 per diluted share.
Adjusted earnings per share of $1.52 was a beat of $0.15 above the top end of our Q2 guidance.
Our expected year-over-year currency benefit for the second quarter should have been approximately $0.10 lower than originally projected, which translates to our actual currency adjusted earnings per share exceeding the top end of our guidance range by $0.17.
This resulted in the largest quarterly adjusted EBITDA result in company history for the second quarter in a row, with adjusted EBITDA of approximately $262 million.
Combined with the prior record in Q1, we have generated over $500 million of adjusted EBITDA during the first half of the year.
For the third quarter, we estimate net sales to be in the range of down 1% to up 5%, which includes an approximate 200 basis points currency tailwind.
The third quarter 2021 represents the most challenging comparison period of the year as we are comping 22% growth in Q3 of 2020.
Looking back over the past four quarters, the two-year stack has range between approximately 19% and 28%.
This quarter's guidance implies a two-year stack of 21% to 27% growth.
Third quarter adjusted diluted earnings per share is expected to be in a range of $1.05 to $1.25.
Adjusted diluted earnings per share includes a projected currency benefit of $0.06 compared to the third quarter of 2020.
This is reflected in our updated net sales guidance of 8.5% to 12.5% growth on a reported basis.
Currency remains a tailwind and we now project an approximate 220 basis point tailwind due to currency for the full year compared to the expected 200 basis points benefit from a quarter ago.
We are updating full-year 2021 guidance for adjusted earnings per share to a range of $4.70 to $5.10.
Despite the reduction to the midpoint of our sales guidance, the midpoint of our adjusted earnings per share range is increasing by approximately $0.05.
For the full year, our guidance includes a projected currency tailwind of approximately $0.15 per diluted share, which is $0.03 higher than the currency benefit included in our prior guidance.
Incrementally, we are initiating adjusted EBITDA guidance for the third quarter and full-year 2021 of $205 million to $235 million and $875 million to $935 million, respectively.
Through the first half of the year, we have generated $287 million of operating cash flow.
However, for the full year we continue to anticipate cash flow will be stronger than the $629 million we generated in 2020.
At the end of the second quarter, we had $838 million of cash on hand.
During the second quarter, we completed approximately $98 million in share repurchases.
Our expectation is that we will complete approximately $200 million of share repurchases over the remainder of the year, resulting in over $900 million of share repurchases for the full-year 2021.
During the quarter, we completed a $600 million offering of 2029 senior notes at a rate of 4.875%.
We used a portion of the net proceeds from the offering to redeem all outstanding $400 million 2026 senior notes that paid a coupon of 7.25%.
Given the favorable rate differential of approximately 240 basis points, we were able to raise nearly $200 million more debt at effectively the same interest payment.
This transaction resulted in a charge of approximately $25 million from the loss on the extinguishment of the 2026 notes.
The borrowing margins of both facilities were reduced by at least 25 basis points in a new pricing grid to 2.25% or lower.
The revolver was increased by approximately $48 million to $330 million with the term loan A increasing by approximately $41 million to $286 million.
|
During the second quarter we delivered worldwide reported net sales of $1.6 billion, growth of 15% compared to the prior year.
For the full year, we expect net sales growth to be within a range of 8.5% to 12.5% compared to the prior year.
Second quarter net sales of $1.6 billion represents an increase of 15% on a reported basis compared to the second quarter in 2020.
For the second quarter, we reported net income of approximately $144.2 million or $1.31 per diluted share.
Adjusted earnings per share of $1.52 was a beat of $0.15 above the top end of our Q2 guidance.
Third quarter adjusted diluted earnings per share is expected to be in a range of $1.05 to $1.25.
This is reflected in our updated net sales guidance of 8.5% to 12.5% growth on a reported basis.
We are updating full-year 2021 guidance for adjusted earnings per share to a range of $4.70 to $5.10.
|
1
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
1
0
1
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
I will then provide an update on our digital platforms and physical operation and, finally, discuss our organization's $250 million commitment and continuing initiative to address economic and social inequity in our community.
Operating earnings per share increased 53% to $0.26, which included an additional $17 million or $0.04 per share of COVID-19 reserve bill in the quarter.
PPNR increased to $130 million.
Core revenue trends remained solid throughout a challenging interest rate environment with total revenues increasing 6% annualized to $306 million.
And total assets growing nearly $3 billion to end June at $38 billion.
Compared to the first quarter, loans and deposits increased $2.3 billion and $3.6 billion or 10% and 15% respectively.
On a linked quarter basis, double-digit second quarter loan and deposit growth were supported by organic commercial production and originating nearly 20,000 PPP loans totaling $2.6 billion.
Our fee-based businesses performed exceptionally well with capital markets and mortgage banking establishing revenue records of $13 million and $17 million respectively.
Our efficiency ratio was 53.7% and operating expenses were well controlled, down 3% from the first quarter.
On a linked quarter basis, total average loans increased 9%, largely driven by growth in commercial loans of 14%.
Commercial line balances when compared to historical levels contracted as we saw much lower line utilization of 36%.
Average deposits increased 11% as we had solid organic growth in customer relationships.
Non-interest bearing deposits were up $2.1 billion or 33% from the prior quarter-end.
Looking at June 30 spot balances, our loan to deposit ratio was 92%, including the funded PPP loans.
In fact, transaction deposits have increased $4 billion or 20% from March 31 and now represent 85% of total deposits, which compares very favorably to 79% five years ago.
This quarter's record mortgage banking income of $17 million better reflects the fundamentals in the results without MSR impairment as the mortgage banking business set a new production record for the quarter of $869 million.
We grew from 26 monthly appointments in January to 2,700 appointments in April.
Customers have been more active in F.N.B.'s mobile and online channels with monthly average users up by 50,000 in both categories compared to the average for 2019.
The level of delinquency ended the second quarter at 92 basis points on a GAAP basis, down 21 bps over the prior quarter as early stage delinquencies returns to more normalized levels.
On excluding PPP loan volume, level of delinquency would have ended the quarter at 1.02%, down 11 bps from the prior quarter.
Level of NPLs and OREO totaled 72 basis points at June, an 8 basis point increase linked quarter, while the non-GAAP level was 80 bps, excluding PPP.
Of our total NPLs at June, 48% of these borrowers continue to pay as agreed and are current.
Net charge-offs remained at a good level at $8.5 million for the quarter or 13 basis points annualized, resulting in a year-to-date level of 12 basis points.
Provision expense totaled $30 million in the quarter, which includes additional build for macroeconomic conditions tied to COVID-19.
Inclusive of the Q1 economic-driven build, our COVID-related provision for the first half of the year totaled $55 million.
Our ending reserve stands at 1.4% and, excluding PPP volume, the non-GAAP ending ACO totals 1.54%, representing a 10 basis point increase over the prior quarter, resulting in NPL coverage of 215%.
When including the acquired unamortized loan discounts, our coverage, excluding PPP volume, is 1.87%.
Under the preliminary severely adverse DFAST scenario, the current reserve position, inclusive of unamortized loan discounts, would cover 78% of stressed loss.
As it relates to our borrowers requesting payment deferral, 10% of our loan portfolio, excluding PPP loans, were approved during the initial deferment request window.
Of these deferments, 98.4% were current and in good standing prior to the pandemic.
Of the remaining 39 million, 12 million is already on non-accrual.
As shown on Slide 10, our exposure at the highly sensitive industries remains low at 3.8% of the total portfolio, which includes all borrowers operating in the travel and leisure, food services and energy space.
And the level of payment deferrals granted to these borrowers remains at 38%.
Our weighted average LTV position in this book remains strong at 65%.
Looking at Slide 5, GAAP earnings per share for the second quarter is $0.25, excluding $0.05 related to significant or outsized items.
This included $17.1 million of COVID-19 reserve build and $2 million of COVID-19-related expenses.
The TCE ratio ended June at 6.97%, reflecting these items as well as a 52-basis-point temporary impact for the $2.5 billion in net PPP loan balances at June 30th.
Without the PPP balances, the TCE ratio would have been 7.49%.
Additionally, our CET1 estimate ended the quarter at 9.4% compared to 9.1% at March 31st and 9.4% at the end of 2019, as PPP loans carry a 0% risk weighting for risk-based capital purposes.
Pretax pre-provision earnings increased to $130 million, providing more than adequate earnings power as we declared our third quarter dividend of $0.12 earlier this week.
With a dividend payout ratio of 48% in the second quarter, they're well below historical levels of previous payout ratios.
Turning to the balance sheet on Slide 14, the key theme is the impact of $2.5 billion in net PPP loan, as high as [Phonetic] 9.5% of total loans and leases at June 30th.
PPP was the primary driver in the linked-quarter average increase of $2.1 billion or 9% as well as strong organic activity across most of the commercial footprint.
Our commercial line utilization ended June at 36%, below historical levels, and down from the mid-40%s spot utilization rate at the end of the first quarter as we clearly saw some customer borrowing activity shift over to the PPP and our large corporate borrowers access to capital markets to reduce their bank debt.
Average consumer loans were essentially flat with direct installment loans increased $65 million from 14% annualized and residential mortgage increased 6% annualized, two bright spots to continue to perform well.
Continuing down to Slide 14, average deposit increased to $2.7 billion or 11% on a linked quarter basis, led by $2.9 billion or 15% of transaction deposit growth.
Transaction deposits equaled 85% of total deposits.
Non-interest-bearing, interest-bearing demand, and savings account balances each increased significantly, up $1.8 billion, $854 million, $226 million respectively.
Compared to the first quarter, net interest income totaled $228 million, a decrease of $4.7 million or 2% as loan and deposit growth mostly offset the impact from lower rates.
The net interest margin narrowed 26 basis points to 2.88%, primarily driven by a full quarter impact from March action, the lower the target Fed fund range to zero to 25 basis points.
Additionally, average one-month LIBOR fell to 36 basis points from 141 in the prior quarter.
Total yield on average earning assets declined 58 basis points to 3.54%, reflecting lower yield on variable and adjustable rate loans due to the lower interest rate environment and the impact of the PPP balances.
Total cost of funds decreased to 67 basis points from 101 basis points as cost on interest-bearing deposits were reduced 37 basis points.
Slide 16 and 17 provide details for non-interest income and expense compared to the first quarter.
Non-interest income totaled $77.6 million, increasing $9.1 million or 13.3% as mortgage banking operations increased $17.6 million on a reported basis or $10.2 million excluding MSR impairments of $300,000 and $7.7 million respectively.
Mortgage production established a new quarterly record at $869 million, increasing $306 million or 55% from the prior quarter with large contributions from North Carolina and the Mid-Atlantic region.
Capital markets also set a new record of $12.5 million, increasing $1.4 million or 12.6% with strong contributions from interest rate derivative activity across the footprint.
As expected, service charges decreased $6.2 million or 20.5% due to noticeably lower transaction volumes in the COVID-19 environment.
Turning to Slide 17, non-interest expense totaled $175.9 million, a decrease of $19 million or 9.7%, including $2 million of expenses associated with COVID-19 in second quarter 2020, $15.9 million of outsized, unusual or significant expenses occurring in the first quarter.
On an operating basis, expenses declined $5.1 million or 2.9% compared to the first quarter of 2020 as we have realized lower variable expenses such as travel and business development and increased FAS 91 benefits, given the amount of loans originated in the second quarter.
Additionally, we recognized an impairment of $4.1 million from a second quarter renewable energy investment tax credit transaction.
The efficiency ratio improved significantly 53.7% compared to 59%.
Lastly, we expect the effective tax rate to be around 17% for the full-year 2020.
For example, for the total risk-based capital ratio fall below 11%, total capital would have to drop by $258 million, 7.9% of total capital of $3.3 billion.
Our risk-weighted assets will have to increase by $2.3 billion, which is 8.5% of total risk-weighted assets of $27.5 billion.
I could comment also that $258 million is in after-tax dollars.
With CET1 of $2.6 billion and an allowance for credit losses of $365 million and a remaining PCD discount of $77 million, we have a substantial base available to absorb credit losses.
To put that in context, our reserves plus remaining discount on previously acquired loans would cover 62 quarters of net charge-offs that averaged $7.1 million per quarter in the first half 2020.
This is before considering the $2.6 billion in CET1.
Again, using $442 million in reserves plus remaining discount, we covered 75% of $586 million in charge-offs projected under the severely adverse scenario for a nine-quarter period.
If we put the $586 million in context, that compares to $64 million over nine quarters using the first half of 2020 net charge-offs or 9.2 times the current levels.
From a Fed perspective, we currently pay out $39 million in common dividends and $2 million in deferred dividend for a total of $41 million per quarter.
The Fed fourth quarter test currently shows in excess of $153 million after paying out the third quarter dividend just declared.
From an OCC perspective, there are significant cushions to support the $46 million the bank is projected to pay up to the holding company.
Three-part [Phonetic] test shows a cushion of $913 million relative to net divided [Phonetic] profits, $517 million relative to net profits for the current year combined with retained net profits for the prior two years, cushions are both well-capitalized levels ranging from 228 basis points to 384 basis points.
Year-to-date PPNR of $236 million more than supports the incremental reserve build through the first six months of the year.
We generated ample capital to cover the preferred and common dividend, and our CET1 ratio was consistent with where we ended 2019 at 9.4%.
Earlier this week, we announced our third quarter dividend of $0.12.
As an organization, we continue to place a strong emphasis on being inclusive and demonstrated by our recent $250 million commitment to address economic and social inequity and low and moderate income and predominantly minority communities.
During the quarter, F.N.B. originated nearly $500 million in Paycheck Protection Program loan in low to moderate income in rural neighborhoods, assisting thousands of small businesses and employees.
Our success is a direct result of our banker's proactive outreach to over 100 organizations and non-profit entities that work directly with these communities.
This recognition, which is based solely on employee feedback, joined the list of nearly 30 such awards received over the past decade.
|
Operating earnings per share increased 53% to $0.26, which included an additional $17 million or $0.04 per share of COVID-19 reserve bill in the quarter.
In fact, transaction deposits have increased $4 billion or 20% from March 31 and now represent 85% of total deposits, which compares very favorably to 79% five years ago.
Looking at Slide 5, GAAP earnings per share for the second quarter is $0.25, excluding $0.05 related to significant or outsized items.
|
0
1
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Our total revenue increased 9% to $6.5 billion and income from continuing operations before taxes increased 53% to $476 million and income from continuing operations increased 44%, the $355 million and related earnings per share increased 45% to $4.46.
Although unit sales were impacted by supply shortages in both our retail automotive and commercial truck dealership operations, earnings growth was driven by a 39% increase in retail automotive, 135% increase in commercial trucks variable gross profit per unit retailed, also 4% increase in retail automotive service and parts gross profit and a 230 basis point reduction in SG&A to gross profit and $15 million in lower interest costs coupled with an increase in commercial truck dealership EBT of 106% and an 83% increase in earnings from Penske Transportation Solutions.
Looking at our retail automotive operations on a same store basis for Q3 '21 versus Q3 '20, units declined 8%.
However, revenue increased 7%.
Gross profit increased 18% including 180 basis point increase in our gross margin.
Our variable gross profit increased 39%, to $5,769 per unit compared to $4,152 last year.
Looking at CarShop, we now operate 22 locations and expect to open one additional location by the end of the year.
During the quarter, CarShop unit sales increased approximately 1% to 18,451 units, revenue improved 24% to $438 million and gross profit per unit increased 12% to $2,668.
Our current annualized run rate is approximately 70,000 to 75,000 units representing revenue of $1.6 billion and an EBT between $45 million and $50 million.
Turning to the retail commercial truck dealership businesses, our Premier Truck Group represented 11% of our total revenue in the third quarter.
Retail revenue increased approximately 26%, including a 6% on a same store basis.
On a same store basis, retail gross profit increased 40%, including a 10% increase in service and parts.
Earnings before taxe is increased 106% to $48 million and the return on sales was 6.7%.
The Class 8 commercial truck market remains very strong and during the third quarter, North American Class 8 net orders increased 28% and the backlog increased to 179% to 279,000 units, representing a 13-month supply.
Turning to Penske Transportation Solutions, we own 28.9% of PTS which provides us with equity income, cash distribution and cash tax savings.
PTS currently operates the fleet to over 350,000 vehicles.
For the nine months ended September 30th, PTS generated $8.2 billion in revenue and $949 million in income or a 12% return on sales.
In Q3, PTS generated $2.9 billion in revenue and income of $409 million or a 14% return on sales.
As a result, our equity earnings in Q3 increased 83% to $118 million.
Our full service leasing and contract sales were up 8%.
Our commercial rental revenue was up 51% and our utilization hit 88% with an additional 14,000 units on rent.
Our consumer rental is up 27% and our logistics revenue increased 27%.
Our gain on sale of used trucks is up 140%, as a strong freight environment and a supply shortage of new trucks is certainly driving a demand for used vehicles.
At September 30th, we have $119 million in cash and we ended the third quarter with over $2 billion in liquidity.
In fact, year-to-date, we have repurchased 2.5 million shares representing approximately 3% of the total shares outstanding.
Year-to-date we generated $1.3 billion in cash flow from operation.
We invested $157 million in capital expenditures, including $18 million to acquire land for future CarShop expansion.
Net capex was $84 million.
At the end of September, our long-term debt was $1.4 billion.
We have repaid $922 million of long-term debt since the end of 2019.
In addition, we have either repaid or refinanced our senior subordinated debt to lower rates while lengthening the term to take advantage of current market conditions, which has contributed to a $34 million reduction in interest expense so far this year.
These initiatives have lowered our debt to total capitalization to 27%, compared to 37% at December 31st and 45.6% at the end of 2019.
Our leverage ratio fits at 0.9 times, an improvement from 2.9 times at the end of 2019.
At the end of September, our total inventory was $2.6 billion, retail, automotive, inventory is $2 billion, which is down $937 million from December last year.
Our day's supply of premium is 22 and volume foreign is 9.
Looking at our other digital tools, we retailed 2,550 vehicles or 4.3% of our U.S. unit sales and 14% of our customers use preferred purchase and their buying journey.
Using the Sytner by-on tool in the UK, a customer reserve a car for 99 pounds, apply for financing, receive insta credit approval, obtain a guarantee price and pay online.
During the quarter, we sold 3,700 units using this platform.
Looking at corporate development, in addition to the 220 million of year-to-date share repurchases, we completed acquisitions totaling $600 million in annualized revenue through September 30th.
In October, we acquired the remaining 51% of our Japanese-based joint venture of premium luxury automotive brands, which will add $250 million in consolidated annual revenue and we have another $300 million in annualized revenue of deals in our pipeline that we expect to close either in the fourth quarter or early in 2022.
We increased our CarShop locations by five and expect to open one additional location by the end of the year, bringing our total to 23 locations.
We remain on track with CarShop to retail 150,000 in unit sales and generate $2.5 billion to $3 billion in total revenue and our $100 million of EBT by the end of 2023.
Before I close, I'd like to congratulate the 35 U.S. dealerships that were named by automotive news to the 100 best dealerships that work for listing.
We had more dealerships on the list than any other automotive retailer, including six of the top 10, 12 of the top 25 in the 2021 ranking.
Additionally, seven PAG dealerships were ranked in the top 10 nationally, including the top three places for their efforts to promote diversity, equity and inclusion.
|
Our total revenue increased 9% to $6.5 billion and income from continuing operations before taxes increased 53% to $476 million and income from continuing operations increased 44%, the $355 million and related earnings per share increased 45% to $4.46.
|
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Collections throughout our portfolio have stabilized to above 90%.
In terms of our current leasing pipeline, which we mentioned on the last call as being approximately $6 million and now it has grown to over $8 million.
And this number is relevant because this pipeline already represents a rebound of about half of the 10% short-term hit to our NOI that we estimated as a result of COVID.
To date, we have executed $3 million of leases in this pipeline, we are at lease for another $3 million and then the balance is at the letter of intent stage.
Leasing activity in our pipeline is now weighted fairly proportionate to our portfolio weighting, meaning that while initially the activity was weighted to our suburban and necessity portion of our portfolio, looking forward in our pipeline, our deal flow is now rebalancing, and about 70% is in street and urban.
Now, given that the street portion of our portfolio represents about 40% of our core portfolio and is a key area of differentiation for us, I think it's worth spending a few minutes on the encouraging rebound we're seeing there.
That provided us a very important ballast to weather a truly 100 year storm.
Second, the contractual rental growth rate in our street portfolio is a 100 basis points to 200 basis points higher than in the other components of our portfolio.
In hindsight, the initial and immediate impact of the pandemic was staggering, with our April 2020 results barely achieving a 50% collection rate.
In fact, as we look back over the course of the pandemic, we actually ended up collecting over 86% of our billings during the three quarters in 2020 and over 90% when we looked at the third and fourth quarter alone.
And as that we outlined in our release, we are now consistently collecting in excess of 90% of our rents.
In terms of tenant deferral agreements, we have approximately $3 million on our books at December 31st, and as our approach was to largely focus our deferral efforts on credit tenants, we remain on track for full repayment in 2021.
Our FFO as adjusted for special items was $0.24 a share for the fourth quarter.
As we highlighted in our release, we have provided our 2021 guidance with a range of $0.98 to $1.14 of FFO before special Items.
Consistent with what we experienced the past couple of quarters, we expect that our quarterly pro rata core and fund NOI should trend in the low to mid $30 million range for at least the first half of 2021.
And this is based on our assumption of maintaining a 90% collection rate along with no meaningful tenant expirations or no leases coming online.
It's worth highlighting that our current spread between physical and leased occupancy is in excess of 1% and given the velocity as to which our leasing team is building the pipeline and executing leases, we anticipate this spread, particularly in our street and urban locations to continue to expand throughout the year.
Now, as we move into the latter half of 2021, we anticipate that our quarterly NOI run rate will increase by approximately $1 million to $3 million.
Of the $8 million pipeline that Ken mentioned, approximately 40% of this involves -- or $3 million involves executed leases, and we expect about $800,000 of that will show up in the second half of 2021 and the remaining portion coming online at various points throughout 2022.
And as I mentioned on prior calls, we expect that the remaining Albertsons shares should be sold over the course of the next 18 months to 24 months.
As a reminder, we own on a pro rata basis, approximately 1 million shares, which are subject to certain lockup arrangements.
And based upon the current share price, this equates to approximately $16 million of gains as the shares are sold.
Additionally, we have guided toward $2 million to $5 million of a temporary reduction in fund fees.
I also want to point out and Amy will discuss further, we have approximately 40% remaining in Fund V to deploy.
And if we invest that consistent with the Fund V returns to date, this provides us with an additional $0.05 to $0.06 of incremental FFO on an annual basis.
And we estimate that should result in roughly $7 million of annual NOI.
Our overall core occupancy is at a decade low occupancy of 90% with the street and urban portion at 87% in some of our best locations available.
In terms of timing of lease-up, as Ken mentioned, our team has made strong progress in this past several months with building out an $8 million pipeline, the majority of which is coming from street and urban locations.
And at a 90% cash collection rate, coupled with a breakeven below 50%, we are continuing to retain cash flow.
In terms of the dividend, as we highlighted in our release, we expect to initially reinstate our dividend at $0.15 a share.
Our thesis was, buy it in 8% cap rate, leverage at two-thirds, in our case at a sub 4% interest rate and then clip a mid-teens coupon.
We did not anticipate any material growth in NOI, nor was it required to make an attractive return at an 8% going in yield.
For example, last year at the property level, we achieved roughly a 14% leveraged yield on invested equity including deferred rents.
Second, collections have rebounded since April and May and are now roughly at or above the 90% level.
Post COVID outbreak, our Fund V leasing pipeline has 32 leases, aggregating annual base rent or ABR of $5.1 million of which 20 leases and approximately $2.6 million of ABR have already been executed.
First, since recapturing a 95,000 square foot Kmart at Frederick County Square in Maryland, last February, we have successfully pre-leased 83% of that box to Lidl, Ollie's Bargain Outlet and Harbor Freight Tools together with our partners at DLC management.
We are also negotiating a lease to the remaining 17,000 square feet.
The parcels located at the back of the shopping center generated $10 million of gross sale proceeds.
Given the strength of the net lease market, we were able to achieve roughly a 200 basis point spread between the allocated cap rate in our underwriting and our actual exit cap rates.
This translates into about $2.5 million to $3 million of profit on these two sales alone.
Looking ahead to new transactional activity, we have approximately $200 million of discretionary equity available to invest, which gives us approximately $600 million of buying power on a leveraged basis.
Finally, on the debt front, during and subsequent to quarter end, we successfully extended approximately $150 million of loans across our fund's platform at a weighted average duration of 17 months.
|
Our FFO as adjusted for special items was $0.24 a share for the fourth quarter.
|
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
For the first time our Company exceeded $3 billion in net sales.
We also maintained top line momentum with organic sales growth of 7.3% including growth of nearly 17% in our auto care business.
Auto care further benefited from the expansion in our international markets, reaching $100 million in sales in those markets for the full year.
We 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.
With more consumers selecting our battery brand, we gained 2.2 share point in the last 12 months.
As 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.
In 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.
Our 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.
Over 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.
All 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.
While 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.
We 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.
In order to mitigate the impact of these costs, we have executed or planned pricing against roughly 85% of our business.
As such, our inventory at the end of fiscal '21 was up 42% versus the prior year.
In 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.
For the quarter reported revenue grew 40 basis points with organic revenue down less than 1% versus 6% organic growth in the prior-year quarter.
Robust demand and distribution gains in auto care delivered a 11.5% growth in the quarter, which offset the expected decline in battery.
Adjusted gross margin decreased 70 basis points to 37.7%.
The 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.
Excluding acquisition and integration costs, SG&A as a percent of net sales was 14.3% versus 15.6% in the prior year.
The absolute dollar decrease of $9.4 million was driven primarily by a reduction in compensation costs.
In the quarter, we realized $9 million in synergies, bringing the total for 2021 to $62 million.
We have delivered over $130 million of synergies related to our battery and auto care acquisitions, well exceeding our initial targets.
Interest expense was $13.4 million lower than the prior-year quarter as we are benefiting from significant refinancing activity over the past 18 months.
During the fourth quarter, we entered into a $75 million accelerated share repurchase program.
Approximately 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.
Net 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.
Adjusted 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.
Interest expense, benefiting from significant refinancing activity, decreased $33 million.
Adjusted earnings per share increased 51% to $3.48 as higher sales, synergies and lower interest expense more than offset the higher input costs.
And adjusted EBITDA increased 10%.
At 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%.
Our adjusted free cash flow for 2021 was $203.5 million.
Now turning to our fiscal 2022 outlook.
Organic 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.
We also expect reported revenue will be negatively impacted by foreign currency headwinds of $20 million to $25 million at current rates.
Last quarter I highlighted the potential for an additional 100 basis points of gross margin headwinds in 2022 if input costs did not improve.
While 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.
These 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.
|
Over 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.
While 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.
In 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.
Now turning to our fiscal 2022 outlook.
We also expect reported revenue will be negatively impacted by foreign currency headwinds of $20 million to $25 million at current rates.
These 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.
|
0
0
0
0
0
0
0
0
1
0
1
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
0
0
1
|
Reported sales growth was 6.4%, organic sales growth -- grew 4.5% and exceeded our 4% Q2 outlook.
The 4.5% organic growth is impressive considering Q2 2020 organic sales growth was 8.4%.
Adjusted earnings per share was $0.76 and that's $0.07 better than our outlook.
We grew consumption in 13 of the 16 categories in which we compete, and in some cases on top of big consumption gains last year.
Another way to look at this is to compare our Q2 consumption on those 16 categories to 2019, a pre-COVID year, we have higher consumption in 14 of those 16 categories compared to Q2 2019.
Regarding brand performance, nine of our 13 brands saw a double-digit consumption growth and I'll name them for you: gummy vitamins, stain fighters, cat litter, condoms, battery powered toothbrushes, depilatories, dry shampoo sailing spray and water flossers.
Now although many of our brands delivered double-digit consumption growth it is not reflected in our 4.5% organic sales growth as shipments were constrained by supply issues which we do expect to lessen by Q4.
In Q2, online sales as a percentage of total sales was 14.2%.
Our online sales increased by 7% year-over-year.
But remember, this is on top of the 75% growth in e-commerce that we experienced in Q2 2020 versus '19.
We continue to expect online sales for the full year to be 15% as a percentage of total sales.
With 70% of American adults having at least one vaccine shots so far, the US has been opening up consumers becoming more mobile.
Consumer Domestic business grew organic sales 2.8%.
This is on top of 10.7% organic growth in Q2 2020.
Looking at market shares in Q2, five out of our 13 power brands met or gained share.
VITAFUSION gummy vitamins saw great consumption growth in Q2, up 10%.
In the last year, VITAFUSION household penetration is up 17%.
WATERPIK grew consumption 72% in Q2 as it continues to recover from COVID lows and benefits from the heightened consumer focus on health and wellness.
BATISTE dry shampoo grew consumption 37%.
Similarly TROJAN delivered 11% consumption growth.
In Q2, TROJAN launched on TikTok with explosive uptick from consumers with over 47 million views.
Despite intermittent lockdowns in our markets, our international business came through with 10.4% organic growth in the quarter, primarily driven by our strong growth in our Global Markets Group.
Our Specialty Products business delivered a positive quarter with 11.8% organic growth.
At the prior year quarterly organic growth for specialty products was 3%.
So 11.8% is an impressive result.
It's the first and only sanitizing laundry additive that boost stain fighting and eliminates 99.9% of bacteria and viruses.
WATERPIK launched WATERPIK ION, a water flosser which is 30% smaller with a long lasting lithium-ion battery.
To capitalize on its earlier success, WATERPIK SONIC FUSION, the world's first flossing toothbrush was upgraded to SONIC FUSION 2.0 with two brush head sizes and two speeds, and that's doing extremely well.
Since we last spoke to you in April, unplanned cost inflation has grown by another $35 million.
In addition to the price increases on 33% of our portfolio that we announced in April, we have just announced price increases on other categories, which means we have now priced up 50% of our portfolio.
We now expect to be at the lower end of our range of adjusted earnings per share growth of 6% to 8% as a result of heightened input costs.
Although we expect to be at the low end of the range, it's really important to remember that we are comping 15% earnings per share growth in 2020.
We expect full year reported sales growth of 5% with 4% full year organic sales growth.
We believe we are well positioned for 2022 with the pricing actions we have taken.
Second quarter adjusted EPS, which excludes the positive earn-out adjustment was $0.76, down 1.3% to prior year.
$0.76 was better than our $0.69 outlook primarily due to continued strong consumer demand for many of our products as well as a temporary reduction in marketing spend as supply chain shortages were impacting customer fill rates, which we expect to recover in Q4.
The $0.76 includes a $0.04 drag from a higher tax rate and a $0.04 drag from the VMS recall costs.
Reported revenue was up 6.4%.
Organic sales were up 4.5% driven by a volume increase of 4.3%.
Our second quarter gross margin was 43.4%, a 340 basis point decrease from a year ago.
This was right in line with our outlook for down 350 basis points for the quarter.
Gross margin was impacted by a 480 basis points of higher manufacturing costs primarily related to commodities, distribution, and labor costs.
Tariff costs negatively impacted gross margin by an additional 50 basis points.
These costs were partially offset by a positive 40 basis point impact from price volume mix and a positive 140 basis point impact from productivity programs as well as a ten basis point positive impact from currency.
Moving to marketing, marketing was down $5.3 million year-over-year as we lowered spend to reduced demand until fill rates could recover.
Marketing expense as a percentage of net sales decreased 100 basis points to 9.2%.
We continue to expect full year marketing expense as a percentage of net sales to be approximately 11.5% in line with historical averages.
For SG&A, Q2 adjusted SG&A decreased 140 basis points year-over-year with lower legal costs and lower incentive comp.
Other expense all in was $11.4 million, a $3.3 million decline to the lower interest expense from lower interest rates.
And for income tax, our effective rate for the quarter was 24% compared to 19.6% in 2020, an increase of 440 basis points, primarily driven by lower stock option exercises.
For the full -- for the first six months of 2021 cash from operating activities decreased 42% to $344 million due to higher cash earnings being offset by an increase in working capital.
As a reminder, in the year-ago numbers there was an $80 million benefit in Q2 related to the timing of US federal income tax payments shifting from the second to the third quarter in the prior year.
We expect cash from operations to be approximately $90 million for the full year.
As of June 30th, cash on hand was $149.8 million.
Our full year CapEx plan is now $140 million as we continue to expand manufacturing and distribution capacity, primarily focused on laundry, litter, and vitamins.
The decrease from our previous $180 million is project timing related.
For Q3 we expect reported sales growth of approximately 3%, organic sales growth of approximately 1.5% entirely due to supply chain constraints.
Adjusted earnings per share is expected to be $0.70 per share, flat from the last year's adjusted EPS.
And now for the full-year outlook, we now expect full-year 2021 reported sales growth to be approximately 5%, organic sales growth to be approximately 4%.
Turning to gross margin, we now expect full year gross margin to be down 75 basis point.
Our April outlook expected gross margin to be flat for the year, and $90 million of inflation from our original guidance.
Now we're absorbing $125 million of incremental costs for the full year.
This additional $35 million of inflation drives the change in our gross margin outlook.
We've taken another round of pricing actions with over 50% of our global brands having announced price increase.
The $35 million movement versus our previous outlook is primarily non-commodity related, transportation, labor, third-party manufacturers, and other raw material price increases make up the majority.
And while we have 80% of our commodities hedged, let me give you a sense of what's going on with major commodities.
For example, previously in our forecast it was based on HDPE being up 30% in the second half of the year, now it's up 60%.
Polypros [Phonetic] moved from being up 40% to now 90%.
We previously expected second half diesel to be up 18% and now it's of 27%.
Our full year tax rate expectations are now 23%, higher versus our last expectations due to lower stock option exercises.
This is a $0.04 drag versus our previous outlook.
We now expect adjusted earnings per share to be at the lower end of our previous range of 6% to 8%.
Our brands continue to go from strength to strength as strong consumption in organic sales growth lapped almost 10% organic growth a year ago.
|
Adjusted earnings per share was $0.76 and that's $0.07 better than our outlook.
We now expect to be at the lower end of our range of adjusted earnings per share growth of 6% to 8% as a result of heightened input costs.
We expect full year reported sales growth of 5% with 4% full year organic sales growth.
We believe we are well positioned for 2022 with the pricing actions we have taken.
Second quarter adjusted EPS, which excludes the positive earn-out adjustment was $0.76, down 1.3% to prior year.
$0.76 was better than our $0.69 outlook primarily due to continued strong consumer demand for many of our products as well as a temporary reduction in marketing spend as supply chain shortages were impacting customer fill rates, which we expect to recover in Q4.
The $0.76 includes a $0.04 drag from a higher tax rate and a $0.04 drag from the VMS recall costs.
And now for the full-year outlook, we now expect full-year 2021 reported sales growth to be approximately 5%, organic sales growth to be approximately 4%.
We now expect adjusted earnings per share to be at the lower end of our previous range of 6% to 8%.
|
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
1
1
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
1
0
|
I'm very pleased with our results this quarter as we generated adjusted earnings per share of $1.35.
The Top 8 EV battery producers represent approximately 90% of the industry and we now have commercial sales to six of these Top 8 manufacturers.
In addition, we are supplying conductive carbon additives to the Top 5 EV battery producers in China.
Operating cash flow in the quarter was $71 million and $157 million year-to-date.
While EBITDA generation has been very strong, conversion to operating cash has been impacted somewhat by higher oil prices, which contributed to over $100 million of the net working capital increase year-to-date.
We recently closed on a new $1 billion ESG linked credit facility, which replaces our existing credit facility that was due to mature in October of 2022.
The Reinforcement Materials segment delivered strong operating results with EBIT of $85 million, which is up $90 million compared to the same quarter in fiscal 2020.
Globally, volumes were up 71% in the third quarter as compared to the same period of the prior year due to 146% growth in the Americas, 100% increase in Europe, and up 30% in Asia.
Looking to the fourth quarter, we expect the volumes to remain strong.
We anticipate this differentials impact will be approximately $5 million in the fourth quarter and we expect to recover this impact in the first quarter of fiscal 2022 through our DCA mechanisms.
Now turning to Performance Chemicals, EBIT increased by $33 million as compared to the third fiscal quarter of 2020 primarily due to strong volumes across the segment and improved product mix.
Year-over-year, volumes increased by 17% in Performance Additives and 20% in Formulated Solutions driven by higher volumes across all our product lines underpinned by higher demand levels in our key end markets.
With higher maintenance impacting both the Reinforcement Materials and Performance Chemical segments, we estimate the sequential impact of higher maintenance costs for the company to be in the $8 million to $10 million range.
With regards to the plant outages, this impact is also across both the Reinforcement Materials and Performance Chemicals segment and we expect the impact across the company to be in the range of $7 million to $10 million in the fourth quarter.
Moving to Purification Solutions, EBIT in the third quarter of 2021 increased by $4 million compared to the third quarter of fiscal 2020 driven by volume growth in specialty applications and an insurance reimbursement from a plant outage in the first quarter of this fiscal year.
We ended the quarter with a cash balance of $173 million and our liquidity position remained strong at $1.3 billion.
During the third quarter of fiscal 2021, cash flows from operating activities were $71 million which included a working capital increase of $47 million.
Capital expenditures for the third quarter of fiscal '21 were $46 million.
For the full year, we expect capital expenditures to be approximately $20 million.
Additional uses of cash during the quarter included $20 million for dividends.
Our year-to-date operating tax rate was 28% and we forecast our operating tax rate will be between 27% and 28% for this fiscal year.
I'm very pleased with our third consecutive quarter of strong operating results and we are raising our expected full year outlook of adjusted earnings per share to be in the range of $4.85 to $5.05.
Through these actions, we have demonstrated the earnings power of our two high-margin segments in Reinforcement Materials and Performance Chemicals and we have enabled this growth in a more capital-efficient manner.
|
I'm very pleased with our results this quarter as we generated adjusted earnings per share of $1.35.
Looking to the fourth quarter, we expect the volumes to remain strong.
I'm very pleased with our third consecutive quarter of strong operating results and we are raising our expected full year outlook of adjusted earnings per share to be in the range of $4.85 to $5.05.
Through these actions, we have demonstrated the earnings power of our two high-margin segments in Reinforcement Materials and Performance Chemicals and we have enabled this growth in a more capital-efficient manner.
|
1
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
1
1
|
Revenue increased 79% to $394 million in the quarter, driven by growth in the number of independent OPTAVIA Coaches coupled with further improvements in coach productivity.
The number of active earning OPTAVIA Coaches reached approximately 59,200 at the end of the second quarter, a record high, that is 62% above the same quarter last year and up nearly 13% sequentially.
Revenue per active earning OPTAVIA Coach was $6,662, another new record, up nearly 14% versus last year and 3% sequentially.
A recent study of consumer health priorities and motivators commissioned by Medifast found that 93% of U.S. adults of health and wellness goals and 84% are actively working toward achieving them.
2/3 of Americans say the biggest motivator for staying consistent with health and wellness goals is feeling good mentally and physically, defined by having more energy and reducing stress and anxiety.
We achieved our $2 billion manufacturing capacity target in the second quarter, six months ahead of the original goal through the expansion of relationships with co-manufacturers.
Importantly, since we were lapping the essential start promotion from last year's second quarter, the absence of promotion provided a nice lift to gross margins, which improved by 210 basis points in the same quarter last year.
Last week, we concluded our biggest ever annual convention which was held in the new hybrid format and saw more than 15,000 global registrants.
This coach-led fundraising initiative raised over $100,000 of worthy nonprofits and advance the company's mission of providing children with education and access to resources that support healthy habits.
Revenue in the second quarter of 2021 increased 79.2% to $394.2 million from $220 million in the second quarter of 2020, reflecting continued growth in the number of active earning OPTAVIA Coaches and higher per coach productivity which resulted in more clients participating in our optimal weight five & one Plan.
We achieved another record for active earning OPTAVIA Coaches, ending the quarter with approximately 59,200 and generating sequential growth of 12.8% compared to Q1 and an increase of 62.2% from last year's second quarter.
Average revenue per active earning OPTAVIA Coach for the second quarter was $6,662, setting another record and up 3.2% from the prior high set just last quarter.
Versus a year ago, revenue per active earning of OPTAVIA Coach was up 13.9%.
Gross profit for the second quarter of 2021 increased 84.4% to $293.7 million compared to $159.3 million in the prior year period.
Gross profit as a percentage of revenue was 74.5%, up 210 basis points compared to 72.4% in the second quarter of 2020.
SG&A for the second quarter of 2021 increased 77% to $232.3 million compared to $131.2 million for the second quarter of 2020.
SG&A as a percentage of revenue decreased 70 basis points year-over-year to 58.9% versus 59.6% in the second quarter of 2020.
Income from operations increased $33.3 million to $61.4 million from $28.1 million in the prior year period, reflecting significant improvement in gross profit margin coupled with leverage of SG&A expenses.
Income from operations as a percentage of revenue was 15.6% for the quarter, an increase of 280 basis points from the year ago period.
The effective tax rate was 23.4% for the second quarter of 2021 compared to 22.1% in last year's second quarter.
Net income in the second quarter of 2021 was $47 million or $3.96 per diluted share based on approximately 11.9 million shares of common stock outstanding.
This compares to net income of $21.9 million or $1.86 per diluted share based on approximately 11.8 million shares of common stock outstanding in last year's second quarter.
Our balance sheet remains very strong with cash, cash equivalents and investment securities of $197.4 million as of June 30, 2021, compared to $174.5 million at December 31, 2020.
On the first quarter call, I provided additional detail around our capital allocation priorities and discussed that we expect higher levels of capital expenditures over the next 24 months to expand our technology and supply chain capabilities.
To that end, during the second quarter, we repurchased $12.2 million of stock, which is up from $7.5 million of repurchase activity in the first quarter, bringing our year-to-date total to $19.7 million through the first half of 2021.
Finally, in June 2021, our Board of Directors declared a quarterly cash dividend of $16.9 million or $1.42 per share, which is payable on August 6.
For the full year 2021, we expect revenue in the range of $1.425 billion to $1.525 billion and diluted earnings per share to be in the range of $12.70 to $14.17.
Our guidance also assumes a 23.25% to 24.25% effective tax rate.
|
Revenue in the second quarter of 2021 increased 79.2% to $394.2 million from $220 million in the second quarter of 2020, reflecting continued growth in the number of active earning OPTAVIA Coaches and higher per coach productivity which resulted in more clients participating in our optimal weight five & one Plan.
We achieved another record for active earning OPTAVIA Coaches, ending the quarter with approximately 59,200 and generating sequential growth of 12.8% compared to Q1 and an increase of 62.2% from last year's second quarter.
Net income in the second quarter of 2021 was $47 million or $3.96 per diluted share based on approximately 11.9 million shares of common stock outstanding.
For the full year 2021, we expect revenue in the range of $1.425 billion to $1.525 billion and diluted earnings per share to be in the range of $12.70 to $14.17.
|
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
1
0
|
Our two largest brands, Coors Light and Miller Lite, our iconic core grew 6.1% and 8.6% in the US off-premise respectively.
Beyond beer, our first foray into non-alcoholic cannabis beverages through the Truss joint venture has netted the number 1 dollar share spot in the entire Canadian cannabis beverage market.
We increased our production capacity for our fast growing seltzers by approximately 400%.
That is the story of Molson Coors in 2020.
To put it more bluntly, Europe alone accounts for 92% of our fourth quarter top line plants.
In the US, our largest beers, Coors Light and Miller Lite delivered 6.1% and 8.6% expected growth in the off-premise.
Vizzy is going to top 10 growth plan for nearly six straight months.
In above premium beers, we have high expectations for Blue Moon LightSky, which ended 2020 as the number 1 new beer in the United States per Nielsen.
We've expanded its production capacity by approximately 400%.
Our regional craft portfolio in the United States grew 17% as per Nielsen in 2020.
And by December, they jumped to the number 1 dollar share position with four of the top five cannabis beverage SKUs in Canada.
It will be a driving force behind our goal to build our emerging growth division into a $1 billion revenue business by 2023.
With 230% growth in e-commerce in the US alone.
We expanded our Seltzer production capacity by approximately 400%.
And we also expanded our Light Sky production capacity by approximately 400%.
We completed a sleek can production line capable of manufacturing approximately 750 million sleek cans annually.
We also increased our support for organizations dedicated to quality, common, racial justice, community building and provided nearly 3 million meals to families in our hometown communities struggling with food and security.
So today I'm proud to announce that not only will we recommit to matching last year's investments in our communities, we have also committed to spend a total of $1 billion with diverse suppliers over the next three years.
In fact, Europe which accounted for only 16% of our revenue in 2020 contributed to 61% of revenue decline, and 83% of our EBITDA decline for the year, and 92% of the revenue decline and 56% of our EBITDA decline for the fourth quarter.
Recapping the year, consolidated net sales revenue decreased 8.7% in constant currency of which North America was down 4.3% while Europe was down 28.4% on a constant currency basis.
