Prompt:
Human: These factors are detailed in the company's financial reports.
You should also note that we will be discussing our consolidated results using core performance measures, unless we specifically indicate our comments relate to GAAP data.
Our core performance measures are non-GAAP measures used by management to analyze the business.
Reconciliation of core results to comparable GAAP value can be found in the investor relations section of our website at corning.com.
You may also access core results on our website with downloadable financials in the interactive analyst center.
We encourage you to follow along.
They're also available on our website for downloading.
Today, we reported third quarter results demonstrating that the company is strong, financially healthy and well positioned for growth.
Sales were $3 billion, up 16% sequentially.
EPS grew 72% sequentially to $0.43, as higher sales and strong manufacturing execution resulted in operating margin expanding to 18.3%, up 710 basis points sequentially and 20 basis points year-over-year.
We generated $518 million of free cash flow and finished the quarter with $2.5 billion in cash.
Our financial performance has improved significantly since April, and we expect a strong fourth quarter.
Nevertheless, we remain vigilant and continue to adapt appropriately to multiple disruptive forces playing out around the world from the pandemic, the civil unrest to recession and geopolitical struggles.
We've been rising to the challenges since day one, and our priorities remain clear.
First, we must make our values evident in our actions.
Our commitment to the health, safety, and well-being of our employees underlines every facet of our operations.
We're dedicating resources and providing leadership to support our communities around the world.
We've launched Unity campaigns as well as racial and social equality programs targeting the multitude of hardships people are confronting right now.
And when it comes to the global health fight, we're all in, mobilizing our capabilities to combat the virus directly.
We must also safeguard our financial health.
Our third-quarter results show that our decisive actions are providing clear benefits as we leverage cost savings and increase efficiencies across the company.
Regardless of the depth or duration of global uncertainty, we're doing everything in our power to keep the company strong, and it's working.
Now to ensure that we emerge even stronger, we're continuing to invest to create additional revenue streams.
We're inventing new-to-the-world materials and manufacturing processes as well as co-innovating new solutions in partnership with our customers.
The relevance of our portfolio puts Corning at the heart of ongoing innovation with industry leaders, and we continue to solve our customers' toughest technology challenges.
You may have seen Apple's recent promotion of ceramic shield for the iPhone 12.
Their featuring are new-to-the-world material, which is the world's first, highly transparent color-free glass ceramic with performance that meets the rigorous demands put on smartphone cover materials.
This latest innovation with Apple exemplifies our ongoing strategy of consistent, long-term value creation by combining our deep expertise in glass science, ceramic science and optical physics with our unparalleled manufacturing and engineering capabilities.
Ceramic shield melds the attributes that we love about glass, create optics and retain strength with the attributes we love about ceramics, most notably, it's toughness.
Ceramics shield consist of ceramic crystals within a glass matrix.
There were two big inventions here.
The first was keeping the best damage-resistant attributes of both glass and ceramics.
The second was ensuring high optical transparency by growing index-matched nanocrystals inside the glass matrix that are one-tenth the wavelength of late.
As you recall, Apple made two investments in Corning, totaling $450 million, as part of their advanced manufacturing fund and their commitment to foster innovation among American manufacturers.
We could not be prouder to be a key component in the iPhone 12.
Now, it's important to note the iPhone 12, and many other flagship phones that we are also proud to be part of, support 5G.
5G matters to us.
The density of fiber necessary to deliver its promise is yet another example.
You've seen us illustrate that up to 100x more fiber is required to deploy 5G in a city than 4G.
This week, we announced a new product design to help operators dramatically boost the speed and reduce the cost of their outdoor deployments.
And we're embarking on new work to support Verizon's efforts to extend 5G indoors.
The relevance of our portfolio and our deep customer relationships, as illustrated by these advancements, keep us at the center of the inexorable shift to optical.
Stepping back, in all the industries we serve, important market trends offer new challenges.
The Corning is uniquely qualified to address and new opportunities to integrate more Corning content into products.
This is an especially powerful value creation lever in times of economic uncertainty, because we aren't exclusively relying on people buying more stuff.
We're putting more Corning into the products that people are already buying.
We are clearly seeing the benefits of this lever in today's results as innovation adoption drove specialty materials sales up 23% year-over-year despite a declining smartphone market.
This type of outperformance is not unique.
From 2016 to 2019, we added $500 million in sales, or 42% cumulatively, while smartphone sales actually went down.
And we're extending that growth streak this year.
In environmental technologies, we grew sales 16% in 2019, much faster than the underlying unit demand as automakers added gas particulate filters to cars.
And we, again, saw outperformance this quarter with sequential sales up 68%.
These are additional examples of the more Corning strategy at work and why the content story is so powerful for us.
I want to stress one additional point.
You often hear us say that our core technologies enable life-changing capabilities.
In these times, we're increasing focus on life-saving innovations.
Safe widespread vaccine delivery is one of society's top priorities, and glass packaging is critical.
Our Valor innovation will help enable faster filling line speeds and increased patient safety.
Right now, we're expanding capacity and supplying glass vials for vaccines as part of operation work speed, all while leveraging our leadership in life sciences to help support COVID diagnostic testing and virus research efforts.
Additionally, reduced fine particulate pollution, the objective of our filtration products, appears to be helpful for reducing infection rates.
And we're excited about recent university lab test, showing that our guardian antimicrobial glass particles, kill bacteria and viruses, including SARS-COV2.
We're also well-positioned to contribute as consumers continue to adapt to a world with social distancing.
For example, fiber increases the capacity and performance of networks, and glass provides the primary window to information and entertainment.
We're confident that we can bring further innovations to bear in many vital areas as the world addresses and recovers from these current challenges.
Overall, we had a very strong quarter on almost every dimension.
From an innovation perspective, I just reviewed our significant advancements.
Financially, we grew sales at double-digit rate sequentially and expanded margins to grow profitability even faster.
Operationally, we performed well, and I'd like to share a few examples.
In the midst of the pandemic, we deployed expert engineering teams to start-up our Gen 10.5 melting operations in both Wuhan and Guangzhou.
These facilities are positioning on us well to capture the fast-growing demand for large TVs.
In mobile consumer electronics, we successfully scaled up a new-to-the-world manufacturing process and product to meet Apple's iPhone launch.
In automotive, we flexed our operations to adjust to the fast pace ramp-up at OEMs after they significantly reduced production in Quarter 2.
In optical communications, we successfully adjusted our cost to the current market environment, resulting in significant profitability expansion, despite flattish sales, on a quarter-over-quarter basis.
We also remain vigilant in our actions to safeguard the company's financial strength.
We're proud of our execution, especially given the current global uncertainties.
Clearly, our employees around the world are dedicated to living our values and giving their best every day.
We had a very strong third quarter.
As Wendell highlighted, we executed effectively, and we bolstered our healthy balance sheet despite the ongoing macroeconomic challenges.
Sales growth and cost actions led to strong sequential margin expansion, further demonstrating that our operational adjustments are working.
We've made significant adjustments to align our cost and operating plan with the lower anticipated sales.
In total, Corning continues to demonstrate that it has the resources to deliver on our commitments and extend our leadership as we continue to focus on operational excellence, cash flow generation, and prudent capital allocation.
Before I get into the details of our performance and results, I want to call out the changes at Hemlock during Q3 and cover the differences between GAAP and core results.
On September 9, Hemlock Semiconductor group redeemed DuPont's 40.25% ownership interest in the company, which transformed Corning's longtime ownership in Hemlock into a majority position.
In the second transaction, Hemlock purchased certain manufacturing assets from DuPont and gained control of a critical raw material, thereby becoming a leading, low-cost producer of ultra-pure polysilicon to the semiconductor industry.
Hemlock's leadership position is backed by attractive the long-term take-or-pay customer contracts with upfront payments.
Now, we're very excited about these transactions.
They are good for Hemlock, good for Corning, and good for our shareholders.
We didn't put any money into the transaction, and Hemlock generates a lot of cash so its debt is mostly paid back in one year.
Corning improves its financials by adding sales and earnings.
In the third quarter, we recognized $31 million of sales from the newly consolidated Hemlock.
And Hemlock will add approximately $150 million in annual cash flow.
Please see our web disclosure for helpful consolidation details.
Now on to GAAP.
The largest differences between our third-quarter GAAP and core results are a noncash gain associated with the Hemlock transaction, ongoing restructuring charges, which are primarily noncash, and a mark-to-market adjustment for our currency hedge contracts.
Now with respect to the mark-to-market adjustments, GAAP accounting requires earnings translation hedge contracts and foreign debt settling in future periods to be mark-to-market and recorded at current value at the end of each quarter even though those contracts will not be settled in the current quarter.
For us, this reduced GAAP earnings in Q3 by $103 million.
To be clear, this mark-to-market accounting has no impact on our cash flow.