Brand volumes declined 7.8% and financial volumes declined 8.9%.
Net sales per hectoliter on a brand volume basis grew 1.1% in constant currency due to pricing growth in North America and Europe as well as positive brand and package mix in the US.
The success of our both premium innovations including Vizzy, Blue Moon LightSky and Coors Seltzer, help drive US net sales per hectoliter up 2.3% for the year.
Underlying COGS per hectoliter increased 2.8% on a constant currency basis driven by cost inflation including higher transportation costs, volume deleverage and mix impacts from premiumization in North America, partially offset by cost savings.
Underlying MG&A decreased 9.9% on a constant currency basis as we quickly took action, pivoting spend away from the areas impacted by the coronavirus pandemic, particularly live in the payments events and sporting events due to shortened or delayed seasons such as the delayed start of the NH-alc season into 2021.
In aggregate, we delivered approximately $270 million across MG&A and cost of goods sold, chasing us on track to meet our $600 million target in total gross savings.
As a result, underlying EBITDA decreased 10% on a constant currency basis.
Underlying free cash flow was $1.3 billion for the year, a decrease of $104 million from the prior year driven by lower underlying EBITDA and higher cash taxes partially offset by favorable working capital.
The working capital benefit was driven by the deferral of approximately $150 million in tax payments on various government bonds with payment deferral programs related to the coronavirus pandemic of which, we currently anticipate the majority to be paid in 2021 as they become due.
Capital expenditures incurred were $530 million for the year.
We reduced our net debt position by $1.1 billion in 2020 and reduce our trailing 12 month net debt to underlying EBITDA ratio to 3.5 times as we remain committed to maintaining our investment grade rating.
Consolidated net sales revenue declined 8.3% in constant currency principally due to financial volume declines as a result of the on-premise restrictions along with corresponding negative channel mix, partially offset by net pricing growth in North America and Europe as well as positive brand and package mix in the US.
North America net sales revenue was down 1% in constant currency.
However, in the US, despite increased on-premise restrictions and aluminum can supply constraints, we delivered net sales revenue growth of 1.9% in the quarter.
And we continue to build this distributor inventory in the US with brand volumes down 6.2% compared to domestic shipment declines of 2.3%.
In Europe, net sales revenue was down 59.4% in constant currency driven by volume declines and negative mix due to increased on premise restriction with the most meaningful in the UK, which experienced a return to almost total on-premise locked down for November and the historically strong month of December and with the subdued nature of many festive celebrations during the fourth quarter, we did not see a big shift of volume into the off-premise.
Net sales per hectoliter on a brand volume basis increased 3.7% in constant currency reflecting net pricing growth in North America and Europe more than offsetting the negative mix effect of the various market dynamics and consumer shift caused by the coronavirus pandemic.
In the US net sales per hectoliter on a brand volume basis increased 4.2% driven by favorable sales mix from new innovations and strong net parking growth.
While in Europe, net sales per hectoliter on a brand volume basis decreased 8.2% due to unfavorable mix, particularly driven by the higher margin UK business which more than offset pricing increases.
Underlying COGS per hectoliter increased 6.4% on a constant currency basis, as we saw a greater impact on price inflation and US mix premiumization in Q4 compared to the full year.
MG&A in the quarter increased 5.8% on a constant currency basis due to higher planned marketing spend to support our core brands and key innovation as well as backing lower incentive compensation and a non-recurring vendor benefit in the fourth quarter of 2019.
As a result, underlying EBITDA decreased 33.6% on a constant currency basis disproportionately driven by Europe.
Given the length and severity of the impact of the coronavirus pandemic on our Europe business as well as the projected recovery currently expected in certain on-premise markets, we recognized a goodwill impairment charge of $1.5 billion in our Europe segment.
We also recognized $39.6 million of asset impairment charges in our North American segment.
As you may recall, on March the 27 of last year, we withdrew our guidance due to the uncertainty driven by the coronavirus pandemic.
For 2021, we expect to deliver mid-single-digit net sales revenue growth.
We anticipate underlying depreciation and amortization of $800 million, net interest expense of $270 million plus or minus passed the same.
And an effective tax rate in the range of 20% to 23%.
As I mentioned we significantly reduced our net debt position by $1.1 billion in 2020 and reduce our leverage ratio to 3.5 times as of December 31, 2020.
We are proud of this progress and are establishing a target net debt to underlying EBITDA ratio of approximately 3.25 times by the end of 2021 and below 3 times by the end of 2022.
And we currently anticipate that our Board of Directors will be in a position to reinstate a dividend in the second half of this year.
|
That is the story of Molson Coors in 2020.
Consolidated net sales revenue declined 8.3% in constant currency principally due to financial volume declines as a result of the on-premise restrictions along with corresponding negative channel mix, partially offset by net pricing growth in North America and Europe as well as positive brand and package mix in the US.
However, in the US, despite increased on-premise restrictions and aluminum can supply constraints, we delivered net sales revenue growth of 1.9% in the quarter.
For 2021, we expect to deliver mid-single-digit net sales revenue growth.
And we currently anticipate that our Board of Directors will be in a position to reinstate a dividend in the second half of this year.
|
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
1
|
For the first quarter, we reported a net loss of $368 million or negative $3.71 per share on revenue of $537 million.
These results included the impact of $393 million of pre-tax adjustments, including $303 million associated with goodwill impairments, $76.1 million of asset impairments and write-offs, $13.7 million in restructuring costs and foreign exchange losses recognized during the quarter.
Adjusted net income was $3.5 million or $0.04 per share.
And our consolidated adjusted EBITDA of $51.6 million surpassed both our forecast and published consensus estimates.
Compared to the fourth quarter of 2019, ROV average revenue per day on hire decreased 4% on flat days on hire.
Adjusted EBITDA margin increased to 32% and ROV utilization improved slightly to 65%.
Keep in mind that although reported fourth quarter 2019 utilization was 58%, it did not include the impact of the 30 ROVs that were retired at the end of the fourth quarter.
For comparison, pro forma fourth quarter utilization, reflecting these vehicles as if they had been retired at the end of -- at the beginning of the quarter, was 64%.
During the first quarter, our fleet size remained at 250 vehicles, the same as year-end 2019.
Our fleet use during the first quarter was 68% in drill support and 30% in vessel-based activity compared to 64% and 36% respectively for the fourth quarter of 2019.
At the end of March, we had ROV contracts on 95 of the 153 floating rigs under contract, resulting in a drill support market share of 62%.
Our Subsea Products revenue mix for the quarter was 74% in manufactured products and 26% in service and rental compared to a 72-28 split, respectively in the fourth quarter.
Our Subsea Products backlog at March 31, 2020 was $528 million compared to $630 million at December 31, 2019.
Reflecting the higher level of throughput and lower level of market activity, our book-to-bill ratio for the first quarter was 0.5.
During the first quarter, we used $32.2 million of net cash in our operating activities and $27.2 million of cash for maintenance and growth capital expenditures.
These two items represented the largest contributors to a $66.2 million cash decrease during the quarter.
At the end of the quarter, we had $307 million in cash and cash equivalents, no borrowings under our $500 million revolving credit facility, and no loan maturities until November 2024.
Based on our determination, as of March 31, we could draw down the entire $500 million and still be in compliance.
We are not providing operating or EBITDA guidance for the second quarter and full year of 2020 due to the lack of visibility in the majority of our businesses.
We maintain our guidance that unallocated expenses are forecasted to be in the mid -- excuse me, in the high-$20 million range per quarter.
We are further revising our capital expenditure guidance by lowering the range to $45 million to $65 million and 2020 cash tax payments guidance by lowering range to $30 million to $35 million.
Our government-supported businesses, which represented approximately 16% of our consolidated 2019 revenue, are not closely tied to the crude oil or public entertainment markets, so contracting activities should be relatively unaffected, absent any COVID-19-related delays.
We are currently targeting a reduction of annualized expenses in the range of $125 million to $160 million by the end of 2020, inclusive of $35 million to $40 million of reduced depreciation expense.
The base salaries for our senior leadership have been reduced by 15% for myself, 10% for all of our Senior Vice President positions, and 7.5% for our Vice President positions.
In addition, we have reduced the Company match on our 401(k) plan by 50% and reduced the expected payouts under our short-term and long-term incentive plans.
In addition to these categories, we also expect to see a benefit from an estimated $35 million to $40 million reduction in depreciation cost as compared to 2019.
Although this is a non-cash expense, it is worthy of highlighting because it will benefit our operating performance and position us to return to profitability sooner.
Since launching this effort, approximately $70 million of annualized cost reductions have been initiated, and that's net of depreciation expense.
We expect the cash costs associated with these actions to be around $15 million.
Over the past 25 years, Marvin has served as our Chief Financial Officer, Executive Vice President overseeing all of Oceaneering support functions, and over the past several years as a strategic advisor to me and our executive management team.
And did you know that Marvin has not missed one quarterly earnings call during his 25 years?
|
For the first quarter, we reported a net loss of $368 million or negative $3.71 per share on revenue of $537 million.
Adjusted net income was $3.5 million or $0.04 per share.
We are not providing operating or EBITDA guidance for the second quarter and full year of 2020 due to the lack of visibility in the majority of our businesses.
We maintain our guidance that unallocated expenses are forecasted to be in the mid -- excuse me, in the high-$20 million range per quarter.
We are further revising our capital expenditure guidance by lowering the range to $45 million to $65 million and 2020 cash tax payments guidance by lowering range to $30 million to $35 million.
We are currently targeting a reduction of annualized expenses in the range of $125 million to $160 million by the end of 2020, inclusive of $35 million to $40 million of reduced depreciation expense.
Although this is a non-cash expense, it is worthy of highlighting because it will benefit our operating performance and position us to return to profitability sooner.
|
1
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
0
1
0
0
0
1
0
0
0
0
|
Today, FCX reported second quarter 2021 net income attributable to common stock of $1.08 billion or $0.73 per share.
Adjusted net income attributable to common stock totaled $1.14 billion or $0.77 per share.
Our adjusted EBITDA for the second quarter of 2021 totaled $2.7 billion.
And you can find a reconciliation of our EBITDA calculations on Page 35 of our slide deck materials.
Our copper sales of 929 million pounds and gold sales of 305,000 ounces were significantly above the year ago quarter, but our sales were approximately 5% lower for copper and 8% lower for gold relative to our recent estimates, primarily reflecting the timing of shipments from Indonesia.
Our second quarter average realized copper price of $4.34 a pound was 70% higher than the year ago quarterly average.
Our net unit cash cost of $1.48 per pound of copper on average in the second quarter was slightly above our estimate going into the quarter of $1.42 per pound, but that primarily related to nonrecurring charges associated with a new four-year labor agreement at Cerro Verde.
Operating cash flow generation was extremely strong, totaling $2.4 billion during the quarter.
That included $0.5 billion of working capital sources.
And our operating cash flow significantly exceeded our capital expenditures of $433 million during the quarter.
Our consolidated debt totaled $9.7 billion at the end of June.
And our consolidated cash and cash equivalents totaled $6.3 billion at the end of June.
Net debt was $3.4 billion at the end of the quarter, and we achieved our targeted net debt level several months ahead of our schedule.
Really important, our Grasberg underground ramp-up is proceeding on schedule.
This quarter alone, we had $2 billion of cash flow after capital spending.
We ended the quarter with $3.4 billion of net debt, and that's within the targeted range we set at $3 billion to $4 billion.
We've reduced our debt by like 60% over the past year.
For the year 2021, copper value -- copper volumes are projected to increase 20%; gold volume, 55% over 2020.
Then looking forward to 2022, we'll see a further growth of 15% to 20% over 2021 levels.
Our volumes will -- with low incremental costs, we yield expanding margins at prices ranging from $4 to $5 per pound for copper.
We've generated annual EBITDA for '22 and '23 of $12 billion to $17 billion of copper with capital expenditures in the range of $2.5 billion a year.
In the second quarter, we achieved just under 80% of our target annualized run rate for metal sales.
I've been working in Freeport for 30 years -- over 30 years.
And I'm personally proud and gratified by our team's accomplishments since we began investing in the underground over 20 years ago, transition from the open pit that began 18 months ago and dealing with COVID, it's just remarkable what we've been able to do.
It would be a block cave with about 90,000 tonnes per day.
Original plan was 75,000 tonnes a day, 200 million pounds of copper.
We now exceeded this, reaching the targeted rate of 95,000 tonnes a day.
On a sustained basis, we have takeouts capacity to do this to yield 285 million pounds of copper.
Looking at a further increment that would involve a relatively small investment in tank houses, mining equipment to produce 300-or-more pounds of copper, 50% more our than original design.
Potential resource is 10 times more than our current reserve.
Our estimate now is for 38 billion pounds of copper in these stockpiles.
And if we can recover just 10% to 20% of this material, it would be like having a major new mine with variable capital and operating costs.
We're very focused now on sustaining the rates to keep our tankhouse full there, which has a capacity of 285 million pounds per year of copper and looking at potential increments beyond that with relatively small and attractive investments.
At Morenci, we've started to increase our mining rates, which had been curtailed in the last 12 months.
We averaged about 725,000 tonnes per day of mining material in the second quarter and are ramping up to reach 800,000 tonnes per day by the end of this year, going to 900,000 tonnes a day in 2023.
And we've been running at about 95% of the mill capacity in recent months.
This allows El Abra to increase production on a sustained basis to about 200 million to 250 million pounds per annum for the next several years as we assess opportunities for a major expansion there.
We successfully commissioned at Grasberg the second crusher at our Grasberg Block Cave during the quarter, and that will provide sufficient capacity for a ramp-up to 130,000 tonnes per day.
We recently entered into an EPC contract with Chiyoda to construct a 1.7 million tonne facility there.
FCX is responsible for 49% of these expenditures.
We recently completed a new $1 billion bank credit facility for PT-FI to advance these projects and are planning additional debt financing, which can be attained at attractive rates to fund these activities.
As indicated, the long-term cost of the financing expected for the smelter would be offset by a phaseout of the 5% export duty.
And the price is ranging from $4 to $5 copper and holding gold and molybdenum flat at $1,800 per ounce of gold and $16 per pound of molybdenum.
What you see here on these graphs, we would generate EBITDA in the range of over $12.5 billion per annum for '22 and '23 on average at $4 copper to $17 billion per annum at $5 copper.
And at operating cash flows, net of taxes and interest would be $9 billion to $12 billion using these price assumptions.
On slide 19, we include our projected capital of $2.2 billion this year and $2.5 billion in 2022.
As you'll note, we shifted about $100 million in expenditures from 2021 to 2022, which was timing related.
You'll see on slide 20, and this is backward looking, but over the last 12 months, we've reduced our net debt by $5 billion, and that included $2 billion in the second quarter alone.
You'll see our credit metrics are strong and less than 0.5 times EBITDA on a trailing 12-month basis.
The slide on 21 just reiterates our financial policy.
We have performance-based payout policy, which was established by our Board earlier this year, providing up to 50% of free cash flow, would be used for shareholder returns with the balance available for growth and further balance sheet improvements.
|
Today, FCX reported second quarter 2021 net income attributable to common stock of $1.08 billion or $0.73 per share.
Adjusted net income attributable to common stock totaled $1.14 billion or $0.77 per share.
Our copper sales of 929 million pounds and gold sales of 305,000 ounces were significantly above the year ago quarter, but our sales were approximately 5% lower for copper and 8% lower for gold relative to our recent estimates, primarily reflecting the timing of shipments from Indonesia.
Our second quarter average realized copper price of $4.34 a pound was 70% higher than the year ago quarterly average.
Really important, our Grasberg underground ramp-up is proceeding on schedule.
The slide on 21 just reiterates our financial policy.
|
1
1
0
0
1
1
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
|
For the quarter, Chimera's book value appreciated 12% to $11.91 per share.
We generated $0.33 of core earnings, and we paid $0.30 in common dividend, resulting in nearly 15% economic return for the period.
The rate of existing-home sales rose in September to 6.5 million homes, the highest level since 2006.
And the available inventory of existing home sales has decreased nearly 20% from the previous year to 1.5 million homes.
Since March, the Federal Reserve has increased its balance sheet by 75% to over $7 trillion, helping to provide low interest rates and ample liquidity to the mortgage market.
The average rate for 30-year mortgages was recently reported at 2.8%, the lowest rate on record, which dates back to 1971.
Additionally, fiscal stimulus from the federal government for COVID-19 relief has added over $3 trillion into the economy and has helped many mortgage borrowers through this difficult economic period.
As of quarter-end, nearly 90% of Chimera's investment portfolio was allocated to mortgage credit.
This quarter, Chimera completed three securitizations while committing to purchase $640 million of mortgage loans.
The 10-year treasury ended the quarter with a yield of 68 basis points, down from 1.92% at the start of 2020.
The overall magnitude of this rate movement has generated price appreciation in 10-year treasury notes of approximately 10 points since the beginning of the year.
During the third quarter, we acted on the strong price performance and selectively sold $659 million securities from our agency CMBS portfolio.
With the sale, we harvested approximately $65 million in gain and plan to reallocate capital into mortgage credit.
Our remaining agency CMBS holdings at quarter-end was $1.8 billion, comprising 10% of Chimera's total investment portfolio.
For the third quarter, Chimera closed three securitized transactions totaling a little over $1 billion.
In July, we issued CIM 2020-R5 with $338 million loans from our existing loan warehouse.
The underlying loans in the deal had a weighted average coupon of 4.98% and a weighted average loan age of 149 months.
The average loan size in the R5 transaction was $152,000 and had an average LTV of 70%.
The average FICO score for the borrowers was 678.
We sold $257 million senior securities from this deal and retained $81 million in subordinated notes and interest-only securities.
Our cost of investment-grade debt for CIM 2020-R5 was 2.05% with a 76% advance rate.
The deal had $362 million loans with a weighted average coupon of 3.76% and a weighted average loan age of six months.
The average loan size was $732,000 and had an average FICO of 766 and an average LTV of 67%.
This deal size was $335 million with a weighted average coupon of 4.31%.
It had an average loan size of $332,000.
The loans had an average FICO of 765 with an average LTV of 64%.
We invested $22 million in these transactions for our non-agency RMBS portfolio.
During the third quarter, we committed to purchasing over $400 million of seasoned reperforming loans.
For the year, we successfully purchased approximately $135 million in business purpose loans and ended the quarter with approximately $210 million on the balance sheet.
The average coupon on this portfolio was 8.57% with a weighted average LTV of 80%.
At quarter-end, we had $412 million loans on our mortgage warehouse for potential future securitizations and have ample liquidity to and opportunistically acquire new pools of loans.
Recourse leverage is materially lower on the year and currently stands at 1.3 times capital.
And as of September 30, Chimera has $5.8 billion of outstanding securitized debt in 16 separate deals that is either currently callable or will be callable through the end of 2021.
GAAP book value at the end of the third quarter was $11.91.
And GAAP net income for the third quarter was $349 million or $1.32 per share.
On a core basis, net income for the third quarter was $80 million or $0.33 per share.
Economic net interest income for the third quarter was $125 million.
For the third quarter, the yield on average interest-earning assets was 6%.
Our average cost of funds was 3.5%, and our net interest spread was 2.5%.
Total leverage for the third quarter was 3.7 to 1, while recourse leverage ended the quarter at 1.3 to 1.
Expenses for the third quarter, excluding servicing fees and transaction expenses, were $17 million, in line with last quarter.
We continue to closely monitor liquidity and have approximately $1 billion in cash and unencumbered assets as we look for new investments and financing options to support our portfolio and to optimize investment returns.
|
We generated $0.33 of core earnings, and we paid $0.30 in common dividend, resulting in nearly 15% economic return for the period.
And GAAP net income for the third quarter was $349 million or $1.32 per share.
On a core basis, net income for the third quarter was $80 million or $0.33 per share.
|
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
|
Earlier today, we reported the highest adjusted second quarter earnings in Company history at $11.12 per share, a 199% increase over last year, including the impact of the two recent equity offerings.
Record revenues of $6 billion were driven by robust consumer demand and an acceleration of acquisitions to produce strong operational performance across all business lines and channels.
During the quarter, total revenue grew 87% over 2019, while total gross profit increased to 125% compared to 2019.
On a same store basis, compared to 2019, we recorded a 20% increase in new vehicle revenues, 49% increase in used vehicle revenues, 39% increase in F&I income, and 3% increase in service body and parts revenues.
Reflecting back on the first year of our five-year plan, we are considerably ahead of schedule and have the required capital to carry us to and beyond $50 in earnings per share and $50 billion in revenue.
At $8 billion in added revenues since planned inception, we have acquired 40% of our targeted $20 billion in annualized revenues.
Despite the cost of the acquisition integration and Driveway's development and expansion, our SG&A as a percentage of gross profit was 55.7% during the quarter.
Our 50/50 plan, which is a base case, assumes mid to low 60% SG&A, though our management team is constructively focused on greater aspirations.
Our past few decades have yielded a $1 of earnings per share for every $1 billion in revenue.
We believe that there is significant potential in increasing profitability and constructively changing the calculus, so that $1 billion of revenue can produce more than $1 of EPS.
To follow on some thoughts on just how much more than $50 in earnings per share can be generated from $50 billion in revenue.
In the recently released Fortune 500, we jumped considerably to number 231.
We were number 12 in 10-year annual growth in revenues of 19.9%.
LAD was number two in 10-year annual growth in earnings per share with 43.7% growth, more than double what we achieved in revenues, demonstrating our ability to integrate and increase profitability.
And finally, we were number three in 10-year total return to shareholders, reflecting a 36.7% return rate, which speaks for the ability to transform and execute.
This growth continues as our current annual run rate is approximately $21 billion as compared to $12 billion in the base year of our plan.
In May, we raised $1.3 billion in equity and $500 million in net additional debt, and plan to deploy this over the next two to four quarters.
Together, we generated approximately $492 million of adjusted EBITDA in the second quarter.
Our unique high-growth strategy with a massive regenerating capital engine is speeding toward our goal of $50 billion in revenue and over $50 in EPS.
We can now market and deliver our 57,000 vehicle inventory to the entire country under a single brand name and negotiation-free experience.
We are on target to achieve an annual run rate of 15,000 Driveway shop and sell transactions in the month of December.
Driveway generated over 350,000 monthly unique visitors in June.
Driveway eclipsed the 500 unit milestone with 550 transactions in June, only six months after launch.
98% of our Driveway customers during our second quarter were incremental and have never done business with Lithia or Driveway before.
95% of our dealership network is actively participating in Driveway with reconditioning, logistics, transaction fulfillment, inventory procurement and last mile delivery.
We continue to build on our online reputation, with an average Google review score of 4.98 stars out of 5.
In addition, our Driveway Google Domain Authority score, which ranks online search, is now at 57, which is higher than all three used only e-commerce competitors, who have also been in operation for a significantly longer than Driveway.
Remember that over 80% of customers purchase a vehicle based on monthly payment, and this provides them upfront transparency and allows customers to focus their search.
While our entire inventory is available nationwide, we are currently reaching approximately 25% of the population with Driveway advertising that we are far from saturating these markets.
Today, our team of Driveway engineers, data scientists, procurement specialist, care center associates and Driveway Finance associate number over 300, and are growing rapidly to mirror the exponential growth in consumer demand.
For decades, we have demonstrated the ability to successfully purchase and integrate acquisitions with an over 80% success rate of exceeding our 15% return threshold and actual after tax returns averaging 25%.
During the quarter, we completed acquisitions, which are expected to generate $3.7 billion in annualized revenues, and year-to-date, we have acquired $4.4 billion.
We expanded our national footprint, entering the Detroit, Las Vegas and Jackson, Mississippi markets, substantially increasing our density and reach in North Central Region 3, Southwest Region 2 and Southeast Regions 6.
Despite a slightly more competitive environment, we continue to successfully target after-tax returns of 15% plus, investments of 15% to 30% of revenues, and three to seven times EBITDA.
Even with our pace being well ahead of schedule, we continue to replenish our more than $2 billion under LOI, and the more than $15 billion pipeline of potential acquisitions that we believe are priced to meet our return thresholds.
With our technology poised for rapid scalability across our existing and future network, we are positioned to lead Lithia & Driveway's progress toward $50 billion in revenue to produce more than $50 of EPS, the first leg of our journey.
As we live our mission of Growth Powered by People, we are once again humbled by our extraordinary team of almost 20,000 associates that, in the second quarter, more than doubled our previous earnings records.
Each day, our leaders are rising to the challenge of achieving or exceeding our 50/50 plan, evolving their skills, growing their teams and navigating the unprecedented operating environment experienced in the first half of 2021.
For the three months ended June 30, 2021, total same store sales increased 26% over 2019.
These increases were driven by a 20% increase in new vehicle sales, a 49% increase in used vehicle sales, a 39% increase in F&I revenue and the 3% increase in service body and parts revenues.
For the quarter, our new vehicle average selling price increased 13% and unit sales increased 6% over 2019.
Total gross profit per unit, including F&I, was $6,123, an increase of $2,463 per unit or 67%.
Excluding F&I, we are in $4,266 of gross profit per unit, a 10.1% margin.
For used vehicles, total gross profit per unit, including F&I, was $5,227, an increase of $1,658 or 46%.
Our used vehicle sales mix in the quarter was 19% certified, 60% core or vehicles three to seven years old, and 21% value auto or vehicles older than eight years.
With over 60% of the 40 million used vehicle sold in the U.S. being nine years and older, our continued strategy of selling deeper into the used vehicle age spectrum and our ability to procure the right scarce vehicles remain the catalyst for future success and growth of Lithia & Driveway.
In the quarter, our average used units per rooftop was 96 units, a strong push toward our goal of 100 units per rooftop that we raised in 2020.
We had 21,000 new vehicle units, a 23-day supply, and 36,000 used vehicle units, a 58-day supply.
Our 900 used vehicle procurement specialists have been working diligently to enable us to navigate the current demand environment, with their focus on procuring scarce high-demand used vehicles through the most profitable channels.
In the second quarter, only 14% of our used vehicles were acquired through the auction and over 50% of our inventory came from passive channels only available to new car dealers.
New and used vehicle sales are supported by our experienced financing specialists that help match the complexity of our consumers' financial position with lending options at over 180 financial institutions, including Driveway Financial.
In the quarter, our finance and insurance business line continued to show a substantial improvement, averaging $1,818 per retail unit compared to $1,458 per unit in 2019, an increase of $360.
We continue to monitor this through the growth of our total gross profit per unit, which was $5,778 this quarter, an increase of $2,118 per unit or 58% over 2019.
Our stores remain focused on the highest margin business lines, service body and parts, which increased 3.4% in revenue and 11% in gross profit, as consumers returned to work and travelled the roads in the comfort and safety of their vehicle.
The recovery was driven by an 11% increase in customer pay, and a 6% increase in wholesale parts, offset by a 10% decrease in warranty and an 8% decrease in body shop revenue.
As a reminder, our service body and parts business see over 5 million paying consumers and brand impressions annually, which generate over 50% margins and remain a huge competitive advantage for Lithia & Driveway.
Same-store SG&A to gross profit was 56.4% in the quarter, an improvement of 1,440 basis points over 2019.
While we expect SG&A to gross profit to normalize as new vehicle supply and gross margins bounce back to historical levels, we continue to benefit from the permanent headcount reductions of 20% or almost 300 basis points of SG&A, and other efficiency measures implemented last year.
Given these improvements to our model and the realization that our highest performing stores consistently maintain in SG&A to gross profit metric in the mid 50%s pre-pandemic, we believe that we are well on our way to exceeding our five-year plan and look to improve beyond our top quartile.
Driveway's financing solutions, which include new vehicle leasing and captive OEM finance options, now represent 29 lenders that are fully integrated with Driveway technology and are available to consumers with approvals they can occur in a matter of seconds.
We anticipate expanding our Driveway support teams 10 times by the end of 2022 to support expected demand.
During the quarter, LAD's fintech arm, Driveway Finance Corporation, originated over 1,500 loans per month, resulting in a 400% increase in business over 2020.
At quarter end, our loan portfolio exceeded $370 million.
We continue to see Driveway's fintech platform elevating the experience for consumers and our goal over the next five years is to scale Driveway Finance to capture 20% of all vehicle sales transactions.
We are focused on our five-year plan to achieve $50 billion in revenue and exceed $50 of earnings per share.
For the quarter, we generated over $492 million of adjusted EBITDA, an increase of 284% compared to 2019, and $282 million of free cash flow, defined as adjusted EBITDA plus stock-based compensation, less the following items paid in cash: interest, income taxes, dividends and capital expenditures.
As a result, we ended the quarter with $2.6 billion in cash and available credit.
In addition, our unfinanced real estate could provide additional liquidity of approximately $655 million for a combined nearly $3.3 billion of liquidity.
As of June 30th, we had $4.3 billion outstanding in debt, of which $1.3 billion was floor plan, used vehicle and service loaner financing.
The remaining portion of our debt is primarily related to senior notes and financed real estate, as we own over 85% of our physical network.
The current environment offers attractive returns on lending, and to expand our reach, last month, we increased the financing available on our ABS warehouse line from $150 million to $300 million with the ability to expand the line to $400 million.
On adjusted, our total debt to EBITDA is overstated at 3.37 times.
Adjusted to treat these items as an operating expense, our net debt to adjusted EBITDA is 1.25 times.
We target 65% investment in acquisitions, 25% internal investment, including capital expenditures, modernization and diversification, and 10% in shareholder returns in the form of dividends and share repurchases.
Combined with a robust balance sheet, we are well positioned to be the leader in consolidating this massive industry, all while progressing toward our five-year plan of achieving $50 billion in revenue and exceeding $50 in earnings per share.
|
Earlier today, we reported the highest adjusted second quarter earnings in Company history at $11.12 per share, a 199% increase over last year, including the impact of the two recent equity offerings.
|
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Today, Greenbrier announced that effective March 1, our founder, Bill Furman will transition to the role of Executive Chairman and the appointment of Lorie Tekorius as Greenbrier's next CEO and President.
It was also Greenbrier's third consecutive quarter with a book-to-bill ratio over 1 leading to a book-to-bill of 1.33 for fiscal 2021.
Safety, availability of labor and supply chain constraints are key priorities for Greenbrier to manage as production increases.
In the quarter, Greenbrier delivered 4500 railcars, including 400 units in Brazil.
Q4 deliveries increased 36% from Q3, reflecting manufacturing successful ramping of production over the last six months.
And while hiring is currently challenging in the US, we're fortunate to have a strong and talented labor pool in Mexico, allowing us to add over 500 employees during the quarter and over the last nine months, we've added nearly 2000 employees in our manufacturing business.
Nearly 70 million of railcars were contributed into GBX Leasing in Q4, bringing the total market value of assets in fiscal 2021 to almost $200 million.
Subsequent to year end, we acquired a portfolio of 3600 railcars, a portion of which will also be held in GBX Leasing.
Our GBX Leasing fleet is valued at $350 million at the end of September and continues to gain momentum.
Our capital markets team syndicated 1000 units in the quarter and continues to generate liquidity and profitability.
In Greenbrier's fourth quarter, we had a book-to-bill of 1.5, reflecting deliveries of 4500 units and orders of 6700 units.
For fiscal '21, Greenbrier generated orders of 17,200 units and deliveries of 13,000 units, which equates to a book-to-bill of 1.3.
International order activity accounted for approximately 30% of this new railcar order activity.
New railcar backlog grew by 2000 units or nearly $400 million of value to 26,600 units with an estimated market value of $2.8 billion.
Greenbrier's lease fleet utilization ended on August 21 at roughly 94% and has grown to over 96% year to date.
Highlights for the fourth quarter include revenue of $599.2 million, an increase of over 33% from Q3.
Aggregate gross margins of 16.4%, driven by stronger operating performance as a result of increased production rates, syndication activity and lease modification fees.
Selling and administrative expense of $55.4 million increased sequentially as a result of higher employee-related costs.
Adjusted net earnings attributable to Greenbrier of $32.9 million or $0.98 per share excludes $1.2 million or $0.03 per share of debt extinguishment losses.
EBITDA of $70.4 million or 11.8% of revenue.
The effective tax rate in the quarter was a benefit of 14.5%.
In the quarter, we recognized $1.6 million of gross costs specifically related to COVID-19 employee and facility safety.
In 2021, we spent nearly $10 million, ensuring our employees and facilities could operate safely.
Adjusted net earnings for the year attributable to Greenbrier was $37.2 million or $1.10 per share on revenue of $1.7 billion and excludes $4.7 million net of tax or $0.14 per share of debt extinguishment loses.
EBITDA for the year was $145.2 million or 8.3% of revenue.
Greenbrier has a strong balance sheet and with liquidity of $835 million comprising cash of $647 million and available borrowings of $188 million, we are well positioned to navigate the market disruptions that we expect to persist into calendar 2022.
You may have noticed the tax receivable has grown to a $112 million as of August 31.
In the fourth quarter, Greenbrier completed almost $1.1 billion of debt refinancing, extending the maturities of our domestic revolving facility and two term loans into 2026 and 2027.
In addition to the GBX Leasing, railcar and warehouse credit facility, Greenbrier's Legacy lease fleet is partially levered with a $200 million six year term loan while the remaining fleet assets serve as collateral in Greenbrier's $600 million US revolving facility.
Also in the quarter, we repurchased an additional $20 million of senior convertible notes due in 2024 and maybe from time to time retire additional outstanding 2024 notes in privately negotiated transactions within the limitations of applicable securities regulations.
Overall in fiscal 2021, Greenbrier completed $1.8 billion of financing activity including $1.5 billion of debt refinancing and the creation of the $300 million GBX Leasing warehouse credit facilities.
Today, we announced a dividend of $0.27 per share, which is our 30th consecutive dividend.
Based on current business trends and production schedules, we expect Greenbrier's fiscal 2022 to reflect deliveries of 16,000 to 18,000 units, which include approximately 1,500 units from Greenbrier Maxion in Brazil.
Selling and administrative expenses are expected to be approximately $200 million to $210 million.
Capital expenditures of approximately $275 million in leasing and services, $55 million in manufacturing and $10 million in wheels repair and parts.
Production reflects more competitive pricing taken during the pandemic 9 to 12 months ago.
We expect deliveries to be back half weighted with a 40% front half, 60% back half left [Phonetic].
In fiscal 2022, approximately 1400 units are expected to be built and capitalized into our lease fleet.
|
Today, Greenbrier announced that effective March 1, our founder, Bill Furman will transition to the role of Executive Chairman and the appointment of Lorie Tekorius as Greenbrier's next CEO and President.
Safety, availability of labor and supply chain constraints are key priorities for Greenbrier to manage as production increases.
Adjusted net earnings attributable to Greenbrier of $32.9 million or $0.98 per share excludes $1.2 million or $0.03 per share of debt extinguishment losses.
In addition to the GBX Leasing, railcar and warehouse credit facility, Greenbrier's Legacy lease fleet is partially levered with a $200 million six year term loan while the remaining fleet assets serve as collateral in Greenbrier's $600 million US revolving facility.
|
1
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
|
For the third quarter, adjusted earnings per diluted share, excluding foreign currency impact increased 10.1% for the quarter and 20.1% for the year.
Looking at the operations in Japan in the third quarter, Aflac Japan generated solid overall financial results as reflected in the profit margin of 26.3%, which was above the outlook range provided at our financial analyst briefing for 2020.
As Max will explain in a few moments, Aflac Japan has reported very strong premium persistency of 94.5%.
Sales for the first nine months of this year were approximately 66% of 2019 level.
We saw a strong profit margin of 22.2%.
Aflac U.S. also continued to have strong premium persistency of nearly 80%.
Sales increased 35% for the quarter and are at approximately 78% of sales for the first nine months of 2019.
Within the challenging small business and labor markets, we continue to make investments in developments of traditional independent sales agents that make up about 53% of our sales as of the third quarter of 2021.
Excluding our acquired platforms, group sales have generated a year-to-date sales increase of 14% over the same period for 2019.
The precise impact is difficult to calculate, but the practical implications include reduced face-to-face consultations, limited access to on-site workers and payroll solicitation, reduced foot traffic to the roughly 400 owned and affiliated retail shops that we sell through and restricted travel between prefectures, which further constrains sales professionals.
When looking at claims experience through the third quarter and since inception of the virus, Aflac Japan's COVID impact has totaled approximately 31,000 claimants with incurred claims of JPY5.6 billion.
Our medical product EVER Prime continues to do well with medical sales up roughly 14% in the quarter and 36% year-to-date over the same period in 2020.
Our market share has improved, but we're still at roughly 85% of the medical sales enjoyed in 2019, which was also a medical product refresh year.
Since our late September launch, we have sold nearly 10,000 policies.
As of the end of the third quarter, Aflac U.S. COVID claimants since inception of the virus, has totaled approximately 79,000 with incurred claims of $135 million.
This quarter, we processed over 1,600 cases, up 30% over the second quarter, as we roll out training and development to agents and launch in additional states.
We are focused on small- and medium-sized businesses with sold cases averaging around 95 employees.
Our premier life and disability team successfully renewed 100% of their current accounts, a testimony to their high-quality service model.
With respect to our e-commerce initiative, Aflac Direct, we currently offer products in 46 states.
We are actively building out a licensed call center and currently have 14 licensed agents.
In the third quarter, these three platforms accounted for roughly 13% of sales and are expected to build as a percentage of sales and earned premium in the coming years.
Year-to-date, we have processed over 38,000 online applications with September being our largest month since launching the capability.
For the third quarter, adjusted earnings per share increased 10.1% to $1.53, with a $0.02 negative impact from foreign exchange in the quarter.
Variable investment income ran $0.11 above our long-term return expectations.
Adjusted book value per share, including foreign currency translation gains and losses, grew 10.1%.
And the adjusted ROE, excluding the foreign currency impact, was a strong 16.2%, a significant spread to our cost of capital.
Total earned premium for the quarter declined 4%, reflecting first sector policies paid-up impacts, while earned premium for our third sector products was down 2.6% due to recent low sales volumes.
Policy count in-force, which we view as a better measure of our overall business growth declined 1.8%.
Japan's total benefit ratio came in at 66.1% for the quarter, down 520 basis points year-over-year, and the third sector benefit ratio was 55%, down 670 basis points year-over-year.
Adjusting for greater than normal IBNR releases and in-period experience, we estimate that our normalized benefit ratio for the third quarter to be 68.7%.
Persistency remained strong with a rate of 94.5%, down 50 basis points year-over-year.
Our expense ratio in Japan was 21.4%, down 30 basis points year-over-year.
Adjusted net investment income increased 19.7% in yen terms, primarily driven by favorable returns on our growing private equity portfolio and lower hedge costs, partially offset by lower reinvestment yield on our fixed rate portfolio.
The pre-tax margin for Japan in the quarter was 26.3%, up 690 basis points year-over-year, a very good result for the quarter.
This quarter's strong financial results lead us to expect the full year benefit ratio for Japan to be below the 3-year guidance range of 68.5% to 71% given at FAB.
And the pre-tax margin to be above the 20.5% to 22.5% range given at -- for the full year 2021.
Net earned premium was down 1%, as lower sales results during the pandemic continue to have an impact on our earned premium.
Persistency improved 110 basis points to 79.9%, 70 basis points of which are from lower sales, as first year lapse rates are roughly twice the level of in-force lapse rates.
In addition, there still remains about 40 basis points of positive impact from emergency orders.
Our total benefit ratio in the U.S. came in lower than expected at 45.1% or 320 basis points lower than Q3 2020, which itself was heavily impacted by the initial pandemic.
This quarter, they amounted to a 3.5 percentage points impact on the benefit ratio, which leads to an underlying benefit ratio, excluding IBNR releases of 48.6%.
For the full year, we now expect our benefit ratio to be in the range of 43% to 46% versus original guidance of 48% to 51%.
Our expense ratio in the U.S. was 38.9%, up 170 basis points year-over-year, but with a lot of moving parts.
Higher advertising spend increased the expense ratio by 40 basis points.
Our continued build-out of growth initiatives, group life and disability, network dental and vision and direct-to-consumer contributed to a 260 basis points increase to the ratio when isolating these investments.
In the quarter, we also incurred $7.8 million of integration expenses, not included in adjusted earnings associated with recent acquisitions.
Adjusted net investment income in the U.S. was up 9.1%, mainly driven by favorable variable investment income in the quarter.
Profitability in the U.S. segment remained strong with a pre-tax margin of 22.2%, with a low benefit ratio as the core driver.
Initial expectations were for us to be toward the low end of 16% to 19%.
In our Corporate segment, we recorded a pre-tax loss of $41 million, as adjusted net investment income was down $12 million versus last year due to low interest rates at the short end of the yield curve and change in value of certain tax credit investments.
The net impact to our bottom line was a positive $5 million in the quarter.
Our capital position remains strong, and we ended the quarter with an SMR in Japan of north of 900% and an RBC north of 600% in Aflac Columbus.
Unencumbered holding company liquidity stood at $4.2 billion, $1.8 billion above our minimum balance.
Leverage, which includes the sustainability bond issued earlier this year, remains at a comfortable 22.6% in the middle of our leverage corridor of 20% to 25%.
In the quarter, we repurchased $525 million of our own stock and paid dividends of $220 million, offering good relative IRR on these capital deployments.
|
For the third quarter, adjusted earnings per share increased 10.1% to $1.53, with a $0.02 negative impact from foreign exchange in the quarter.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
First, I want to discuss last week's Northeast, which impacted approximately 525,000 customers across our service territory.
Our Eastern Massachusetts customers sustained the greatest damage with more than 450,000 customers impacted.
That's over 35% of Eversource's customers in Eastern Massachusetts.
We have 9,300 dedicated employees, all focused on providing the best possible experience for our customers.
I believe that's critical for us to be out front, visible, transparent and collaborative during these major events, something that has been difficult to do as we all work in a remote pandemic restricted environment for the last 18 months.
Eversource is fully committed to providing each and every one of our 4.3 million electric, natural gas and water customers across New England with exceptional service.
We continue to expect commercial operation of the 12 turbines, 130-megawatt project by the end of 2023.
Finally, our largest project, Sunrise Wind, which will supply 924 megawatts to New York.
The Biden administration continues to show significant support for offshore wind in both words and actions, targeting 30,000 megawatts of offshore turbines by 2030.
They can hold at least 4,000 megawatts of offshore wind turbines, far more than the approximately 760 megawatts we currently have under contract.
We did not bid into Massachusetts September RFP for up to 1,600 megawatts of offshore wind.
In Connecticut, we are partnering with the state on more than $200 million upgrade of the New London State Pier.
Onshore construction is underway, which you can see from either I-95 or Amtrak's nearby Boston to New York line.
Our GAAP earnings were $0.82 per share for the quarter, including the $0.19 charge associated with the Connecticut electric rate settlement and the $0.01 charge relating to our integration of Eversource gas of Massachusetts.
Our electric transmission business earned $0.40 per share in the third quarter of 2021 compared with earnings of $0.36 in the third quarter of last year, reflecting a higher level of necessary investment in our transmission facilities.
Our electric distribution business, excluding charges related to the Connecticut rate settlement, earned $0.62 per share in the third quarter of 2021 compared with earnings of $0.60 in the third quarter of 2020.
Storm-related expenses remain a headwind for us, costing us $0.01 a share in the third quarter of 2021 compared to the same period in 2020 and a total of $0.05 a share more in 2021 than last year on a year-to-date basis.
Our natural gas distribution business lost $0.06 per share in the third quarter of 2021 compared with a loss of $0.04 in the third quarter of 2020.
Given the seasonal nature of customer usage, natural gas utilities tend to record losses over the summer months, our natural gas segment now -- our natural gas segment loss is now about 50% larger as a result of the acquisition of Columbia Gas of Massachusetts assets back in last October.
So Eversource Gas of Massachusetts lost about $0.03 per share in the quarter.
Just to some investors underestimated the $0.14 per share positive contribution from EGMA in the first quarter.
As I said, EGMA lost $0.03 in the quarter, and it was not part of the Eversource family in the third quarter of 2020.
Our water distribution business, Aquarion, earned $0.05 per share in the third quarter of 2021 compared with earnings of $0.07 in the third quarter of 2020.
The $17.5 million that we earned at our water segment in the third quarter of 2021 is more on -- a more normalized level for that segment.
Our parent and other earned $0.01 per share in the third quarter of 2021 compared with earnings of $0.03 in the third quarter of 2020.
Our consolidated rate was 24.8% in the third quarter of 2021 compared with 23.7% in the third quarter of 2020.
You can see that we have reiterated the $3.81 to $3.93 earnings per share guidance that we issued in February.
That range excludes the $0.25 per share of charges related to our Connecticut settlement and storm-related bill credits that we recognized in the first quarter of this year as well as the transition costs related to the integration of the former Columbia Gas of Massachusetts assets into the Eversource system.
Also, we project long-term earnings per share growth in the upper half of the range of 5% to 7% through 2025.
That growth is largely driven by our $17 billion five-year capital program and continued strong operational effectiveness throughout the business.