Our currency hedges protect us economically from foreign exchange rate fluctuations and provide higher certainty for our earnings and cash flow, our ability to invest for growth, and our future shareholder distributions.
Our non-GAAP or core results provide additional transparency into operations by using a constant-currency rate aligned with the economics of our underlying transactions.
We're very pleased with our hedging program and the economic certainty it provides.
We've received $1.7 billion in cash under our hedge contracts since our inception more than five years ago.
Now, I'll walk through our third quarter performance.
At the outset of the pandemic, we committed to preserving our financial strength and positioning the company to emerge even stronger.
In Q1 and Q2, we told you we were responding to economic uncertainty by making significant operational adjustments.
We said we reduced cost and capital spend to align with lower anticipated sales.
And while ramping down production and reducing inventory impacts margins, we said that when sales growth resumed, we expect improved profitability.
Now, looking at the third quarter, we grew 16% -- sales grew 16% sequentially to $3 billion, and our operating margin expanded by 710 basis points sequentially, to 18.3%.
This resulted in net income of $380 million and earnings per share of $0.43, up 72% sequentially.
We also said we would maintain a strong cash balance and generate positive free cash flow for the year.
In the third quarter, free cash flow grew to $518 million, cumulative free cash flow for the first three quarters was $484 million.
We ended the quarter with a cash balance of $2.5 billion and expect to generate additional positive free cash flow in the fourth quarter as we continue to reduce cost, control inventory and execute well overall.
As a result, I'm confident that we will succeed on our free cash flow goals.
These actions -- the actions we're taking are clearly working.
We have delivered great operational improvements, which started to show results in Q2, and really accelerated in Q3.
We expect the benefit of these actions to continue in Q4, contributing to another strong quarter.
Now, let's review the business segments.
In display technologies, third quarter sales were $827 million, up 10% sequentially, and net income was $196 million, up 29% sequentially.
Display glass volume grew approximately 10% sequentially, as panel makers increase utilization, resulting in strong incrementals.
Sequential price declines were moderate, as expected.
From an end-market perspective, it appears that the impact from COVID-19 has been a positive.
In developed markets, consumers are prioritizing in-home entertainment.
Globally, work and study from home trends are growing.
This is increasing demand for TV and IT products.
On the other hand, smartphone demand has been down.
In total, the retail market, as measured in square feet of glass, is up mid-single digits year-to-date through August.
Of course, the upcoming holiday retail season will be a big factor in how the market actually plays out for the full year.
Longer term, we remain confident that TV screen size will continue to grow.
TVs at 65 inches or larger grew 40% year-to-date through August.
And we are well positioned to capture the majority of that growth with Gen 10.5, which is the most efficient gen size for large TV manufacturing.
We continue to expect display pricing to decline by a mid-single-digit percentage in 2020.
We believe that three factors drive a favorable glass pricing environment: First, we expect glass supply/demand to be balanced to tight.
For Corning, we are ramping our Gen 10.5 tanks to align with panel makers' schedules.
Second, our competitors continue to face profitability challenges at current pricing levels.
And third, display glass manufacturing requires periodic investments in existing capacity to maintain operations.
Glass prices must support acceptable returns on those investments.
In optical communications, third-quarter sales grew 10% sequentially to $909 million, as carrier spending and deployments remain stable and enterprise sales grew slightly.
Net income grew by $34 million or 42% to $115 million, driven by improving cost performance.
Looking forward, demand on the network is at an all-time high, and we are seeing positive statements on capacity expansion from network operators.
Currently, COVID-related factors hampered the ability to invest broadly in networks, and operators are focusing efforts on addressing capacity bottlenecks.
We believe operators will begin additional investments to reestablish normal network headroom and expand offerings.
Large-carrier and enterprise capital projects are inevitable.
But as we've said before, it's always hard to predict the timing.
Environmental technology sales in the third quarter were $379 million, up 68% sequentially as markets recovered and OEMs continued to adopt GPS in Europe and China.
We effectively adjusted our operations to pace with the market recovery and delivered net income of $69 million, compared to breakeven in the second quarter.
The business team did a great job over the last six months in reacting to the rapid shutdown and restart of auto production by controlling cost and maintaining flexibility.
Automotive sales increased 1% year-over-year as continued strong adoption of GPS helped us exceed vehicle production, which declined 6% year over year.
In the quarter, we saw continued strong market performance in China, up slightly year over year.
North America and European OEMs more than doubled production sequentially, but declined 5% on a year-over-year basis.
Diesel sales improved 49% from the second quarter, but we're still down 15% year-over-year.
The North American heavy-duty truck market improved, but remains in a cyclical downturn with vehicle production down 46% year-over-year.
Third-quarter sales of heavy-duty vehicles in China, however, continue to exceed 2019 levels, and adoption of advanced content increased in preparation for China 6 regulations.
No doubt, this has been a challenging year for our automotive market access platform.
However, we are recovering faster than the market due to increasing content, primarily GPS and advanced heavy-duty products.
Our content-driven strategy continues to drive strong results.
Specialty materials sales were $570 million in the third quarter, up 23% year-over-year and in sharp contrast to the smartphone market, which declined.
Net income grew 59% year over year to $146 million.
Sales growth was driven by Ceramic Shield, our new-to-the-world glass ceramic on the iPhone 12 as well as premium glass sales, IT and tablet glass sales in support of work from home trends, and strength in our advanced optic products.
In brief, strong adoption and commercialization of our innovations produced strong year-over-year results for the third quarter for specialty materials, and we expect that to be true for full year 2020 as well.
In life sciences, North America lab utilization is increasing, and the pandemic is driving demand for laboratory diagnostic test in consumables.
As a result, we are seeing increased demand for our products.
In July, we carried out our long-term plan to ramp a new, larger distribution center needed to support our growth and enhance our ability to address our customers' increased needs around the world.
Starting up this center in the middle of a pandemic proved to be more difficult than we expected, which constrained third-quarter sales.
Sales declined 8% sequentially.
Net income declined 10%, in line with the lower volume.
We have added resources where required implemented recovery plans and are confident that operations will support the required output in Q4.
As a result, we expect strong sequential life science growth in the fourth quarter.
Now, I'll turn to our balance sheet and our dedication to financial stewardship.
As I mentioned at the outset of the pandemic, we committed to preserving our financial strength and positioning the company to emerge even stronger.
I've discussed the operational improvements we've implemented and our strong free cash flow generation.
It is also important to note that we continue to maintain a conservative balance sheet with a strong cash position that ended the quarter at $2.5 billion.
And we have a debt structure that is conservative by design and relatively unique.
Today, our average debt maturity is about 25 years, the longest in the S&P 500.
Over the next 15 months, we have under $70 million coming due.
Less than half of our total debt is due within the next 20 years.
And during this time, there is no single year with debt repayment over $500 million.
Our balance sheet is built for times like these.
As I've previously mentioned, we expect to generate positive free cash flow in the fourth quarter and for the year.
We also expect to maintain a strong cash position and to maintain our dividend.
We have the financial resources needed for the duration of the economic slowdown.
In closing, we demonstrated outstanding operational performance in the quarter with significant sequential improvement in sales, net income, earnings per share and free cash flow.
We are successfully carrying out the operational and financial goals we set up to stay strong during the crisis.
We expect another solid quarter to end the year.
We remain aware of potential impacts from the pandemic, the global recession, civil unrest, and geopolitical tensions.
Regardless of how long or what shape the recovery takes, Corning is effectively safeguarding its financial strength, our growth drivers are intact and we continue advancing important growth initiatives with leaders in industries we serve.
We are confident that our execution and market leadership positions us to emerge from the current global uncertainty even stronger.
With that, let's move to Q&A.
We're ready for our first question.
 Assistant:

Chosen response:
q3 core earnings per share $0.43.
qtrly display technologies net sales were $827 million versus $793 million.
qtrly optical communications net sales were $909 million versus $1,007 million.


Prompt:
Human: These factors are detailed in the company's financial reports.
You should also note that we'll be discussing our consolidated results using core performance measures unless we specifically indicate our comments relate to GAAP data.
Our core performance measures are non-GAAP measures used by management to analyze the business.
For the fourth quarter, the largest differences between our GAAP and core results stem from noncash mark-to-market gains associated with the company's currency hedging contracts and noncash impairment charges.
With respect to mark-to-market adjustments, GAAP accounting requires earnings translation hedge contracts and foreign debt settling in future periods to be marked to market and recorded at current value at the end of each quarter, even though those contracts will not be settled in the current quarter.
For us, this increased GAAP earnings in Q4 by $86 million.
To be clear, this mark-to-market accounting has no impact on our cash flow.
Our currency hedges protect us economically from foreign exchange rate fluctuations and provide higher certainty for our earnings and cash flow, our ability to invest for growth, and our future shareholder distributions.
Our non-GAAP or core results provide additional transparency into operations by using constant-currency rates aligned with the economics of our underlying transactions.