And through September 30, our capital expenditures totaled $2.3 billion.
The settlement calls for $65 million in rate credits to CL&P customers over the course of December of 2021 in January of 2022.
And that's about -- in total, $35 per customer over the two months for the typical residential customer.
It provides another $10 million of shareholder pay benefits to customers who are most in need of help with their energy bills.
Further, as part of the settlement, we will withdraw our superior court appeal of the $28.4 million total storm-related credits that customers first saw in their bills in September of 2021.
As prior of the settlement, the 90 basis point indefinite reduction of CL&P's distribution ROE will not be implemented.
Additionally, the current 9.25% ROE and capital structure will remain in effect.
This will avoid an appeal of the interim rate reduction and will withdraw the pending appeal of the 90 basis point reduction.
Since CL&P's last distribution rate case was effective in May of 2018, the actual -- the company's actual ROEs have generally ranged between 8.6% and 9%, with the latest reported quarter at 8.6%.
We'll continue to provide superior service to our nearly 1.3 million CL&P customers will also be effectively managing our operations.
The program is planned to launch January one of 2022, and will support the state's target of having at least 125,000 electric vehicles on the road by the end of 2025.
To date, we'll need to replace more than 800,000 meters over the next -- to do that, we'll have to replace over 800,000 meters over the next several years.
Altogether, moving CL&P fully to AMI would involve a capital investment of nearly $500 million we estimate in meters and communication related technologies.
We've submitted nearly $200 million grid modernization plan to regulators for the 2022 through 2025 period.
It would involve about $575 million of capital investments over multi-years from 2022 through 2027.
The extension would provide investments of nearly $200 million over the next four years, with about $68 million being capital investments.
Although, these facilities provide us with -- altogether, these facilities provide us with storage connected to our distribution system of nearly 6.5 billion cubic feet.
And as of now, we expect the commodity portion of natural gas bills to be approximately 20% higher than last winter's extremely low levels due to COVID, prices were pretty low last year and well below levels we experienced a decade ago after Hurricane Katrina struck the Gulf of Mexico and Louisiana.
Overall, including the distribution charge, we expect natural gas heating bills will be up about 15% on average.
That's about $30 a month to the average for a typical heating customer compared to last winter.
While a 15% increase is significant it is far less than the -- more than 30% increase that propane heating customers are facing and really a 60% increase that's out there for home heating oil as the alternatives for customers.
Between 60% and 65% of our electric load is bought by customers directly from third-party suppliers.
For the 35% to 40% of our load that continues to buy through our franchises, Connecticut Light & Power, NSTAR Electric and Public Service in New Hampshire, this is mostly residential load and customers will see higher prices, but they are partially protected by the fact that we contract for power in multiple tranches throughout the year.
Due to wintertime natural gas constraints in New England, our customers normally see $0.015 to $0.02 per kilowatt hour increase in their retail electric prices in January, an increase that usually reverses as we move into the summer.
This January customers in Massachusetts and Connecticut elected to experience an additional $0.02 to $0.03 increase due to higher gas prices driving power production.
This would be an additional $20, $25 per month for a typical residential customer compared with last winter.
And we've redoubled our efforts again to urge customers to take advantage of the more than $500 million that we have available on energy efficiency initiatives that we provide customers throughout our states each year.
|
Our GAAP earnings were $0.82 per share for the quarter, including the $0.19 charge associated with the Connecticut electric rate settlement and the $0.01 charge relating to our integration of Eversource gas of Massachusetts.
You can see that we have reiterated the $3.81 to $3.93 earnings per share guidance that we issued in February.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
With the recent events associated with the COVID-19 outbreak that no longer seems as relevant.
Our direct businesses which are 70% of our sales were strong with positive comps in all quarters of the year by brand and on a consolidated basis.
Importantly, our e-commerce business led the charge with 10% year-over-year growth and 11% comp and now represents 23% of sales.
At the same time, our wholesale sales declined in 2019 as many of those retailers continued to face strategic challenges with sales to department stores representing only 11% of our consolidated revenue.
Our adjusted earnings of $4.32 per share, which were flat with fiscal 2018 included the negative impact of increased tariffs as well as an increase and our effective tax rate, importantly as we ended the fiscal year with very strong liquidity, including $53 million of cash and no borrowings under our $325 million asset-based credit facility which leads us to the topic of the day.
As I mentioned earlier, we entered 2020 with over $50 million in cash and an undrawn $325 million credit facility.
To further bolster our cash concession and maintain our high level of liquidity, we have drawn down $200 million from the facility.
One of the largest is employment costs which were approximately $260 million in fiscal 2019.
We are also focusing efforts, including partnering with our landlords as appropriate on mitigating our occupancy costs which were over $100 million last year.
Marketing expense, which was over $50 million last year is being addressed in phases.
Also other variable costs such as credit card transaction fees, royalties on licensed brands, sales commissions, packaging in the supplies were approximately $50 million in fiscal 2019.
All capital expenditures are being reevaluated with many, including new store openings and remodels, as well as certain IT projects being deferred in this uncertain environment and our Board of Directors reduced our quarterly dividend from $0.37 a share to $0.25 per share.
|
With the recent events associated with the COVID-19 outbreak that no longer seems as relevant.
As I mentioned earlier, we entered 2020 with over $50 million in cash and an undrawn $325 million credit facility.
All capital expenditures are being reevaluated with many, including new store openings and remodels, as well as certain IT projects being deferred in this uncertain environment and our Board of Directors reduced our quarterly dividend from $0.37 a share to $0.25 per share.
|
1
0
0
0
0
1
0
0
0
0
0
1
|
Adjusted earnings per diluted share, excluding foreign currency impact, increased 24.2% for the quarter and 24.5% for the year.
At the same time, sales improved year-over-year for the first time during the pandemic in the second quarter in both the United States and Japan.
Looking at our operations in Japan, in the second quarter, Aflac Japan generated solid financial growth results as reflected in its profit margin of 26.5%.
Aflac Japan also reported strong premium persistency of 94.7%.
Sales improved year-over-year, generating an increase of 38.4% for the quarter and 15.7% for the first six months.
While sales in the first half of 2021 are at approximately 65% of 2019 levels, we continue to navigate evolving pandemic conditions in Japan.
Turning to Aflac U.S., we saw a strong profit margin of 24.4 -- 25.4% and very strong premium persistency of 80.1%.
As a result of softer sales a year earlier and more face-to-face opportunities, sales increased 64.1% for the quarter and are at a 73% of the first half of the 2019 levels.
Medical product sales for the first half of the year are up roughly 48% over the same period in 2020 and have approached pre-pandemic levels down only 4% from the 2019 period.
In the second quarter, we have registered close to 600 agencies with SUDACHI and issued about 230 policies.
In the second quarter, we have processed over 14,000 online applications as compared to nearly 8,000 in the first quarter.
On Japan Post, proposal activity has increased month-to-month as sales training and promotion permeates the 20,000 branches that sell our insurance.
Through the month of June, Aflac Japan has conducted over 35,000 training sessions with Japan Post sales agents nationwide, along with providing contact information on nearly 700,000 existing cancer policyholders to inform on the latest coverage advantages.
Individual agent recruiting remains under pressure, and we are running at 70% of weekly producers we enjoyed pre-pandemic.
Our Network Dental product is approved in 43 states and Vision in 42 states, with more states coming online later in the year.
We are completing national training programs and have about 50% of trained agents who have quoted on our new dental and vision product offerings.
It's early, however, we continue to see our volume building each month, and over 50% of our dental and vision cases include voluntary benefit sales.
With respect to our e-commerce initiative, Aflac Direct, we offer critical illness, accident and cancer and are now approved in 45 states, including California.
Our digital platform overall is experiencing a 16% conversion rate on qualified leads and generally consistent with many digital D2C insurance platforms.
Through six months in 2021, these three platforms, new platforms, have combined for 5% of sales as they are in the early building and development stages.
We continue to forecast a strong second half based on increased activity and expect these three growth initiatives will contribute upwards of 15% to sales in the second half of 2021.
Aflac has made a $2 billion multiyear general account commitment to launch a new debt platform focused on investing in the senior secured debt of sustainable infrastructure projects.
Aflac will hold a 24.9% minority interest in a newly created entity Denham Sustainable Infrastructure.
We are also making a $100 million commitment to Denham Equity Fund, focused on sustainable infrastructure investments.
For the second quarter, adjusted earnings per share increased 24.2% to $1.59.
This strong performance for the quarter was largely driven by lower claims utilization due to the pandemic, especially in the U.S. In addition, variable investment income ran $112 million above our long-term return expectations.
Adjusted book value per share, including foreign currency translation gains and losses, grew 20.5%.
And the adjusted ROE, excluding foreign currency impact, was a strong 17%, which is a significant spread to our cost of capital.
Starting with our Japan segment, total earned premium for the quarter declined 3.8%, reflecting the impact of first sector policies reaching paid-up status, while earned premium for our third sector products was down 2.3% due to recent low sales volumes.
Japan's total benefit ratio came in at 66.9% for the quarter, down 290 basis points year-over-year.
And the third sector benefit ratio was 56.5%, down 305 basis points year-over-year.
Persistency was down 10 basis points, yet remained strong at 94.7%.
Our adjusted expense ratio in Japan was 20.8%, up 80 basis points year-over-year.
Adjusted net investment income increased 27.4% in yen terms, primarily driven by favorable returns on our growing alternatives portfolio and lower hedge costs, partially offset by lower reinvestment yield on our fixed rate portfolio.
The pre-tax margin for Japan in the quarter was 26.5%, up 450 basis points year-over-year, which was a very favorable result for the quarter.
This quarter's strong financial results leads us to expect the full year benefit ratio for Japan to be at the lower end of the 3-year guidance range of 68.5% to 71% given at Fab.
And the pre-tax margin to be at the higher end of the 20.5% to 22.5% range.
Turning to U.S. results, net earned premium was down 3.4% due to weaker sales results.
Persistency improved 180 basis points to 80.1%.
63 basis points of the elevated persistency in both the second quarter of this year and the prior year can be explained by emergency orders.
80 basis points of improved persistency in the quarter is attributed to lower sales, as first year lapse rates are roughly twice total in-force lapse rates.
Another 30 basis points of improved persistency is due to conservation efforts, and the remainder largely comes from improved experience.
Our total benefit ratio came in lower than expected at 43.5% or 80 basis points lower than Q2 2020, which, itself, was heavily impacted by the initial pandemic.
This quarter, IBNR releases amounted to 5.6 percentage points impact on the benefit ratio, which leads to an underlying benefit ratio, excluding IBNR releases, of 49.1%.
For the full year, we now expect our benefit ratio to be in the range of 45% to 48% versus our original guidance of 48% to 51%.
Our expense ratio in the U.S. was 36.9%, up 160 basis points year-over-year but with a lot of moving parts.
Higher advertising spend increased the expense ratio by 60 basis points.
Our continued buildout of growth initiatives, group life and disability, network dental and vision and direct to consumer contributed to a 170 basis point increase to the ratio.
In the quarter, we also incurred $5.5 million of integration and transition expenses not included in adjusted earnings associated with recent acquisitions.
Adjusted net investment income in the U.S. was up 9.9%, mainly driven by favorable variable investment income in the quarter.
Profitability in the U.S. segment was very strong with a pre-tax margin of 25.4%, with a low benefit ratio as the core driver.
Initial expectations were for us to be toward the low end of 16% to 19%.
In our Corporate segment, we recorded a pre-tax loss of $76 million, as adjusted net investment income was $45 million lower than last year due to low interest rates at the short end of the yield curve and amortization of certain tax credit investments, which amounted to $30 million this quarter held at the corporate level.
Our capital position remains strong, and we ended the quarter with an SMR above 900% in Japan and an RBC of approximately 600% in Aflac Columbus.
Unencumbered holding company liquidity stood at $4.4 billion, which was $2 billion above our minimum balance, excluding the $400 million proceeds from the sustainability bond that we issued in March that reinforced our ESG initiatives and believe that sustainable investments are also good long-term investments.
Leverage, which includes our sustainability bond, remains at a comfortable 22.8%, in the middle of our leverage corridor of 20% to 25%.
In the quarter, we repurchased $500 million of our own stock and paid dividends of $223 million, offering good relative IRR on these capital deployments.
|
At the same time, sales improved year-over-year for the first time during the pandemic in the second quarter in both the United States and Japan.
For the second quarter, adjusted earnings per share increased 24.2% to $1.59.
This quarter, IBNR releases amounted to 5.6 percentage points impact on the benefit ratio, which leads to an underlying benefit ratio, excluding IBNR releases, of 49.1%.
|
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Backlog at the end of the quarter was a record $15.8 billion, which we believe reflects the continued advancement of our long-term growth strategies.
The recognition that the country's infrastructure needs to be modernized to support economic growth improved safety and reliability and for a cleaner environment is evidenced by the Biden administration's recently proposed $2 trillion infrastructure plan.
Additionally, we continue to believe, we can achieve at least $1 billion in annual revenue with double-digit operating income margins in the medium term.
We believe this demonstrates the strength and sustainability of our business and long-term strategy, favorable end market trends, our ability to safely execute, and our strong competitive position in the marketplace.
Today we announced first quarter 2021 revenues of $2.7 billion.
Net income attributable to common stock was $90 million or $0.62 per diluted share and adjusted diluted earnings per share a non-GAAP measure was $0.83.
Our electric power revenues were $2.1 billion a record for the first quarter and a 17% increase when compared to the first quarter of 2020.
This increase was driven by continued growth in base business activities as well as contributions from larger transmission projects under way in Canada and revenues from acquired businesses of approximately $70 million.
Also revenues associated with emergency restoration services attributable to winter storm response efforts were approximately $80 million a first quarter record.
Electric segment margins in 1Q 2021 were 9.7% versus 7.3% in 1Q 2020.
Operating margins also benefited from approximately $5 million of income associated with our LUMA joint venture.
Underground Utility and Infrastructure segment revenues were $643 million for the quarter, 35% lower than 1Q 2020 due primarily due to reduced revenues from our industrial operations and a reduction in contributions from larger pipeline projects.
Despite the COVID-related headwinds, the segment delivered margins of 1.4%.
And although 170 basis points lower than 1Q 2020 primarily due to the reduced revenues, the results exceeded our original expectations for 1Q led by execution across much of our base business activity including our gas distribution and industrial services.
Our total backlog was a record $15.8 billion at the end of the first quarter with 12-month backlog of $8.9 billion representing solid increases when compared to year end as well as the first quarter of 2020.
For the first quarter of 2021, we generated free cash flow, a non-GAAP measure of $49 million, $115 million lower than 1Q 2020, however 1Q 2020 included the collection of $82 million of insurance proceeds associated with the settlement of two pipeline project claims.
Day sales outstanding or DSO measured 89 days for the first quarter, an increase of four days compared to the first quarter of 2020 and an increase of six days compared to December 31, 2020.
We had approximately $200 million of cash at the end of the quarter with total liquidity of approximately $2.1 billion and a debt-to-EBITDA ratio as calculated under our credit agreement of approximately 1.3 times.
Based on the Electric segment's strong first quarter and continued confidence in our ability to execute on the opportunities across the segment, we've increased the low end of our full year expectations for segment revenues resulting in a range between $8.4 billion and $8.5 billion for 2021.
Similarly, we are increasing the low end of our full year margin range for the segment with 2021 operating margins now expected to range between 10.2% and 10.9%.
Accordingly, we are reiterating our original full year guidance for the segment with revenues expected to range between $3.65 billion and $3.85 billion and segment margins ranging between 5.5% and 6%.
These segment operating ranges support our increased expectations for 2021 annual revenues of between $12.05 billion to $12.35 billion and adjusted EBITDA, a non-GAAP measure of between $1.1 billion and $1.2 billion.
The midpoint of the range represents 10% growth when compared to 2020's record adjusted EBITDA.
We now expect our full year tax rate to range between 25.25% and 25.75%.
As a result, our increased expectation for full year diluted earnings per share attributable to common stock is now between $3.25 and $3.69, and our increased expectation for adjusted diluted earnings per share attributable to common stock a non-GAAP measure is now between $4.12 and $4.57.
We are maintaining our free cash flow guidance for the year, expecting it to range between $400 million and $600 million.
|
We believe this demonstrates the strength and sustainability of our business and long-term strategy, favorable end market trends, our ability to safely execute, and our strong competitive position in the marketplace.
Today we announced first quarter 2021 revenues of $2.7 billion.
Net income attributable to common stock was $90 million or $0.62 per diluted share and adjusted diluted earnings per share a non-GAAP measure was $0.83.
These segment operating ranges support our increased expectations for 2021 annual revenues of between $12.05 billion to $12.35 billion and adjusted EBITDA, a non-GAAP measure of between $1.1 billion and $1.2 billion.
As a result, our increased expectation for full year diluted earnings per share attributable to common stock is now between $3.25 and $3.69, and our increased expectation for adjusted diluted earnings per share attributable to common stock a non-GAAP measure is now between $4.12 and $4.57.
|
0
0
0
1
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
1
0
|
The D.R. Horton team delivered an outstanding first quarter, highlighted by a 48% increase in earnings to $3.17 per diluted share.
Our 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%.
Our 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%.
After 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.
Earnings 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.
Net income for the quarter increased 44% to $1.1 billion compared to $792 million.
Our 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.
Our 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%.
Our 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.
A 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.
Our average number of active selling communities decreased 3% from the prior-year quarter and was up 3% sequentially.
Our average sales price on net sales orders in the first quarter was $383,600, up 22% from the prior-year quarter.
The cancellation rate for the first quarter was 15%, down from 18% in the prior-year quarter.
Our 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.
Our gross profit margin on home sales revenues in the first quarter was 27.4%, up 50 basis points sequentially from the September quarter.
On 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%.
In 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.
We 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.
We ended the quarter with 54,800 homes in inventory, up 30% from a year ago.
25,600 of our total homes at December 31 were unsold, of which only 1,000 were completed.
At December 31, our homebuilding lot position consisted of approximately 550,000 lots, of which 24% were owned and 76% were controlled through purchase contracts.
23% of our total owned lots are finished and at least 47% of our controlled lots are or will be finished when we purchase them.
Our 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.
Forestar, our majority-owned residential lot manufacturer, operates in 55 markets across 23 states.
Forestar 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%.
At December 31, Forestar's owned and controlled lot position increased 33% from a year ago to 103,300 lots.
$330,000 million of our finished lots purchased in the first quarter were from Forestar.
Forestar 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%.
Financial 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.
For 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.
FHA and VA loans accounted for 44% of the mortgage company's volume.
Borrowers originating loans with DHI Mortgage this quarter had an average FICO score of 721 and an average loan-to-value ratio of 88%.
First-time homebuyers represented 55% of the closings handled by the mortgage company this quarter.
Our 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.
Our rental property inventory at December 31 was $1.2 billion compared to $386 million a year ago.
We sold one multifamily rental property of 350 units for $76.2 million during the quarter.
We 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.
At December 31, our rental property inventory included $519 million of multifamily rental properties and $642 million of single-family rental properties.
In fiscal 2022, we continue to expect our rental operations to generate more than $700 million in revenues.
We 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.
During 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.
At 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.
Our homebuilding leverage was 17.3% at the end of December and homebuilding leverage net of cash was 6.9%.
Our consolidated leverage at December 31 was 25.1% and consolidated leverage net of cash was 15.2%.
At December 31, our stockholders' equity was $15.7 billion and book value per share was $44.25, up 29% from a year ago.
For the trailing 12 months ended December, our return on equity was 32.4% compared to 24.4% a year ago.
During 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.
We repurchased 2.7 million shares of common stock for $278.2 million during the quarter.
Our remaining share repurchase authorization at December 31 was $268 million.
We 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.
We 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%.
We 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.
For 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.
We 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.
|
The D.R. Horton team delivered an outstanding first quarter, highlighted by a 48% increase in earnings to $3.17 per diluted share.
Our 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%.
Earnings 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.
Our 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.
Our 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.
Our remaining share repurchase authorization at December 31 was $268 million.
For 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.
|
1
1
0
0
1
0
1
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
1
0
|
For the quarter, we generated a second consecutive record adjusted earnings per share of $1.38 and segment EBIT of $149 million.
Adjusted earnings per share was up 79% over the second fiscal quarter of 2020 largely due to strong volumes across all regions, robust unit margins, disciplined operational execution and strong performance in our targeted growth initiatives.
Looking at our major segments, Reinforcement Materials generated record EBIT performance in the quarter of $89 million, driven by robust customer demand and strong Asia pricing.
Results in Performance Chemicals were up sharply over the prior year with segment EBIT of $58 million compared to $31 million last year, as the business drove double-digit volume growth in both Performance Additives and Formulated Solutions businesses, and benefited from favorable product mix.
Lithium ion batteries are growing rapidly and expected to grow at a 25% to 30% compound annual growth rate through 2030 with the primary growth driver being electric vehicles as countries establish CO2 reduction goals and accelerate the shift away from internal combustion engines.
The current conductive carbon additives market for lithium ion batteries which includes both CNTs and conductive carbon black is approximately $400 million in material value.
We expect this market will grow to approximately $1 billion in value by 2025.
Our energy materials business is off to a strong start in fiscal 2021 with forecasted revenue of approximately $80 million for the fiscal year.
Over the past five years, revenue has grown at a CAGR of roughly 50% which includes the acquisition of our CNT business in China.
While we are making significant investments to drive qualification and further extend our technical capabilities EBITDA is forecasted to be between $15 million and $20 million in fiscal year 2021.
The Reinforcement Materials segment delivered record operating results with EBIT of $89 million which is up 46% compared to the same quarter of fiscal 2020, primarily due to significantly higher volumes across all regions and improved unit margins driven by favorable spot pricing in the Asia region.
Globally, volumes were up 18% in the second quarter as compared to the same period of the prior year primarily due to 30% growth in Asia and 10% higher volumes in the Americas and Europe.
In addition, we anticipate higher feedstock cost flow-through in Asia, while fixed costs are expected to be higher due to the timing of planned plant maintenance spending, after delayed spending in 2020 and the first half of this fiscal year.
Now, turning to Performance Chemicals, EBIT increased by $27 million as compared to the second fiscal quarter of 2020, primarily due to strong volumes across the segment and improved product mix, driven by an increase in sales and into automotive applications.
Year-over-year volumes increased by 10% in Performance Additives and 14% in Formulated Solutions, driven by increases across all our key product lines from higher demand levels and some level of customer inventory replenishment during the quarter.
Looking ahead to the second half of fiscal 2021, we expect overall volumes to remain strong.
In addition, we anticipate higher fixed costs in the second half of the fiscal year due to the timing of spending.
Moving to Purification Solutions, EBIT in the second quarter of 2021 declined by $1 million compared to the second quarter of 2020.
We ended the quarter with a cash balance of $146 million and our liquidity position remains strong at approximately $1.3 billion.
During the second quarter of fiscal 2021, cash flows from operating activities were $65 million which included a working capital increase of $80 million.
Capital expenditures for the second quarter were $40 million, for the full year we expect capital expenditures to be approximately $200 million.
Additional uses of cash during the quarter included $20 million for dividend.
Our year-to-date operating tax rate was 28% and we forecast our operating tax rate will be between 27% and 29% for the fiscal year.
Against this demand outlook, we expect some impact from the flow-through of higher raw material costs in Asia, moderating volumes into automotive applications due to the semiconductor chip shortage and higher fixed costs as we perform some maintenance and turnarounds that are necessary to ensure we can meet customer demand in 2022.
Based on these factors, we expect adjusted earnings per share for the full year to be in the range of $4.70 to $4.95.
Our debt to EBITDA ratio was 2.3 times at the end of March and we expect this will be reduced further by year end.
|
For the quarter, we generated a second consecutive record adjusted earnings per share of $1.38 and segment EBIT of $149 million.
In addition, we anticipate higher feedstock cost flow-through in Asia, while fixed costs are expected to be higher due to the timing of planned plant maintenance spending, after delayed spending in 2020 and the first half of this fiscal year.
Looking ahead to the second half of fiscal 2021, we expect overall volumes to remain strong.
In addition, we anticipate higher fixed costs in the second half of the fiscal year due to the timing of spending.
Against this demand outlook, we expect some impact from the flow-through of higher raw material costs in Asia, moderating volumes into automotive applications due to the semiconductor chip shortage and higher fixed costs as we perform some maintenance and turnarounds that are necessary to ensure we can meet customer demand in 2022.
Based on these factors, we expect adjusted earnings per share for the full year to be in the range of $4.70 to $4.95.
|
1
0
0
0
0
0
0
0
0
0
0
0
1
0
0
1
1
0
0
0
0
0
0
1
1
0
|
In the first quarter, we achieved revenue growth of 15% over the same period last year, which resulted in our first quarterly sales of more than $1.4 billion.
The $1.43 billion first quarter sales were also an 11.9% increase over first quarter 2019, which was then a record for the period.
Driving the record sales was 20.2% increase in our international business and an 8.5% increase in our domestic business.
This double-digit growth drove international sales to 57.8% of total sales in the first quarter.
Our International Wholesale business grew 23.8% for the first quarter last year and 13% from 2019.
The quarterly sales growth was driven by an increase of 174% in China, which was severely impacted by the pandemic in the prior year.
However, even as compared to 2019, China grew 45.5%.
Subsidiary sales decreased 4.8% from 2020 but improved 4.2% from 2019.
Our distributor business was down 6.5% from last year, yet several markets experienced growth in the quarter, specifically Russia, Taiwan, Turkey and Ukraine.
Sales in our Domestic Wholesale business decreased less than 1% in the first quarter compared to the same period in 2020 but improved 8.1% compared to the first quarter of 2019.
Additionally, the average selling price per pair increased 2.7%, reflecting the strength and appeal of new comfort products and technologies.
Skechers direct-to-consumer business increased 18.1% over 2020 and 13.1% over 2019, despite the fact that domestic operating hours were reduced by approximately 15% during January and February, and 7% in March.
In our international company-owned stores, we lost 37% of the days available to sell during the quarter.
Our domestic direct-to-consumer sales increased 28.4% compared to the first quarter of 2020 and 18% compared to 2019.
This improvement came from our domestic e-commerce channel, which grew by 143% and our brick and mortar stores, which grew by 13.6%.
Our domestic direct-to-consumer average selling price per unit rose 10.9%, which speaks to the strength of our current product offering.
Our international direct-to-consumer business increased 1.9% over the first quarter of 2020 and 4.4% over 2019.
In the first quarter, we opened 12 company-owned Skechers stores, six of which are in international location, including our largest store in India.
We closed 20 locations in the first quarter as we opted not to renew expiring leases, and we expect to close one additional store at the end of this month.
An additional net 106 third-party Skechers stores opened in the first quarter, bringing our total store count at quarter end to 3,989.
The stores that opened were across 16 countries with most located in China and India.
In the first quarter, we were awarded Company of the Year by leading industry publication, Footwear Plus, for the ninth time in 15 years.
We are pleased with our performance in the first quarter, I think this was a solid beginning, especially given the ongoing pandemic-related difficulties most recently impacting our international business, which now represents 58% of our total sales.
Sales in the quarter achieved a new record, totaling $1.43 billion, an increase of $186.1 million or 15% from the prior year and an impressive 11.9% increase over the first quarter of 2019.
On a constant currency basis, sales increased $145.9 million or 11.7%.
International Wholesale sales increased 23.8% in the quarter compared with the first quarter of 2020 and 13.4% compared with the first quarter of 2019.
Our joint ventures grew an impressive 120% in the quarter led by China, which grew 174% against prior year results, which contained the most severe impacts of the COVID-19 outbreak.
As compared to the first quarter of 2019, China grew 45.5% driven by strong e-commerce performance.
Subsidiary sales declined slightly in the quarter by 4.8%, primarily as a result of continuing closures in Europe and Latin America.
However, as compared to 2019, our subsidiary sales grew an impressive 4.2% despite the current year operational restrictions.
As expected, our distributor business continued to face pandemic headwinds in the first quarter, decreasing 6.5% but saw a marked improvement as compared to the second half of 2020.
Domestic Wholesale sales decreased slightly in the quarter by less than 1%, primarily due to the unfavorable timing of shipments to customers, which we now expect to occur in the second quarter.
Compared to the first quarter of 2019, sales increased 8.1%, which we believe is more reflective of the positive underlying trends we are seeing with the majority of our domestic wholesale partners, particularly based on sell-through we observed in the back half of the quarter.
Direct-to-consumer sales returned to growth in the quarter increasing 18.1%, the result of a 28.4% increase domestically and a 1.9% increase internationally.
The results reflect a slight benefit from the pandemic store closures in the prior year but more importantly, also reflect a notable 143% increase in our domestic e-commerce business and a significant increase in store traffic and sales in March, a trend that has continued.
Gross profit was $679.6 million, up 24.1% or $131.9 million compared to the prior year.
Gross margin was 47.6%, an increase of 350 basis points versus the prior year, primarily driven by increases in our average selling price across all segments as well as a favorable mix of online sales.
Total operating expenses increased by $19.9 million or 3.9% to $528 million in the quarter.
Selling expenses increased by $11.2 million or 15.2% to $85.3 million, which was flat as a percentage of sales versus last year.
General and administrative expenses increased slightly by $8.6 million or 2% to $442.7 million, which was primarily the result of volume-driven expenses in warehouse and distribution for both our international and domestic e-commerce businesses.
Earnings from operations was $157.7 million versus prior year earnings of $44.8 million.
This represents an increase of 252% or $112.9 million.
Operating margin was 11% compared with 3.6% a year ago and 13% in 2019, reflecting strong combination of top line performance and operating expense leverage despite ongoing pandemic-related challenges.
Net earnings were $98.6 million or $0.63 per diluted share on 155.9 million diluted shares outstanding.
This compares to prior-year net income of $49.1 million or $0.32 per diluted share on 154.7 million diluted shares outstanding.
Our effective income tax rate for the quarter was 20.2% versus 15.3% in the same period last year.
We ended the quarter with $1.51 billion in cash, cash equivalents and investments, which was an increase of $148.2 million or 10.8% from March 31, 2020.
Trade accounts receivable at quarter end were $798.8 million, an increase of $2.6 million from March 31, 2020.
Total inventory was $1.07 billion, an increase of 8.3% or $81.8 million from March 31, 2020.
Total debt, including both current and long-term portions, was $779.7 million at March 31, 2021 compared to $699.8 million at March 31, 2020.
Capital expenditures for the first quarter were $84.2 million, of which $42.9 million related to the expansion of our joint venture-owned domestic distribution center, $13.8 million related to investment in our new corporate offices in Southern California, $12.4 million related to investments in our direct-to-consumer technology and retail stores and $3.6 million related to our new distribution center in China.
For the remainder of 2021, we expect total capital expenditures to be between $200 million and $250 million.
We expect second quarter 2021 sales to be in the range of between $1.45 billion and $1.5 billion and net earnings per diluted share to be in the range of between $0.40 and $0.50.
For fiscal year 2021, we expect sales to be in the range of between $5.8 billion and $5.9 billion and net earnings per diluted share to be in the range of between $1.80 and $2.
We also anticipate that gross margins for the full year will be flat or up slightly compared to 2020 and that our effective tax rate for the year will be approximately 20%.
We achieved a new quarterly sales record over $1.4 billion due to the strong demand for our comfort technology footwear and markets where we are open.
International, which is approximately 58% of our total sales was the biggest driver, but we saw strong improvements in our domestic business with increasing traffic in March and now in April.
In addition, our new 1.5 million square foot China distribution center remains on track for full implementation by mid-year.
Given today is Earth Day, I'd like to note that we are continuing to work on the expansion of our LEED Gold certified North American distribution center, which will bring our facility in Southern California to 2.6 million square feet in 2022.
We are also completing construction on Phase 1 of our new LEED Gold certified office buildings and we are increasing efficiencies in our existing corporate office buildings, including the addition of solar panels.
|
The $1.43 billion first quarter sales were also an 11.9% increase over first quarter 2019, which was then a record for the period.
Sales in the quarter achieved a new record, totaling $1.43 billion, an increase of $186.1 million or 15% from the prior year and an impressive 11.9% increase over the first quarter of 2019.
Net earnings were $98.6 million or $0.63 per diluted share on 155.9 million diluted shares outstanding.
We expect second quarter 2021 sales to be in the range of between $1.45 billion and $1.5 billion and net earnings per diluted share to be in the range of between $0.40 and $0.50.
For fiscal year 2021, we expect sales to be in the range of between $5.8 billion and $5.9 billion and net earnings per diluted share to be in the range of between $1.80 and $2.
|
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
|
We have a nationwide network of 13 campuses, where we offer hands-on training in state-of-the-industry labs, complemented by our new online training, which allows us to offer quality education during the COVID-19 pandemic and will serve UTI and its students going forward.
New student starts were, up 6.6% year-over-year, excluding our Norwood campus, where we're winding down operations.
Contracts for the quarter grew 4.5% year-over-year, and our show rate improved 100 basis points.
Total revenues increased 1.2% to $82.7 million.
Net income, which included an income tax benefit of $10.8 million, was $10.1 million, and adjusted EBITDA was $3.1 million.
In February, we successfully raised $49.5 million in a primary equity offering led by B. Riley FBR, who also led the December secondary offering and brought in many new investors.
As governors and local officials began to issue orders and mandate closings of schools and businesses, we suspended all in-person classes at our 13 campuses on March 19 and transitioned all classroom learning to online.
Today, we have over 11,000 students enrolled, with more than 8,000 currently progressing their education through the online platform, including over 500 students, who have started directly into the online platform over the past several weeks.
In order to optimize our lead generation in this environment, we cut $2 million from our broadcast budget and have intensified our focus to where our target audiences are spending their time right now, which is social media.
For example, in April, in addition to telephone interview, our admission reps averaged 80 virtual interviews a day.
This required some very difficult decisions, including the furlough of approximately 280 of our employees.
As Jerome noted, we performed well for the majority of our fiscal 2020 second quarter and posted solid results, but they were impacted, starting in mid-March by the COVID-19 pandemic, which lowered our revenue approximately $2.5 million to $3 million from our pre-COVID expectations for the quarter.
We partially offset the revenue impact on profitability by taking steps to mitigate costs, such as the employee furloughs, and reduced variable and discretionary spend across the enterprise for categories like travel, contract services, and campus supplies, so that the profitability impact in the quarter was approximately $1.25 million to $1.7 million.
For student metrics, new student starts in the second quarter increased 6.6% year-over-year, and were 2,093 in the quarter.
In the first half of 2020, starts were higher by 7.1% year-over-year.
This is all same-store growth and is driven by enrollments, which were higher by 4.5% in Q2 and 5.1% year-to-date, and show rate improvement of 100 basis points in the quarter and in the first half.
Revenue increased 1.2% to $82.7 million, driven by higher revenue per student, partially offset by a decrease in the average student population, due to the student LOAs that caused the $2.5 million to $3 million impact in the quarter I mentioned previously.
First half 2020 revenue of $170 million is up 3.1% versus the first half of fiscal 2019, due primarily to higher revenue per student.
Average students for the quarter were down 3.1% year-over-year, and slightly positive for the first half of the year, when compared to the first half of 2019.
We ended the second quarter with 7,373 active students.
This has since increased to approximately 8,300 active students, with another approximately 600 students on LOA, who only need to complete their remaining hands-on labs to graduate from the program.
There are approximately 2,500 other students currently on LOA versus approximately 300 at the same time last year.
Operating expenses decreased by 4.7% to $83.2 million, for our fifth straight quarter of year-over-year expense declines, while growing revenue.
Compensation and related costs were 52% of revenue in the quarter and down 450 basis points as a percent of revenue year-over-year.
Headcount was 1,645 as of March 31st, a decrease of 70 versus the end of the prior-year quarter.
First half 2020 expenses of $166.2 million are down 6.4% year over year.
Our student-to-on-campus instructor ratio is typically 27:1, while a typical online learning ratio is much higher.
As we begin to resume hands-on labs on our campuses in the near term, we will have some inefficiencies, as the student-to-instructor ratio will be 9:1.
Net income for Q2 was $10.1 million, translating to basic and diluted earnings per share of $0.18.
We had 32.7 million basic shares outstanding as of the end of the quarter, which reflects the 6.8 million shares transferred from treasury stock for our February equity offering.
Q2 net income improved $15.4 million from the prior-year quarter and included a $10.8 million income tax benefit resulting from net operating loss carryback revisions within the CARES Act.
First half 2020 net income is $14.8 million, up $27.8 million year over year, and also includes the income tax benefit.
Operating cash flow of $10.9 million for the first half of 2020 increased $8.1 million year-over-year and reflects our improved profitability in cash management, as well as working capital timing.
Adjusted operating income for the quarter was $500,000, a $4.7 million increase year-over-year, and $7 million for the first half of 2020, a $14.2 million year-over-year improvement.
Adjusted EBITDA was $3.1 million in Q2, a $2.3 million year-over-year increase, and $13.1 million for the first half, an $11 million year-over-year improvement.
Both the Q2 and first half results include the $1.3 million per quarter negative year-over-year impact, due to the leasing standard implementation this fiscal year.
Adjusted free cash flow was $6.7 million for the first half of 2020 and increased $3.7 million versus the prior year.
Capex was $5.2 million for the first half of 2020, up slightly versus the prior year, and reflects spend associated with our welding program expansion investments, the Exton, Pennsylvania facility rightsizing, and other spending.
Our available liquidity as of March 31st was $118.1 million, which includes $76.6 million of unrestricted cash and cash equivalent, and $41.5 million of short-term held-to-maturity securities.
As we announced previously, we expect to receive approximately $33 million in grant funds through the CARES Act Higher Education Emergency Relief Fund.
Per the Department of Education's guidelines, at least 50% of these funds will be used to grant emergency financial aid to students impacted by COVID-19.
From a cash perspective, we are electing to defer our payroll tax payments starting with April 2020 through the end of calendar 2020, and expect a quarterly cash benefit of approximately $1.5 million to $2 million.
As noted previously, this action will save approximately $1.3 million annually.
Under this scenario, we estimate that the net cash burn in Q3 could range between $25 million and $35 million, and that we could fully recover it in Q4.
As leading indicators, we are very encouraged by the fact we were able to start over 500 students directly into the online curriculum in April.
|
Total revenues increased 1.2% to $82.7 million.
Net income for Q2 was $10.1 million, translating to basic and diluted earnings per share of $0.18.
|
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
The good news is that we're starting to see order activity increase in the third quarter and our overall A&D segment orders increased by more than 40% compared to last year's third quarter.
Our USG business continues to outperform from a profitability perspective with year-to-date adjusted EBIT margins of 19.4% compared to 15.1% last year.
We did see sales growth from delve over approximately 8% in the quarter, we have not yet seen demand return to pre-pandemic levels.
Sales in the third quarter grew by 5% with A&D up 1.8%, USG up 12% and Test growing 4.6%.
Adjusted EBIT margins were 12.7% in the quarter compared to 14.2% in the prior year quarter.
No bad product were sent or billed to customers, but we did have charges recorded in the quarter of $2.1 million and year-to-date charges of $4.4 million.
Adjusted earnings per share came in at $0.67 per share in the quarter below prior year $0.76 per share.
Adjusted pre-tax dollars were down 2.5% compared to prior year Q3 and we had an exceptionally low tax rate in prior year Q3 which further reduced EPS.
The Navy business grew by over 20%, which more than offset declines in the commercial aerospace sales of approximately 10%.
USG saw growth of 12% in the quarter.
The Utility business did grow in Q3, but it is not return to pre-pandemic levels adjusted EBIT margins were 18.3% in Q3 compared to 14.8% in the prior year Q3.
The test business grew 4.6% in the quarter, continued steady performance from this group, margins were down in the quarter due to mix and timing issues.
Year-to-date, operating cash flows of over 40%.
Year-to-date, our adjusted EBITDA was nearly $91 million with a 17.8% margin compared to 18% in the 2020 year-to-date.
We booked $203.8 million of new business in the quarter ended with a backlog of $539 million and a book to bill of 112%.
This represents 29% growth compared to prior year Q3, strength in orders came from all three segments with A&D orders increasing 44%, USG increasing 10% and Test increasing 28%.
As we continue navigating through what we hope is the near end of COVID, our number 1 focus remains the same increasing and maximizing our liquidity to position us for future M&A growth and increased investment in new products and solutions.
We have delivered free cash flow conversion at 118% of net earnings for the first nine months.
The guidance for Q4 is a range of $0.73 to $0.78 per share.
The sales levels in Q4 are key issue as we think about the guidance and this range is predicated on a sales level in the range of $190 million to $200 million.
|
Sales in the third quarter grew by 5% with A&D up 1.8%, USG up 12% and Test growing 4.6%.
Adjusted earnings per share came in at $0.67 per share in the quarter below prior year $0.76 per share.
The guidance for Q4 is a range of $0.73 to $0.78 per share.
|
0
0
0
1
0
0
1
0
0
0
0
0
0
0
0
0
0
0
1
0
|
Third quarter revenue was a record $702 million, up 23% from a year ago.
Revenue for the first nine months was a record $2.2 billion, up 30% year-over-year.
In Financial Advisory, record third quarter revenue of $381 million increased 24% from last year's period, reflecting broad-based activity across sectors, market cap and regions.
A high percentage of these were in the $1 billion to $10 billion range.
Year-to-date, our advisory revenue from transactions involving financial sponsors has more than doubled.
Asset Management third quarter operating revenue of $311 million increased 19% from last year's period, reflecting a larger base of assets under management.
Average AUM reached a record high of $278 billion for the third quarter, 23% higher than a year ago and 1% higher on a sequential basis.
As of September 30, we reported AUM at quarter-end of $273 billion, 20% higher than last year's period and 2% lower on a sequential basis.
The decrease was primarily driven by negative foreign exchange movement of $3.3 billion and net outflows of $2.3 billion, partly offset by market appreciation of $0.8 billion.
As of October 22, AUM increased to approximately $279 billion, driven primarily by market appreciation of $6.6 billion and positive foreign exchange movement of $0.9 billion, partly offset by net outflows of $1.1 billion.
Our recent investments in thematic, fixed income and alternative platforms, as well as their performance position them well for growth.
While we continue to focus on internal promotes, year-to-date, we have made more than 20 senior hires, including MDs and senior advisors.
Our adjusted non-compensation ratio for the third quarter was 16.6% compared to 18.1% in last year's third quarter.
Non-compensation expenses were 13% higher than the same period last year, reflecting increased business activity and technology investments.
We continue to accrue compensation expense at a 59.5% adjusted compensation ratio in the third quarter.
Regarding taxes, our adjusted effective tax rate in the third quarter was 25.1%.
For the first nine months of the year, it was 26.2%.
We continue to expect this year's annual effective tax rate to be in the mid-20% range.
In the third quarter, we returned $103 million, which included $52 million in share repurchases.
During the quarter, we bought back 1.1 million shares of our common stock at an average price of $46.01 per share.
As of September 30, our total outstanding share repurchase authorization was $314 million.
|
Third quarter revenue was a record $702 million, up 23% from a year ago.
Year-to-date, our advisory revenue from transactions involving financial sponsors has more than doubled.
Average AUM reached a record high of $278 billion for the third quarter, 23% higher than a year ago and 1% higher on a sequential basis.
Our recent investments in thematic, fixed income and alternative platforms, as well as their performance position them well for growth.
|
1
0
0
0
1
0
1
0
0
0
1
0
0
0
0
0
0
0
0
0
0
|
EPS grew 25% to a record $2.76.
These results were driven by strong growth in our U.S. residential HVAC equipment business, which grew 19% during the quarter and from operating efficiencies achieved throughout our network, as evidenced by the nominal change in SG&A.
Weekly users of our mobile apps have grown 31% since last year with over 100,000 downloads.
E-commerce transactions have grown by 19% this year to nearly 1 million online orders, which is about $1.5 billion in annual rate at the moment.
Our annual -- our annualized e-commerce sales run rate is 32%, versus 29% at the end of last year and in certain markets the use of e-commerce is over 50%.
This technology has only been available for a few months and already over 12,000 orders were fulfilled during the quarter by more than 2,000 unique users.
Contractors using our -- what we call OnCall Air platform provided digital proposals to over 39,000 households during the quarter, and generated $114 million in sales, nearly double that of last year.
Our CreditForComfort platform process doubled in number of digital financing applications resulting in an 87% increase in third-party funded loans.
Investments in inventory management software have also benefited us this year, with inventory turns improving 25 basis points over last year and of course contributing to cash flow and operating efficiency.
We generated record operating cash flow of $373 million, which is far away a record for the year, so far, and we have no debt at this time.
And I always like to comment that we're in a $40 billion industry of which we are only $5 billion, so we have lots of room for growth.
|
EPS grew 25% to a record $2.76.
Investments in inventory management software have also benefited us this year, with inventory turns improving 25 basis points over last year and of course contributing to cash flow and operating efficiency.
|
1
0
0
0
0
0
0
0
1
0
0
|
With just over $3.4 billion in sales, our third quarter revenue decreased by about 7% organically.
Excluding the year-over-year growth in our aftermarket business, our OEM business declined 9% compared to the 22% decline in our market during the quarter as we benefited from new business and favorable mix.
In fact, we estimate that more than 90% of that target is already booked.
With that in mind, on a full year basis, we now expect our global weighted light vehicle and commercial vehicle markets to be down 2.5% to flat year-over-year.
Additionally, we announced a new 800-volt silicon carbide inverter award with a German OEM expected to launch in early 2025.
And as you can see by the chart on the slide, we expect the business to grow rapidly from about 500,000 units in 2021 to 2.5 million units by 2025, representing about 50% CAGR.
We expect this volume to drive total inverter sales of $1.7 billion by 2025 -- in 2025, sorry.
As we look at our year-over-year revenue walk for Q3, we begin with pro forma 2020 revenue of just under $3.6 billion, which includes a little over $1 billion of revenue from Delphi Technologies.
Next, you can see that foreign currencies increased revenue by about 2%.
Then our organic revenue decline year-over-year was approximately 7% or almost 9%, excluding growth in our aftermarket segment.
That compares to a 22% decrease in weighted average market production, which suggests that our outgrowth in the quarter was more than 13%.
The sum of all these was just over $3.4 billion of revenue in Q3.
Our third quarter adjusted operating income was $311 million compared to pro forma operating income of $396 million last year.
This yielded an adjusted operating margin of 9.1%.
On a comparable basis, excluding the impact of foreign exchange and the impact of AKASOL, adjusted operating income decreased $79 million on $261 million of lower sales.
That translates to a decremental margin of approximately 30%.
This higher than typical decremental margin was primarily driven by $24 million of higher commodity costs, net of customer recoveries.
Excluding these higher commodity costs, our year-over-year decremental margin was approximately 19%, which we view as a sign that we're effectively managing our operating cost performance in spite of the supply chain disruptions.
We consumed $10 million of free cash flow during the third quarter.
We now expect our end markets to be down 2.5% to flat for the year.
Next, we expect to drive market outgrowth for the full year of approximately 1,000 basis points.
Based on these assumptions, we expect our 2021 organic revenue to increase approximately 8.5% to 11% relative to 2020 pro forma revenue.
Then adding an expected $425 million benefit from stronger foreign currencies and an expected $70 million related to the acquisition of AKASOL, we're projecting total 2021 revenue to be in the range of $14.4 billion to $14.7 billion.
From a margin perspective, we expect our full year adjusted operating margin to be in the range of 9.6% to 10% compared to a pro forma 2020 margin of 8.3%.
This contemplates the business delivering full year incrementals in the low 20% range before the impact of Delphi-related cost synergies and purchase price accounting.
From a cost synergy perspective, our margin guidance continues to include $100 million to $105 million of incremental benefit in 2021, the same as our prior guidance.
Based on this revenue and margin outlook, we're now expecting full year adjusted earnings per share of $3.65 to $3.95 per diluted share.
And finally, we expect that we'll deliver free cash flow in the range of $600 million to $700 million for the full year.
From a cost perspective, we expect incremental Delphi-related cost synergies in the $40 million to $45 million range, and we also expect incremental restructuring savings of $40 million to $50 million.
These combined savings are expected to largely offset our estimated increase in R&D spending of approximately $100 million.
And finally, we expect to complete the disposition of approximately $1 billion in combustion revenue.
Or to put it another way, with this booked business, we're more than 90% of the way toward our $2.5 billion organic revenue target we gave you back in March.
And then we will supplement this organically developed revenue with EV revenues from AKASOL and any future acquisitions.
|
Additionally, we announced a new 800-volt silicon carbide inverter award with a German OEM expected to launch in early 2025.
Then adding an expected $425 million benefit from stronger foreign currencies and an expected $70 million related to the acquisition of AKASOL, we're projecting total 2021 revenue to be in the range of $14.4 billion to $14.7 billion.
Based on this revenue and margin outlook, we're now expecting full year adjusted earnings per share of $3.65 to $3.95 per diluted share.
And finally, we expect that we'll deliver free cash flow in the range of $600 million to $700 million for the full year.
And then we will supplement this organically developed revenue with EV revenues from AKASOL and any future acquisitions.
|
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
1
1
0
0
0
0
1
|
For the fourth quarter of 2021, GAAP results include a noncash after-tax mark-to-market pension charge of $14 million and after-tax transformation and other charges of $45 million.
The after-tax total for these items is $59 million, an impact to fourth quarter 2021 earnings per share of $0.07 per diluted share.
The mark-to-market pension charge of $14 million represents losses recognized outside of a 10% corridor on company-sponsored pension and postretirement plans.
Let me begin by recognizing the efforts of our amazing UPSers, 534,000 strong around the world.
Not only did our team once again provide industry-leading service during peak, but over the last year, we delivered 1.1 billion COVID-19 vaccine doses, with 99.9% on-time service.
Consolidated revenue rose 11.5% from last year to $27.8 billion, and operating profit grew 37.7% from last year to $4 billion.
Consolidated revenue increased 15% to reach $97.3 billion, and operating profit totaled $13.1 billion, 50.8% higher than last year.
We generated $10.9 billion in free cash flow, more than double the amount generated in the prior year.
And diluted earnings per share were $12.13, an increase of 47.4%.
In 2021, our SMB average daily volume grew 18% and represented 26.8% of our total U.S. volume, putting us on track to achieve our 2023 target of more than 30%.
In 2020, I challenged the team to turn DAP into a $1 billion business.
In 2021, DAP generated $1.3 billion in revenue.
Looking ahead, we expect DAP to reach more than $2 billion in 2022 as we add new partners and expand to additional countries.
And in the fourth quarter, our international SMB revenue growth rate was 18%.
And in 2021, our healthcare portfolio reached more than $8 billion in revenue.
Our healthcare expertise and end-to-end solutions are unmatched in the industry, and we are well on our way to hitting our $10 billion revenue target for 2023.
You may not know this, but we generate over $9 billion in gross revenue annually from transactions on our global website.
We redesigned the U.S. site in 2021 and saw site visits grow 100-fold, with an equally impressive growth in monthly page views, up from 10,000 in January to 600,000 in December.
We know it will take time to move the needle on our Net Promoter Score, which stands at 30, but we set a target of 50 and have laid out a path to get there.
When I became CEO in 2020, our likelihood to recommend metrics stood at 51% globally, and our goal is to surpass 80%.
We've made great strides, gaining 10 percentage points to finish 2021 at 61%.
In fact, productivity in our U.S. operations improved by 1.7% for the fourth quarter, as measured by pieces per hour.
As Brian will detail, in 2021, we reversed a multiyear downward trend in this metric and delivered a return on invested capital of 30.8%, 910 basis points above 2020.
In June, we told you we were going to target a dividend payout ratio at year-end of 50% of adjusted earnings per share, and we're doing just that.
Today, the UPS board approved a 49% increase in the quarterly dividend, from $1.02 per share to $1.52 per share.
In 2022, consolidated revenues are expected to be about $102 billion.
Operating margin is expected to be approximately 13.7% and return on invested capital is anticipated to be above 30%.
Consolidated revenue increased 11.5% to $27.8 billion.
Consolidated operating profit totaled $4 billion, 37.7% higher than last year.
Consolidated operating margin expanded to 14.2%, which was 270 basis points above last year.
For the fourth quarter, diluted earnings per share was $3.59, up 35% from the same period last year.
And full year earnings per share was $12.13 per diluted share, an increase of 47.4% year over year.
Average daily volume increased by 39,000 packages per day, or 0.2% year over year, to a total of 25.2 million packages per day.
In fact, SMB average daily volume, including platforms, grew 8.4%, outpacing the market.
And in the fourth quarter, SMBs made up 25.8% of U.S. domestic volume, up 240 basis points versus last year.
Mix also shifted positively toward commercial volume as our B2B average daily volume continued to recover and was up 8.8%.
B2B represented 36% of our volume compared to 33% in the fourth quarter of 2020.
For the quarter, U.S. domestic generated revenue of $17.7 billion, up 12.4%, driven by a 10.5% increase in revenue per piece.
Fuel drove 380 basis points of the revenue per piece growth rate and demand-related surcharges drove 110 basis points of the growth rate increase.
Revenue per piece grew across all products and customer segments, with ground revenue per piece up 10%.
Total expense grew 8.1%.
Fuel drove 230 basis points of the expense growth rate increase.
Wages and benefits, which included market rate adjustments, drove 410 basis points of the increase.
For example, through our ongoing efforts to optimize our trailer loads, we eliminated over 1,000 loads per day compared to the same time period last year.
The U.S. domestic segment delivered $2.2 billion in operating profit, an increase of $786 million or 57% compared to the fourth quarter of 2020, and operating margin expanded 340 basis points to 12.2%.
Because of tough year-over-year comps and COVID-19 dynamics, we anticipated a fourth quarter decline in average daily volume, which was down 4.8%.
On a more positive note, product mix was favorable, with B2B average daily volume up 4.7% on a year-over-year basis.
This partially offset a decline in B2C volume, which was down 18.4% compared to an increase of 104% during the same period last year.
In addition to tough year-over-year comps, total export average daily volume declined by 5.2% due to the decrease in volume between the U.K. and Europe arising from Brexit disruptions and from fewer flights coming out of Asia.
In the fourth quarter, we operated 105 fewer flights than planned, primarily due to COVID-19.
Despite these factors, for the fourth quarter, international revenue increased 13.1% to $5.4 billion.
Revenue per piece increased 16.4%, including a 730-basis-point benefit from fuel and a 340 basis point benefit from demand-related surcharges.
Operating profit was $1.3 billion, an increase of 14.7%, and operating margin was 24.7%.
Revenue increased to $4.7 billion, up 6.7%, despite a $789 million reduction in revenue from the divestiture of UPS freight.
Forwarding revenue was up 37.9% and operating profit more than doubled as global market demand remained strong and capacity stayed tight.
International air freight kilos increased 3.3%.
And in ocean freight, volume growth on the Transpacific Eastbound Lane, our largest trade lane, grew 7.8%, which was more than twice the market growth rate.
In the fourth quarter, supply chain solutions generated strong operating profit of $456 million and delivered an operating margin of 9.7%.
Walking through the rest of the income statement, we had $173 million of interest expense.
Other pension income was $267 million.
And lastly, our effective tax rate came in at 22%.
Now, let me comment on our full year 2021 results.
Starting at the consolidated level, revenue increased $12.7 billion to $97.3 billion.
We grew operating profit by $4.4 billion, an increase of 50.8%, finishing the year at $13.1 billion.
Operating margin was 13.5%, an increase of 320 basis points.
And for context, this is the highest consolidated operating margin we've had in 14 years.
We increased our ROIC to 30.8%, an increase of 910 basis points.
We generated $10.9 billion of free cash flow, an increase of 114% over 2020, and we strengthened the balance sheet by paying off $2.55 billion of long-term debt.
And we reduced our pension liabilities by $7.8 billion, which improved our debt-to-EBITDA ratio to 1.9 turns compared to 3.6 last year.
And we returned over $3.9 billion of cash to shareholders through dividends and share buybacks.
domestic, operating profit was up 62.7%, an increase of $2.6 billion, to reach $6.7 billion for the full year.
And we expanded operating margin to 11.1%, a year-over-year increase of 340 basis points.
International grew operating profit by $1.2 billion, ending the year at a record $4.7 billion in profit.
And operating margin was 24.2%, an increase of 200 basis points.
And supply chain solutions increased operating profit by $649 million, up 61.3%, and delivered operating margin of 9.8%, 280 basis points above 2020.
Global GDP is expected to grow 4.2%.
So looking at 2022, on a consolidated basis, revenues are expected to be about $102 billion, which takes into account the divestiture of UPS freight.
Additionally, consolidated operating margin is expected to be approximately 13.7%.
In U.S. domestic, we anticipate revenue growth of around 5.5%, with revenue per piece growing faster than volume.
As a result, we anticipate domestic operating margin will expand around 50 basis points in 2022.
Revenue growth is anticipated to be approximately 7.7%, with volume growing slightly faster than revenue.
Pulling it all together, operating profit in the international segment is expected to increase around 5% and operating margin is anticipated to be around 23.6%.
In supply chain solutions, we expect revenue to be around $17 billion, driven by continued strong growth in healthcare and elevated demand in Forwarding.
Operating margin is expected to be about 9.4%.
And for modeling purposes, below the line, we anticipate $1.2 billion in other pension income, partly offset by $665 million in interest expense.
The full year net impact is expected to be around $570 million, which can be spread evenly across the quarters.
In line with the capex range we shared then, we expect 2022 capital expenditures to be about 5.4% of revenue or $5.5 billion.
These investments will continue to improve overall network efficiency and move us further down the path to achieving our 2050 carbon-neutral goals.
About 60% of our capital spending plan will be allocated to growth projects and about 40% to maintenance.
We have 30 delivery centers and two automated hub projects planned to be delivered this year.
We will purchase over 3,700 alternative fuel vehicles this year, including around 425 arrival electric delivery vehicles to be deployed in the U.S. and in Europe.
We will take delivery of two new 747-8 aircraft in 2022, which adds international capacity and will make predelivery payments on the 19 Boeing 767 freighters that we announced in December.
And lastly, across these projects and others, our annual capital expenditures will again include over $1 billion of investments that support our carbon-neutral goals.
We expect free cash flow of around $9 billion, including our annual pension contributions, which are equal to our expected service costs.
As Carol mentioned, the board has approved a dividend per share of $1.52 for the first quarter, which represents a 49% increase in our dividend.
We are planning to pay out around $5.2 billion in dividends in 2022, subject to board approval.
We expect to buy back at least $1 billion of our shares, and we'll evaluate additional opportunities as the year progresses.
We expect diluted share count to be about 880 million shares throughout the year.
Finally, our effective tax rate is expected to be around 23%.
|
The after-tax total for these items is $59 million, an impact to fourth quarter 2021 earnings per share of $0.07 per diluted share.
In 2022, consolidated revenues are expected to be about $102 billion.
Now, let me comment on our full year 2021 results.
So looking at 2022, on a consolidated basis, revenues are expected to be about $102 billion, which takes into account the divestiture of UPS freight.
|
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
In the second quarter, we achieved an operating EBITDA of $1.31 billion, which we converted into strong cash from operations of more than $1 billion.
With all of this powerful momentum, we now expect to generate 2021 adjusted operating EBITDA of at least $5 billion with free cash flow of at least $2.5 billion, all while continuing to make growth investments in our sustainable solutions and technology platforms.
At our automated facilities, labor costs were 35% lower in the second quarter compared to our other single-stream MRFs.
Next month, we're hosting a supplier diversity initiative called Share the Green, which will give women-owned businesses the opportunity to become a supplier for one or more of the 45 companies participating in the event.
We are now connecting our advanced technologies to automatically insert 90% of our new commercial customers into existing routes, reducing our cost to serve and improving our speed to service.
We produced exceptional EBITDA growth of almost 24% in the collection and disposal business as the economy continues to recover from the pandemic's steepest impacts in the second quarter of 2020.
Collection and disposal volume climbed 9.6% in the quarter, which exceeded our expectations.
And our focus on disciplined pricing programs produced a substantive second-quarter collection and disposal yield of 3.7%.
For the full year, we now expect organic volume in the collection and disposal business to grow 2.5% or more.
This focus is particularly evident in our residential core price of 5.4%, landfill core price of 4.7% and transfer core price of 3.4%.
Our new full-year outlook for collection and disposal yield is 3.7% or greater.
Churn was 8.8% in the quarter, and service increases outpaced service decreases by more than twofold.
Second-quarter operating expenses as a percentage of revenue improved 10 basis points to 61.1%, demonstrating that we are continuing to manage our cost as volumes recover even in the face of inflationary cost pressures.
To date, we've combined around 45% of the ADS operations into our billing and operational systems, which has allowed us to capture synergies and provide additional services to those customers.
Year to date, we have achieved more than $30 million of annual run-rate synergies, and we expect cost synergies of between $80 million and $85 million in 2021.
This will bring the annual run-rate synergies to around $100 million at the end of 2021, and we continue to forecast another $50 million to be captured in 2022 and 2023 from a combination of cost and capital savings.
Robust volume growth since last year's peak pandemic impact, dynamic pricing efforts, record recycling results, disciplined integration of the ADS business, and our continued focus on cost management combined to deliver 28% operating EBITDA growth and 50 basis points of operating EBITDA margin expansion.
Full-year revenue growth is now expected to be 15.5% to 16%, with organic growth in the collection and disposal business of 5.5% or greater.
For adjusted operating EBITDA, we expect to generate between $5 billion and $5.1 billion, an increase of $225 million at the midpoint from the original guidance we provided in February.
While the bridge from our initial guidance to the current guidance has a number of puts and takes, the most significant drivers have accelerated price and volume recoveries in the collection and disposal business of about $135 million; improved recycling profitability of another $135 million; renewable energy increases of about $55 million; and additional ADS synergies of around $25 million.
These increases are partially offset by elevated cost inflation and incentive compensation costs that we currently estimate to be about $125 million.
The increase in adjusted operating EBITDA guidance is expected to translate directly into incremental free cash flow, and we now expect that we will generate between $2.5 billion and $2.6 billion of free cash flow for the year.
SG&A was 9.6% of revenue in the second quarter, a 30-basis-point improvement over 2020.
Second-quarter net cash provided by operating activities grew more than 20%.
In the second quarter, capital spending was $396 million, bringing capital expenditures in the first half of 2021 to just over $665 million.
We continue to target full-year capital spending within our $1.78 billion to $1.88 billion guidance range.
In the first half of 2021, our business generated free cash flow of $1.5 billion, a conversion from operating EBITDA of 61%.
In the second quarter, we paid $242 million in dividends and allocated $250 million to share repurchases.
Our leverage ratio of 2.84 times has improved even more quickly than expected due to our strong operating EBITDA growth, and it's tracking well toward our target leverage of 2.75 times by the end of the year.
At the same time, our robust cash generation in the first half of the year positions us to increase our full year share repurchase expectation up to our full $1.35 billion authorization.
With this increase, we expect our weighted average share count for the full year to be approximately 422 million shares.
|
Full-year revenue growth is now expected to be 15.5% to 16%, with organic growth in the collection and disposal business of 5.5% or greater.
For adjusted operating EBITDA, we expect to generate between $5 billion and $5.1 billion, an increase of $225 million at the midpoint from the original guidance we provided in February.
The increase in adjusted operating EBITDA guidance is expected to translate directly into incremental free cash flow, and we now expect that we will generate between $2.5 billion and $2.6 billion of free cash flow for the year.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
1
0
0
0
0
0
0
0
0
0
|
I'm excited to share our strong second quarter results as we delivered record second quarter unit development and 23% same-store sales growth.
We are raising our previous guidance of 4% unit growth to between 4% and 5% unit growth.
As a reminder, our long-term growth algorithm includes 2% to 3% same-store sales growth and mid to high single-digit system sales growth leading to high single-digit core operating profit growth.
system sales grew 26%, driven by 23% same-store sales growth.
Importantly, same-store sales grew 4% on a two-year basis, which includes the impact of approximately 700 or about 1% of our stores being temporarily closed due to COVID as of the end of Q2 2021.
Even more exciting is the extremely strong net new unit growth of 603 units that we delivered during the quarter, which was both broad-based and record-setting.
Looking across the more than 150 countries in which we operate, we've seen that while the overall global trend is positive, the recovery will neither be consistent from country to country nor linear within a country.
We delivered a second quarter record with over $5 billion in digital sales, a 35% increase over the prior year.
Even more exciting, for the first time, on a trailing 12-month basis, we delivered more than $20 billion in digital sales.
We're seeing significant uptick in frequency and higher spend per visit, leading to an increase in overall spend of 35% for active customers in the Taco Bell rewards program compared to their pre-loyalty behavior.
Starting with the KFC division, which accounts for approximately 51% of our divisional operating profit, Q2 system sales grew 35%, driven by 30% same-store sales growth and 5% unit growth.
For the division, Q2 same-store sales grew 2% on a two-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of Q2 2021.
At KFC International, same-store sales grew 36% during the quarter.
Same-store sales declined 1% on a two-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of Q2 2021.
Next, at KFC U.S., we continued to see strong momentum, with 11% same-store sales growth in Q2.
Importantly, same-store sales grew 19% on a two-year basis, owing to the continued strength of our group occasion business, the digital capabilities mentioned earlier, and our new chicken sandwich.
Moving on to Pizza Hut, which accounts for approximately 17% of our divisional operating profit.
The division reported Q2 system sales growth of 10%, driven by 10% same-store sales growth.
While the division had a 3% unit decline versus last year, driven by the elevated COVID-related dislocations and closures of 2020, it has sustained its positive 2021 development momentum, delivering 1% unit growth relative to Q1.
Global Q2 same-store sales grew 1% on a two-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of Q2 2021.
Overall, Pizza Hut International same-store sales grew 16%.
Same-store sales declined 6% on a two-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of Q2 2021.
Importantly, the off-premise channel achieved 21% same-store sales growth on a two-year basis for the quarter and delivery continued to be the primary driver of growth as the shift toward an off-premise model continues in most of our Pizza Hut markets.
At Pizza Hut U.S., we continue to see positive same-store sales with 4% overall same-store sales growth.
On a two-year basis, the off-premise channel grew 18% and overall same-store sales grew 9%, which includes the impact of about 1% of our stores being temporarily closed as of the end of Q2 2021.
As for Taco Bell, which accounts for approximately 31% of our divisional operating profit, Q2 system sales grew 24%, driven by a 21% same-store sales growth and 2% unit growth.
For the division, Q2 same-store sales grew 12% on a two-year basis.
The quarter kicked off with the return of the Quesalupa as part of the fan-favorite $5 Chalupa Cravings Box, followed by the relaunch of the iconic Naked Chicken Chalupa.
We generated over 2 billion impressions and step-change brand awareness, especially in our international markets where we have a tremendous run rate for growth.
And finally, the Habit Burger Grill delivered 31% same-store sales growth and 6% unit growth.
Q2 same-store sales grew 7% on a two-year basis.
Importantly, digital sales continued to mix over 35%, only a modest pullback from Q1, even as dining rooms continued reopening and dine-in sales saw a steady improvement throughout the quarter.
system sales grew 26%, driven by 23% same-store sales growth.
On a two-year basis, same-store sales grew 4%, which includes the negative impact of about 1% of our stores being temporarily closed due to COVID as of the end of Q2 2021.
We delivered 2% unit growth year-over-year, which included a Q2 record of 603 net new units.
EPS, excluding special items, was $1.16, representing a 41% increase compared to ex-special earnings per share of $0.82 in Q2 2020.
Core operating profit grew 53% in the second quarter, driven by accelerated same-store sales growth in several developed markets at KFC, the combination of strong sales and restaurant margin growth at Taco Bell and a year-over-year benefit associated with reserves for franchisee accounts receivable.
At Taco Bell, company restaurant margins were 25.9%, 1.4 points higher than prior year.
These recoveries resulted in a $4 million net benefit to operating profit related to bad debt during the quarter, representing a $17 million year-over-year tailwind to operating profit growth as we lapped $13 million of expense in Q2 2020.
As a reminder, we ended 2020 with $12 million of full-year bad debt expense with large quarterly swings due to COVID.
As such, we expect year-over-year operating profit growth to be negatively impacted in the second half as we lap bad debt recoveries of $21 million and $8 million in Q3 and Q4, respectively.
General and administrative expenses were $230 million.
We now estimate that our consolidated G&A expenses will be approximately $1 billion for the full year 2021, a slight increase from our Q1 estimate attributable to increased incentive-based compensation.
Reported interest expense was $159 million, an increase of 21% compared to Q2 2020, driven by a special item charge of $34 million related to early redemption of restricted group bonds during the quarter.
Interest expense, ex-special, was approximately $125 million, a decrease of 5%, driven by recent refinancing actions and the elimination of revolver balances held in the prior year.
We still expect our 2021 interest expense to be approximately $500 million, excluding the previously mentioned $34 million special item charge similar to 2020.
Capital expenditures, net of refranchising proceeds, were $16 million for the quarter.
As we've discussed on prior earnings calls, we believe roughly $250 million in annual gross capex appropriately balances the inherent needs of the business, with opportunities to invest in technology initiatives and strategic development of equity stores.
We still anticipate at least $50 million in annual proceeds from refranchising, which will fund the strategic equity store investments.
Now on to our unmatched operating capability growth driver.
Their improvements are fueled by continued adoption of frictionless restaurant technology, including our in-house intelligent coaching app called HutBot that launched at the end of 2020 and is now live in 40 markets, covering 4,000 restaurants.
Speed for Q2 was six seconds faster than Q2 2020 and our teams served 4 million more cars compared to the same quarter last year.
Our net new unit growth of 603 during the quarter was broad based across brands and geographies, making this not only a record quarter, but also capping a record first half.
Most notably, KFC opened 428 net new units during the quarter with significant builds in China, Russia, India, Latin America, and Thailand, contributing to 5% unit growth year-over-year.
Pizza Hut has sustained its positive 2021 development momentum, delivering 1% unit growth relative to Q1, underpinned by the strength in gross openings and moderating store closures.
Pizza Hut opened 99 net new units during the quarter, led by strong development in China, India, and Asia.
Taco Bell opened 74 net new units and we're excited to share that Taco Bell International had its best development quarter ever, opening 30 net new units led by Spain and the U.K. In the U.S., we opened our flagship Taco Bell Cantina in Times Square, with a digital forward footprint and personalized experience.
Overall, we are pleased with the momentum in the first half of the year and we're extremely proud to announce 4% to 5% unit growth guidance, led by development from all four brands across our footprint.
We ended Q2 with cash and cash equivalents of approximately $552 million, excluding restricted cash.
The strong recovery in EBITDA during Q2 drove our consolidated net leverage down to approximately 4.5 times, temporarily below our target of approximately 5 times.
During the quarter, we repurchased 2.1 million shares, totaling $255 million at an average price per share of $119.
Year-to-date, we've repurchased $530 million of shares at an average price of $112.
|
I'm excited to share our strong second quarter results as we delivered record second quarter unit development and 23% same-store sales growth.
We are raising our previous guidance of 4% unit growth to between 4% and 5% unit growth.
system sales grew 26%, driven by 23% same-store sales growth.
Even more exciting is the extremely strong net new unit growth of 603 units that we delivered during the quarter, which was both broad-based and record-setting.
We delivered a second quarter record with over $5 billion in digital sales, a 35% increase over the prior year.
Starting with the KFC division, which accounts for approximately 51% of our divisional operating profit, Q2 system sales grew 35%, driven by 30% same-store sales growth and 5% unit growth.
As for Taco Bell, which accounts for approximately 31% of our divisional operating profit, Q2 system sales grew 24%, driven by a 21% same-store sales growth and 2% unit growth.
The quarter kicked off with the return of the Quesalupa as part of the fan-favorite $5 Chalupa Cravings Box, followed by the relaunch of the iconic Naked Chicken Chalupa.
system sales grew 26%, driven by 23% same-store sales growth.
We delivered 2% unit growth year-over-year, which included a Q2 record of 603 net new units.
EPS, excluding special items, was $1.16, representing a 41% increase compared to ex-special earnings per share of $0.82 in Q2 2020.
Interest expense, ex-special, was approximately $125 million, a decrease of 5%, driven by recent refinancing actions and the elimination of revolver balances held in the prior year.
Now on to our unmatched operating capability growth driver.
Our net new unit growth of 603 during the quarter was broad based across brands and geographies, making this not only a record quarter, but also capping a record first half.
Most notably, KFC opened 428 net new units during the quarter with significant builds in China, Russia, India, Latin America, and Thailand, contributing to 5% unit growth year-over-year.
Overall, we are pleased with the momentum in the first half of the year and we're extremely proud to announce 4% to 5% unit growth guidance, led by development from all four brands across our footprint.
The strong recovery in EBITDA during Q2 drove our consolidated net leverage down to approximately 4.5 times, temporarily below our target of approximately 5 times.
|
1
1
0
1
0
1
0
1
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
0
0
0
0
1
0
1
1
0
0
0
0
0
0
0
0
1
0
0
0
0
1
0
0
1
1
0
0
0
1
0
1
0
0
|
In the first quarter, we had all-time record sales of almost $2.7 billion, an increase of 17% as reported or 9% on a constant basis with adjusted operating income of $329 million, our highest ever first quarter earnings per share of $3.49.
We continue to implement our restructuring plans, which have achieved $75 million of our anticipated $100 million to $110 million in savings.
In the first quarter, we purchased $123 million of our stock at an average price of $179 for a total of $686 million since we initiated our purchasing program.
Our balance sheet remains strong with net debt less short-term investments of $1.3 billion.
Sales in Q1 2021 were $2,669 billion.
That's a 17% increase as reported and 9% on a constant basis.
Gross margin was 29.7% as reported or 30.1% excluding charges, increasing from 27.5% in the prior year.
SG&A, as reported, was 17.
8% or 17.7% versus 20.3% in the prior year, both excluding charges, as we saw strong leverage on the increased volume and productivity actions, partially offset by inflation in FX.
Gives us an operating income, as reported, of 11.9% of sales.
Restructuring charges for the quarter were $11 million, and our savings, as Jeff said, are on track as we have recorded approximately $75 million of the plan.
Operating margin excluding charges of 12.3%, improving from 7.2% in the prior year or 510 basis points.
Interest expense of $15 million includes the full impact of the 2020 bond offerings.
Other income of $2 million, mainly the result of favorable transactional FX.
Our non-GAAP tax rate was 22% versus 20% in the prior year, and we expect the full year to be 21.5% to 22.5%.
Giving us an earnings per share as reported of $3.36 or excluding charges, $3.49, which is 110% improvement versus prior year.
Global Ceramic had sales of $930 million, a 10% increase as reported, or approximately 5% on a constant basis with strong geographic growth, especially in Brazil, Mexico and Russia, while the U.S. was unfavorably impacted by the February ice storm.
Operating income, excluding charges of 9.6%, that's up 400 basis points versus prior year, and this improvement was from strengthening volume and price/mix increased manufacturing uptime and productivity, partially offset by unfavorable inflation.
In Flooring North America, sales of $969 million or a 14% increase as reported or 9% on a constant basis, driven by strong residential demand with commercial beginning to recover from its trough.
Operating income excluding charges of 9.3%, that's an increase of 410 basis points versus prior year.
And finally, Flooring Rest of the World with sales of $770 million.
That's an increase of 31% as reported or 15% on a constant basis as our focus on the residential channel drove improvement across product -- all our product groups led by laminate, LVT and soft surface business in Australia and New Zealand.
The operating margin excluding charges of 20.9%, an increase of 740 basis points versus prior year, driven by the higher volume, favorable impact of price/mix and productivity, partially offset by the increase in inflation.
Corporate and eliminations came in at $11 million, and I expect for the full year 2021 to be approximately $40 million to $45 million.
Turning to the balance sheet; cash and short-term investments are approximately $1.3 billion, with free cash flow in the quarter of $145 million.
Receivables at just over $1.
8 billion, giving us a DSO improvement to 54.
4 days versus 57 days in the prior year.
Inventories were just shy of $2 billion.
That's a decrease of approximately $200 million or 9% from the prior year, with the marginal sequential increase of 4% from Q4 or approximately $80 million.
Inventory days remained historically low at 105.5 days versus almost 130 in the prior year.
Property plant equipment just over $4.4 billion with CapEx for the quarter of $115 million versus D&A of $151 million.
Full year CapEx is currently estimated at $620 million with us reevaluating our plan, and we will most likely see an increase from that level.
Full year D&A is projected to be $583 million.
And lastly, the overall balance sheet and cash flow remained very strong with gross debt of $2.7 billion.
As I said, total cash and short-term investments of over $1.3 billion, giving us a leverage of 0.9 times adjusted EBITDA.
First quarter sales of our Flooring Rest of World segment increased 31% as reported or 15% on a constant basis, exceeding our expectations.
Margins expanded over last year to approximately 21% due to higher volume, favorable price and mix and positive leverage on SG&A, partially offset by inflation.
At this point, we anticipate some material shortages continuing into the second quarter.
For the period, our Flooring North America sales increased 14% as reported or 9% on a constant basis.
Adjusted margins expanded to 9% due to higher volume, productivity gains and mix improvements, partially offset by inflation.
In the quarter, our Global Ceramic sales rose 10% as reported and 5% on a constant basis, with sales increases in each of our markets, driven by growth in residential remodeling and new construction.
The segment's adjusted margin expanded to approximately 10% due to volume, price, mix and productivity gains, partially offset by inflation.
Given these factors, we anticipate our second quarter adjusted earnings per share to be $3.57 to $3.
67 excluding any restructuring charges.
|
In the first quarter, we had all-time record sales of almost $2.7 billion, an increase of 17% as reported or 9% on a constant basis with adjusted operating income of $329 million, our highest ever first quarter earnings per share of $3.49.
Giving us an earnings per share as reported of $3.36 or excluding charges, $3.49, which is 110% improvement versus prior year.
At this point, we anticipate some material shortages continuing into the second quarter.
Given these factors, we anticipate our second quarter adjusted earnings per share to be $3.57 to $3.
|
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
1
0
|
The severe winter freeze experienced in the South Central U.S. in mid-February caused widespread plumbing infrastructure problems and was an unexpected benefit that we estimate positively affected consolidated sales by about 3%.
We incrementally spent approximately $2 million of which over half was invested in our smart and connected products.
We plan to increase investment spending for the full year from $13 million to $16 million primarily to support additional growth in productivity projects.
Our proposal impacts approximately 85 employees.
On a net basis we anticipate downsizing by approximately 50 people.
New residential single-family constructions continues to look steady for the year with recent March and year-to-date housing starts positive and multifamily residential starts although lumpy showed some buoyancy recently with March starts up over 30% sequentially.
A recent AGC survey of about 1,500 contractors noted that 77% saw new projects either postponed or canceled in 2020, and 40% are seeing further project cancellations or postponements for the January to June 2021 period.
Second, we recently took part in Project 24 in partnership with the Planet Water Foundation.
We sponsored the installation of an integrated water system and funded a water health and hygiene education program for more than 600 students in a small Vietnamese town.
Since the beginning of our partnership with Planet Water in 2016, we provided approximately 30,000 people in nine countries with safe, clean drinking water.
Sales of $413 million were up 8% on a reported basis and up 4% organically.
As discussed, we had an easier compare in APMEA during the quarter and we estimate sales increase by approximately 3% because of the freeze in the South Central United States.
Foreign exchange, primarily driven by a strong euro, increased the year-over-year sales by roughly $13 million or 3%.
Acquisitions net of divestitures accounted for $4 million of incremental sales year-over-year.
Adjusted operating profit was $60 million, up 24% compared to last year, and adjusted earnings per share were up 31% to $1.24.
Adjusted operating margin of 14.5% was up 190 basis points as volume, price, productivity and cost actions more than offset inflation and incremental investments.
The adjusted effective tax rate was 28% comparable to the first quarter of 2020.
Our free cash flow for the quarter was $32 million as compared to negative $8 million in the first quarter of 2020.
Our goal is to drive free cash flow conversion at 100% or more of net income for the year.
During the quarter, we repurchased approximately 31,000 shares of our common stock for $3.8 million, and as Bob mentioned, announced a double-digit increase in our dividend.
The Americas posted a solid quarter where organic sales up approximately 3%.
This was primarily driven by the tailwind from the freeze in the South Central Region of the U.S., which we estimate provided almost 4% of incremental growth.
Adjusted operating profit increased by 11%, and adjusted operating margin increased by 110 basis points.
Europe delivered a solid quarter with organic sales up approximately 2%, and adjusted operating margin expanded by 350 basis points.
Reported sales also increased by 10% from favorable foreign exchange movements.
Reported sales increased by 76% including 43% of organic growth, 23% from net acquisitions and 10% from favorable foreign exchange movement.
The AVG acquisition provided approximately $3 million of sales, which was in line with our expectations.
Adjusted operating margin increased 15.5 percentage points due to higher third party and intercompany sales volume, and from cost actions and productivity offsetting inflation and investments.
China intercompany activity was up 80% organically benefiting from the U.S. freeze-driven demand.
Further, we anticipate an additional sales benefit of approximately 4% from the continued impact of the freeze in the U.S. and expect restocking actions in the wholesale market.
In total, we estimate consolidated sales may grow organically between 19% and 24%.
In addition, acquired growth should approximate $4 million for the second quarter.
We estimate our adjusted operating margin could range from 13.5% to 14.5% for the second quarter driven by volume and offset partially by incremental investment spending of $4 million and incremental cost of $6 million related to temporary spending reductions in 2020 that we expect will return All-in we estimate the incremental volume to drop through between 25% and 30%.
Corporate cost should approximate $10 million.
We expect interest expense should approximate $2 million in the second quarter or about half of last year's interest charge.
The adjusted effective tax rate should approximate 27%.
We estimate that organically Americas sales may increase in the range of 2% to 7% for 2021, driven by the freeze benefit and the second price increase neither of which was anticipated in our February outlook as well as stronger growth in non-residential repair and replace due to higher GDP expectations.
Sales should increase by about $4 million for the full year from the acquisition of the Detection Group.
For Europe, we are forecasting organic sales to increase between 1% and 5%.
In APMEA, we now expect organic sales to grow from 10% to 15% for the year.
Sales should also increase by approximately $6 million from the AVG acquisition in the first half.
Overall, on a consolidated basis, we anticipate Watts' organic sales to range from up 2% to 7% in 2021.
This is approximately 7% higher than our previous outlook and is primarily driven by the impact of the freeze in the South Central region of the United States, the second inflation driven price increases, and the slightly better end market expectations in our key regions.
We estimate our consolidated adjusted operating margin maybe up 30 to 70 basis points for the year.
This is primarily driven by the drop through from incremental volume, price, restructuring savings of $14 million, and productivity being offset partially by 2020 cost headwinds of $15 million, incremental investments of $16 million, and general cost inflation.
We expect corporate costs will approximate $42 million for the year.
Interest expense should be roughly $7 million for the year.
Our estimated adjusted effective tax rate for 2021 should approximate 27.5%.
Capital spending is expected to be in the $38 million range.
Depreciation and amortization should approximate $46 million for the year.
We expect to continue to drive free cash flow conversion equal to or greater than 100% of net income.
We are now assuming a 1.19 average euro-U.S. dollar FX rate for the full year versus the average rate of EUR1.14 in 2020.
Please recall that for every $0.01 movement up or down in the euro-dollar exchange rate, our European annual sales are impacted by approximately $4 million and our annual earnings per share is impacted by $0.01.
We expect our share count to approximate 34 million for the year.
|
Sales of $413 million were up 8% on a reported basis and up 4% organically.
Adjusted operating profit was $60 million, up 24% compared to last year, and adjusted earnings per share were up 31% to $1.24.
|
0
0
0
0
0
0
0
0
0
0
1
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Throughout the past 18 months, we've rallied through the uncertainty surrounding the pandemic and made decisions to increase our investments in new opportunities, which we believe are starting to bear fruit.
In the second quarter, we estimate that we left approximately $50 million of demand on the table and most of this demand is rolled into future quarters.
Given component constraints, we estimate we may leave $100 million of unfulfilled demand in this quarter, demonstrating the strength of end customer orders.
During the quarter, we also faced disruptions in our Malaysian operations from the ongoing COVID pandemic where government regulations reduced staffing levels to 60% and required our team to replan our workforce and shift patterns through most of the second quarter.
Government restrictions have recently eased, now allowing 80% of the workforce capacity and our leadership team continues to do a phenomenal job managing through reduced staffing and intermittent work stoppages to keep our employees healthy and maximize production.
With improving revenue, our non-GAAP gross margins improved 50 basis points to 8.8%, and non-GAAP operating margins improved 20 basis points to 2.5%.
As a reminder, our non-GAAP operating margins include stock compensation expenses, which were approximately 70 basis points in the second quarter.
Earnings per share of $0.27 was above the midpoint of our guidance, and we had another solid quarter of cash conversion cycle results at 64 days.
High-performance computing will be a key contributor to our growth over the next 12 months.
Total Benchmark revenue was $545 million in Q2, which was at the higher end of our guidance driven by continued strong performance in Semi-Cap and improving revenue in Industrials and Telco.
Semi-cap revenues were up 23% in the second quarter and up 60% year-over-year from continued demand strength from our front-end wafer fab equipment customers where we saw increased demand from each of our top customers.
A&D revenues for the second quarter increased 8% sequentially and 9% year-over-year from continued strong demand in our Defense programs for surveillance vehicles, secure communications and computing and military satellite programs.
Overall, the higher-value markets represented 82% of our second quarter revenue.
Our traditional markets represented 18% of second quarter revenues.
Our top 10 customers represented 46% of sales in the second quarter.
Our GAAP earnings per share for the quarter was $0.20.
Our GAAP results included restructuring and other onetime costs totaling $1.6 million related to restructuring activities.
For Q2, our non-GAAP gross margin was 8.8%.
This is 20 basis points better than the midpoint of our second quarter guidance, driven by higher revenues and a better mix.
On a sequential basis, we were up 50 basis points as a result of our higher revenue, improved productivity and utilization, somewhat offset by higher variable compensation expenses and higher-than-expected U.S. medical costs.
Our SG&A was $34 million, an increase of $3.5 million sequentially due to higher variable compensation expenses and higher U.S. medical costs.
Non-GAAP operating margin was 2.5%.
In Q2 2021, our non-GAAP effective tax rate was 20.3% as a result of the mix of profits between the U.S. and foreign jurisdictions.
Non-GAAP earnings per share was $0.27 for the quarter, which is $0.01 higher than the midpoint of our Q2 guidance and $0.06 sequential improvement.
Non-GAAP ROIC was 7.5%, a 110 basis point increase sequentially and 160 basis point improvement year-over-year.
Our cash conversion cycle days were 64 in the second quarter, an improvement of one day from Q1.
The cash balance was $370 million at June 30, with $135 million available in the U.S.
Our cash balances decreased $30 million sequentially.
We generated $4 million in cash flow from operations in Q2, and our free cash flow was a use of $9 million of cash after capital expenditures.
As of June 30, we had $133 million outstanding on our term loan with no borrowings outstanding on our available revolver.
In Q2, we paid cash dividends of $5.8 million and used $17 million to repurchase 566,600 shares.
As of June 30, we had approximately $174 million remaining in our existing share repurchase authorization.
We expect revenue to range from $555 million to $595 million, which at the midpoint represents a 9% year-over-year improvement.
We expect that our gross margins will be 9% to 9.4% for Q3, and SG&A will range between $34 million and $35 million.
We are still targeting gross margins for the full year to be 9%.
Implied in our guidance is a 3.1% to 3.4% non-GAAP operating margin range for modeling purposes.
We expect to incur restructuring and other nonrecurring costs in Q3 of approximately $800,000 to $1.2 million.
Our non-GAAP diluted earnings per share is expected to be in the range of $0.33 to $0.41 or a midpoint of $0.37.
We expect our capex plans for the year to be between $50 million and $60 million.
We expect -- we estimate that we will generate approximately $80 million to $100 million of cash flow from operations for fiscal year 2021.
Other expenses net is expected to be $2.1 million, which is primarily interest expense related to our outstanding debt.
We expect that for Q3, our non-GAAP effective tax rate will be between 19% and 21% because of the distribution of income around our global network.
The expected weighted average shares for Q3 are approximately $35.7 million.
For the second quarter, we expect revenue to be up sequentially by about $30 million.
After 60% year-over-year growth in Q2, we expect our Semi-Cap sector will remain at Q2 revenue levels as demand still remains robust, but we are constrained in the near term by mechanical sub-tier suppliers.
With this ongoing demand strength and signals from our customers, we are revising our outlook for this sector upward from 20% to greater than 30% revenue growth over 2020 levels.
In A&D, where we grew 8% in Q2, we expect continued growth in third quarter led by increased demand for ruggedized electronics for ground-based military vehicles and secure communication devices.
If there are no further component decommits or design delays, computing could be up over 50% sequentially in the third quarter.
With this demand improvement forecasted in the second half and a tremendous number of new program ramps in Q4, this sector has the potential to achieve greater than 10% growth for this year.
From our second quarter results to the midpoint of our Q3 guide, we're expecting a greater than 30% sequential earnings improvement.
Our target to sustain gross margins at 9% for the full year and our commitment to control our expenses.
On the gross margin line, we are still targeting to achieve 9% for the full year 2021.
With these results, we are still expecting operating cash flows between $80 million and $100 million.
Through the first half of 2021, we repurchased $30 million of stock and may continue to purchase the stock opportunistically as well as continue our recurring quarterly dividend which we raised last quarter as part of our capital allocation plan.
|
Earnings per share of $0.27 was above the midpoint of our guidance, and we had another solid quarter of cash conversion cycle results at 64 days.
Total Benchmark revenue was $545 million in Q2, which was at the higher end of our guidance driven by continued strong performance in Semi-Cap and improving revenue in Industrials and Telco.
Our GAAP earnings per share for the quarter was $0.20.
Non-GAAP earnings per share was $0.27 for the quarter, which is $0.01 higher than the midpoint of our Q2 guidance and $0.06 sequential improvement.
We expect revenue to range from $555 million to $595 million, which at the midpoint represents a 9% year-over-year improvement.
Our non-GAAP diluted earnings per share is expected to be in the range of $0.33 to $0.41 or a midpoint of $0.37.
|
0
0
0
0
0
0
0
1
0
1
0
0
0
0
0
1
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
1
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Gross margin increased across all 3 segments.
SG&A decreased by 100 basis points as a percentage of revenue generated strong cash from operations of $19.4 million and free cash flow of $13.4 million.
On a per share basis free cash flow was $0.46 for the third quarter.
Consolidated gross margin increased 160 basis points.
Cash from operations of $40.5 million with free cash flow of $22.5 million.
Debt paydown of $23.3 million exclusive of the $4.8 million paid for New Century Software our latest acquisition.
However our strong momentum developed over the past 2 quarters encountered some headwinds coming into the fourth quarter of 2019.
Based on what we are seeing and hearing underground we believe we are gaining market share and except for a few locations we have retained a vast majority of the customers served by our close to 90 labs across the U.S. Canada and Europe.
Even by conservative estimates we serve a $14 billion industry within the NDT spend of the business not counting the greater spend generated in the data and mechanical sectors in which we participate.
Looking at results for the third quarter consolidated revenues were up 5.5% to $192 million.
Organic growth was 2.1% with acquisitions contributing 4.4% offset by a 1% decline due to unfavorable currency translation.
Consolidated gross profit for the quarter was $57.8 million a 10% increase over the year ago quarter.
Consolidated gross profit margins improved significantly to 30.1% for the third quarter compared with 28.7% in the prior year quarter an increase of 140 basis points.
Operating income improved for the third quarter to $10.8 million compared with $3 million in the comparable period last year.
On a non-GAAP basis adjusted operating income was $11.2 million compared to $10.1 million last year an increase of 10%.
Net income for the third quarter was $3.1 million compared with a net loss of $1 million for the same period last year.
Adjusted EBITDA was up 7% to $22.4 million for the third quarter of 2019.
As a percentage of revenue adjusted EBITDA improved to 11.6% for the third quarter compared to 11.4% in the same period last year.
We stated last quarter that we had anticipated a continued strengthening of our cash flow generation coming into the back half of the year and we achieved that with third quarter cash from operations of $19.4 million and free cash flow of $13.4 million.
On a per share basis free cash flow was $0.46 for the third quarter this was consistently strong on a sequential basis over the second quarter and a significant improvement over the prior period last year.
Services revenue increased by almost 8% in the third quarter.
Organic revenue grew a little over 2%.
And acquisitions primarily Onstream incrementally added nearly 6% to revenue growth.
The Services segment generated a gross profit margin of 28.4% for the quarter an improvement of 90 basis points compared to the year ago period of 27.5%.
International revenues in the third quarter were up 5.4% organically offset by 4.4% unfavorable currency rates for a 1% nominal increase.
For the third quarter International reported a 31.6% gross profit margin compared to 29.7% a year ago which represents a 190 basis point improvement.
Products and Systems revenue decreased slightly in the third quarter to $5.5 million due to the sale of a subsidiary that was divested in 2018.
Gross profit margin increased for this segment to 49.6% compared with 45.6% in the prior year due to a favorable product sales mix.
We had another prudent quarter in maintaining strong cost control with a below inflation increase of 1% in SG&A year-over-year.
As a percentage of revenue SG&A was down 22% from 23% in the same period last year a decrease of 1 full percentage point once again reflecting our focus on improving operating leverage.
The company's net debt defined as total debt less cash and cash equivalents was $252.9 million as of September 30 2019 compared to $265.1 million at December 31 2018.
The company has paid down over $23 million of total debt during the first nine months of this year.
The company additionally paid a total of $7.7 million for acquisitions and income taxes related to the net settlement of share-based awards during the nine months ended September 30 2019.
As defined in our credit agreement our leverage ratio was approximately 3.6x as of September 30 2019.
Our effective tax rate was approximately 61% for the third quarter of 2019 including a $1.4 million or $0.05 per share write-off of certain deferred tax assets.
Consequently the company's full year outlook is now lower than originally anticipated for the fourth quarter and accordingly the company is lowering its guidance for full year 2019 as follows: total revenues are expected to be between $740 million to $750 million; adjusted EBITDA is expected to be between $70 million to $75 million; capital expenditures are expected to be under $25 million; and free cash flow is expected to be between $28 million to $32 million.
|
Consequently the company's full year outlook is now lower than originally anticipated for the fourth quarter and accordingly the company is lowering its guidance for full year 2019 as follows: total revenues are expected to be between $740 million to $750 million; adjusted EBITDA is expected to be between $70 million to $75 million; capital expenditures are expected to be under $25 million; and free cash flow is expected to be between $28 million to $32 million.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
|
We are proud to announce that Prosperity Bank has been rated in the Top 10 of Forbes Best Banks in America for the seventh consecutive year, and we are the highest rated Texas bank -- the highest rated Texas-based banks.
One, there was a one-time charge of $46.4 million related to the merger.
For the first quarter of 2020, we expect approximately $13 million to $14 million pre-tax in loan discount accretion.
Net income was $86.1 million for the three months ending December 31, 2019, compared with $83.3 million for the same period in 2018.
Our earnings per diluted common share were $1.01 for three months ending December 31, 2019, compared with the $1.19 for the same period in 2018, and were impacted by merger-related expenses of $46.4 million.
It should also be noted that earnings per share is calculated based on average shares outstanding, which were 85,573,000 for the fourth quarter.
We issued approximately 26,228,000 shares in the Merger.
As of December 31, 2019, we had 94,746,000 shares outstanding.
Loans at December 31, 2019, were $18.8 billion, an increase of $8.4 billion or 81.7% compared with $10.3 billion at December 31, 2018.
Linked-quarter loans increased $8.1 billion or 76.6% from the $10.6 billion at September 30, 2019.
Excluding loans acquired in the Merger and new production by the acquired lending operations since November 1, 2019, loans at December 31, 2019, grew $218 million or 2.1% compared with December 31, 2018, and decreased $84 million or 80 basis points on a linked-quarter basis.
The Average loans, excluding the impact of the Merger, increased $407 million or 4% during 2019.
Deposits at December 31, 2019 were $24.2 billion, an increase of $6.9 billion or 40.2% compared with $17.257 billion at December 31, 2018.
Our linked-quarter deposits increased $7 billion -- $7.2 billion or 42% from $16.9 billion at September 30, 2019.
Excluding deposits assumed in the Merger and new deposits generated at the acquired banking centers since November 1, 2019, deposits at December 31, 2019 increased $801 million or 4.6% compared with December 31, 2018, and increased $1.1 billion or 6.7% on a linked-quarter basis.
Asset quality or non-performing assets totaled $62.9 million or 25 basis points of quarterly average interest-earning assets at December 31, 2019 compared with $18.9 million or 10 basis points of quarterly average interest-earning assets at December 31, 2018, and $51 million or 26 basis points of quarterly average interest-earning assets at September 30, 2019.
We announced today that our Board of Directors has authorized a share repurchase program under which the Company can purchase up to 5% of its outstanding common stock, approximately 4.7 million shares over the next year.
So overall, despite oil and gas prices remaining in the $55 to $60 per barrel range, Texas and Oklahoma continued to experience employment and population growth, with many companies moving to these states because of the favorable tax environments and business-friendly political climates.
Net interest income before provision for credit losses for the three months ended December 31, 2019 was $232 million compared to $157.2 million for the same period in 2018, an increase of $74.8 million or 47.6%.
The net interest margin on a tax equivalent basis was 3.66% for the three months ended December 31, 2019 compared to 3.15% for the same period in 2018, and 3.16% for the quarter-ended September 30, 2019.
Excluding purchase accounting adjustments, the core net interest margin for the quarter-ended December 31, 2019 was 3.26% compared to 3.1% for the same period in 2018, and 3.14% for the quarter-ended September 30, 2019.
Noninterest income was $35.5 million for the three months ended December 31, 2019 compared to $29.1 million for the same period in 2018.
Noninterest expense for the three months ended December 31, 2019 was $156.5 million compared to $80.8 million for the same period in 2018.
The increase was primarily due to the merger-related expenses of $46.4 million and two months of LegacyTexas expenses.
Until the conversion, sorry, until the system integration and conversion, we expect noninterest expense to range around $120 million to $125 million per quarter, those are excluding any additional merger-related expenses.
The efficiency ratio was 58.07% for the three months ended December 31, 2019 compared to 43.2% for the same period in 2018 and 43.7% for the three months ended September 30, 2019.
Excluding merger-related expenses, the efficiency ratio was 40.85% for the three months ended December 31, 2019.
The bond portfolio metrics at 12/31/2019 showed a weighted average life of 3.42 years and projected annual cash flows of approximately $2 billion.
Nonperforming assets at quarter-end December 31, 2019 totaled $62.943 million or 33 basis points of loans and other real estate.
The December 31, 2019 nonperforming asset total was comprised of $55.684 million in loans, $324,000 in repossessed assets, and $6.935 million in other real estate.
Of the $62.943 million in nonperforming assets, $15.811 million or 25% are energy credits, $15.487 million of which are service company credits, and $324,000 are production company credits.
Since December 31, 2019, $2.259 million in other real estate has been put under contract to be sold.
Net charge-offs for the three months ended December 31, 2019 were $1.291 million.
$1.700 million was added to the allowance for credit losses during the quarter-ended December 31, 2019.
The average monthly new loan production for the quarter-ended December 31, 2019 was $496 million.
Loans outstanding at December 31, 2019 were $18.845 million -- excuse me, $18.845 billion.
The December 31, 2019 loan total is made up of 38% fixed rate loans, 34% floating rate, and 28% variable rate loans.
|
Our earnings per diluted common share were $1.01 for three months ending December 31, 2019, compared with the $1.19 for the same period in 2018, and were impacted by merger-related expenses of $46.4 million.
|
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
There are over 50,000 ships around the world of all different types and today an estimated 200,000 plus mariners are stranded on vessels and in need of repatriation.
Shipping moves 80% of the global commerce and as an essential part of keeping the global economic recovery going.
We stated last quarter that our revised estimated revenue for 2020 was $395 million and the estimated cash operating margin would be 35%.
We now anticipate full year revenue to be approximately $390 million, which is down $5 million from what we estimated as the full-year revenue on the last call.
We still anticipate cash operating margins of 35%, which would result in cash from core operations of $136 million for the year.
Further, we budgeted $20 million for frictional costs associated with the pandemic, and we still see this as the annual impact of the crisis.
This $20 million of cost gets us down to cash flow of $117 million.
General and administrative expense is now anticipated to be $77 million for the year, a $4 million improvement from $81 million we forecasted on the earlier call and that gets us to $40 million of cash flow.
Vessel disposals of $40 million less dry-dock expenditures of $36 million gets us another positive $4 million.
We are still anticipating a liquidation of working capital, net of taxes and other costs of $21 million for the year.
So our current 2020 outlook compared to the outlook on the last call has cash operating margin down approximately $2 million, dry-dock expenditures are up $3 million, and general and administrative expenses are down $4 million, down $1 million overall to $64 million of free cash flow for the year and consistent with what we laid out on the first quarter call.
This reassessment resulted in impairments and other charges that totaled $111.5 million for the quarter.
The vessel impairments of $55.5 million reflects two components.
The first relates to moving into the asset held for sale category 22 additional vessels were the revised forecasted day rates and utilization, resulted in a present value from continuing to operate those vessels that was lower than their current disposal value.
Further, in addition to the adjustment in book value for those 22 vessels, the second component is a similar mark-to-market adjustment on the 24 vessels that were already classified as assets held for sale.
So we currently have a total of 46 vessels in this category, valued at $29 million and our intention is to dispose of these vessels over the next 12 months.
Our activity levels in West Africa are down over 80% and our operations in East Africa for the time being, have been completely shut down.
Other areas of the continent were negatively impacted although more in line with the roughly 25% global average decline, we noted on the first quarter call.
The balance was in excess of $400 million in 2014 and 2015 and although the balance has been substantially reduced during the intervening years, the current pullback in activity has resulted in us reassessing the collectability of the remaining balance.
As a result of that assessment we recognized an impairment of $42 million.
That resulted in the receipt by Tidewater of $17.1 million of cash in the quarter and dividend income of the same amount.
Also on the continent of Africa, as a result of the steep decline in the business and the outlook in Nigeria, we recognized an impairment on the $12 million owed to Tidewater by our joint venture there and we established a liability for a $2 million loan guarantee, Tidewater provided to the joint venture, back in 2013.
Right now we have $40 million forecasted for proceeds from vessel disposals and we remain on track with 25 vessels sold for $21 million in the first half of 2020.
In the second quarter, we generated revenue of $102.3 million, which is a decrease of 19% from the same quarter in the prior year.
This was principally driven by decreases in vessel activity in our West Africa segment, which had a fewer active vessels in the second quarter and our Europe Mediterranean segment, which had 14 fewer active vessels.
Overall, we had 26 fewer average active vessels in the second quarter of 2020 then in the second quarter of 2019.
In addition, active utilization decreased from 79% in the same period in 2019 compared to 75% in the second quarter of 2020, which is result of vessels going off hire and into layup.
Consolidated vessel operating costs for the quarters ended June 30, 2020 and 2019 were $64.8 million and $80.4 million respectively.
The decrease year-over-year is driven by the decrease in the number of active vessels, but also a 5% decrease in operating cost per active day.
Our general and administrative expense for the quarters ended June 30, 2020 and 2019 were $17.6 million and $23.7 million respectively, which is down 23% year-over-year.
The significant restructuring of our executive management and corporate administrative functions in 2019 and ongoing cost measures resulted in this 12% decrease in G&A expense per active day, down from $1,587 million in the prior year to $1,401 million in the second quarter of this year.
Depreciation expense for the quarter ended June 30, 2020 and 2019 were $28.1 million and $25 million respectively.
The decrease in depreciation is due to the sale in 2019 of over 40 vessels and the reclassification of the aforementioned 46 vessels to assets held for sale.
Looking at our results of the segment level, despite the industry downturn our average day rates across the company improved to approximately $10,800 for the quarter, up approximately 3% from the same quarter last year.
Our Americas segment saw revenue decreases of 3% or $1.2 million during the quarter ended June 30, 2020, compared to the quarter ended June 30, 2019.
Vessel operating profit for the Americas segment for the second quarter was $5.4 million, excuse me, $4.5 million, $1.6 million higher than the prior year quarter.
The higher operating profit was due to a $3.5 million decrease in operating expenses, resulting from fewer dry-docks and better vessel uptime in the second quarter of this year.
Vessel revenues increased 17% or $3.5 million during the quarter ended June 30, 2020 as compared to the quarter ended June 30, 2019.
Activity utilization for the quarter increased to 76% from 75% average, day rate increased almost 10% and average active vessels in the segment increased by 2%.
The Middle East Asia Pacific segment reported an operating profit of $600,000 for the quarter compared to an operating loss of $2.1 million for the same quarter of the prior year.
For our Europe and Mediterranean region our vessel revenues decreased 41% or $14.4 million compared to the year ago quarter.
The lower revenue was driven by 14 fewer active vessels and lower average day rates, which were down 2%.
However, active utilization increased 2 percentage points during the quarter.
The segment reported an operating loss of $1.8 million for the quarter ended June 30, 2020 compared to an operating profit of $2.8 million for the prior year quarter due to decreased revenue, partially offset by $7.9 million of decreased operating cost, which was primarily due to lower personnel and lower repair and maintenance costs associated with the drop in active vessels.
Finally to West Africa where vessel revenues in the segment decreased 32% or $10.6 million during the quarter compared to the same quarter of the prior year.
The active vessel count was lower by -- inactive utilization decreased from 76% during the second quarter of 2019 to 55% during the second quarter of this year.
Average day rates increased 13% due to the vessel mix of remaining contract, similar to what I mentioned earlier.
Vessel operating profit for the segment decreased from $3.1 million for the quarter ended June 30, 2019 to an operating loss of $4 million in the current quarter due to the decrease in active utilization.
Operating cost per active day are down 10% from the previous quarter and down 4% from the year ago quarter.
|
In the second quarter, we generated revenue of $102.3 million, which is a decrease of 19% from the same quarter in the prior year.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
We will never forget that we would not be in the business without our 4.3 million customers; they are our top priority.
We have thousands of employees in Connecticut, who work hard each day to provide our 1.7 million natural gas, water, and electric customers with the most reliable and responsive service possible.
During emergency situations, which we have had far too often over the past year, due to the historic storm levels, they are working up to 16 hours a day for as many days as it takes to ensure that our customers have their service restored promptly and safely, even in a pandemic.
Among many elements, the law will allow each of the state's utilities to build up to 200 -- 280 megawatts of solar generation, NSTAR Electric will be able to increase its level of solar generation in rate base from 70 megawatts to 350 megawatts.
As Phil mentioned during our year-end earnings call, we have budgeted approximately $500 million for this initiative from 2022 to 2025.
The other item with a direct impact on us is a 2,400 megawatts expansion of Massachusetts offshore wind authorization from 3,200 megawatts to 5,600 megawatts.
As you can see on Slide 2, there are now more than 10,000 megawatts of unawarded offshore wind authorizations in Southern New England and New York, with Massachusetts set to award up to 1,600 megawatts later this year.
Late last month BOEM released a schedule for reviewing the 704 megawatt project.
Finally, we expect to receive BOEM review schedule for our 924 megawatt Sunrise Wind project later this year.
The goal was to have about 30,000 megawatts of offshore wind turbines operating in the U.S. by 2030.
Already more than 1,750 megawatts are under contract to serve load in Connecticut, New York, and Rhode Islands.
So I'll start with Slide number 4 and noting that earnings were $1.06 per share in the first quarter, compared with earnings of $1.01 per share in the first quarter of 2020.
Results for both years included after-tax costs associated with our recent acquisition of the assets of Columbia Gas, Columbia Gas of Massachusetts and that's $0.02 per share this year and $0.01 per share in 2020.
Electric Distribution earned $0.27 per share in the first quarter of this year, compared with earnings of $0.39 per share in the first quarter of 2020.
The first is that we recorded a charge of $30 million or $0.07 per share, primarily to reflect customer credits of $28.4 million and an additional penalty of $1.6 million to be paid to the state of Connecticut.
Additionally, Electric Distribution results were negatively affected by approximately $20 million of higher storm-related expenses in the first quarter of 2021 and that's compared to a pretty quiet and warm first quarter in 2020.
And in fact, in this quarter, we experienced 31 separate storm events across our three states versus fairly limited activity in Q1 of 2020.
So, by contrast, our Natural Gas Distribution segment showed a sharp increase in earnings because it's now about 50% larger than it was a year ago.
It earned $0.43 per share in the first quarter of 2021 compared with earnings of $0.26 per share in the first quarter of 2020.
Improved results were due primarily to the addition of Eversource Gas of Massachusetts, which earned $0.14 per share in the quarter.
To date, more than 80% of the business processes have been transferred to Eversource from NiSource's, great progress has been made.
On the Electric Transmission segment, we earned $0.39 per share in the first quarter of 2021, compared with $0.38 per share in the first quarter of 2020.
Our Water Distribution segment earned $3.6 million in the first quarter of 2021, compared with earnings of $2.1 million in the first quarter of last year.
New England service company, as it's called, serves about 10,000 customers in the three states and has rate base of about $25 million.
As you probably noted in our news release and you can see on Slide 5, we are reaffirming our long-term earnings-per-share growth rate in the upper half of the 5% to 7% range.
We now project earnings per share toward the lower end of the $3.81 to $3.93 range and this includes the $0.07 per share impact of the credits.
In addition to the penalty I described previously, PURA also identified a 90 basis point reduction in our authorized distribution ROE.
To help you size that impact currently, CL&P's authorized ROE is 9.25% and we have approximately $5 billion of rate base at CL&P.
I would expect that the New England transmission owners and others will file comments opposing the change, which some see as being inconsistent with the Energy Policy Act of 2005 and with President Biden's focus on building out the nation's electrical infrastructure to bring more clean-energy resources to market.
As a helpful rule from a 10 basis point reduction in our transmission ROE effects consolidated earnings by about $0.01 per share.
In terms of financings, we completed $450 million of debt issuances so far this year, primarily to pay off maturities at Eversource parent and at the Aquarion in Connecticut -- Aquarion company in Connecticut.
However, as you know and we've stated in the past, we continue to expect to issue approximately $700 million of new equity through some sort of after market program and that would occur at various points in time over our forecast period.
|
So I'll start with Slide number 4 and noting that earnings were $1.06 per share in the first quarter, compared with earnings of $1.01 per share in the first quarter of 2020.
As you probably noted in our news release and you can see on Slide 5, we are reaffirming our long-term earnings-per-share growth rate in the upper half of the 5% to 7% range.
We now project earnings per share toward the lower end of the $3.81 to $3.93 range and this includes the $0.07 per share impact of the credits.
|
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
|
These results serve as the foundation for our exceptional net income result of over $1 billion through the first half of 2021, and another important step to achieving our three-year strategic plan objectives and the delivery of superior results to our shareholders.
Everest achieved an annualized total shareholder return of 22.5% through the first half of 2021, while exceeding our three-year strategic planned target of 13%.
We grew gross written premiums by 35% and net written premiums by 39%.
The combined ratio was 89.3%, an 8-point improvement year-over-year.
The attritional combined ratio was 87.6%, almost a four point better than prior year, with both segments expanding margins.
We generated $274 million in underwriting profit compared to $51 million in the second quarter last year.
Net investment income was simply outstanding at $407 million, compared to $38 million in the prior year second quarter.
These strong operating results led to a net income for the quarter of $680 million, resulting in an annualized return on equity of over 28%.
Gross written premiums in reinsurance were up 40% over the second quarter of 2020.
The attritional combined ratio, ex COVID-19 pandemic impact was 86.1% for the quarter, a 60 basis point improvement year-over-year, resulting from our continued focus on loss and expense management.
We wrote over $1 billion in gross written premiums for the first time in a quarter.
This represents 25% growth year-over-year or 30% growth, excluding workers' compensation.
We also delivered strong underwriting results with a 93.5% combined ratio, a 10-point improvement over the same period last year, which was impacted by COVID.
The underlying performance was also excellent with a 92.1% attritional combined ratio, a 1.6% improvement over last year and almost four points better than the second quarter of 2019.
Renewal rate increases continued to exceed our expectations for loss trend, up 14% in the quarter, excluding workers' compensation, and up 11%, including workers' compensation.
Rate increases were led by excess casualty, up 22%; property, up 16%; financial lines, up 14% and general liability, up 9%.
We continue to thoughtfully manage the workers' compensation line, which now represents 10% of our second quarter premiums, down from 14% year-over-year.
For the second quarter of 2021, Everest reported gross written premium of $3.2 billion, representing 35% growth over the same quarter a year ago.
By segment, reinsurance grew 40% to $2.1 billion and insurance reported its first-ever $1 billion top line quarter, representing 25% growth year-over-year.
For the second quarter, Everest reported net income of $680 million, resulting in an annualized return on equity of 28%.
We also reported net operating income of $587 million, equal to operating earnings of $14.63 per share and an annualized operating return on equity of 24.5%.
All three of our earnings engines provided meaningful contributions with significant underwriting income from both our reinsurance and insurance franchises, capped off by net investment income of $407 million, a record quarterly net investment income result.
The underwriting income during the quarter of $274 million reflects Everest's disciplined execution of our strategy to grow and expand margins.
The combined ratio was 89.3% for the quarter, compared to 97.5% last year.
Catastrophe losses during the quarter of $45 million are pre-tax and net of reinsurance and reinstatement premiums, with $35 million in the reinsurance segment and $10 million in the insurance segment, representing additional IBNR provisions for Winter Storm Uri.
Finally, I note we have not added to our COVID-19 incurred loss provision, which remains at $511 million, with the vast majority remaining as IBNR.
Excluding the catastrophe losses, reinstatement premiums, prior year development and COVID-19 pandemic impact, the attritional loss ratio for the group was 60.3% in the second quarter of 2021, compared to 60% in the second quarter of 2020.
The year-to-date attritional loss ratio for the group was 60.5% compared with 60.7% a year ago.
The attritional combined ratio for the group was 87.6% for the second quarter compared to 88.5% for the second quarter of 2020, representing a 0.9 point improvement.
Year-to-date, attritional combined ratio for the group was 87.4% compared with 89.1% a year ago, representing a 1.7 point improvement.
For insurance, the attritional loss ratio improved to 64.2% in the second quarter of 2021 compared with 65.1% year-over-year.
The attritional combined ratio for insurance improved to 92.1% as compared to 93.7% over the same period of time.
For reinsurance, the second quarter 2021 attritional loss ratio was 59.1% compared with 58.2% a year ago.
The attritional combined ratio was 86.1% for the second quarter, down from 86.7% for the second quarter of 2020.
The group commission ratio of 21.8% for the second quarter of 2021 was down 100 basis points from 22.8% reported in Q2 2020, largely due to changes in the composition of our business mix.
The expense ratio remained low at 5.5% for the quarter as compared with 5.8% reported a year ago, and the expense ratio continues to benefit with our continued focus on expense management and the increased scale and efficiency of our operating model.
For the second quarter, investment income had an exceptional result of $407 million as compared to $38 million for Q2 2020.
Alternative investments accounted for $266 million of income during the second quarter, largely due to increases in the reported net asset values of our diversified limited partnership investments.
Invested assets at the end of the second quarter totaled $27.1 billion compared to $21.6 billion at the end of Q2 2020 and $25.5 billion at year-end 2020.
Approximately 80% of our invested assets are comprised of a well-diversified high credit quality bond portfolio with a duration of 3.6 years.
Our effective tax rate on operating income for the second quarter of 2021 was 9.3% and 10.6% on net income.
This was a favorable variance versus our estimated tax rate of approximately 11% based on the geographic distribution of income.
For the first six months of 2021, Everest generated a record $1.6 billion of operating cash flow, compared to $1.1 billion for the first half of 2020, reflecting the strength of our premium growth year-over-year.
Shareholders' equity was $10.4 billion at the end of the second quarter 2021, compared with $9.7 billion at year-end 2020.
We repurchased $16.8 million of shares in the quarter.
Our debt leverage ratio is 13.3% or approximately 15.5% inclusive of our $310 million short-term loans from the Federal Home Loan Bank.
Book value per share was $260.32 at the end of the second quarter compared with $241.57 at the end of Q1 2021, reflecting dividend adjusted growth of 8.4%.
And for the year-to-date, the TSR number is 22.5% annualized.
|
We grew gross written premiums by 35% and net written premiums by 39%.
We also reported net operating income of $587 million, equal to operating earnings of $14.63 per share and an annualized operating return on equity of 24.5%.
|
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
At the same time, 84% of consumers said that they will continue to shop online the same amount or more in the future.
82% of consumers polled across the country are feeling the impact of inflation, and one in four consumers are not confident in their finances right now.
We are very proud to share that Home Chef became a $1 billion brand on an annualized basis in the third quarter as mealtime shortcuts and solutions, as well as new product innovations, have clearly resonated with our customers.
Kroger is focused on delivering a customer-centric, seamless experience that requires 0 compromise no matter how customers choose to engage with us.
This unique convenience and immediacy offering positions us to win more trips with current customers and to bring new customers to the Kroger ecosystem by offering the largest selection of quality fresh products at affordable prices in 30 minutes.
Our hybrid hiring event last month contributed to the hiring of over 64,000 new associates during the quarter.
Over 405,000 associates have completed diversity and inclusion training.
We've increased our strategic hiring partnerships with Historically Black Colleges & Universities and Hispanic-serving institutions from six to 17.
Foundation has awarded more than $3 million in grants to support innovative organizations focused on building more equitable and inclusive communities, and we increased Kroger's diverse supplier spend by 21% to $4.1 billion last year alone and remain on track toward our long-term goal to spend $10 billion annually with diverse suppliers by 2030.
Our identical sales without fuel in the quarter returned to positive, growing 3.1% as we delivered for our customers across our seamless ecosystem, and customers, again, signaled higher food-at-home consumption is here to stay.
Adjusted FIFO operating profit and adjusted earnings per share both increased year over year and grew by compounded annual growth rates of 22% and 29%, respectively, versus 2019.
This triggered a write-off of deferred losses and a nonrecurring noncash charge of $87 million on a pre-tax basis.
This company pension plan is currently 100% funded as a result of previous action taken to freeze the plan and protect benefits for our associates.
The second unusual item was Kroger recording a nonrecurring benefit of $47 million or $0.07 per diluted share, primarily due to the favorable outcome of income tax audit examinations, covering multiple years.
On a two-year stack basis, our identical sales without fuel increased 14%.
We also saw digital sales increased 103% on a two-year stack.
Gross margin was 21.66% of sales for the third quarter.
The FIFO gross margin rate, excluding fuel, decreased 41 basis points compared to the same period last year.
Recognizing recent inflation trends and our outlook for the rest of the year, we recorded a higher LIFO charge for the quarter of $93 million, compared to $23 million in the prior year.
This increase represents a $0.07 headwind to earnings per share in the quarter versus 2020.
The operating, general and administrative rates decreased 49 basis points, excluding fuel and adjustment items.
We remain on track to deliver $1 billion of cost savings during 2021.
Our alternative profit business had a record third quarter and remains on track to deliver the high end of our expected range of $100 million to $150 million of incremental operating profit in 2021.
Gallons grew in the third quarter by 5%, outpacing market growth.
The average retail price of fuel was $3.24 this quarter versus $2.15 in the same quarter last year.
Our cents per gallon fuel margin was $0.42, compared to $0.37 in the same quarter in 2020.
Kroger is operating from a position of strength and continues to generate strong free cash flow as evidenced by our net debt-to-EBITDA ratio hitting an all-time low of 1.68 in the third quarter.
While we continue to see attractive opportunities to invest in the business, to widen our competitive moat, and drive sustainable revenue and earnings growth, our capital expenditures in 2021 are now expected to be below our original guidance range of $3.4 billion to $3.6 billion.
During the quarter, we repurchased $297 million of shares, and year to date, have repurchased $1 billion of shares.
Since 2000, we have now returned more than $20 billion to shareholders via share repurchases at an average price of $16.45 per share.
As of the end of the third quarter, $511 million remains outstanding under the current Board authorization announced on June 17, 2021.
In addition to the $350 million of hourly rate investment already planned this year, we have committed to further investments in the fourth quarter, which equates to an incremental $100 million on an annualized basis.
During the third quarter, we ratified new labor agreements with the UFCW for associates in our Columbus and Mid-Atlantic divisions, covering over 4,500 associates.
We now expect identical sales without fuel for the full year to be between negative 0.4% and negative 0.2% and a two-year identical sales stack of between 13.7% to 13.9%.
There remain some uncertainties as we look ahead, and our guidance of positive ID sales excluding fuel of between 1.5% to 2.5% in the fourth quarter reflects this.
We expect adjusted net earnings per diluted share to be in the range of $3.40 to $3.50.
We expect our adjusted FIFO operating profit to be in the range of $4.1 billion to $4.2 billion, reflecting a two-year compounded annual growth rate of between 17% and 18.4%.
And because we recorded a LIFO credit in the fourth quarter last year, LIFO is now expected to be a $0.13 headwind to earnings per share in the fourth quarter.
In conclusion, Kroger is executing against its key financial and operational initiatives and continues to invest in strategic priorities that will deliver attractive and sustainable total shareholder return of 8% to 11% over time.
|
Our identical sales without fuel in the quarter returned to positive, growing 3.1% as we delivered for our customers across our seamless ecosystem, and customers, again, signaled higher food-at-home consumption is here to stay.
We also saw digital sales increased 103% on a two-year stack.
We now expect identical sales without fuel for the full year to be between negative 0.4% and negative 0.2% and a two-year identical sales stack of between 13.7% to 13.9%.
We expect adjusted net earnings per diluted share to be in the range of $3.40 to $3.50.
|
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
0
0
0
|
I'm pleased to report Teradata delivered a solid second quarter, worldwide sales and operational execution as well as our continued cost discipline resulted in year-over-year growth and outperformance in key financial and operational metrics, including 157% growth in public cloud ARR as well as growth in recurring revenue, non-GAAP earnings per share and free cash flow.
Since June of 2020, we've experienced more than 50% growth in cloud customers, and we are adding new logos in each of our three geographic regions.
Our top 10 customers in terms of cloud ARR at the end of June last year grew significantly year-on-year.
Here's one recent example, a world-leading manufacturer of consumer electronics is using QueryGrid to enable business agility throughout its extended data ecosystem with new functionality and enhancements to QueryGrid, performance was improved by orders of magnitude from 10 to 15 hours to just over three minutes.
Our report notes are pledged to the UN Global Compact principles of ethical behavior and human rights, a careful monitoring and reduction of greenhouse gas emissions and specifically, the reduction of total Scope one and Scope two emissions of about 40% since 2018.
The company scored 90 out of 100 and we are using the inputs and learning how to better support our LGBTQ colleagues.
Our sales and product teams executed well, delivering in line with our outlook and growing public cloud ARR by 157% year-over-year and growing recurring revenue by 16% year-over-year as reported.
Our operational execution was very efficient across the Board, driving an operating margin of 23.8% and non-GAAP earnings per share of $0.74, which is above the previous outlook.
Enabling us to generate $219 million in free cash flow.
These digital transformation activities resulted in total ARR growing by 9% year-over-year as reported and by 7% year-over-year in constant currency.
Total ARR grew by $22 million sequentially.
Public cloud ARR grew by $15 million sequentially, of which more than half resulted from customers migrating to Vantage in the cloud from on-premises perpetual and subscription licenses.
We saw strong growth in subscription ARR, driving a 20% increase year-over-year and approximately a 5% increase sequentially.
Total revenue was $491 million, a 7% increase year-over-year and 4% in constant currency, driven by strength in all three revenue components.
We continue to build on a higher base of recurring revenue, growing 16% year-over-year and 13% in constant currency.
Similar to last quarter, the economic structure of these arrangements resulted in the upfront recognition of approximately $22 million in recurring revenues in the second quarter.
This $22 million was approximately $4 million higher than what we forecasted in our second quarter outlook and will lower recurring revenue in the next three quarters by approximately $7 million per quarter.
Second quarter gross margin expanded to 64.8%, which was approximately six percentage points higher than last year's second quarter primarily for four reasons.
Second quarter operating margin expanded to 23.8%, significantly ahead of what we anticipated, driven by the combination of benefits flowing through gross margin and a lower cost structure as a result of last year's cost actions and continued cost discipline.
Total operating expenses were down 2% year-over-year and flat sequentially.
Second quarter earnings per share of $0.74 and exceeded our outlook range of $0.47 to $0.49 by $0.26 at the midpoint.
Of the $0.26, $0.18 flows through to full year EPS.
The remaining $0.08 only benefit the second quarter.
The $0.08 includes the $0.03 from additional upfront recurring revenues, $0.02 from currency, $0.02 from cost delays and $0.01 related to tax rate and weighted average share assumptions.
We have already exceeded our annual free cash flow outlook with first half free cash flow of $324 million.
In the second quarter, greater operational efficiency on cash collections resulted in free cash flow of $219 million.
Second quarter DSO was 55 days, which was 12 days better than last quarter and 13 days better than last year.
While we look to maintain our collection efficiency, we view 55 days as exceptional and generally not sustainable.
In the second quarter, we repurchased approximately 850,000 shares for $36 million in total.
For the first half of the fiscal year, we spent $121 million on share repurchases or a return of 37% of year-to-date free cash flow to shareholders.
For the full year, we anticipate returning approximately 50% of free cash flow to shareholders via share repurchases while continuing to make investments in the company to support our strategy for profitable growth and cloud acceleration.
The incremental investments are anticipated to have a $0.02 to $0.03 impact on earnings per share in each quarter in the second half.
The outlook for the third quarter of fiscal 2021 is public cloud ARR is expected to grow at least 90% year-over-year or by at least $15 million sequentially.
Non-GAAP earnings per diluted share to be in the range of $0.30 to $0.34, the fiscal second quarter operational outperformance about $0.04 flows through a sustainable improvement in the quarter, offset by the incremental investments I previously mentioned.
We anticipate the tax rate to be between 17% and 18% and a weighted average shares outstanding to be between 113 million and 114 million.
Public cloud ARR growth is expected to be at least 100% and total ARR growth is expected to be in the mid- to high single-digit percentage range.
Total revenue is now anticipated to grow in the low to mid-single-digit percentage range year-over-year.
Non-GAAP earnings per diluted share is expected to be in the range of $1.92 to $1.96.
We anticipate the tax rate to be approximately 23% and the weighted average shares outstanding to be between 113 million and 114 million.
Free cash flow for the year is now expected to be at least $400 million.
|
Our operational execution was very efficient across the Board, driving an operating margin of 23.8% and non-GAAP earnings per share of $0.74, which is above the previous outlook.
Total revenue was $491 million, a 7% increase year-over-year and 4% in constant currency, driven by strength in all three revenue components.
Second quarter earnings per share of $0.74 and exceeded our outlook range of $0.47 to $0.49 by $0.26 at the midpoint.
The $0.08 includes the $0.03 from additional upfront recurring revenues, $0.02 from currency, $0.02 from cost delays and $0.01 related to tax rate and weighted average share assumptions.
Non-GAAP earnings per diluted share to be in the range of $0.30 to $0.34, the fiscal second quarter operational outperformance about $0.04 flows through a sustainable improvement in the quarter, offset by the incremental investments I previously mentioned.
Total revenue is now anticipated to grow in the low to mid-single-digit percentage range year-over-year.
Non-GAAP earnings per diluted share is expected to be in the range of $1.92 to $1.96.
|
0
0
0
0
0
0
0
1
0
0
0
0
0
1
0
0
0
0
0
0
1
0
0
1
0
0
0
0
0
0
0
0
0
1
0
0
1
1
0
0
|
Now at Carnival Cruise Line, we were able to offer more comparable itineraries than 2019, our revenue per dims were up 20% compared to 2019 and that's inclusive of the impact of incentives from previous cancellations, and that's despite the quoting nature of the bookings.
In fact, Carnival Cruise Lines restarted more ships out of the United States than any of the cruise brand and still achieved occupancy above 70%, all of which combined to generate an even greater cash contribution.
Of course, agility has been a key strength of ours over the last 18 months, and we continue to aggressively manage to optimize given this ever-changing landscape.
In fact, while by design, we're not yet at 100% occupancy.
We have individual sailings with over 4,000 guests.
To-date, we have carried over 0.5 million guests this year already.
And on any given day, we are now successfully carrying around 50,000 guests, and expect that number to continue to rise as we introduce more capacity and as we increase occupancy over the coming months.
So far, we've announced the resumption of guest cruise operations for 71 ships through next spring, and that's across eight of our nine brands.
We're evaluating the remaining shifts through next spring, with a continued focus on maximizing future cash flow while delivering a great guest experience in a way that serves the best interest of public health.
We have also opened bookings earlier for cruises in 2023, and we're achieving those early bookings with strong demand and good prices.
In fact, these efforts contributed to the $630 million increase in guest deposits, our long-term guest deposits.
And that's deposits on bookings beyond 12 months, are 3 times historical levels, driven in part by our proactive efforts to open more inventory for sale in outer years.
We continue to focus our efforts on our lower cost channels like direct marketing to our sizable past guest database of over 40 million guests, and earned media, as we build on our multiple new ship launches and restart news flow.
In the report, we build on the achievement of our 2020 goal by sharing more details on our 2030 goals and our 2050 aspiration.
We are committed to decarbonization, and we aspire to be carbon neutral by 2050.
As we have previously shared, despite 25% capacity growth since that time, our absolute carbon emissions peaked in 2011 and will remain below those levels.
I'm very humbled by the dedication I've seen in these past 18 months.
Our strategic decision to accelerate the exit of 19 ships left us with a more efficient and effective fleet, and has lowered our capacity growth to roughly 2.5% compounded annually from 2019 through 2025, and that's down from 4.5% pre-COVID.
And we will achieve a structural benefit to unit costs in 2023 as we introduce these new, larger and more efficient ships, coupled with the 19 ships leaving the fleet, which were among our least efficient, with the aggressive actions we've already taken, optimizing our portfolio and reducing capacity.
I'll start today with a review of our guest cruise operations along with our third quarter monthly average cash burn rate.
We ended the quarter with 35% of our fleet capacity in service.
Our plans call for another 27 ships to restart guest cruise operations during the fourth quarter and the month of December.
So on New Year's Day, we anticipate celebrating with 55 ships or nearly 65% of our fleet capacity back in service.
For the third quarter, occupancy was 54% across the ships in service.
Occupancy did improve month-to-month through the quarter and in the month of August, occupancy reached 59% from 39% in June and 51% in July.
Occupancy for our North American brands reflects our approach of vaccinated cruises, which for the time being, does limit the number of families with children under 12 that can sail with us.
Occupancy for our European brands reflects capacity restrictions, such as social distancing requirements for our Continental European brands and a 1,000-person cap per sailing for some of the quarter in the U.K. For the full third quarter, our North American brands occupancy was 68%, while for our European brands, occupancy was 47%.
Revenue per passenger cruise day for the third quarter 2021 increased compared to a strong 2019 despite the current constraints on itinerary offerings which did not include many of the higher-yielding destination-rich itineraries offered in 2019.
As we previously guided, the ships in service during the third quarter were, in fact, cash flow positive.
They generated nearly $90 million of ship level cash contribution.
For those of you who are modeling our future results, I did want to point out that due to the cost of a portion of our fleet being in pause status during the first half of 2022, restart related expenses and the cost of maintaining enhanced health and safety protocols, we are projecting ship operating expenses in 2022 per available lower berth day or per ALBD, as it is more commonly called, to be higher than 2019 despite the benefit we get from the 19 smaller, less efficient ships leaving the fleet.
We do anticipate that most of these costs and expenses will end with 2022 and will not reoccur in fiscal 2023.
For the third quarter 2021, our cash burn rate was $510 million per month, which was better than our previous guidance and was in line with the $500 million per month for the first half of 2021.
With the timing of certain capital expenditures now shifting to the fourth quarter, the company expects its monthly average cash burn rate for the fourth quarter to be higher than the monthly average rate for the first nine months of the year.
Other good news positive factors impacting the fourth quarter are restart expenditures to support not only the 22 ships that will restart during the fourth quarter but also the additional ships that will restart in the first quarter of 2022, along with the significant increase in dry dock days during the fourth quarter, driven by the restart schedule.
Also, during the fourth quarter, we are forecasting positive cash flow from the 50 ships that will have guest cruise operations during the quarter.
And ALBDs for the fourth quarter are expected to be 10.3 million, which is approximately 47% of our total fleet capacity.
Our booking volumes for the all future cruises during the third quarter 2021 were higher than booking volumes during the first quarter.
Our cumulative advanced book position for the second half of 2022 is ahead of a very strong 2019 and is at a new historical high.
To-date, through our debt management efforts, we have reduced our future annual interest expense by over $250 million per year.
And we have completed cumulative debt principal payment extensions of approximately $4 billion, improving our future liquidity position.
The $4 billion extension results from three things: first, the July refinancing of 50% of our first lien notes were $2 billion.
Second, the completion of the European debt holiday amendments, which deferred $1.7 billion of principal payments.
And third, the extension of a $300 million bilateral loan with one of our banking partners.
|
We're evaluating the remaining shifts through next spring, with a continued focus on maximizing future cash flow while delivering a great guest experience in a way that serves the best interest of public health.
We have also opened bookings earlier for cruises in 2023, and we're achieving those early bookings with strong demand and good prices.
I'll start today with a review of our guest cruise operations along with our third quarter monthly average cash burn rate.
Revenue per passenger cruise day for the third quarter 2021 increased compared to a strong 2019 despite the current constraints on itinerary offerings which did not include many of the higher-yielding destination-rich itineraries offered in 2019.
As we previously guided, the ships in service during the third quarter were, in fact, cash flow positive.
We do anticipate that most of these costs and expenses will end with 2022 and will not reoccur in fiscal 2023.
For the third quarter 2021, our cash burn rate was $510 million per month, which was better than our previous guidance and was in line with the $500 million per month for the first half of 2021.
With the timing of certain capital expenditures now shifting to the fourth quarter, the company expects its monthly average cash burn rate for the fourth quarter to be higher than the monthly average rate for the first nine months of the year.
Our booking volumes for the all future cruises during the third quarter 2021 were higher than booking volumes during the first quarter.
Our cumulative advanced book position for the second half of 2022 is ahead of a very strong 2019 and is at a new historical high.
|
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
1
1
0
0
1
1
1
0
0
0
1
1
0
0
0
0
0
|
We delivered another strong quarter with operating earnings per share up 7% over the prior year period, excluding significant items and COVID impacts in both periods.
Total life and Health NAP was up 1% over the third quarter of 2020 and up 1% relative to 2019 levels.
We ended the quarter with an RBC ratio of 388% and $366 million in cash at the holding company.
This is after returning $131 million to shareholders through a combination of share repurchases and dividends.
Relative to 2019, life sales were up 22%.
Overall, health sales were essentially flat year-over-year but down 16% relative to 2019.
Total collected life and health premiums were down 2%.
Annuity collected premiums were up 17% year-over-year and up 2% relative to the third quarter of 2019.
Client assets in our brokerage and advisory grew 30% year-over-year to $2.7 billion, fueled by new accounts, which were up 16%, net client asset inflows and market value appreciation.
Sequentially, client assets grew 2%.
Fee revenue was up 41% year-over-year to $28 million, reflecting growth within our broker-dealer and registered investment advisor, higher fees generated by Web Benefits Design, our worksite technology platform and the inclusion of DirectPath results, which is our worksite enrollment and advisory services business.
Consumer segment life and health sales were down 2% over the prior period but up 8% over 2019.
Direct-to-consumer life sales were up 13% on top of 23% growth in the prior period.
Life sales generated by our exclusive field agents were down 15%.
Health sales were down 5%, largely reflecting continued weakness in Medicare Supplement sales.
We now have nearly 3,000 exclusive field agents certified to sell Medicare products, which is up 14% from last year, and we boosted our D2C capabilities through enhanced lead acquisition and sales capabilities.
As I mentioned, annuity collected premiums were up a healthy 17% as compared to the prior year and up 2% versus 2019.
The number of new accounts grew 6% and the average annuity policy rose 10%.
Client assets in brokerage and advisory grew 30% year-over-year to $2.7 billion in the third quarter.
Combined with our annuity account values, we now manage $13 billion of assets for our clients.
The number of agents that have been with us for at least three years has remained consistent through the third quarter and is up 1% year-to-date.
Productivity among these veteran agents is up 5% over the prior period and up 13% year-to-date.
Our producing agent count was down 5% year-over-year and down 11% sequentially due to the tight labor market.
Asian count remains down more than 45% from pre-COVID levels.
Our average client size in these businesses increased 15%, and our average per employee per month rates were up double digits.
Our robust free cash flow enabled us to return $131 million to shareholders in the third quarter, including $115 million in share buybacks.
We intend to deploy 100% of our excess capital to its highest and best use over time.
We generated operating earnings per share of $0.72 in the quarter, which is down $0.07 year-over-year as reported, down $0.05, excluding significant items and up $0.04 or 7% excluding significant items and adjusting for the net favorable COVID impacts on insurance product margin.
We had $3 million pre-tax or $0.02 per share of unfavorable significant items in the current period and none ended prior year period.
And we had $23 million or $0.14 per share of net favorable COVID impacts in the current period as compared to $42 million or $0.23 per share in the prior year period.
Over the last four quarters, we have deployed more than $400 million of excess capital on share repurchases, reducing weighted average shares outstanding by 9%.
The operating return on equity was 11.5% for the 12 months ending September 30, 2021.
Insurance product margin, excluding significant items, was down $21 million or 9% in the third quarter as compared to the prior year period, driven by the $19 million year-over-year change in COVID impacts.
Page 10 of our financial supplement summarizes those impacts by quarter.
The sequential decline in our annuity margin reflects volatility related to the indexed annuity FAS 133 accounting for our embedded derivative reserve, which had a favorable impact in the second quarter and an unfavorable impact in the third quarter.
Investment income not allocated to products, which is where the variable components of investment income flow through increased $7.2 million or 16%, reflecting solid performance within our alternative investment portfolio and higher prepayment income.
Our new money rate of 3.55% for the quarter was up 17 basis points sequentially, reflecting increased allocation to direct investments and an increase in market yields.
Our new investments comprised $849 million of assets with an average rating of A minus and an average duration of 13 years.
At quarter end, our invested assets totaled $28 billion, up 5% year-over-year.
Approximately 95% of our fixed maturity portfolio is investment-grade rated with an average rating of single A. This allocation to A-rated holdings is up 20 basis points sequentially.
The BBB allocation comprised 39% of our fixed income maturities, down 180 basis points year-over-year and 40 basis points sequentially.
During the quarter, we established a $3 billion funding agreement backed note program and in early October, we issued an inaugural $500 million funding agreement backing five-year notes.
We expect the FABN program will provide roughly 100 basis points of annualized pre-tax spread income, net of expenses on the notional amount of the notes outstanding.
We'll report the net spread income in NII, not allocated products, just as we currently report the net spread income associated with our Federal Home Loan Bank program on page 17 of our quarterly financial supplement.
We continue to generate strong free cash flow to the holding company in the third quarter with excess cash flow of $166 million to 179% of operating income, which reflects the solid operating results in the quarter, the continued up in quality bias in our investment portfolio and our decision to increase dividends out of the operating companies to bring the RBC ratio down into our targeted range.
At quarter end, our consolidated RBC ratio was 388%, which represents approximately $70 million of excess capital relative to the low end of our targeted range.
Our Holdco liquidity at quarter end was $366 million, which represents $216 million of excess capital relative to our $150 million minimum Holdco liquidity target.
As mentioned previously, that will reduce our RBC by approximately 16 points, all else equal, which translates to about $80 million of capital.
For the time being, we are not reducing our target RBC ratio, but we will manage the low end of the 3.75% to 400% target range.
And we will move closer to our $150 million minimum Holdco liquidity target.
|
Our average client size in these businesses increased 15%, and our average per employee per month rates were up double digits.
We generated operating earnings per share of $0.72 in the quarter, which is down $0.07 year-over-year as reported, down $0.05, excluding significant items and up $0.04 or 7% excluding significant items and adjusting for the net favorable COVID impacts on insurance product margin.
At quarter end, our invested assets totaled $28 billion, up 5% year-over-year.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
1
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
|
Further, we were able to increase our cash position this quarter by nearly 190 million, which allows us to accelerate our delevering plans.
After our initial delevering event, we repaid our revolver in full in Quarter 1.
We stated our goal of reducing long-term debt by $200 million by year-end 2021.
We recently announced the redemption of 150 million of 6.875% senior notes due in 2024.
And now today, we're able to increase increased our delevering goal to 300 million assuming a $65 oil price for the remainder of 2021.
Additional cash flow has been accomplished, not only through stronger oil prices, but also ongoing operational excellence as we've achieved less operated downtime offshore while experiencing the benefits of our optimization efforts and upgrades completed over the previous 18 months.
Additionally, we produced 100,000 barrels of oil per day in the second quarter, topping our guide by 5%.
We've now established a goal of zero routine flaring by 2030 and obtained third-party assurance of our 2020 scope one and scope two greenhouse gas emissions.
Statistical highlights include receiving a 47% reduction in scope one and scope two greenhouse gas emissions since 2016 and a 10% decrease in greenhouse gas emissions from 2020 -- from 2019 to 2020, excuse me.
On Slide 5, our second-quarter production volumes of 171,000 barrels of oil equivalent per day were 4% above our guidance midpoint for the quarter.
Accrued capex for the quarter was $198 million, revenue of near 700 million, which is the highest in a year was achieved through strong realized pricing of $65.53 per barrel for oil.
In the second quarter, we reported a net loss of $63 million or $0.41 per diluted share.
After adjusting for certain after-tax items, such as 103 million non-cash mark-to-market loss on crude oil derivatives and a $49 million non-cash mark-to-market loss on contingent consideration, we reported adjusted net income of $91 million or $0.59 per diluted share.
Cash from operations for the quarter totaled $449 million, including the noncontrolling interest.
After accounting for net property additions of $203 million, we achieved positive adjusted cash flow of $246 million.
Our 2021 capex plan is heavily weighted toward the first half of the year with 198 million total accrued capex in the second quarter.
Overall, our ongoing disciplined spending has led us to tighten our capex guidance for the year, now ranging from 685 million to $715 million, with $700 million maintained as the midpoint.
Approximately 63% has already been spent in the Eagle Ford Shale as of June 30th, and 66% has been spent in the Gulf of Mexico, while 76% of onshore Canada capex has been spent by that date.
Since 60% of our 2021 capital plan is complete, and key contracts are in place for the remaining plan, we have minimal near-term supply chain risk to our capital spending.
Our third-quarter production guidance range of 162 to 170,000 a barrels of oil equivalent per day includes 4,100 barrels of oil equivalent per day of assumed Gulf of Mexico storm downtime.
Additionally, we are adjusting our full-year production guidance range to 157.5 thousand barrels of oil equivalent per day to 165.5 thousand barrels of oil equivalent per day, which includes fourth-quarter impacts of 1,300 barrels of oil equivalent per day for assumed Gulf of Mexico storm downtime and 7,900 barrels of oil equivalent per day for net planned offshore downtime.
On Slide 9, in the second quarter, we brought online three operated and 29 gross non-operated wells in the Eagle Ford Shale, 10 wells are brought online in the Tupper Montney, that wraps up our activity in offshore Canada for the year.
Our Eagle Ford Shale wells produced 42,000 barrels equivalent per day in the second quarter in process of 75% oil and 88% liquids.
For the remainder of the year, we plan to drill and complete 4 wells in the fourth quarter, I just mentioned, in our Catarina acreage, all within our planned annual capex of $170 million.
The team continues to execute and generate efficiencies as evidenced of our 25% improvement in our rate of penetration completion cost per lateral foot since 2019.
Overall, we've achieved a 40% reduction in completion costs in four years.
And making operational improvements, our average per well drilling and completion costs has improved to 4.7 million from 6.3 million in 2018.
As a result, we are now achieving well payouts of approximately nine months on our 2021 program at oil prices averaging nearly $62 per barrel in the first half of this year.
On Slide 12, the Tupper Montney, we produced 248 million cubic feet per day in the second quarter.
10 wells are brought online, which completes all well activity for the year.
we've seen a 24% reduction in drilling and completion costs since 2017 while achieving a total well cost of just 4.4 million in 2021, compared to 5.5 million in 2019.
The -- In particular, our completion cost per lateral foot have improved 25% since 2019 through lower nonproductive time, optimized wireline operations, enhanced water handling, and natural gas-powered frac pumps.
Further, our average pumping average per day has increased more than 50% since 2017 from almost 12 hours to 18 hours per day, the ability to lower our cost per well by nearly $1 million will add significant value to our Tupper Montney project and represents the tremendous work of our drilling and completions team in that area.
3 well was drilled in the quarter, and we're now drilling the Khaleesi 3 well.
Our next well is Samurai 4, which is planned for later in the third quarter before we begin completions work on all seven wells that make up the Khaleesi/Mormont, Samurai development.
In Brunei, on Slide 17, in the quarter, we participated in the drilling of discovery well in Block CA1 in Brunei with the Jagus SubThrust-1X well for a total cost of Murphy of just $2.8 million at approximately an 8% working interest.
Post this well, we reclassified our working interest in Block CA-1 of Brunei has not held for sale any longer.
This exploration in the Gulf of Mexico in the second quarter on Page 18, and drilling was commenced at the Chevron-operated sale back prospect in the Gulf, which we anticipate finishing this month.
Our participation provides access to 12 blocks with potential for attractive play opening trend and is adjacent to the large position Murphy holds with our partners.
Murphy along with the operator, ExxonMobil, and partners planned to spud the cut through one well in the fourth quarter of 2021 and approximate net cost of Murphy of just $15 million.
I'm pleased with our excellent production results this quarter and our oil production exceeded by 5% has remained consistent in our ever-improving operations and operated offshore and in the Eagle Ford Jail.
We remain on track with our full-year production at our midpoint of 161.5 thousand barrels equivalent per day with 55% oil weighting.
As such, we affirm the 700 million midpoint of capex for 2021 and have announced today that we're tightening the range around this midpoint.
Our continued execution and capital discipline laid in maintaining our capital spend of 600 million from '21 through 2024 with a production CAGR of approximately 6% through that period.
Of course, we're trending well in our current oil weighting and are above the plan for 2021 at 55%.
Assuming an average long-term WTI price of $60 per barrel, Murphy is able to -- will be able to cut its debt in half to less than 1.4 billion by the end of '24 while maintaining a quarterly dividend payment to shareholders.
We note that this plan accelerates using an average price of $70 per oil in '23, enabling us to reach the debt reduction by just mid-2023.
Beyond delevering, we remain focused on our exploration program and portfolio of over 1 billion barrels of oil equivalent and net risked resource potential.
We decided to accelerate our long-term debt reduction goal for 2021 to 300 million from 200 million, assuming an oil price of $65 for the rest of the year, and look forward to achieving our goal of 1.4 billion in long-term debt reduction by '24 with a long-term average price of $60 per barrel.
|
In the second quarter, we reported a net loss of $63 million or $0.41 per diluted share.
After adjusting for certain after-tax items, such as 103 million non-cash mark-to-market loss on crude oil derivatives and a $49 million non-cash mark-to-market loss on contingent consideration, we reported adjusted net income of $91 million or $0.59 per diluted share.
Our third-quarter production guidance range of 162 to 170,000 a barrels of oil equivalent per day includes 4,100 barrels of oil equivalent per day of assumed Gulf of Mexico storm downtime.
Additionally, we are adjusting our full-year production guidance range to 157.5 thousand barrels of oil equivalent per day to 165.5 thousand barrels of oil equivalent per day, which includes fourth-quarter impacts of 1,300 barrels of oil equivalent per day for assumed Gulf of Mexico storm downtime and 7,900 barrels of oil equivalent per day for net planned offshore downtime.
We remain on track with our full-year production at our midpoint of 161.5 thousand barrels equivalent per day with 55% oil weighting.
|
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
|
Revenue in the second quarter was a record of more than $1.5 billion, an increase of 29%.
For the six-month period, revenue was nearly $2.3 billion, up 27% and further illustrating our growth was roughly as much as our 2015 full year revenue.
The growth in revenue and lower expense ratios resulted in record non-GAAP earnings per share of $1.70, which was up 65% year-on-year and $3.20 year-to-date, which is up 75% and when compared to our past full year results would rank as the fourth best in our history.
I'm also pleased with our operating leverage as we generated record pre-tax margin of 24% and our annualized return on tangible common equity was nearly 31%.
Tangible book value per share increased 29% in the last year.
Our record second quarter net revenue was driven by global wealth management and increased 26% in our institutional business, which posted a 31% improvement.
Compensation as a percentage of net revenue declined sequentially to 59.5%, which was in-line with our guidance on last quarter's call.
Our operating expense ratio of 17% and excluding credit provision in investment banking grow subs, our operating ratio totaled 16%.
This, coupled with strong credit performance in our loan portfolio resulted in a reversal of more than $9 million of credit provisions during the quarter.
I would note that this was comprised of a $4 million release of credit provisions due to improving economic outlook and approximately $5 million relating to loan sales.
Neutralizing the impact of credit provisions, Stifel's pre-tax, pre-provision income totaled $270 million, which increased 31% year-on-year and 13% sequentially.
To illustrate some of the numbers, at the end of 2015, our net revenue total approximately $2.3 billion, with nearly $1.4 billion from Wealth Management and roughly $1 billion from our institutional group.
This has led to a more than 70% increase in total client assets and annualized global wealth revenue that would surpass 2015 results by 84%.
Our institutional business, we've made six acquisitions and our total Managing Directors have increased 67% and our investment banking business contributing an 111% increase in our institutional revenue since 2015.
In the first half of 2021, our pre-tax margin increased to 23% from 10% in 2015, while our return on tangible common equity improved to 30% from 10% in that same time period.
We now expect net revenue to be in the range of $4.5 billion to $7 billion, up 13% to 18% from the high end of our prior guidance.
We are tightening our net interest income guidance to $465 million to $485 million as the benefits of the growth in our balance sheet has helped to offset the decline in short-term rate.
In the second half of 2021, we anticipate an additional $2 billion of asset growth at our bank.
Our comp ratio is lowered to 58% to 60%, given our expected NII results and strong investment banking.
Our operating non-comp expense ratio expectations has declined to 16.5% to 18.5% as we continue to see improved operating leverage in our business.
I would also note that not only is our updated guidance, significantly above our original expectations, but also well above the current 2021 Street expectations of $4.3 billion in revenue and $5.57 of earnings per share.
Second quarter revenue totaled a record of $638 million, up 26% year-on-year and with six-month revenue of $1.3 billion, also a record and up 17%.
Total assets under administration were $402 billion and fee-based assets of $149 billion rose 8% sequentially.
Net interest income increased 3% year-over-year, primarily, given our continued ability to grow loans and produce a stable net interest margin.
We added 26 advisors, including 14 experienced advisors with total trailing 12-month production of $12 million.
Our quarterly net revenues total a record $521 million, which was up 31% from the prior year.
Six-month revenue increased 41% over $1 billion.
Quarterly advisory revenues more than doubled to $207 million while capital raising posted revenue of $158 million, which was up 42%.
These results more than offset a 17% decline in our trading revenue.
The leverage in these investments was on display this quarter as our pre-tax margins improved by 630 basis points to 27%.
Looking at the revenue components of our institutional business, our equities business posted record first half results of $391 million, up 52% while our second quarter revenue totaled $163 million, up 29% year-on-year.
Our fixed income business posted quarterly revenue of $147 million, while down 13% year-over-year was up sequentially.
With respect to our trading businesses, equity quarterly revenue totaled $61 million, down 22% from record levels in the first quarter, which was slightly better than the overall market volume declines which we witnessed.
Six-month revenue was $141 million, which was up 5% from 2020.
Fixed income trading revenue of $92 million was down 7% sequentially.
On slide 9, investment banking revenue of $376 million was our third consecutive quarterly record, an increase of 73%, driven primarily by record advisory revenue.
First half revenue of $716 million increased 81% as we generated record capital raising in the first quarter and record advisory revenue in the second quarter of this year.
Record revenue of $207 million surpassed our prior quarterly record by 19%.
Since the beginning of 2020, KBW has advised on 8 of the 10 largest bank mergers and has the highest market share in the firm's illustrious history.
Our equity underwriting business posted revenue of $112 million, up 61% and our second best quarter in history, trailing only the first quarter of this year.
In addition to the strength of our equity business, we generated record results in our fixed income underwriting business of $57 million, which was up 16%.
Our municipal finance business posted another great quarter, as we lead managed 244 municipal issues.
For the first 6 months, our market share in terms of number of transactions increased to 12.5% from 10.9% in the first half of 2020.
I think it is noteworthy that in the first half of 2021, non-public finance revenue which was minimal just a few years ago now accounts for nearly 20% of our fixed income underwriting.
I the quarter, we saw a $0.10 differential between our GAAP and non-GAAP results.
For the quarter, net interest income totaled $190 million, which was up $6 million sequentially.
Our firmwide and bank debt interest margins remained at 200 basis points and 240 basis points respectively.
While net interest income, benefited from a 6% increase in interest earning assets.
In terms of our third quarter expectations, we see a net interest income in a range of $115 million to $125 million and with a similar NIM to the second quarter.
We are maintaining our prior guidance of $150 million to $175 million of incremental pre-tax income as a result of 100 basis point increase in rates.
We ended the quarter with total net loans of $12.9 billion, which is up approximately $700 million from the prior quarter and was primarily driven by growth in our consumer channel.
Our mortgage portfolio increased by $400 million sequentially as we continue to see demand for residential loans from our Wealth Management clients.
Our securities based loan portfolio increased by approximately $240 million.
Our commercial portfolio accounts for 37% of our total loan portfolio, it is primarily comprised of C&I loans, which were up slightly from the prior quarter.
Our portfolio is well-diversified with our highest sector exposure in Fund Banking, which increased outstanding balances by $325 million during the quarter.
I also want to note that we had a nearly $200 million reduction in our PPP loans during the quarter.
Moving to the investment portfolio, which increased by $300 million sequentially.
In the second quarter, we had a $9 million reversal of our allowance through a negative provision expense as additional reserves tied to loan growth we're more than offset by the improved economic scenario in our CECL model.
I would also highlight that approximately $5 million of the negative provision expense was tied to $200 million of loans that are being sold at a premium.
As a result of the reserve release in the composition of our loan growth during the quarter, our ratio of allowance to total loans declined to 99 basis points, excluding PPP loans.
At quarter end, the consumer allowance to total loans was 35 basis points, while the commercial portfolio was 142 basis points.
We also continue to see strong credit metrics with non-performing assets and non-performing loans declining to 5 basis points.
Our risk-base and leverage capital ratios came in at 18.9% from 11.7% respectively.
During July, we also closed on a $300 million, 4.5% non-cumulative perpetual preferred stock offering and announced the redemption of our 6.25% percent Series A preferred.
We continued our share repurchase program in the second quarter by buying back 440,000 shares at an average price of $65.85.
In addition to the $6 billion available on our sweep program, the bank has access to off-balance sheet funding of more than $4 billion.
Within our primary broker dealer and holding company, we have access to nearly $2 billion of liquidity from cash, credit facilities that are committed and unsecured, as well as secured funding sources.
In the second quarter, our pre-tax margin improved 650 basis points year-on-year to a record 24%.
Our comp-to-revenue ratio of 59.5% was down 50 basis points from the prior year.
For the first six months of this year, our comp ratio was 60.2% and given our updated guidance, it is safe to assume that we expect the comp ratio in the second half of the year to be below the first.
Non-comp operating expenses excluding the credit-loss provision and expenses related to investment banking transactions totaled approximately $185 million that represented approximately 16% of net revenue.
The effective tax rate during the quarter came in at 25%, which is at the lower end of the range and in-line with our commentary on last quarter's call.
Absent any other discrete items, we'd expect to see an effective rate to be between 24% and 26% in the second half of the year.
In terms of our share count, our average fully diluted share count was up 1% primarily as a result of normal stock-based compensation, offset by share repurchases.
Absent any assumption for additional share repurchases and assuming a stable stock price we'd expect the third quarter, fully diluted share count to total 118.5 million shares.
In addition to the excess capital we generate from operations as Jim noted, we raised an additional $300 million in preferred shares during July after redeeming our Series A preferred, we added an incremental $150 million in capital.
As our updated guidance illustrates, we believe that we can grow our balance sheet by an additional $2 billion in the second half of the year.
The combination of these growth channels has enabled us to generate and the average annual loan growth rate of 30% in the last seven years, while maintaining a strong credit profile.
In terms of growth in our other business lines, we continue to focus on both hiring and acquisitions while we haven't done an acquisition in 18 months.
|
The growth in revenue and lower expense ratios resulted in record non-GAAP earnings per share of $1.70, which was up 65% year-on-year and $3.20 year-to-date, which is up 75% and when compared to our past full year results would rank as the fourth best in our history.
|
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
During the fourth quarter, leasing traffic was strong, and we captured 6% higher move-ins as compared to prior year.
And despite the normal seasonal slowdown during the holidays, we were able to capture positive blended lease-over-lease rent growth that equaled the prior third quarter with particularly strong renewal lease pricing averaging 5.2% in Q4.
Average physical occupancy also remained strong at 95.7% in the fourth quarter, a slight improvement from the performance in Q3.
Leasing volume for the quarter was up 6%.
This allowed us to improve average daily occupancy from 95.6% in the third quarter to 95.7% in the fourth quarter.
In addition to the improvement in occupancy, we were able to hold blended rents in the fourth quarter, in line with the third quarter and an 80 basis point increase.
All in-place rents or effective rent growth on a year-over-year basis improved 1.3% for the fourth quarter.
We collected 99.2% of build rent in the fourth quarter.
In April, we had 5,600 residents on relief plans.
The number of participants has decreased to just 491 for the January rental assistance plan.
This represents less than 0.5% of our 100,000 units.
For the full year 2020, we installed 23,950 Smart Home packages and completed just over 4,200 interior unit upgrades.
As of January 31, we've collected 98.7% of rent build which is comparable to the month end number for the third and fourth quarters of 2020.
Leasing volume in January was strong, up 4.9% from last year.
Effective blended lease-over-lease pricing for January was positive 2.2%, 40 basis improvement from the prior year.
Effective new lease pricing for January was negative 1.8%.
This is a 70 basis point improvement from January of last year.
January renewals effective during the month were up 6.3%.
Our customer service scores improved 110 basis points over the prior year.
This aids to our retention trends, which are positive for January, February and March, as well as lease-over-lease renewal rates for those months, which are in the 5.5 to 6.5 range.
Average daily occupancy for the month of January is 95.4%, which is even with January of last year.
60-day exposure, which is all vacant units plus notices through a 60-day period, is just 7.8%.
Led by job growth, which is expected to increase 3.4% in 2021 versus the 6.1% drop we saw for our markets in 2020, we expect to see the broad recovery in our region and the country continue.
Due to the robust demand, supported by continued low interest rates, cap rates have compressed further and are frequently in the high 3% and low 4% range for high-quality properties in desirable locations within our markets.
While acquiring will be a challenge, as noted in the earnings guidance, we do plan to come to market with $200 million to $250 million of planned property dispositions this year.
We will redeploy those proceeds into our growing development pipeline, which currently stands at $595 million with eight projects in just over 2,600 units.
Both of these are lower density suburban projects that we expect to deliver stabilized NOI yields around 6%, well in excess of our current acquisition cap rates.
We are encouraged that despite facing some supply pressure, our Phase two lease-up property located in Fort Worth continues to lease up at our original expectations as does our soon to be completed Phase two in Dallas, where over 90% of the units have been delivered.
Based on our assessment and the projection data we have, new supply deliveries across our major markets are projected to remain flat with 2020 levels, at 2.8% of existing inventory.
Core FFO of $1.65 per share for the fourth quarter produced full year core FFO of $6.43 per share, which represented a 2.7% growth over the prior year and is well above our internal expectations following the breakout of the pandemic.
Stable occupancy, strong collections and positive pricing performance were the primary drivers of continued same-store revenue growth for the fourth quarter, which is 1.8% and for the full year, which is 2.5%.
As Brad mentioned, our development pipeline has increased to eight deals with total projected costs of $595 million.
During the quarter, we funded $104 million of development costs, leaving less than half or another $259 million remaining to be funded toward the completion of the current pipeline.
Though still growing, our pipeline is still is only about 3% of our enterprise value, which is a modest risk, given the overall strength of our balance sheet and a diversified portfolio strategy.
As Tom mentioned, we also made good progress toward the -- during the quarter on our internal programs, funding a total of $40 million toward the interior unit redevelopments, Smart Home installations and external amenity upgrades, bringing our full year funding for lease programs to $76 million, which is expected to begin contributing to our growth more strongly late in 2021 and 2022.
We ended the year with low leverage, debt-to-EBITDA of only 4.8 times and with $850 million of combined cash and borrowing capacity under our line of credit.
Core FFO for the full year is projected to be $6.30 to $6.60 per share, which is $6.45 at the midpoint.
The primary driver of earnings performance is same-store revenue growth, which is projected to be around 2% for the year.
This growth is based on the expectation of continued improving economic trends and job growth in our markets, as Tom outlined, and we believe these trends will support both stable occupancy levels, averaging around 95.5% for the year.
And modestly improving pricing trends through the year, driving effective rent growth for the year of around 1.7%.
An additional contribution of 30 to 40 basis points of projected revenue growth for the year is related to the final portion of our Double Play bulk internet program.
Same-store operating expense growth is projected to moderate some as compared to 2020, will continue to be impacted by the rollout of Double Play and higher insurance costs with these costs combining for an estimated 1.4% of the same-store expense growth in 2021.
But excluding Double Play and insurance, all other same-store expenses are expected to increase in a more modest 2.5% to 3% range for the full year.
And this includes real estate tax growth of 3.75% at the midpoint, which is moderating, but still somewhat elevated.
Overhead costs for 2021 are projected to be more normalized, with total overhead expenses expected to be about $107 million for the year, which is a 2.8% increase over the midpoint of our original guidance for 2020.
Our forecast also assumes development funding of $250 million to $350 million for the year, primarily provided by projected asset sales of $200 million to $250 million.
And given our current forecast, we have no current plans to raise additional equity, and we expect to end the year with our debt-to-EBITDA just below 5 times.
|
Core FFO for the full year is projected to be $6.30 to $6.60 per share, which is $6.45 at the midpoint.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
|
Yesterday, we reported record earnings of $0.94 per share compared with $0.54 in the prior year's quarter and $0.79 sequentially.
Revenue was a record $144.4 million for the quarter compared with $94 million in the prior year's quarter and $125.8 million sequentially.
Our implied effective fee rate was 58 basis points in the second quarter compared with 57.3 basis points in the first quarter.
Excluding performance fees, our second quarter implied effective fee rate would have been 57 basis points.
Operating income was a record $62.6 million in the quarter compared with $35.5 million in the prior year's quarter and $53.2 million sequentially.
Our operating margin increased to 43.4% from 42.3% last quarter.
Expenses increased 12.6% compared with the first quarter, primarily due to higher compensation and benefits, distribution and service fees and G&A.
The compensation to revenue ratio, which included the just mentioned cumulative adjustments to lower the incentive compensation accrual, was 35.03% for the second quarter and is now 35.25% for the six months ended.
Our effective tax rate, which also included a cumulative adjustment, was 26.51% for the second quarter and is now 26.85% for the six months ended.
Our firm liquidity totaled $185.6 million at quarter-end compared with $124.3 million last quarter.
Total assets under management was a record $96.2 billion at June 30th, an increase of $9.2 billion or 11% from March 31st.
The increase was due to net inflows of $2.6 billion and market appreciation of $7.4 billion, partially offset by distributions of $769 million.
Advisory accounts, which ended the quarter with a record $23.1 billion of assets under management, had net inflows of $1 billion during the quarter.
We recorded $300 million of inflows from five new mandates and a record $1.2 billion of inflows from existing accounts.
Partially offsetting these inflows were $493 million of outflows resulting from client rebalancing.
Japan Subadvisory had net outflows of $272 million during the quarter, compared with net outflows of $204 million during the first quarter.
Subadvisory excluding Japan had net outflows of $375 million primarily from a single client who decided to bring the portfolio management for a portion of the assets we manage for them in-house.
Open-end funds, which ended the quarter with record assets under management of $43.5 billion, had net inflows of $2.1 billion during the quarter.
This marks the 10th straight quarter of net inflows into open-end funds, and the first time we have recorded net inflows into each of our 11 US mutual funds.
Distributions totaled $312 million, $260 million of which was reinvested.
As a result, we reduced the compensation to revenue ratio by 25 basis points to 35.25% for the six months ended, and we expect that our compensation to revenue ratio will remain at 35.25%.
As we resume certain business activities that have been restricted during the worst of the pandemic, we expect G&A will increase by about 12% from the $42.6 million we recorded in 2020, but only by about 3% from the $46 million we recorded in 2019.
We expect that our effective tax rate will remain at 26.85%.
A good portion of our AUM did better than the S&P 500, which was up 8.6%.
For the last 12 months, all nine core strategies outperformed.
99% of our AUM is outperforming benchmarks on a one-year basis compared with 93% last quarter, driven by improvements in global listed infrastructure and certain global real estate portfolios.
On a three-year basis 100% of AUM is outperforming, and for five years 99% is outperforming, essentially the same as last quarter.
US REITs returned 12% in the quarter, lifting the year-to-date return to 21.3%.
We outperformed our benchmark in the quarter and for the last 12 months.
Global real estate returned 9.2% in the quarter compared with global stocks at 7.7%, lifting the year-to-date return to 15.5%.
For both the quarter and the last 12 months, we have outperformed in all three of our regional strategies as well as in our global and international strategies.
Global listed infrastructure returned 2.9% in the quarter, lifting the year-to-date return to 7%.
We outperformed for the quarter and for the last 12 months.
Preferred returned 2.9% in the quarter, helped by the 10-year treasury yield falling 30 basis points to 1.4%.
The year-to-date return is 2.4%.
We outperformed in the quarter and for the last 12 months in both our core and low duration preferred strategies.
Our real assets multi-strategy benchmark returned 8.5% in the quarter, lifting the year-to-date return to 14.5%.
We outperformed for both the quarter and the last 12 months, driven by excess returns in every strategy sleeve, real estate, infrastructure, commodities, resource equities, gold and high-grade low duration credit, and through top down asset allocation.
In the quarter commodities returned 13.3%, with 25 of the 27 commodities in the index producing positive spot price returns.
Real assets are the cheapest versus equities in nearly 20 years.
The setup that I've talked about before is how to achieve in a risk-managed fashion, a return bogey of 7% from a 60-40 blend of stocks and bonds.
For a long while now, the 40% in fixed income on a current basis has not been able to meet the return goal.
First off, it's great to be back at work in my office, and I'm 100% healthy.
We believe our strong brand and investment performance have put us in a unique position to capitalize on these trends as evidenced by our $2.6 billion in net inflows and the 12% organic growth in this latest quarter.
Last quarter's net flows in the wealth channel were a near-record $2.1 billion, and just shy of the first quarter record of $2.2 billion.
The organic growth rate in this, our largest channel was 22%.
DCIO also delivered a $163 million of net inflows, which marks the 12th consecutive quarter of positive net flows for this vertical.
The preferred securities fund led the way with $665 million of net inflows, and our low duration preferred securities fund also generated $205 million of net inflows.
Consistent with the growing interest in real estate, our global real estate securities fund achieved a record $370 million of net inflows in the quarter, and year-to-date has generated a 62% organic growth rate.
Net flows into our three US real estate funds were strong as well at $390 million.
Our non-US funds experienced $61 million of net inflows, which marks the fourth consecutive quarter of positive inflows.
The advisory channel delivered a solid $1 billion of net inflows in the quarter, also with strong demand across a range of strategies.
US real estate led the way with $443 million of net inflows, followed by preferred securities at $314 million.
Global real estate and global infrastructure also experienced net inflows of $227 million and $162 million, respectively.
$860 million of the $1.4 billion beginning institutional pipeline was funded during the quarter.
In addition, $479 million of new mandates was both won and funded in the quarter, and thus, never even made it into the pipeline.
Our end of quarter pipeline stands at $925 million.
The subadvisory channel had net outflows of $375 million, which was attributable to one client who took $381 million of US and global real estate mandates in-house as a cost-saving measure.
Similarly, Japan subadvisory saw $272 million of net outflows, and $309 million of distributions, which reflect the continuing effects of a distribution cut in a large US REIT fund.
And this, together with our listed and unlisted capabilities, will position us at the intersection of what is now for us a $16 trillion real estate universe.
|
Yesterday, we reported record earnings of $0.94 per share compared with $0.54 in the prior year's quarter and $0.79 sequentially.
Total assets under management was a record $96.2 billion at June 30th, an increase of $9.2 billion or 11% from March 31st.
The increase was due to net inflows of $2.6 billion and market appreciation of $7.4 billion, partially offset by distributions of $769 million.
We believe our strong brand and investment performance have put us in a unique position to capitalize on these trends as evidenced by our $2.6 billion in net inflows and the 12% organic growth in this latest quarter.
|
1
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
We're now up to two-thirds of our revenue this -- you heard me talk about this is probably 160% but now the two-thirds of our revenue comes from customers who buy from four more of these technologies.
Top quartile safety performance, we had a 23% reduction in recordable incidents this now makes 75% reduction for the last five years, which has been phenomenal.
Sales decline was 2.5% year-over-year, you can see it was a little over 6% from an organic standpoint this was significantly better than our guidance and about a 50% plus improvement from where we were on Q1.
Q2 was a record net income at $447 million, the EBITDA margin was a little over 23%, as reported or 20.8% adjusted.
You can see the significant improvement versus prior 230 basis points.
Year-to-date cash flow from operations was a record at 20.4% of sales.
And then the table to bottom there has got segment operating margin, both as reported and adjusted basis so I'd call your attention to the adjusted row, 20.4% segment our operating margin adjusted and again a giant increase versus prior plus 230 basis points.
So the easy way to remember this is, is the quarter we put up 320's and we happen to highlight them in gold, so greater than 20% EBITDA margin, CFOA margin and segment operating margin, so we're pretty proud of that.
If you go to Slide 6, we're going to talk about cash flow the cash flow quarter paid down $767 million of debt in a quarter.
If you look at our last 14 months it's $2.8 billion of debt this was a little over half of the acquisition debt, so we took almost organic size, just great progress there.
You see the ratios in the middle of the page there, of significance, if we go back a year ago, we were 4.0 and now we're at 2.7 on a gross debt to EBITDA basis.
And we've now reinstated effective in this quarter Q3 our 10b5-1 share repurchase program.
So I'm not going to talk about on this really today, but their historical success factors that will continue on into the future.
So we go to Slide 9, the Win Strategy and this is 3.0, this is our business system a pound for pound this has been the most impactful change we've made to-date to the Win Strategy, and it's going to be Win 3.0 and our purpose statement.
If you go to 10, you've seen our purpose statement enabling engineering breakthroughs that lead to a better tomorrow this is a statement that everybody has really rallied around the foundry inspiration within the company.
So on the left hand side, it's a series of portfolio things that you've seen us make transforming the portfolio company buying three great companies, $3 billion of acquired revenue we're all accretive on growth, cash margins.
And a matter of fact, as an example, LORD grew mid-single digits last quarter, while the rest of the company, total company grew minus 6%.
And what's interesting about this list with the exception of international distribution, these are all new with Win Strategy 3.0.
The output of what we're trying to do here is that we want our PBI context the percent of sales to grow by 600 basis points over the next five years and more innovative portfolio, better chances to grow, better margins etc.
It's a speed initiative, it's a cost initiative, it's a customer experience initiative, it's a recognition that 70% of your costs are tied up on how you design a product and Simply by Design is all about focusing on design excellence.
International Distribution is going to continue from the success we've had with 2.0.
We generated $3.44 this quarter and that compares to $2.98 last year.
If you look at the breakdown of adjustments for the FY '22 or excuse me FY '21, as reported numbers it netted to $0.03 this quarter, and that is made up in the following buckets, business realignment expenses of $0.14, integration cost to achieve of $0.02, acquisition-related amortization expense of $0.62, and as we communicated last quarter, we are adjusting out the gain on the sale of land that amounted to $0.77.
And all-in the net tax impact of all of those adjustments, is $0.02.
Last year, our second quarter earnings per share were adjusted by $1.41, the details of which are included in the reconciliation tables for non-GAAP financial measures.
If you move to Slide 15, this is just a walk from the $2.98 to the $3.44 for the quarter and despite organic sales declining 6% and total sales declining 2.5%, adjusted segment operating income increased by $70 million or $0.11, that equated to $0.42 per share,so very strong operating beat for the quarter.
If you continue on the slide, we had a slight headwind from higher corporate G&A just $0.02, that was a result of market-based adjustments to investment tied to deferred comp.
And as Tom mentioned, our strong cash flow allowed us to pay off a significant portion of debt on a year-over-year basis that reduced our interest expense, that equated to $0.12 for the quarter.
And then if you look at the remaining items, other expense was just $0.01, slightly higher, we had a higher effective tax rate that impacted us by $0.03 and finally slightly higher diluted shares resulted in a $0.02 impact, that's how we get to the $3.44.
So if you look at this, our second quarter discretionary savings exceeded our forecast and now amount to $190 million on a year-to-date basis.
We are now forecasting for the full year that discretionary total will increase to $225 million or an increase of $50 million.
The majority of that increase was recognized in the second quarter and roughly amounted to $35 million above our forecast.
There is no changes to what we have communicated previously, our full-year forecast will generate savings of $250 million and that will be $210 million incremental.
If we move to Slide 17, this is just a walk of the total results for the company's our sales and segment operating margin, and as Tom mentioned, organic sales did decline by 6.1% this year.
The decline was partially offset by the contributions from acquisitions, that was 2.6% and currency impact of 1%.
And again, despite these lower sales, total adjusted segment operating margins improved to 20.4% versus 17.9% last year.
This 250 basis point improvement reflects all the positive impacts from our Win Strategy initiatives, the hard work and dedication to cost containment and productivity improvements, as well as savings from those realignment activities, I just spoke off and really performance of the recent acquisition.
If we jump into the segments, if you go to Slide 18, looking at Diversified Industrial North America, sales there declined by 5.9%, acquisitions were a plus of 3.1% and currency-only slightly negatively impacted sales.
But again, even with these lower sales our operating margin for the second quarter on an adjusted basis increased sizably to 21.3%, last year it was 18.2%.
So again another impressive 310 basis point improvement, focused on our long-term initiatives around Win Strategy along with the productivity improvements, diligent cost containment actions and really some increased synergies we're seeing out of the LORD acquisitions.
So if we go to the next slide, Slide 19, for Diversified Industrial International, organic sales for the quarter increased by 3.1%, acquisitions added 3.2% and currency accounted for 3.5%, again strong operating performance here, for the quarter, we reached 20.3% of sales versus 16% in the prior year.
And again, what we'll see here is a decline of 20.9% for the quarter, acquisitions helped us by 0.4%, and again, a small currency impact of 0.1% really declines in the commercial business is both in the OEM and aftermarkets and markets were the main impact, these were partially offset by higher sales in both military OEM and military aftermarket sales.
Operating margins for the second quarter was 18% versus last year's 20.2%, this resulted in a detrimental margin of 28.8%, which is in line with our expectations, and really the result of all the previous actions we've taken to realign the Aerospace business to current market conditions, along with strong cost controls and really helping to offset the pandemic imposed to the mix that we're seeing from the commercial and military businesses.
Tom already mentioned this, but our operating cash flow activities increased 64% year-over-year to a record of $1.35 billion of cash, this is an impressive 20.4% of sales.
If you look at free cash flow, year-to-date, we now move to 19%, that's an increase of 78% versus prior year and our cash flow conversion is now 164% versus 130% last year.
If we want to just focus on orders, real quick moving to Slide 22, our orders came in at flat this year or this quarter I should say and that was really driven by plus 1% and our Industrial North American businesses plus 10% in our Diversified Industrial businesses and minus 18% on a 12 month basis in Aerospace.
So, all-in, we came in flat and that's the first time in seven quarters, I believe that the numbers have been not negative.
And based on the strong performance we just spoke off in the first half, all the current indicators that we see right now we have increased our total outlook for sales to a year-over-year increase of 1.7% at the midpoint,this includes the forecasted organic decline of 3.4%, offset by increases from acquisitions of 2.9% and currency of 2.2%.
In respect to margins, for adjusted operating margins by segment, at the midpoint we are now forecasting to increase margins 150 basis points year-over-year and that range is expected to be 20.2% to 20.4% for the full year.
And if you note for items below segment operating income, there is a fairly significant difference between the as reported estimate of $388 million and the adjusted forecast of $487 million.
The difference is that land sale that we spoke about that's $101 million pre-tax, $76 million after-tax that was recognized as other income in Q2.
Full-year effective tax rate, no change, we still expect that to be 23%, and for the full year, the guidance range for earnings per share on an as reported basis is now $11.90 to $12.40 or $12.15 at the midpoint and on an adjusted per share basis, the guidance range is now $13.65 to $14.15 or $13.90, at the midpoint.
Adjustments to the as reported forecast made in this guidance at a pre-tax level include business realignment expenses of approximately $60 million for the year associated with savings projected from those actions to be $50 million in the current year, and acquisition and integration cost to achieve $50 million of expense.
Synergy savings for the lower acquisition are now projected to reach $100 million, that is an increase of $20 million from our prior stated numbers of $80 million and that is included in our guidance.
Exotic synergies remain are expected to be $2 million for the full year.
Just a reminder, acquisition-related intangible asset amortization expense is forecasted to be $322 million for the year, and some assumptions that we have baked into the guidance here, at the midpoint, our sales are divided 48% first half 52% second half, and both, adjusted segment operating income and adjusted earnings per share is split 47% first half, 53% second half.
For the third quarter of FY '21, we are forecasting adjusted earnings per share to be $3.54 at the midpoint and that excludes $0.57 or $97 million of acquisition-related amortization expense, the business realignment expense and integration cost, we achieved in the quarter.
We had guided at $12 per share last quarter based on the strong second quarter performance, we exceeded our estimates by a $1.6 and we've mentioned this, but the improving demand environment along with the strong operational performance, some additional extended discretionary savings, the permanent restructuring savings, and increased LORD synergies, we feel confident in raising our forecasted margins, which at $0.85 of segment operating income over the next two quarters for the remainder of the fiscal year.
This calculated to an estimated incremental margin of 41% for the second half and then some other minor adjustments to the below segment operating income lines are a negative impact of $0.01 and that's a net of interest expense and income tax.
So that's how we get to the $13.90.
That is approximately a 60% increase from our prior guidance.
We talked about the portfolio, it's a big competitive advantage of us at connectivity, the transformation on those three acquisitions is a fact that they're outgrowing and generating more cash and margins on legacy Parker, our performance over the cycle, but we're just reflecting the last 5 years and just use round numbers, our margins are up 500 basis points.
And then our Win Strategy 3.0 in particular in the Purpose Statement are going to be the powerhouse behind accelerating our performance intoo the future.
|
If you go to Slide 6, we're going to talk about cash flow the cash flow quarter paid down $767 million of debt in a quarter.
So I'm not going to talk about on this really today, but their historical success factors that will continue on into the future.
We generated $3.44 this quarter and that compares to $2.98 last year.
If you move to Slide 15, this is just a walk from the $2.98 to the $3.44 for the quarter and despite organic sales declining 6% and total sales declining 2.5%, adjusted segment operating income increased by $70 million or $0.11, that equated to $0.42 per share,so very strong operating beat for the quarter.
And then if you look at the remaining items, other expense was just $0.01, slightly higher, we had a higher effective tax rate that impacted us by $0.03 and finally slightly higher diluted shares resulted in a $0.02 impact, that's how we get to the $3.44.
So, all-in, we came in flat and that's the first time in seven quarters, I believe that the numbers have been not negative.
Full-year effective tax rate, no change, we still expect that to be 23%, and for the full year, the guidance range for earnings per share on an as reported basis is now $11.90 to $12.40 or $12.15 at the midpoint and on an adjusted per share basis, the guidance range is now $13.65 to $14.15 or $13.90, at the midpoint.
|
0
0
0
0
0
0
0
0
1
0
0
0
1
0
0
0
0
0
0
0
0
1
0
0
0
1
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
|
And 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.
In fact, approximately 20% of our overall assortment remains at $1 or less.
As 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.
First, 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.
Of 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.
Targeting a total of about 1,000 pOpshelf locations by fiscal year-end 2025.
Finally, 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.
Net sales increased 3.9% to $8.5 billion following a 17.3% increase in Q3 of 2020.
Comp sales declined 0.6% to the prior year quarter, which translates to a robust 11.6% increase on a two-year stack basis.
As 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.
For 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.
SG&A as a percentage of sales was 22.9%, an increase of 105 basis points.
The quarter also included $16 million of disaster-related expenses attributable to Hurricane Ida.
Operating profit for the third quarter decreased 13.9% to $665.6 million.
As a percentage of sales, operating profit was 7.8%, a decrease of 162 basis points.
And 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.
Our effective tax rate for the quarter was 22.2% and compares to 21.6% in the third quarter last year.
Finally, earnings per share for Q3 decreased 10% to $2.08, which reflects a compound annual growth rate of 21% over a two-year period.
Merchandise 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.
Year-to-date through [Phonetic] the third quarter, we generated significant cash flow from operations totaling $2.2 billion.
Capital 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.
During 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.
At the end of Q3, the total remaining authorization for future repurchases was $619 million.
We announced today that our Board has increased this authorization by $2 billion.
We 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.
For 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.
Our earnings per share guidance now assumes an effective tax rate of approximately 22%.
With regards to SG&A, we continue to expect about $70 million to $80 million, an incremental year-over-year investments in our strategic initiatives.
This amount includes $56 million in incremental investments made during the first three quarters of 2021.
The 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.
Notably, 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.
Overall, 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.
pOpshelf 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.
During the quarter we added 14 new pOpshelf locations, bringing the total number of stores to 30.
Opened our first 14 store within a store concepts and celebrated the one-year anniversary of our first pOpshelf store opening.
For 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.
In 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%.
We believe this bodes well for the future as we move toward our goal of about 1,000 pOpshelf locations by year-end 2025.
As 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.
With regards to our cooler expansion program, during the first three quarters we added more than 52,000 cooler doors across our store base.
In total, we expect to install approximately 65,000 additional cooler doors in 2021.
Turning 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.
This offering was available in nearly 800 stores at the end of Q3, with plans to expand to approximately 1,000 stores by year-end.
We 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.
Through the first three quarters, we completed a total of 2,386 real estate projects, including 798 new stores, 1,506 remodels and 82 relocations.
For 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.
In 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.
For 2022 we plan to execute 2,980 real estate projects in total, including 1,110 new stores, 1,750 remodels and 120 store relocations.
We 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.
Of 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.
Importantly, 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.
Our 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.
As 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.
In 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.
Of 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.
Looking 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.
As evidenced in 2022, we plan to create more than 8,000 net new jobs.
In fact, over 75% of our store associates at/or above the lead sales associate position were internally placed.
|
Net sales increased 3.9% to $8.5 billion following a 17.3% increase in Q3 of 2020.
Finally, earnings per share for Q3 decreased 10% to $2.08, which reflects a compound annual growth rate of 21% over a two-year period.
For 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.
|
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Barnes Group delivered a very good third quarter of financial performance with 20% organic sales growth, a 180 basis points increase in adjusted operating margin, and an 80-plus percent increase in earnings per share year-over-year.
Similarly, orders were seasonally good as we generated a book-to-bill of 0.9 times for both industrial and aerospace.
Organic sales growth was 17% while organic orders growth was 3%.
China continues to hover around the neutral 50 mark.
Relative to their prior view, 2021 production was reduced by 5 million units or 6%, and 2022 was reduced by 8.5 million units or 9%.
For 2022, IHS expects global auto production to grow 11% over this year, so still a rebound.
Operating margin was 13%, up 60 basis points from a year ago and 130 basis points sequentially.
While our July outlook contemplated $2 million of second half inflation pressure, we saw approximately $2.5 million in the third quarter.
With respect to organic sales, we generated a 15% increase over the prior year quarter.
At Force & Motion Control, organic orders were up 27% with organic sales up 24%.
Engineered Components once again generated solid organic sales growth on a year-over-year basis, up 15%, primarily driven by industrial end markets.
And we saw a third quarter pushout of approximately $6 million in revenue, which was doubled what we anticipated.
We now forecast our fourth quarter impact of a similar $6 million.
However, we continue to expect 2021 to deliver organic growth of approximately 20% on par with our July expectation.
We now anticipate operating margins of 11.5% to 12%, a bit softer than our prior expectation with the decline primarily driven by the current economic environment.
Moving to Aerospace, sales improved 30% over last year and 8% sequentially from the second quarter.
Adjusted operating margin improved 490 basis points from a year ago and 130 basis points sequentially.
Solid order activity continued in the third quarter with total orders of approximately 70% versus a year ago.
OEM orders were up approximately 80% with the aftermarket being up approximately 50%.
Within the aftermarket, MRO was up 40% plus and spare parts up 70%.
Segment operating margin is anticipated to be approximately 14%, slightly higher than our prior outlook benefiting from the better spare parts mix.
Third quarter sales were $325 million, up 21% from the prior year period with organic sales increasing 20%.
Adjusted operating income was $43.9 million, up 39% from $31.5 million last year.
While adjusted operating margin was 13.5% up 180 basis points from a year ago.
Interest expense was $4 million, an increase of $300,000 over last year as a result of a higher average interest rate, offset in part by lower average borrowings.
Sequentially, our interest expense was lower by $448,000.
For the quarter, our effective tax rate of 27.6% compared with 44.1% in the third quarter of 2020 and 37.6% for full year 2020.
Net income was $27.9 million or $0.55 per diluted share compared to $15.4 million or $0.30 per diluted share a year ago.
Third quarter Industrial sales were $232 million, up 18% from a year ago, while organic sales increased 17%.
Favorable foreign exchange increased sales by approximately 1%.
Sequentially sales decreased slightly as they were further impacted by the semiconductor and supply chain issues that Patrick mentioned.
Industrial operating profit was $30.1 million, up 23% from $24.4 million last year.
Operating margin was 13%, up 60 basis points from a year ago and 130 basis points sequentially.
Moving now to Aerospace, sales were $94 million, up 30% driven by a 23% increase in our OEM business and a 46% increase in our aftermarket business.
Operating profit was $13.6 million doubling the $6.8 million in last year's third quarter.
Excluding a small amount of restructuring in the current and prior year period, adjusted operating profit was up 95% from a year ago.
Adjusted operating margin was 14.8%, up 490 basis points from last year and 130 basis points sequentially.
Aerospace OEM backlog ended September at $665 million, down 4% from June 2021 and we expect to convert approximately 40% of this backlog to revenue over the next year.
Accordingly, a downward adjustment of $46 million at Industrial and $19 million at Aerospace was made during the third quarter.
Moving to cash flow performance, year-to-date cash provided by operating activities was $128 million versus $164 million last year with free cash flow of $101 million, down from $134 million last year.
Capital expenditures were $27 million, down approximately $3 million from a year ago.
As a reminder, year-to-date operating cash flow in 2020 saw an approximate $60 million benefit from working capital as cash management was a significant focus during the pandemic.
Regarding the balance sheet, our debt to EBITDA ratio, as defined by our credit agreement was 2.6 times at quarter end, down from 2.9 times at the end of last quarter.
Our third quarter average diluted shares outstanding were 51.1 million during the third quarter, we did not repurchase shares and approximately 3.6 million shares remain available under the Board's 2019 stock repurchase authorization.
Organic sales are forecast to be up 11% to 12% for the year consistent with our prior view.
Foreign exchange is expected to have about a 2% favorable impact on sales, while divested Seeger revenues will have a small negative impact.
Adjusted operating margin is forecast to be approximately 12.5%, down slightly from 13% in our July outlook.
Adjusted earnings per share is expected to be in the range of $1.83 to $1.93 per share, up 12% to 18% from our 2020 adjusted earnings per share of $1.64.
This expectation reflects the decrease at the top end of our previous range of $1.83 to $1.98 related to Q4 headwinds.
A few other outlook items, our interest expense forecast remains approximately $16 million while other expense is anticipated to be $6 million, slightly less than our July outlook.
We expect the full year tax rate of approximately 29% excluding adjusted items, a point lower than our previous estimate.
Estimated Capex of $40 million is down from our prior view of $50 million, average diluted shares of $51 million is consistent with our prior view.
And cash conversion is now anticipated to be approximately 120%, an increase over our prior expectation of greater than 110%.
|
While our July outlook contemplated $2 million of second half inflation pressure, we saw approximately $2.5 million in the third quarter.
Third quarter sales were $325 million, up 21% from the prior year period with organic sales increasing 20%.
Net income was $27.9 million or $0.55 per diluted share compared to $15.4 million or $0.30 per diluted share a year ago.
Sequentially sales decreased slightly as they were further impacted by the semiconductor and supply chain issues that Patrick mentioned.
Organic sales are forecast to be up 11% to 12% for the year consistent with our prior view.
Foreign exchange is expected to have about a 2% favorable impact on sales, while divested Seeger revenues will have a small negative impact.
Adjusted operating margin is forecast to be approximately 12.5%, down slightly from 13% in our July outlook.
|
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
1
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
0
0
0
0
0
0
|
We also saw a significant jet fuel recovery as domestic and international travel opened up, increasing from approximately 60% of pre-pandemic levels at the beginning of the year to approximately 80% at the end of the year.
In addition, the Diamond Green Diesel expansion project, DGD 2, commenced operations in the fourth quarter on budget and ahead of schedule.
The expansion has since demonstrated production capacity of 410 million gallons per year of renewable diesel as a result of process optimization, above the initial nameplate design capacity of 400 million gallons per year.
This expansion brings DGD's total annual renewable diesel capacity to 700 million gallons.
Looking ahead, the DGD 3 project at our Port Arthur refinery is progressing ahead of schedule and is now expected to be operational in the first quarter of 2023.
With the completion of this 470 million-gallon per year plant, DGD's total annual capacity is expected to be 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha.
Valero is expected to be the anchor shipper with 8 ethanol plants connected to this system, which should provide a higher ethanol product margin.
In 2021, we took measures to reduce Valero's long-term debt by approximately $1.3 billion.
We ended the year well capitalized with $4.1 billion of cash and $5.2 billion of available liquidity, excluding cash and our net debt to capitalization was 33%.
We continue to honor our commitment to stockholders, defending the dividend across margin cycles and delivering a payout ratio of 50% in 2021.
And as recently announced, the board of directors has approved a quarterly dividend of $0.98 per share for the first quarter of 2022.
For the fourth quarter of 2021, net income attributable to Valero stockholders was $1 billion or $2.46 per share compared to a net loss of $359 million or $0.88 per share for the fourth quarter of 2020.
Fourth quarter 2021 adjusted net income attributable to Valero stockholders was also $1 billion or $2.47 per share compared to an adjusted net loss of $429 million or $1.06 per share for the fourth quarter of 2020.
For 2021, net income attributable to Valero stockholders was $930 million or $2.27 per share compared to a net loss of $1.4 billion or $3.50 per share in 2020.
2021 adjusted net income attributable to Valero stockholders was $1.2 billion or $2.81 per share compared to an adjusted net loss of $1.3 billion or $3.12 per share in 2020.
The refining segment reported $1.3 billion of operating income for the fourth quarter of 2021 compared to a $377 million operating loss for the fourth quarter of 2020.
Fourth quarter 2021 adjusted operating income for the refining segment was $1.1 billion compared to an adjusted operating loss of $476 million for the fourth quarter of 2020.
Refining throughput volumes in the fourth quarter of 2021 averaged 3 million barrels per day, which was 483,000 barrels per day higher than the fourth quarter of 2020.
Throughput capacity utilization was 96% in the fourth quarter of 2021 compared to 81% in the fourth quarter of 2020.
Refining cash operating expenses of $4.86 per barrel in the fourth quarter of 2021 were $0.46 per barrel higher than the fourth quarter of 2020, primarily due to higher natural gas prices.
The renewable diesel segment operating income was $150 million for the fourth quarter of 2021 compared to $127 million for the fourth quarter of 2020.
Adjusted renewable diesel operating income was $152 million for the fourth quarter of 2021.
Renewable diesel sales volumes averaged 1.6 million gallons per day in the fourth quarter of 2021, which was 974,000 gallons per day higher than the fourth quarter of 2020.
The higher operating income and sales volumes were primarily attributed to the start-up of Diamond Green Diesel expansion project DGD 2 in the fourth quarter.
The ethanol segment reported record operating income of $474 million for the fourth quarter of 2021 compared to $15 million for the fourth quarter of 2020.
Adjusted operating income for the fourth quarter of 2021 was $475 million compared to $17 million for the fourth quarter of 2020.
Ethanol production volumes averaged 4.4 million gallons per day in the fourth quarter of 2021, which was 278,000 gallons per day higher than the fourth quarter of 2020.
For the fourth quarter of 2021, G&A expenses were $286 million and net interest expense was $152 million.
G&A expenses of $865 million in 2021 were largely in line with our guidance.
Depreciation and amortization expense was $598 million and income tax expense was $169 million for the fourth quarter of 2021.
The annual effective tax rate was 17% for 2021, which reflects the benefit from the portion of DGD's net income that is not taxable to us.
Net cash provided by operating activities was $2.5 billion in the fourth quarter of 2021 and $5.9 billion for the full year.
Excluding the favorable impact from the change in working capital of $595 million in the fourth quarter and $2.2 billion in 2021 and the other joint venture members' 50% share of Diamond Green Diesel's net cash provided by operating activities, excluding changes in DGD's working capital, adjusted net cash provided by operating activities was $1.8 billion for the fourth quarter and $3.3 billion for the full year.
With regard to investing activities, we made $752 million of total capital investments in the fourth quarter of 2021, of which $353 million was for sustaining the business, including costs for turnarounds, catalysts and regulatory compliance and $399 million was for growing the business.
Excluding capital investments attributable to the other joint venture members' 50% share of Diamond Green Diesel and those related to other variable interest entities, capital investments attributable to Valero were $545 million in the fourth quarter of 2021 and $1.8 billion for the year.
We returned $401 million to our stockholders in the fourth quarter of 2021 through our dividend and $1.6 billion through dividends in the year, resulting in a 2021 payout ratio of 50% of adjusted net cash provided by operating activities for the year.
And our board of directors recently approved a regular quarterly dividend of $0.98 per share, demonstrating our sound financial position and commitment to return cash to our investors.
With respect to our balance sheet at year-end, total debt and finance lease obligations were $13.9 billion and cash and cash equivalents were $4.1 billion.
The debt-to-capitalization ratio net of cash and cash equivalents was 33%.
In the fourth quarter, we completed a series of debt reduction and refinancing transactions that together reduced Valero's long-term debt by $693 million.
These debt reduction and refinancing transactions, combined with the redemption of $575 million floating rate senior notes due 2023 in the third quarter, collectively reduced Valero's long-term debt by $1.3 billion.
At the end of the year, we had $5.2 billion of available liquidity, excluding cash.
We expect capital investments attributable to Valero for 2022 to be approximately $2 billion, which includes expenditures for turnarounds, catalysts and joint venture investments.
About 60% of our capital investments is allocated to sustaining the business and 40% to growth.
Approximately 50% of our growth capital in 2022 is allocated to expanding our low-carbon businesses.
For modeling our first quarter operations, we expect refining throughput volumes to fall within the following ranges: Gulf Coast at 1.66 million to 1.71 million barrels per day, Mid-Continent at 395,000 to 415,000 barrels per day, West Coast at 185,000 to 205,000 barrels per day and North Atlantic at 430,000 to 450,000 barrels per day.
We expect refining cash operating expenses in the first quarter to be approximately $4.80 per barrel.
With respect to the renewable diesel segment, we expect sales volumes to be approximately 700 million gallons in 2022.
Operating expenses in 2022 should be $0.45 per gallon, which includes $0.15 per gallon for noncash costs such as depreciation and amortization.
Our ethanol segment is expected to produce 4.2 million gallons per day in the first quarter.
Operating expenses should average $0.44 per gallon, which includes $0.05 per gallon for noncash costs such as depreciation and amortization.
For the first quarter, net interest expense should be about $150 million and total depreciation and amortization expense should be approximately $600 million.
For 2022, we expect G&A expenses, excluding corporate depreciation, to be approximately $870 million.
|
For the fourth quarter of 2021, net income attributable to Valero stockholders was $1 billion or $2.46 per share compared to a net loss of $359 million or $0.88 per share for the fourth quarter of 2020.
Fourth quarter 2021 adjusted net income attributable to Valero stockholders was also $1 billion or $2.47 per share compared to an adjusted net loss of $429 million or $1.06 per share for the fourth quarter of 2020.
|
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
We're increasing our organic net sales guidance based on stronger-than-expected consumer demand and lower-than-anticipated elasticities.
Taken together, we continue to believe that elevated consumer demand, coupled with additional pricing and cost savings actions, will enable us to deliver adjusted diluted earnings per share of about $2.50.
On a two-year CAGR basis, organic net sales for the second quarter increased by more than 5% and adjusted earnings per share grew by nearly 1%.
Total Conagra retail sales were up 14.8% on a two-year basis in the quarter, with double-digit growth in each of our domestic retail domains frozen, snacks and staples.
Total Conagra household penetration was up 59 basis points on a two-year basis and our category share increased 41 basis points.
We again delivered strong quarterly growth in our $1 billion e-commerce business and e-commerce accounted for a larger percentage of our overall retail sales than our peers.
You can see on Slide 17 we currently expect gross inflation to be approximately 14% for fiscal 2022 compared to the approximately 11% we anticipated at the time of our first quarter call.
As I discussed earlier, we're reaffirming our adjusted earnings per share guidance of approximately $2.50 for the full year with a few updates on how we expect to get there.
We're increasing our organic net sales guidance to be approximately plus 3%, up from approximately 1%.
We're slightly adjusting our adjusted operating margin guidance to approximately 15 and a half percent, down from approximately 16%.
And we're updating our gross inflation guidance to about 14%, up from approximately 11%.
Overall, our actions favorably impacted our top line during the quarter with organic net sales up 2.6% compared to the year ago period.
The 4.2% decline in volume was primarily due to the lapping of the prior-year surge in demand during an earlier stage in the COVID-19 pandemic as volume increased approximately 1% on a two-year CAGR.
The second quarter volume decline was more than offset by the very favorable impact of brand mix and inflation-driven pricing actions we realized this quarter, driving an overall organic net sales growth of 2.6%.
Those increases were reflected in our P&L this quarter, driving the 6.8% increase in price mix.
Together, all these factors contributed to a 2.1% increase in total Conagra net sales for the quarter compared to a year ago.
As you can see, we continue to deliver strong two-year compounded net sales growth in each of our three retail segments, which resulted in a two-year compounded organic net sales growth of 5.3% for the total company.
We drove a 6.2 percentage point benefit from improved price mix, supply chain-realized productivity, cost synergies associated with the Pinnacle Foods acquisition and lower pandemic-related expenses.
Netted within the 6.2% are the additional investments we made to service orders and maximize product availability.
The 6.2% also includes transitory supply chain costs such as higher inventory write-offs and increased overtime to support operations.
The 6.2 percentage point benefit was more than offset by an inflation headwind of 11 percentage points.
The second quarter gross inflation rate of 16.4% of cost of goods sold was approximately 100 basis points or $20 million higher than expected, driven by higher-than-anticipated increases in proteins and transportation, which are both difficult to hedge.
The combination of the favorable margin levers, our choiceful supply chain investments and inflation headwinds resulted in adjusted gross margin declining by 483 basis points.
Our operating margin was further impacted by 20 basis points due to our increased A&P investment during the quarter, as I mentioned earlier.
While each segment was impacted, our Refrigerated & Frozen segment was impacted the most with adjusted operating margin down 707 basis points primarily due to outsized materials inflation and the additional investment incurred to service orders and get food delivered to consumers.
As you can see on Slide 33, our second quarter adjusted earnings per share of $0.64 was heavily impacted by the input cost inflation across our portfolio.
First, as previously mentioned, inflation came in higher by approximately 100 basis points of cost of goods sold or approximately $0.02 to $0.03 of EPS.
Second, the cost we elected to incur to service orders, coupled with the additional transitory supply chain costs I described earlier, led to another $0.02 to $0.03 impact on our adjusted EPS.
Looking at Slide 35, we ended the quarter with a net debt-to-EBITDA ratio of 4.3x, which is in line with the seasonal increase in leverage expected for the second quarter.
We expect to generate strong free cash flow in the second half of the fiscal year and expect to end the year with a net leverage ratio of approximately 3.7 to 3.8 times.
We remain committed to a longer-term net leverage target of approximately 3.5 times and to maintaining an investment-grade credit rating.
I'll start by saying that we remain confident in our ability to achieve approximately $2.50 in adjusted earnings per share for the full fiscal year.
We are increasing our organic net sales growth guidance to approximately 3% to reflect our stronger-than-expected performance year-to-date as well as our incremental pricing actions in the second half.
We are lowering our adjusted operating margin guidance to approximately 15 and a half percent.
We expect the incremental sales and pricing actions in the second half to offset the dollar impact of the incremental net inflation and other supply chain costs.
We have increased our gross inflation expectations to approximately 14%, largely driven by higher estimated costs versus the previous estimate for proteins, transportation, dairy and resin.
|
We're increasing our organic net sales guidance based on stronger-than-expected consumer demand and lower-than-anticipated elasticities.
We're increasing our organic net sales guidance to be approximately plus 3%, up from approximately 1%.
As you can see on Slide 33, our second quarter adjusted earnings per share of $0.64 was heavily impacted by the input cost inflation across our portfolio.
We expect the incremental sales and pricing actions in the second half to offset the dollar impact of the incremental net inflation and other supply chain costs.
|
1
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
1
0
|
Our fourth quarter sales were $1.32 billion, a half of 1% decrease from the prior year which was a fourth quarter record and notably a sequential improvement from the third quarter of nearly 2%, illustrating the continuing recovery of our business.
Our strong year-over-year sales in the fourth quarter was the result of a 1.2% increase in our domestic wholesale business and a 1.1% increase in our international business, which was led by nearly 30% sales increase in China, as well as growth in Europe and Latin America.
In our domestic wholesale business, our fourth quarter sales growth of 1.2% came primarily from our athletic casuals, walking and work footwear, as well as high single-digit improvement in our men's business.
The domestic business decreased 2.8% due to a 7.6% decline in our direct-to-consumer sales, which was negatively impacted by reduced traffic in our brick-and-mortar stores, a result of the stay at home guidelines, and an overall decline in foot traffic and tourism.
The decrease in our domestic direct-to-consumer business was partially offset by a 142.7% increase in our domestic e-commerce channel, which continues to perform extremely well.
Our international direct-to-consumer business decreased 4.4% which was due to a decline in traffic with stay at home guidelines, reduced hours and temporary closures primarily in Europe, Canada and Latin America.
In total, Skechers direct-to-consumer segment decreased 6.4% as the pandemic spread again in numerous markets temporary store closures and reduced hours continued.
In the United States, consumer traffic at our stores was approximately 35% lower and operating hours were reduced by approximately 20%.
For our international company-owned stores we effectively lost 17% of the days available to days available to sell during the quarter.
At quarter end nearly 10% of our company-owned stores were closed due to health guidelines.
To note, while our direct-to-consumer business decreased in the fourth quarter, we did experience sequential quarterly sales improvement of 9.5%.
In the fourth quarter, we opened 19 company-owned Skechers stores, 12 of which were international locations, including a flagship store in Munich.
We closed 6 locations in the fourth quarter and another 18 have closed to date in the first quarter.
By the end of the first quarter, another 5 to 7 company owned stores are expected to close.
An addition of 108 third party Skechers stores opened in the fourth quarter, bringing our total store count at quarter end to 3891.
The stores that opened were across 22 countries with China opening the most locations including our first dedicated golf store at the same Mission Hills Golf Resort in Shenzhen.
Our international sales improved 1.1% over the same period last year and sequentially 4.5% higher than the third quarter.
Our international wholesale business improved 2.5% from the fourth quarter last year.
This was the result of increases in our joint venture business with 19.4% led by an increase of 29.7% in China and an increase in our subsidiaries of 12.7%.
As expected, our distributor business was down 57.9% due to ongoing store closures in several markets, including our largest distributor, which covers the Middle East.
The automation of our new 1.5 million square foot China distribution center remains on track for full implementation by midyear and we continue working on the expansion of our North American distribution center which will bring our facility to 2.6 million square feet in 2022.
Sales in the quarter totaled $1.32 billion, a decrease of $6 million or half of a 0.05% below the prior year.
On a constant currency basis, sales decreased $33.5 million or 2.5%.
Domestic wholesale sales increased 1.2% or 3.5 million, fueled by broad strength across customer types and encouraging consumer sell-through in multiple categories.
International wholesale sales increased 2.5% in the quarter.
Our subsidiaries were up 12.7%, led by Latin America and Europe, which grew 29.9%, and 22.9% respectively.
Our joint ventures were up 19.4% in the quarter.
China sales grew 29.7%, driven by strong e-commerce channel performance, particularly around Singles' Day and December's 12/12 event.
These increases were offset by our distributor business, which as expected, decreased 57.9% or $72.6 million in the quarter, reflecting acute challenges in several distributor managed markets.
Direct-to-consumer sales decreased 6.4%, the result of a 7.6% decrease domestically and a 4.4% decrease internationally, reflecting both challenged consumer traffic trend and the impact of temporary store closures in operating our restrictions.
However, these results were partially offset by another strong increase in our domestic e-commerce business of 142.7%.
Gross profit was $648.4 million up $10.7 million compared to prior year.
Gross Margin increased over 100 basis points versus the prior year, primarily driven by a favorable mix of international and online sales and an increase in domestic wholesale average selling price, where higher full price sell through of several of our innovative platforms like Arch Fit and Max Cushioning drove average selling prices higher.
Total operating expenses increased by $47.4 million or 8.6% to $595.7 million in the quarter.
Selling expenses increased by $9.2 million or 10.4% to $97.9 million, primarily due to an increase in domestic demand creation through digital advertising channels.
General and Administrative expenses increased by $38.1 million or 8.3% to $497.8 million, which was primarily the result of volume driven expenses in warehouse and distribution for both our international and domestic e-commerce businesses.
Earnings from operations was $57.7 million versus prior earnings of $94.1 million.
Net earnings were $53.3 million or $0.34 per diluted share on 155.4 million diluted shares outstanding.
Net income included a one-time, discrete tax benefit of $15.9 million.
Excluding the effects of this one-time tax benefit adjusted diluted earnings per share were $0.24.
These compared to prior year net income of $59.5 million or $0.39 per diluted share on 154.6 million diluted shares outstanding.
Our effective income tax rate for the quarter was a negative 14%.
We ended the quarter with $1.37 billion in cash and cash equivalents, which was an increase of $545.9 million or 66.2% from December 31, 2019.
The inventories, primarily reflects the company's outstanding borrowings of $452.5 million on a senior unsecured credit facility.
However, even net of those borrowings and nearly $310 million in capital expenditures, cash and cash equivalents grew by over $90 million.
Trade accounts receivable at quarter end were $619.8 million, a decrease of 4% or $25.5 million from the prior year end.
Total inventory was $1.02 billion, a decrease of 5% or $53.1 million from December 31, 2019.
Total debt including both current and long-term portions were $735 million at December 31, 2020 compared to $121 million at December 31, 2019.
Capital expenditures for the fourth quarter were $96.7 million, of which $48.9 million related to the expansion of our joint venture owned domestic distribution center, $13.9 million related to investments in retail technologies and stores, $11.4 million related to our new distribution center in China, and $7 million related to our new corporate offices in California.
In 2021, we expect total capital expenditures to be between $275 and $325 million.
However, due to the continued uncertainty in the retail marketplace, we will not be providing guidance this quarter, as the environment remains too unpredictable to forecast reliably.
Now as we continue to face challenges due to the ongoing health crisis, our fourth quarter sales increased only a 0.5% to 1% from the prior year record.
|
Our strong year-over-year sales in the fourth quarter was the result of a 1.2% increase in our domestic wholesale business and a 1.1% increase in our international business, which was led by nearly 30% sales increase in China, as well as growth in Europe and Latin America.
In our domestic wholesale business, our fourth quarter sales growth of 1.2% came primarily from our athletic casuals, walking and work footwear, as well as high single-digit improvement in our men's business.
This was the result of increases in our joint venture business with 19.4% led by an increase of 29.7% in China and an increase in our subsidiaries of 12.7%.
Sales in the quarter totaled $1.32 billion, a decrease of $6 million or half of a 0.05% below the prior year.
Domestic wholesale sales increased 1.2% or 3.5 million, fueled by broad strength across customer types and encouraging consumer sell-through in multiple categories.
China sales grew 29.7%, driven by strong e-commerce channel performance, particularly around Singles' Day and December's 12/12 event.
Net earnings were $53.3 million or $0.34 per diluted share on 155.4 million diluted shares outstanding.
However, due to the continued uncertainty in the retail marketplace, we will not be providing guidance this quarter, as the environment remains too unpredictable to forecast reliably.
|
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
1
0
1
0
0
0
1
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
1
0
|
Faced with dual issues of the ransomware incident and significant weather disruption, the team focused, executed, and delivered for our customers, generating revenue of $4.4 billion, adjusted segment EBITDA of $641 million, and adjusted earnings per share of $0.54 per share.
The ransomware and weather incidents lowered our adjusted earnings per share by $0.23.
I toured 12 facilities, met virtually or in-person with hundreds of teammates, and spoken with many of our top customers WestRock has built a unique portfolio, successfully integrating acquisitions, and investing to create a differentiated set of capabilities with incredible opportunities for growth.
We've already taken the first step today with the announcement of a 20% increase to our quarterly dividend.
We remain committed to our investment-grade credit profile and believe that our leverage target of 2 in a quarter to 2.5 times is appropriate.
We generated revenue of $4.4 billion, adjusted segment EBITDA of $641 million, and adjusted earnings per share of $0.54 per share.
The two events negatively impacted revenue by $189 million, adjusted segment EBITDA by $80 million, and adjusted segment EBITDA margins by approximately 110 basis points.
Adjusted earnings per share was $0.23 lower as a result of these events.
In addition to the impact of the ransomware incident that we show on the adjusted segment EBITDA bridge, we also incurred $20 million in ransomware recovery costs.
The $20 million of recovery costs were excluded from our adjusted segment EBITDA and adjusted earnings per share.
We estimate that the total insurance claim will be approximately $75 million, and we expect to recover the claim from our cyber and business interruption insurance coverage in future periods.
The implementation of these price increases and improved business mix drove $88 million in year-over-year earnings improvement.
Notably, we had record second-quarter North American box shipments which increased 5.5% year over year on a per-day basis.
We did not exercise the option to purchase an additional 18.7% equity interest in Grupo Gondi.
As a result, we recorded a charge of $22.5 million that we excluded from adjusted EPS.
Despite this, our net funded debt declined $74 million from Q1 and our net leverage decreased to 2.8 times.
Due to the decisive actions we have taken over the past year to strengthen our balance sheet, we have reduced our adjusted net debt by $1.6 billion.
Our overall packaging volumes increased by 3% in Q2, including e-commerce box volume growth of 18.4% on a per-day basis.
Our paper sales represent 27% of our total revenue in the company and we are focused on reducing our participation in the export containerboard and specialty SBS markets.
Turning to segment results, our corrugated packaging segment reported revenue of $2.9 billion and adjusted segment EBITDA of $438 million.
North American adjusted segment EBITDA would have been $54 million higher and margins approximately 140 basis points higher without the events in the quarter.
As I said earlier, corrugated box shipments were up 5.5% per day year over year.
Excluding the impact of the ransomware and weather incidents, per-day box shipments would have increased approximately 8%.
We lost approximately 121,000 tons of containerboard production and revenue due to the disruptions in the quarter.
Inventory levels remain low as we head into our peak mill-outage quarter in Q3 with 112,000 tons of planned maintenance outage downtime.
The segment reported revenue of $1.6 billion and adjusted segment EBITDA of $212 million.
EBITDA would have been $26 million higher and margin's approximately 100 basis points higher without the events in the quarter.
Food and beverage packaging revenues were up 4.7% year over year, driven by improved mix to quick-service restaurants and beverage packaging.
We lost approximately 46,000 tons of production and corresponding revenue due to the disruptions in the quarter.
In addition, we had approximately 20,000 tons of consumer paperboard shipments that were deferred into the third quarter due to these disruptions.
In addition, we are making progress with CNK production at the Evadale mill and are on track to deliver 25,000 tons of CNK production in FY '21 and 50,000 tons of production in FY '22.
We expect adjusted segment EBITDA of $775 million to $805 million and adjusted earnings per share of $0.88 to $0.97 per share.
In addition, we will take approximately 112,000 tons of scheduled maintenance downtime across our North American containerboard mills.
As a result, we expect full-year adjusted segment EBITDA to be approximately $3.05 billion.
Given our earnings outlook and continued strong cash flows, we fully expect to be within our leverage target of 2.25 to 2.5 times by the end of the fiscal year.
|
Faced with dual issues of the ransomware incident and significant weather disruption, the team focused, executed, and delivered for our customers, generating revenue of $4.4 billion, adjusted segment EBITDA of $641 million, and adjusted earnings per share of $0.54 per share.
We've already taken the first step today with the announcement of a 20% increase to our quarterly dividend.
We generated revenue of $4.4 billion, adjusted segment EBITDA of $641 million, and adjusted earnings per share of $0.54 per share.
|
1
0
0
1
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
So, a couple of months ago, we held our first Investor Day as Raytheon Technologies and that day we laid out our 2025 goals to deliver strong top line growth, margin expansion and at least $10 billion in free cash flow by 2025, all while continuing to invest in our businesses and return significant cash to our shareowners.
This is demonstrated of course by the significant awards we received this quarter, which included over $1 billion in classified bookings at RIS and two important franchise wins in our Missiles & Defense business where we were awarded almost $2 billion for the Long-Range Standoff weapon or LRSO, and $1.3 billion for the Next-Generation Interceptor.
In the U.S. daily travelers throughout the TSA checkpoints have averaged over $2 million per day in July, and that's more than doubled since January of this year.
So given our performance year-to-date and the recent trends across our end markets, we're going to raise the low end of our full year sales outlook by $500 million to a new range of $64.4 billion to $65.4 billion.
And we're also going to raise and tighten our adjusted earnings per share outlook with a new range of $3.85 to $4 per share and we're increasing our free cash flow outlook to a range of $4.5 billion to $5 billion for the year.
I'm pleased with the strong orders we saw in the quarter, which grew our company backlog to a record $152 billion and that's a 3% increase since the first quarter.
Our defense book-to-bill was a strong 1.12 resulting in a defense backlog of over $66 billion and commercial backlog increased by $3.5 billion in the quarter.
On the capital allocation front, we repurchased $632 million on shares bringing us to over $1 billion in share repurchase year-to-date and we're on track to meet our commitment of buying back at least $2 billion of shares for the year.
We also continue to execute on the merger integration activities and given our substantial progress and the robust pipeline of opportunities, we're going to raise our gross cost synergy target by another $200 million to $1.5 billion and that $1.5 billion will be realized in the four -- first four years following the merger.
That's now 50% more than our original synergy commitment and there's great execution by the team but I would tell you, we're not done yet.
And our Collins Aerostructures business has scheduled over 125 lean events this year, and they're focused on specifically reducing the takt time, labor time for the A320neo nacelle.
We've invested in lean events such as these throughout the pandemic because they've allowed the Aerostructures business to reduce nacelle manufacturing time by over 75%.
Of course, though our normal goal here is about an 87% learning curve, these lean events allow us to exceed that in incredible ways.
The team has made good progress this year, demonstrated a 15% turnaround time, an improvement over the past year.
But importantly, they're on track to drive a 30% reduction by the end of this year.
Altogether, these initiatives will save over $5 billion in cost through 2025.
Sales were $15.9 billion, which was at the high end of our outlook range and up 10% organically versus prior year on an adjusted pro forma basis and up 4% sequentially.
Adjusted earnings per share of $1.03 was ahead of our expectations, primarily driven by commercial aftermarket and contract-related settlements at Collins but also better than expected performance at Pratt, RIS and RMD.
On a GAAP basis, earnings per share from continuing operations was $0.69 per share and included $0.34 of acquisition accounting adjustments and net significant and/or nonrecurring items.
Free cash flow of $966 million exceeded our expectations primarily due to the continuation of better than expected collections and lower than expected capital expenditures.
We achieved $185 million of incremental gross cost synergies in the quarter, bringing our year-to-date savings to $390 million and given the pace that we realize these synergies on to-date, we're increasing our 2021 cost synergy target by $50 million, which brings our new target to the year -- for the year to $660 million.
Collins also achieved nearly $50 million of further acquisition synergies in the quarter, bringing total Rockwell Collins acquisition-related savings to nearly $560 million since the deal closed in November of 2018, and we now expect Collins to meet their $600 million acquisition synergy target in 2021, a year ahead of schedule.
Sales were $4.5 billion in the quarter, up 6% on an adjusted basis driven primarily by the recovery of the commercial aerospace industry, and up 11% on an organic basis.
By channel, commercial aftermarket sales were up 24% driven by a 30% increase in parts and repair, a 16% increase in modification and upgrades, and a 15% increase in provisioning.
Sequentially, commercial aftermarket sales were up 15% with growth in all three channels most notably provisioning, which grew at 40% and parts and repair, which grew 14%.
Commercial OE sales were up 8% from the prior year, driven principally by the recovery of the commercial aerospace industry.
And military sales were down 7% on an adjusted basis to the prior year divestitures and down 1% organically on a tough compare.
Recall Collins military sales were up 10% in the same period last year.
Adjusted operating profit of $518 million was better than expected and was up $494 million from the prior year, driven primarily by higher commercial aftermarket and OE sales, the benefit of continued cost reduction actions as well as favorable contract settlements that were worth about $50 million.
And given the favorable mix in the first half of the year, the commercial recovery and the benefit of cost containment measures, we are increasing Collins full-year operating profit outlook to a new range of up $100 million to $275 million versus prior year.
Sales of $4.3 billion were up 19% on an adjusted basis and up 21% on an organic basis, primarily driven by the recovery of the commercial aerospace industry.
Commercial aftermarket sales were up 41% in the quarter with legacy large commercial engine shop visits up 56% and Pratt Canada shop visits up 18%.
Commercial OEM sales were up 30% driven by higher GTF deliveries within Pratt large commercial engine business and general aviation platforms at Pratt Canada.
Military sales were down 3% also on a tough compare given Pratt's military sales were up 11% in the same period last year.
Adjusted operating profit of $96 million was slightly better than expected and was up $247 million from the prior year, driven primarily by higher commercial aftermarket sales and favorable shop visit mix.
And we are increasing the low end of Pratt's full-year operating profit outlook by $25 million to a new range of down $50 million to up $25 million versus 2020.
RIS sales were $3.8 billion, up 12% versus the prior year on an adjusted basis and adjusted pro forma basis, including the pre-merger stub period, sales were up 6% driven by strength in Airborne ISR Program within sensing and effects as well as strength in the classified cyber programs within cyber training and services.
Adjusted operating profit in the quarter of $415 million was slightly better than expected and was up $86 million year-over-year on an adjusted pro forma basis, driven primarily by program efficiencies.
RAF had $4 billion of bookings in the quarter resulting in strong book-to-bill of 1.13 and a backlog of $19.4 billion.
Significant bookings included approximately $1.1 billion on classified programs as well as several other notable awards, including the STARS follow-on award for the FAA to implement a terminal automation system in their airports, and our first production award for the U.S. Navy Next Generation Jammer Mid-Band system that utilizes RTX industry-leading gallium nitride technology.
It's worth noting that we continue to expect RIS full year book-to-bill to be about 1.
Turning to RIS full year outlook, we continue to expect sales to grow low to mid single digit, and we are increasing the low end of RIS' operating profit outlook by $25 million to a new range of up $150 million to $175 million versus adjusted pro forma 2020.
RMD sales were up $4 billion up 15% to prior year on an adjusted basis and adjusted pro forma basis, which again includes pre-merger stub period.
Sales were up 9% driven primarily by higher volume on the international Patriot program and on StormBreaker program, both which included liquidation of pre-contract costs.
Adjusted operating profit of $532 million was slightly better than expected and was up $121 million versus prior year on adjusted pro forma basis due to favorable mix and higher program efficiencies.
RMD had $6.1 billion of bookings in the quarter resulting in an exceptionally strong book-to-bill of 1.55, and a backlog of $29.7 billion.
We also continue to expect RMD's full year book-to-bill to be about 1.
Turning to RMD's full-year outlook, we continue to expect sales to grow low to mid single digit, and we are increasing the low end of RMD's operating profit by $25 million to a new range of up $50 million to $75 million versus 2020 on an adjusted pro forma basis.
Keep in mind about 65% of 2019 air travel was international.
As Greg mentioned, we're increasing our gross merger cost synergy target to $1.5 billion and that's driven by higher savings from the corporate and segment consolidations as well as additional procurement and supply chain savings.
As Greg discussed, we're bringing up the low end of our sales range by $500 million and we're raising our adjusted earnings per share range to $3.85 to $4 per share or up about $0.33 from the midpoint of our prior outlook.
About half of the increase comes from the segments, primarily Collins and the other half is from $0.13 of tax improvement and about $0.03 of lower corporate tax items.
The $0.13 tax benefit is driven by the ongoing optimization of the company's legal and financing structure that we expect to realize discretely in the third quarter.
On the cash side, given the improved earnings outlook, we now expect free cash flow in the range of $4.5 billion to $5 billion for the year.
|
So given our performance year-to-date and the recent trends across our end markets, we're going to raise the low end of our full year sales outlook by $500 million to a new range of $64.4 billion to $65.4 billion.
Sales were $15.9 billion, which was at the high end of our outlook range and up 10% organically versus prior year on an adjusted pro forma basis and up 4% sequentially.
Adjusted earnings per share of $1.03 was ahead of our expectations, primarily driven by commercial aftermarket and contract-related settlements at Collins but also better than expected performance at Pratt, RIS and RMD.
On a GAAP basis, earnings per share from continuing operations was $0.69 per share and included $0.34 of acquisition accounting adjustments and net significant and/or nonrecurring items.
As Greg discussed, we're bringing up the low end of our sales range by $500 million and we're raising our adjusted earnings per share range to $3.85 to $4 per share or up about $0.33 from the midpoint of our prior outlook.
On the cash side, given the improved earnings outlook, we now expect free cash flow in the range of $4.5 billion to $5 billion for the year.
|
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
1
|
Yesterday, Graco reported third quarter sales of $487 million, an increase of 11% from the third quarter of last year.
The effect of currency translation added two percentage points of growth or approximately $6 million in the quarter.
Reported net earnings were $104 million for the third quarter or $0.59 per diluted share.
After adjusting for the impact of excess tax benefits from stock option exercises and certain nonrecurring tax adjustments, net earnings were $100 million or $0.57 per diluted share.
Gross margin was down 110 basis points from the third quarter of last year as the favorable effect from realized pricing, increased factory volume and currency translation were not enough to offset the unfavorable gross margin rate impact of higher product costs.
These higher product costs, such as material, labor and freight, decreased our gross profit by $14 million in the quarter with $10 million of this impacting the Contractor segment.
Operating expenses increased $20 million or 19% in the quarter.
Sales and volume-based expenses increased $9 million, new product spending increased $2 million and changes in currency translation rates increased operating expense by $1 million in the third quarter.
The adjusted tax rate for the quarter was 18%.
Cash flows from operations are $357 million for the year compared to $263 million last year.
Significant uses of cash are dividend payments of $95 million and capital expenditures of $83 million, including $33 million for facility expansion projects.
Subsequent to the end of the third quarter, Graco entered into an agreement, in which approximately $63 million of pension obligations were transferred to an insurance company through the purchase of an annuity contract.
We expect to recognize a noncash pre-tax pension settlement charge of approximately $12 million in other nonoperating expense in the fourth quarter.
Based on current exchange rates, the full year favorable effect of currency translation is estimated to be 2% on sales and 4% on earnings, with the most significant impact having occurred in the first half of the year.
Also for the remainder of 2021, we expect unallocated corporate expense to be approximately $26 million to $28 million.
Our full year adjusted tax rate is expected to be 18% to 19%.
Capital expenditures are estimated to be $150 million, including $80 million for facility expansion projects.
At the end of the third quarter, our consolidated backlog was approximately $280 million, which is $25 million higher than what it was at the end of the second quarter, and $121 million higher than our backlog at the end of last year.
Contractor backlogs are elevated at $46 million, which is up $6 million from June and up $22 million from the same time last year.
Process segment sales grew 21% for the quarter, with year-to-date sales exceeding previous high set in 2019.
With demand persisting, we confirm our full year outlook of mid- to high-teen organic revenue growth on a constant currency basis for the full year 2021.
|
Reported net earnings were $104 million for the third quarter or $0.59 per diluted share.
After adjusting for the impact of excess tax benefits from stock option exercises and certain nonrecurring tax adjustments, net earnings were $100 million or $0.57 per diluted share.
With demand persisting, we confirm our full year outlook of mid- to high-teen organic revenue growth on a constant currency basis for the full year 2021.
|
0
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
|
At the beginning of this pandemic, we adopted a framework of safety, caution and agility to navigate the crisis.
We took a strong voice in the world, hosting multiple COVID-19 webinars, which were attended by over 20,000 leaders and we led Race Matters webinars for colleagues and clients that attracted more than 100,000 leaders from global organizations.
Fee revenues were down about 7.9% at constant currency as the impact of the virus accelerated through the quarter.
Our adjusted EBITDA margin was almost 16% and we delivered $0.60 of adjusted EPS.
Full year revenues were $1.9 billion and we delivered approximately $300 million of adjusted EBITDA and $2.92 of adjusted EPS.
The pace and magnitude of the decline caused by this global health crisis is unprecedented, at least in the last 100 years.
And I believe in the next two years, there is going to be more change than in the last 10.
And as a reminder, our assessment and learning business is almost 25% of the company.
For example, we're moving from analog to digital delivery of our assessment and learning business, which as I just mentioned, it's 25% of the company in a way that makes our IT more relevant and scalable.
When I look back during the Great Recession, our revenue was up almost 60% four quarters from the trough, eventually growing 5x to almost $2.1 billion revenue run rate, annual revenue run rate a few months ago.
April, May and June stabilized, down approximately 30% year-over-year.
And sequentially, June was up approximately 18% over May.
As a result, we will not be providing specific revenue and earnings guidance for the first quarter of FY '21.
For the full year of fiscal '20, our fee revenue was $1.93 billion, which was essentially flat year-over-year.
Our adjusted EBITDA margin was -- our adjusted EBITDA, I should say, was $301 million and the adjusted EBITDA margin was 15.6%.
And as Gary indicated, adjusted fully diluted earnings per share were $2.92.
Fee revenue was $440.5 million, which was down 7.9% year-over-year measured at constant currency.
In the fourth quarter, fee revenue for Executive Search was down 10% globally, RPO and Pro Search was down 9%, Consulting down 14% and Digital grew 14%, and all of that's at constant currency.
Adjusted EBITDA in the fourth quarter was approximately $70 million with a 15.8% adjusted EBITDA margin, and our adjusted fully diluted earnings per share in the quarter were $0.60.
Cash and marketable securities totaled $863 million, and that's up about $95 million year-over-year.
And then when you pull out amounts reserved for deferred compensation and accrued bonuses, that's our -- what we define as our investable cash, that balance at the end of the fourth quarter was approximately $532 million, that's up about $150 million year-over-year.
At April 30, 2020, we have undrawn capacity of $646 million on our revolver.
So we have close to $1.2 billion in liquidity to manage our way through COVID-19, and as Gary indicated, to invest back into the business through the recovery.
Last, the firm had outstanding debt at the end of the fourth quarter of about $400 million.
And we have initially reduced our cost base by about $300 million on a run rate basis.
Global fee revenue for KF Digital was $69 million in the fourth quarter and up approximately $7 million or 14% year-over-year measured at constant currency.
The subscription and licensing component of KF Digital's fee revenue in the fourth quarter was approximately $21 million, which was up $6 million year-over-year and was flat sequentially.
Adjusted EBITDA in the fourth quarter for KF Digital was $17 million with a 24.5% adjusted EBITDA margin.
In the fourth quarter, Consulting generated $121 million of fee revenue, which was down approximately 14% year-over-year at constant currency.
Adjusted EBITDA for Consulting in the fourth quarter was $11.1 million with an adjusted EBITDA margin of 9.2%.
RPO and Professional Search generated global fee revenue of $82 million in the fourth quarter with both components down approximately 9% year-over-year at constant currency.
Adjusted EBITDA for RPO and Professional Search in the fourth quarter was $12.7 million with adjusted EBITDA margin of 15.4%.
Finally for Executive Search, global fee revenue in the fourth quarter of fiscal '20 was approximately $168 million, which compared year-over-year and measured at constant currency was down approximately 10%.
At constant currency, North America and EMEA were each down 10% year-over-year and APAC was down 16%.
The total number of dedicated Executive Search consultants worldwide at the end of the fourth quarter was 556, down nine year-over-year and down 26 sequentially.
Annualized fee revenue production per consultant in the fourth quarter was $1.18 million.
And the number of new search assignments opened worldwide in the fourth quarter was 1,229, which was down approximately 28% year-over-year.
Adjusted EBITDA for Executive Search in the fourth quarter was approximately $47.5 million with an adjusted EBITDA margin of 28.3%.
Excluding new businesses for RPO, our global new business measured year-over-year was down approximately 20% in March and 34% in April.
Starting our new fiscal year, May was down approximately 32% year-over-year and June was down 26%.
And over the past two years, June has been sequentially better than May kind of in the 5% to 7% range.
With regards to the RPO, new business in the fourth quarter was once again strong with $109 million of global awards, which was comprised of $72 million of new clients and $37 million of renewals and extensions.
|
At the beginning of this pandemic, we adopted a framework of safety, caution and agility to navigate the crisis.
Our adjusted EBITDA margin was almost 16% and we delivered $0.60 of adjusted EPS.
As a result, we will not be providing specific revenue and earnings guidance for the first quarter of FY '21.
Fee revenue was $440.5 million, which was down 7.9% year-over-year measured at constant currency.
Adjusted EBITDA in the fourth quarter was approximately $70 million with a 15.8% adjusted EBITDA margin, and our adjusted fully diluted earnings per share in the quarter were $0.60.
|
1
0
0
1
0
0
0
0
0
0
0
0
1
0
0
0
1
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Entravision posted strong results for the first quarter with net revenue of $148.9 million, up 132% year over year.
On a pro forma basis including Cisneros Interactive revenue in our prior-year results, revenue increased 43% over the first quarter of 2020.
Adjusted EBITDA totaled $14.2 million for the quarter, which is up 47% from the prior-year period.
On a pro forma basis, accounting for Cisneros Interactive, adjusted EBITDA increased a solid 35% year over year.
Our television division generated $36.1 million for the first quarter, down 8% compared to the prior year, primarily due to lack of non-returning political revenue compared to the first quarter last year, excluding $5.3 million of non-returning television political spend in the first quarter of 2020.
Core television advertising increased by 3%.
With national advertising revenues increasing by 4% and local advertising revenues up 1%.
Strength in core television revenues in the first quarter was driven by growth in services, up 13%, healthcare improved 23% and groceries and finance were up 11% compared to the prior-year period.
Auto, our largest television advertising category decreased 1% year over year.
Approximately 16 million cars are forecasted to be sold in the United States this year, which equals an increase in cars sold off almost 10% over the last year.
In terms of television ratings for winter 2021 or Univision television stations finished ahead of or tied with their Telemundo competitor among adults 18 to 49 for early local news in 12 of the 17 markets where we have head-to-head competition with Telemundo.
For late local news, we finished ahead of our or tied our Telemundo competitors in 11 of the 17 markets where we have head-to-head competition.
During a full week, our Univision and UniMás television stations have a cumulative audience of 4.4 million people ages two-plus across all of our markets, compared to Telemundo 3.5 million people ages two-plus.
We have 26% more viewers in Telemundo, in our Univision and UniMás television footprint, which is 4% higher than the November 2020 range release.
Turning to our digital operations, digital revenues total $101.5 million for the first quarter, compared to $13.3 million in the prior-year period, an increase of 661%.
Digital revenues represented 68% of total revenues for the company in the first quarter.
On a pro forma basis, our digital revenues increased 90% compared to the prior-year period.
Other drivers of growth for our digital unit in the first quarter were our U.S. local advertising solutions business, up 21% and Smadex are global programmatic and performance product grew its revenue 21% compared to the first quarter of 2020.
Our highly proficient digital sales operation now serves more than 4600 clients each month in 21 countries.
Our audio revenues for the first-quarter 2021 totaled $11.3 million, a decrease of 4% year over year.
Local audio revenues decreased 10% year over year, while national audio revenues were up 9% year over year, excluding radio political spending $1.1 million the prior-year period, core radio revenues increased 6% versus the first quarter of 2020.
In the 12 markets where we subscribe to Miller Kaplan Data for total spot revenue, we outperformed the market by 13 points in total revenue combined.
We outperform the total market in 10 of the 12 markets to which we subscribe.
Our Los Angeles radio cluster beat the market by 23 points.
Our Phoenix radio stations outperformed the market by 15 points, and our McAllen radio cluster surpassed the market in total spot revenue by 31 points.
These three markets are all Top 10 U.S. Hispanic markets.
In terms of advertising categories, services remain our largest category representing 42% of total audio revenue.
Services improved 22% year over year.
Auto, our second-largest ad category declined 36% for the quarter as compared to the first quarter of 2020.
to 7 p.m. for the winner measurement period among Hispanic adults 18 to 49 and Hispanic adults 25 to 54, including ties.
As Walter discussed revenue for Q1 2021 totaled $148.9 million, an increase of 132% from the first quarter of 2020.
results, revenues were increased 43% year over year.
For our TV division, total ad and spectrum-related revenue was $26.4 million, down 11% at year over year, excluding political core ad and spectrum-related revenue was up 9% year over year.
Retransmission revenue totaled $9.6 million and was up 1% year over year.
For our digital division, digital revenues totaled $101.5 million, up 661% year over year.
When comparing on a pro forma basis and including Cisneros Interactive's revenue in our 2020 results, digital revenues increased 90% year over year.
Lastly, for our audio division revenues totaled $11.3 million, down 4% over the prior-year period, excluding political core audio revenue was up 6% over Q1 of last year.
SG&A expenses were $13.9 million for the quarter, an increase of 2%, compared to the $13.6 million in the year-ago period.
Excluding the Cisneros acquisition SG&A expenses were down 19%.
Direct operating expenses totaled $26.6 million in Q1 of 2021, down slightly from $26.7 million in Q1 of 2020.
Excluding the Cisneros acquisition direct operating expenses were down 9% year over year.
Finally, corporate expenses for the quarter increased 5% to a total of $7.2 million, compared to $6.8 million in the same quarter of last year.
We also maintained a dividend at $0.250 and continue to eliminate expenses at the operating and corporate level been secondary to serving our core media businesses.
Looking forward, we expect that our operating expenses excluding the digital cost of goods sold and corporate will be up approximately 3% in the second quarter as compared to the first quarter of this year.
Consolidated adjustment EBITDA totaled $14.2 million for the first quarter, up 47% compared to the first quarter of last year.
On a pro forma basis, accounting for the Cisneros acquisition, adjusted EBITDA was up 35% year over year.
Entravision's 51% portion of Cisneros interactive adjusted EBITDA represented a $3 million contribution to our total EBITDA in the first quarter.
Earnings per share for the quarter in 2021 were $0.06, compared to a loss of $0.42 per share in the same quarter of last year.
Net cash interest expense was $1.4 million for the first quarter compared to $1.9 million in the same quarter of last year.
Cash capital expenditures for Q1 totaled $1.8 million compared to $2.7 million in the prior year.
Capital expenditures for the year are expected to be approximately 8 million.
Cash and marketable securities as of March 31, totaled $165.7 million, total debt was $214.5 million, net of $75 million of cash and marketable securities on the books are total leverage as defined in our credit agreement was 2.15 times at the end of the first quarter.
As of today, our TV advertising business is pacing 44% over the prior-year period with core TV, excluding political pacing at a plus 55%.
Our digital business, including revenue from Cisneros Interactive is pacing plus 900%, factoring in Cisneros revenue generated in Q2 of last year, our digital business on a pro forma basis is pacing plus 115%.
Lastly, our audio business is pacing plus 84% with core audio, excluding political pacing plus 103%.
All-in our total revenue compared to last year is pacing at a plus 360%, pro forma on Cisneros acquisition, our total revenue is currently pacing at a plus 87%.
|
Entravision posted strong results for the first quarter with net revenue of $148.9 million, up 132% year over year.
As Walter discussed revenue for Q1 2021 totaled $148.9 million, an increase of 132% from the first quarter of 2020.
Earnings per share for the quarter in 2021 were $0.06, compared to a loss of $0.42 per share in the same quarter of last year.
|
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
|
Additionally, total backlog of $17 billion at the end of the quarter was also a record, which we believe reflects the benefits of our collaborative approach with the customers, favorable end market dynamics and continued advancement of our long-term growth strategies.
During the quarter, Hurricane Ida made landfall over Louisiana, which ultimately left 1.2 million customers across eight states without power, including one million outages in Louisiana alone.
Quanta deployed significant resources to support utility customers through electric power infrastructure who was damaged or destroyed by the hurricane, including more than 2,500 line workers and front-end support services and engineering staff.
For example, Blattner is currently constructing more than 30 utility-scale renewable energy projects across the country, and another Quanta company is currently working on the largest solar-powered battery storage projects in North America.
The initiative would leverage existing pipelines, requires a new pipeline and facility investment, which when fully constructed would be capable of transporting more than 20 million tons of carbon dioxide annually.
We believe Quanta's diversity, unique operating model and entrepreneurial mindset form the foundation that will allow us to continue to generate long-term value for our stakeholders.
Today, we announced record third quarter 2021 revenues to $3.4 billion.
Net income attributable to common stock was $174 million or $1.21 per diluted share.
And adjusted diluted earnings per share, a non-GAAP measure, was $1.48.
Our electric power revenues were $2.3 billion, a quarterly record and a 10% increase when compared to the third quarter of 2020.
Also contributing to the increase were revenues from acquired businesses of approximately $55 million.
Electric segment operating income margins in 3Q '21 were 12.4%, slightly lower than 12.7% in 3Q '20 but better than our initial expectations.
Operating margins benefited from record emergency restoration revenues of approximately $230 million, which typically present opportunities for higher margins than our normal base business activities due to higher utilization as well as overall solid execution across our electric operations.
Additionally, segment margins benefited from approximately $10 million of income associated with our LUMA joint venture.
Underground Utility and Infrastructure segment revenues were $1.02 billion for the quarter, 12% higher than 3Q '20 due primarily to increased revenue from gas distribution and industrial services.
Third quarter operating income margins for the segment were 6.7%, 170 basis points lower than 3Q '20, but generally in line with our expectations.
Our total backlog was $17 billion at the end of the third quarter, the fifth consecutive quarter we've posted record total backlog.
Additionally, 12-month backlog of $9.8 billion also represents a quarterly record.
However, the total backlog from Blattner and the other 4Q acquisitions is approximately $1.8 billion.
For the third quarter of 2021, we generated negative free cash flow, a non-GAAP measure, of $40 million compared to $70 million of positive free cash flow in 3Q '20.
Also, 3Q '20 benefited from the deferral of $41 million of payroll taxes in accordance with the CARES Act, 50% of which are due by December 31, 2021, with the remainder due by December 31, 2022.
Days sales outstanding, or DSO, measured 89 days for the third quarter of 2021, an increase of seven days compared to the third quarter of 2020 and an increase of six days compared to December 31, 2020.
Prior to the closing, in September 2021, we issued $1.5 billion aggregate principal amount of senior notes with a weighted average interest rate of 2.12%, receiving net proceeds of $1.48 billion.
Accordingly, as at quarter end, we had approximately $1.7 billion of cash.
Subsequent to the quarter, we amended our credit agreement to, among other things, provide a term loan facility of $750 million, which was fully drawn and combined with the net proceeds from the senior notes offering to fund a substantial majority of the cash consideration payable to the Blattner shareholders at closing.
That said, excluding the expected contributions from the recently acquired companies, we now expect full year revenues from our legacy operations to range between $12.15 billion and $12.35 billion.
Due to the strength of our consolidated performance for the first nine months of the year, we are increasing our expectations for the contribution of our legacy operations to adjusted EBITDA to range between $1.17 billion and $1.2 billion, with the midpoint of the range representing an increase over our previous guidance and 13% growth when compared to 2020's record adjusted EBITDA.
We continue to expect full year revenues to range between $8.7 billion and $8.8 billion for our legacy electric segment operations.
However, based on the strong performance through the first nine months of the year and continued confidence in our ability to execute on the opportunities across the segment, we've increased our full year margin range for the segment with 2021 operating margins expected to come in slightly above 11%.
Accordingly, we are reducing our full year expectations for the segment with revenues now expected to range between $3.45 billion and $3.55 billion while segment margins are now expected to range between 4.5% and 5%, which includes a $23.6 million provision for credit loss recognized in the second quarter, a nearly 70-basis-point negative impact on a full year basis.
With regard to the recently acquired companies operations I spoke of earlier, including Blattner, we expect post-closing revenue contributions for the year to range between $400 million and $500 million and adjusted EBITDA, a non-GAAP measure, ranging between $40 million and $60 million.
Accordingly, including the expected contributions from the recently acquired companies, we now expect our consolidated full year revenues to range between $12.55 billion and $12.85 billion and adjusted EBITDA, a non-GAAP measure, of between and $1.21 billion and $1.26 billion.
We currently estimate amortization expense for the full year will be between $149 million and $159 million, with $60 million to $70 million attributable to the recently acquired companies.
Stock compensation expense for the full year is now expected to be approximately $89 million, with approximately $2 million attributable to restricted stock units issued to employees of the acquired company.
Acquisition and integration costs are expected to be approximately $26 million for the fourth quarter, resulting in approximately $36 million for the year.
This includes approximately $10.5 million of expenses associated with change of control payments awarded to certain employees of Blattner by the selling shareholders, which require expense accounting as they have a one-year service period requirement.
Below the line, we expect interest expense for the year to be around $67 million, which includes approximately $16 million of incremental interest expense associated with debt financing used to fund the cash portion of the Blattner acquisition.
Additionally, we now expect our full year tax rate to be around 24%, reflecting a slight reduction from our prior expectations due primarily to a favorable shift in the mix of earnings between various taxing jurisdictions.
As a result, our expectation for full year diluted earnings per share attributable to common stock is now between $3.20 and $3.40.
And our increased expectation for adjusted diluted earnings per share attributable to common stock, a non-GAAP measure, is now between $4.62 and $4.87.
On a consolidated basis, we now expect free cash flow for the year to range between $350 million and $500 million.
|
We believe Quanta's diversity, unique operating model and entrepreneurial mindset form the foundation that will allow us to continue to generate long-term value for our stakeholders.
Today, we announced record third quarter 2021 revenues to $3.4 billion.
Net income attributable to common stock was $174 million or $1.21 per diluted share.
And adjusted diluted earnings per share, a non-GAAP measure, was $1.48.
Prior to the closing, in September 2021, we issued $1.5 billion aggregate principal amount of senior notes with a weighted average interest rate of 2.12%, receiving net proceeds of $1.48 billion.
Accordingly, including the expected contributions from the recently acquired companies, we now expect our consolidated full year revenues to range between $12.55 billion and $12.85 billion and adjusted EBITDA, a non-GAAP measure, of between and $1.21 billion and $1.26 billion.
And our increased expectation for adjusted diluted earnings per share attributable to common stock, a non-GAAP measure, is now between $4.62 and $4.87.
|
0
0
0
0
0
1
1
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
1
0
|
Our sales for the quarter decreased 26% from $542 million to $401 million and our adjusted diluted earnings per share from continuing operations decreased 70% from $0.57 per share to $0.17 per share.
Our total sales to commercial customers decreased 48% from the prior year, while sales to government and defense customers increased 10%, reflecting new contract awards and significant shipments out of our Mobility business against the previously announced $125 million Cargo Pallets contract.
For the quarter, sales to government and defense customers were 56% of the total.
We announced a three-year contract with the Royal Netherlands Air Force to repair F-16 jet fuel starters.
These actions and other items resulted in predominantly non-cash pre-tax charges of $37.3 million.
The total amount received was $57.2 million, of which $48.5 million was a grant and $8.7 million was a low interest pre-payable loan.
In the quarter, we utilized $8 million of the CARES Act grant and $3 million of other non-U.S. government labor subsidies for a total of $11 million.
As of the quarter-end, the unutilized portion of the grant was $40.8 million, which was recorded as a current liability.
SG&A expense was $45.3 million for the quarter.
On an adjusted basis, SG&A was $39.7 million, down $10.5 million from the prior year quarter, which reflects the reduction of our overhead cost structure.
In the quarter, adjusted SG&A as a percentage of sales was 9.9%.
Net interest expense for the quarter was $1.6 million compared to $2.1 million last year, which reflects the lower interest rate in the period.
During the quarter, we generated $39.8 million of cash in our operating activities from continuing operations.
This includes the $48.5 million grant portion of the CARES Act funding and a net use of cash of $18.6 million, as we reduce the level of our accounts receivable financing program.
Excluding the CARES Act and accounts receivable financing program impacts, cash flow provided by operating activities from continuing operations was $9.9 million.
Additionally, as we are focused on lowering our working capital, we were able to reduce inventory by $19 million during the quarter.
Also, we repaid $355 million of our revolving credit facility during the quarter.
Our net debt at quarter-end was $149.3 million and unrestricted cash was $107.7 million.
Our balance sheet remains strong with net leverage of 1.1 times and availability under our revolver of approximately $355 million and we have no near-term maturities.
|
Our sales for the quarter decreased 26% from $542 million to $401 million and our adjusted diluted earnings per share from continuing operations decreased 70% from $0.57 per share to $0.17 per share.
|
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
For the third quarter of 2020, our combined adjusted EBITDA was $218.5 million as our Global Ingredients platform continues to be resilient.
The food segment, led by Rousselot, the Number 1 collagen provider in the world, is poised to provide meaningful earnings growth in 2021.
Diamond Green Diesel achieved a $2.41 per gallon EBITDA margin on record sales of 80 million gallons for the quarter.
We recorded $96.4 million of EBITDA, which is Darling's share of the joint venture.
Although oil and diesel prices remained significantly lower than the same time a year ago, diesel is currently trading $0.80 a gallon under Q4 of 2019.
And we expect that Diamond Green will sell between 55 million and 60 million gallons of renewable diesel in the fourth quarter and should average between $2.30 and $2.40 a gallon for those gallons sold.
On a year-to-date basis, Darling has generated $627 million of combined adjusted EBITDA for the Company, putting us on pace to finish what most everyone considers to be a challenging year with record results.
We currently believe that we can finish 2020 with combined adjusted EBITDA between $800 million and $810 million.
We certainly believe this gives us a solid platform as we move into 2021 for what we believe will be a transformative year as the 400 million gallon expansion, or what's known as DGD 2, comes online in late 2021.
Net income for the third quarter of 2020 totaled $101.1 million or $0.61 per diluted share compared to a net income of $25.7 million or $0.15 per diluted share for the 2019 third quarter.
For the first nine months of 2020, net income was $252.1 million or $1.51 per diluted share compared to $70 million or $0.42 per diluted share for the same period of 2019.
As Randy mentioned earlier, our gross margin continues to show improvement as we reported 24.9% for the third quarter of 2020 compared to 22.5% for the same period in 2019 as net sales increased $8.5 million and cost of sales and operating expenses decreased $14.6 million.
Operating income improved $67.7 million in the third quarter 2020 as compared to the prior year, reaching $127.5 million for the third quarter and totaled $356.6 million year-to-date 2020 compared to $182.5 million for the 2019 period.
In addition to the improved gross margin, the improvement in operating income benefited from a $59.1 million increase in Darling's equity and net income from Diamond Green Diesel.
SG&A expense was higher by $6.4 million in the quarter, partially attributable to the higher cost related to COVID-19, certain insurance increases as we recently renewed our coverages across the business, and higher benefits more than offsetting lower travel cost.
Interest expense was $18.8 million for the third quarter of 2020 compared to $19.4 million for the prior-year period.
We currently project quarterly interest expense to be approximately $15 million per quarter over the next several quarters.
The Company reported income tax expense of $4.8 million for the three months ended September 26, 2020.
The effective tax rate is 4.5%, which differs from the federal statutory rate of 21% due primarily to the biofuel tax incentives; the relative mix of earnings among jurisdictions with different tax rates and discrete items, including the recognition of a previously unrecognized tax benefit; and the favorable impact of certain US Treasury regulations issued during the quarter.
For the nine months ended September 26, 2020, the Company recorded income tax expense of $43.1 million with an effective tax rate of 14.5%.
Excluding discrete items, the year-to-date effective tax rate is 18.2%.
The Company also paid $24.9 million of income taxes as of the end of the third quarter.
For the remainder of the year, we project the effective tax rate to be about 20% with cash taxes for the year totaling approximately $35 million.
For the three and nine months 2020, Darling's share of Diamond Green Diesel's earnings was $91.1 million and $252.4 million as compared to $32 million and $94.4 million for the same period of 2019.
Capital expenditures of $184.9 million were made for the nine months of 2020 as we continue to take a disciplined approach during the pandemic prioritizing compliance and safety needs of the business and our reduced capex spend.
Now, turning to the balance sheet, in the third quarter, we were successful in amending and extending our $1 billion revolving credit facility with favorable terms.
In addition, we paid down our term loan balance by $145 million to a new balance of $350 million outstanding at the end of the quarter.
With our improved financial results and the paydown of the term loan B, our bank covenant leverage ratio for Q3 was 1.93 to 1.00.
Our liquidity remains very strong with approximately $934 million available under our revolving credit facility at the end of Q3, providing strategic flexibility, while at the same time, maintaining a very solid capital structure.
As I mentioned earlier, our share of the 2020 DGD earnings should be approximately $330 million based on the ranges I laid out for you.
With the strong performance of Q3 and prices for our products improving as we work through the fourth quarter, we believe we can produce EBITDA of approximately $470 million to $480 million in 2020 in our Global Ingredients business.
Once approved, construction should begin immediately, putting DGD 3 in a position to be operational in early 2024.
|
Net income for the third quarter of 2020 totaled $101.1 million or $0.61 per diluted share compared to a net income of $25.7 million or $0.15 per diluted share for the 2019 third quarter.
|
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
|
And we took advantage of a healthy used-equipment market driving record retail sales to generate almost 30% more proceeds in the quarter than we did a year ago.
And I'm proud to report the team United delivered $873 million of adjusted EBITDA in the first quarter and they did it safely turning in another quarterly recordable rate below one.
With Franklin, we added 20 stores to our General Rental footprint in the Central and Southeast regions.
And we're continuing to invest in growing our specialty network with six cold starts year-to-date and another 24 planned this year.
Customer sentiment continues to trend up in our surveys, as a majority of our customers expect to see growth over the next 12 months.
Rental revenue for the first quarter was $1.67 billion, which was lower by $116 million or 6.5% year-over-year.
Within rental revenue, OER decreased $117 million or 7.7%.
In that a 5.7% decline in the average size of the fleet was a $87 million headwind to revenue.
Inflation of 1.5% cost us another $24 million and fleet productivity was down 50 basis points or a $6 million impact.
Sequentially fleet productivity improved by a healthy 330 basis points recovering a bit faster than we expected.
Finishing the bridge on rental revenue this quarter is $1 million in higher ancillary and rerent revenues.
As I mentioned earlier, used equipment sales were stronger than expected in the quarter, coming in at $267 million, that's an increase of $59 million or about 28% year-over-year, led by a 49% increase in retail sales.
The end market for used equipment remained strong and while pricing was down year-over-year, it's up for the second straight quarter with margins solid at almost 43%.
Adjusted EBITDA for the quarter was just under $873 million, a decline of $42 million or 4.6% year-over-year.
The dollar change includes an $84 million decrease from rental, in that OER was down $86 million, while ancillary and rerent together were an offset of $2 million.
Used sales were tailwind to adjusted EBITDA of $19 million, which offset a $2 million headwind from other non-rental lines of business and SG&A was a benefit in the quarter up $25 million as similar sales the last couple of quarters.
Our adjusted EBITDA margin in the quarter was 42.4%, down 70 basis points year-over-year and flow through as reported was about 62%.
Adjusting for those two results is an implied detrimental flow through for the quarter of about 37%.
Our shift to adjusted EPS, which was $3.45, that's up $0.10 versus Q1 last year, primarily on lower interest expense and a lower share count.
For the quarter gross rental capex was $295 million.
Our proceeds from used equipment sales were $267 million, resulting a net capex in Q1 of $28 million.
Now turning to ROIC, which remained strong at 8.9%.
As we look back over what's obviously been a challenging 12 months.
Free cash flow was also strong at $725 million for the quarter.
This represents an increase of $119 million versus the first quarter of 2020 or about a 20% increase.
As we look at the balance sheet, net debt is down 21% year-over-year without having reduced our balance by about $2.3 billion over those 12 months.
Leverage continues to move down and was 3 times at the end of the first quarter, that compares with 2.5 times at the end of the first quarter last year.
We finished the quarter with over $3.7 billion in total liquidity that's made up of ABL capacity of just under $3.2 billion and availability on our AR facility of $276 million.
We also had $278 million in cash.
And third, the contribution of our Franklin Equipment acquisition, which we estimate at about $90 million of revenue and $30 million of adjusted EBITDA for the remainder of the year.
Bonus expense remains the headwind we've discussed previously, and at midpoint is about a 60 basis point drag in margin year-over-year.
Finally, the increase in free cash flow reflects the puts and takes, from the changes I mentioned and remains robust at a midpoint of $1.8 billion.
|
Our shift to adjusted EPS, which was $3.45, that's up $0.10 versus Q1 last year, primarily on lower interest expense and a lower share count.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
|
Both same-store and non-same-store assets are performing well, with lease-ups particularly in non-same-store assets outpacing our projections as NOI grew by 46%.
With the addition of the recently announced ezStorage portfolio, our year-to-date 2020 acquisition activity either closed or under contract is $2.5 billion.
Of note, since 2019, we have acquired, developed and redeveloped approximately 22 million square feet and have expanded our portfolio by 13% having invested $4.3 billion.
First, the integration of the assets into the Public Storage brand and operating platform will be seamless as we already had a broad presence in these markets with 115 assets.
We now enjoy even stronger presence with now 163 assets with unmatched brand presence across the Mid-Atlantic region.
The Public Storage development team has taken lead on these opportunities and is ready to execute on each one of them, allowing us to expand the portfolio by approximately 10% over the next 24 months.
Looking to fall 2021, we are encouraged by core customer demand, our well located portfolio, the strength of our balance sheet and the quality and dedication of the 5,000 plus team members at Public Storage, all of whom are committed to enhancing the leading brand in the self-storage industry.
In the same-store, our revenue increased 3.4% compared to the first quarter of 2020, which represents a sequential improvement in growth of 2.6% from the fourth quarter.
The benefit this quarter was worth $0.05 of FFO.
Some of the technology and operating model evolution we'll discuss on Monday at our Investor Day showed up in our first quarter numbers with property payroll down 13% in the quarter given efficiency improvements.
And as we started 2021, we've seen continued strength, as Joe mentioned, in customer demand with occupancy is up 260 basis points and in-place contract rent per occupied square foot turning into positive year-over-year territory in January.
We anticipate same-store revenue to grow from 4% to 5.5% in 2021.
Our current expectations are for occupancy to be down 100 basis points plus in the fourth quarter compared to 2020.
Our expectations are for 1% to 2% same-store expense growth.
Property tax expense growth will pick up this year with our expectations around a 5% increase for the year, again recognized ratably through the year.
In total, our outlook is for core FFO per share of $11.35 to $11.75 for 2021.
The offering comprised of three, seven and 10 year tranches with the weighted average cost of about 1.6%.
|
In total, our outlook is for core FFO per share of $11.35 to $11.75 for 2021.
|
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
|
We have now filed our 200th U.S. patent application and received 90 U.S. patents for OpenBlue energy optimization innovations.
About two weeks ago, we launched the Community College partnership program aimed at expanding and advancing associate degree and certificate programs in HVAC, fire and security and digital building automation systems across the U.S. Over the next five years, Johnson Controls will grant $15 million to nonprofit community colleges in support of academic programs that train and develop the next generation of skilled trades technicians.
Ultimately, the actions we are taking are designed to drive 200 or 300 basis points of above-market growth, which would place us firmly in the mid-single-digit annual growth range for the entire $6-plus billion in revenues.
In the quarter, service revenue increased 11%, in line with the rebound we expected with double-digit growth across all three regions.
Order growth also accelerated, as expected, up 13%.
And our attachment rate year-to-date has now improved close to 400 basis points, already achieving our guidance range for the full year.
And nearly $250 billion, sustainability and decarbonization is a once-in-a-generation opportunity and we are excited about our role in leading these critical trends.
Organic sales accelerated in Q3, up 15% overall, in line with the guidance we provided last quarter as growth in Global Products and our field businesses accelerated.
Segment EBITA increased 21% versus the prior year and segment EBITA margin expanded 30 basis points to 16.2%.
EPS of $0.83 increased 24%, benefiting from higher profitability as well as a lower share count.
Free cash flow in the quarter was $735 million, flat versus the prior year despite the planned uptick in capex.
Orders for our field businesses increased 18% year-over-year, accelerating at a faster pace than expected, led by continued strength in retrofit project activity, which we include in install, but also stabilization in new construction activity.
Service orders recovered above pre-pandemic level, up 13%, led primarily by improving conditions for our transactional service business.
Backlog grew 7% to $10 billion with service backlog up 5% and installed backlog up 7%.
Operations were a $0.16 tailwind versus the prior year, driven by higher volumes and favorable mix, partially offset by price cost and the reversal of prior year mitigating cost actions.
Excluding this impact, underlying incrementals in Q3 were just over 30%.
We're on track with our SG&A productivity program, which equated to a benefit of around $0.03.
North America revenues grew 8% organically with solid growth in both service and install.
Service revenues were higher in all domain, driven by a sharp rebound in our transactional service business, which increased nearly 30%.
Segment margin decreased 70 basis points year-over-year to 14.7% as North America experienced the most headwinds from the reversal of temporary cost given the majority of the action in the prior year related to furloughs and other employee compensation-related expense.
Orders in North America accelerated on a sequential basis and grew 18% versus the prior year with mid-teens growth in Fire & Security and performance infrastructure.
Commercial HVAC orders were up over 20% overall, driven by strong retrofit activity with equipment orders up over 50%.
Backlog to $6.2 billion increased 6% year-over-year.
Revenue in EMEALA increased 17% organically, led by strong recovery in installed activity.
Non-resi construction grew more than 25% in the quarter, with most verticals returning to 2019 levels, led by increased demand for energy-related infrastructure projects.
Fire & Security, which accounts for nearly 60% of segment revenues inflected sharply, growing at a mid-20s rate in Q3 and surfacing 2019 levels.
Industrial refrigeration grew 20% and commercial HVAC and controls grew high single digits.
By geography, revenue growth in Europe accelerated to nearly 25%, while the Middle East declined low double digits and Latin America increased 10%.
Segment EBITA margins increased 250 basis points, driven by volume leverage and the benefit of SG&A actions.
Orders in EMEALA accelerated further, increasing 22% in the quarter with strong growth in Fire & Security and Commercial HVAC.
APAC revenues increased 14% organically with install and service increasing by the same amount.
EBITA margins declined 380 basis points year-over-year to 11.8% as the benefit of volume leverage was more than offset by the significant temporary cost mitigation actions taken in the prior year and geographic mix.
APAC orders grew 14%, driven by continued strength in Commercial HVAC in China and recovery in controls business in Japan.
Global Products revenue grew 21% on an organic basis in the quarter, in line with what we initially expected despite incremental headwinds related to COVID lockdown in Asia and the short-term supply chain restrictions.
Our global Residential HVAC business was up 16% in the quarter, with strong growth in all regions.
Although not reflected in our revenue growth, our iSense joint venture grew revenue 44% year-over-year in Q3, expanding our leading shares in China.
Commercial HVAC sales improved significantly up more than 20% with our indirect applied business up more 25%.
Light commercial industry up over 20%, led by the recovery in North America and VRF up high single digits.
Fire & Security products growth was above 30%, led by continued strength in our security business, which grew over 40% in the quarter.
EBITDA margin expanded 140 basis points year-over-year to 20.9% as volume leverage, positive mix increased equity income and the benefit of SG&A actions more than offset the significant temporary cost actions taken in the prior year as well as current price cost pressure.
As expected, corporate expense increased significantly year-over-year of an abnormally low level to $70 million.
For the full year, we now expect corporate expense to be in the range of $280 million to $285 million, slightly below the low end of the prior guide.
Our balance sheet remains healthy with leverage of roughly 1.8 times, still below our targeted range of 2 times to 2.5 times.
On cash, we generated $735 million in free cash flow in the quarter, bringing us to nearly $1.7 billion year-to-date.
For the full year, we expect free cash flow conversion to be approximately 105%.
During the third quarter, we repurchased a little more than 5 million shares for roughly $340 million, which brings us to around 19 million shares year-to-date, completing our $1 billion program.
We expect to repurchase an incremental $350 million of shares in Q4.
For the full year, we're raising our guidance once again and now target adjusted earnings per share in the range of $2.64 to $2.66.
This puts the midpoint at the high end of our previous earnings per share guidance of $2.58 to $2.65.
Based on our strong performance year-to-date and the continued underlying momentum we are seeing in most of our end markets, we continue to expect organic sales growth in the mid-single digits.
Segment EBITA margins are tracking toward the high end of our most recent range, and we now expect 80 to 90 basis points of expansion for the full year, which includes a 10-basis point headwind related to the acquisition of Silent-Aire.
Based on the full year guide, Q4 adjusted earnings per share is expected to be in the range of $0.86 to $0.88, which assumes mid-single-digit organic revenue growth and 30 basis points of segment EBITA margin expansion.
|
EPS of $0.83 increased 24%, benefiting from higher profitability as well as a lower share count.
For the full year, we're raising our guidance once again and now target adjusted earnings per share in the range of $2.64 to $2.66.
Based on our strong performance year-to-date and the continued underlying momentum we are seeing in most of our end markets, we continue to expect organic sales growth in the mid-single digits.
Based on the full year guide, Q4 adjusted earnings per share is expected to be in the range of $0.86 to $0.88, which assumes mid-single-digit organic revenue growth and 30 basis points of segment EBITA margin expansion.
|
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
0
1
|
Economic earnings per share of $4.28 improved 35% year over year and represented the strongest first quarter in our history, primarily driven by EBITDA growth of 23% and ongoing share repurchase activity.
Nearly 20 years ago, we began developing AMG-led distribution resources to complement the existing sales efforts of our affiliates.
We have significantly enhanced our capital position and we repurchased nearly 20% of our shares outstanding.
Adjusted EBITDA of $247 million grew 23% year over year, driven by strong affiliate investment performance and the impact of our growth investments.
Economic earnings per share of $4.28 grew 35% year over year further benefiting from share repurchase activity.
In alternatives, fundraising remains strong at Pantheon, Baring, EIG and Comvest as clients continue to steadily increase private market allocations globally, and we reported net inflows of $2.8 billion in the first quarter.
Overall, our private markets book remains a significant source of earnings growth, accounting for nearly 20% of management fee EBITDA with increasing future carried interest potential.
In U.S. equities, we reported net inflows of $300 million.
In global equities, net outflows of $3.9 billion were driven by redemptions in regionally focused strategies.
These strategies generated $900 million in net client cash flows during the quarter, primarily driven by ongoing demand for muni bond strategy at GW&K and stable growth across our wealth management affiliates.
For the first quarter, adjusted EBITDA of $247 million grew 23% year over year, driven by strong affiliate investment performance.
Adjusted EBITDA included $42 million of performance fees, reflecting outstanding performance in certain liquid alternative strategies.
Economic earnings per share of $4.28 grew by 35% year over year, further benefiting from share repurchase activity.
We expect adjusted EBITDA to be in the range of $210 million to $220 million based on current AUM levels, reflecting our market blend, which was up 3% as of Friday.
Our estimate includes performance fees of up to $10 million and the impact of our newest investments in OCP Asia and Boston Common.
Our share of interest expense was $27 million for the first quarter, and we expect interest expense to remain at a similar level for the second quarter.
Controlling interest depreciation was $2 million in the first quarter, and we expect the second quarter to be at a similar level.
Our share of reported amortization and impairments was $41 million for the first quarter, and we expect it to be $35 million in the second quarter.
Our effective GAAP and cash tax rates were 24% and 20%, respectively, for the first quarter, and we expect similar levels for the second quarter.
Intangible-related deferred taxes were $9 million in the first quarter, and we expect an $11 million level in the second quarter.
Other economic items were negative $15 million and included the mark-to-market impact on GP and seed capital investments.
In the second quarter, for modeling purposes, we expect other economic items, excluding any mark-to-market impact, on GP and seed to be $1 million.
Our adjusted weighted average share count for the first quarter was $43.2 million, and we expect our share count to be approximately $42.4 million for the second quarter.
We expect the business to contribute $0.20 of incremental economic earnings per share in 2021 and $0.33 in 2022, including $16 million of EBITDA in 2022.
In the first quarter, we repurchased $210 million of shares and now have repurchased nearly 20% of our shares outstanding over the past two years.
We are focused on continuing to reduce our share count through repurchases over time, and we remain on track to repurchase $500 million of shares this year.
|
Economic earnings per share of $4.28 improved 35% year over year and represented the strongest first quarter in our history, primarily driven by EBITDA growth of 23% and ongoing share repurchase activity.
Economic earnings per share of $4.28 grew 35% year over year further benefiting from share repurchase activity.
Economic earnings per share of $4.28 grew by 35% year over year, further benefiting from share repurchase activity.
|
1
0
0
0
1
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
|
For the first quarter, sales per operating week were up 4.8% relative to pre-COVID.
And through the first three weeks in September, sales per operating week were up approximately 7% relative to pre-COVID.
And we remain on track to open approximately 35 to 40 new restaurants this fiscal year.
A long-term framework calls for 2% to 3% sales growth from new restaurants.
We 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.
For the quarter, off-premise sales accounted for 27% of total sales at Olive Garden and 15% of total sales at LongHorn Steakhouse.
Digital transactions accounted for 60% of all off-premise sales during the quarter, and guest satisfaction metrics for off-premise experiences remained strong.
As 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.
Total 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.
Diluted net earnings per share from continuing operations were $1.76.
We returned approximately $330 million to our shareholders this quarter, paying $144 million in dividends and repurchasing $186 million in shares.
We 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.
The market for proteins this quarter was very strong with spot premiums as high as 30% above our contracted rates.
This resulted in higher average cost per pound for our proteins contributing to total commodities' inflation for the quarter of approximately 5.5%.
Now 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.
For the first quarter, food and beverage expenses were 150 basis points higher, driven by investments in both food quality and pricing significantly below inflation.
Restaurant 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.
Restaurant expenses were also 110 basis points lower due to sales leverage.
Marketing spend was $45 million lower, resulting in 220 basis points of favorability.
As a result, restaurant-level EBITDA margin for Darden was 20.9%, 290 basis points better than pre-COVID levels.
G&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.
Additionally, we had approximately $5 million of expense related to mark-to-market on our deferred compensation.
Our effective tax rate for the quarter was 12.6%, which benefited from the deferred compensation hedge I just mentioned.
First quarter sales at Olive Garden were flat to pre-COVID, while segment profit margin increased 220 basis points.
This was strong performance despite elevated inflation and two-year check growth of only 2.4%.
LongHorn 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.
Sales at our Fine Dining segment increased 24% versus pre-COVID in what's traditionally their slowest quarter from a seasonal perspective.
Segment profit margin grew by 490 basis points, driven by strong sales leverage and operational efficiencies, which more than offset double-digit commodity inflation.
Our Other segment grew sales by nearly 5% and segment profit margin by 360 basis points.
We 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.
|
Diluted net earnings per share from continuing operations were $1.76.
Now 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.
We 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.
|
0
0
0
0
0
0
0
0
0
1
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
|
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.