We're very pleased with our hedging program and the economic certainty it provides.
We've received more than $1.8 billion in cash under our hedge contracts since their inception more than five years ago.
A reconciliation of core results to the comparable GAAP value can be found in the Investor Relations section of our website at corning.com.
You may also access core results on our website with downloadable financials in the Interactive Analyst Center.
We encourage you to follow along.
They're also available on our website for downloading.
Today, we reported fourth quarter and full year 2021 results.
We delivered another strong quarter of year-over-year growth.
For the fourth quarter, sales were $3.7 billion, up 12% year over year.
We generated earnings per share of $0.54 and free cash flow of $425 million.
For the full year, sales were $14.1 billion, up 23% year over year.
We generated earnings per share of $2.07, up 49% year over year.
And we nearly doubled free cash flow.
In addition, we achieved double-digit ROIC, we expanded our operating margin by 230 basis points, we increased our dividend by 9% and we reduced our outstanding shares by 5% through the resumption of share repurchases.
By leveraging our fundamental capabilities and our More Corning strategy, we are capturing a compelling set of short- and long-term opportunities across our portfolio.
We are performing well in a challenging environment, and we have momentum entering the year.
Now, all of that said, our gross margin is simply not where it should be.
As we said last quarter, throughout the pandemic, we had prioritized protecting our people and delivering for our customers in a complex, inflationary environment.
And it has come at a cost.
Over the last several months, we have negotiated with customers to increase prices in our long-term contracts to more appropriately share the increased cost we are experiencing.
We are focused on expanding our gross.
We are focused on expanding our gross margin and expect improvement in 2022 as our sales grow and our price actions take hold throughout the year.
Last quarter, we also discussed our expectations for our Display business.
I am pleased to report we had another strong quarter of Display revenues and profits in Quarter 4.
Display glass pricing is expected to be flat sequentially in the first quarter.
The supply demand balance for display glass is tight.
In 2022, we expect overall glass supply to remain tight to balanced and the pricing environment to remain favorable.
Then Tony and Ed will discuss our results, as well as our plan to enhance our profitability and overall financial strength.
So, let's dive in.
We've been delivering consistent growth.
Sales have been up for six quarters in a row.
Since 2019, we've grown sales by 21% and earnings per share by 18% with more balanced and consistent contributions across our businesses.
Everything begins with our cohesive portfolio.
We're the world leader in glass science, ceramic science, and optical physics along with our four proprietary manufacturing and engineering platforms.
We focus our strategy on capturing synergies among these capabilities and applying them to create disruptive innovations.
Across multiple industries, we work closely with many of the most influential and successful companies to bring our world-leading capabilities to bear on their toughest challenges.
In the process, we help move the world forward.
As we partner with our customers to advance their visions, our probability of success increases as we combine our capabilities, reapply our talent, and repurpose existing assets.
This provides a powerful value creation lever by unlocking new ways to integrate more of our content into our customers' ecosystems.
We aren't exclusively relying on people buying more stuff.
We're driving more Corning content into the products they're already buying.
Our progress in 2021 illustrates the effectiveness of our approach, and it gives us confidence that we're building on a strong foundation for additional growth in 2022.
In Optical Communications, we've returned to growth with sales up 22% in 2021.
And we expect strong growth to continue.
Operators are expanding network capacity, capability, and access.
The pace of data center construction is accelerating as more applications move to the cloud and data creation continues to soar.
And fiber-rich wireless deployments are underway.
Meanwhile, governments around the world are initiating plans to extend the reach of broadband to more people in more places as network access is increasingly viewed as a human right.
For example, the recently passed U.S. infrastructure bill allocates $65 billion in new spending for broadband infrastructure, including $42 billion for new network builds.
Our customers are stating their preferences for fiber to build these networks.
As the only large-scale end-to-end manufacturer of optical solutions, Corning plays a vital role in driving the continued expansion of connectivity.
We're working even more closely with industry players at the regional and national levels, including expanding our longtime collaboration with AT&T.
Stepping back, we're at the beginning of a large, multiyear wave of growth for passive optical networks.
Project momentum is strong across our customer base.
infrastructure plans roll out, it could add as much as $1 billion a year to the market for four years starting as early as 2023.
We believe private carrier and public infrastructure investments will push the market into double-digit growth over the next few years.
In Life Sciences, we're delivering growth on multiple fronts with sales up 24% in 2021.
We're seeing ongoing demand in support of a global pandemic response.
Our inventions are also helping the industry advance the transition to cell- and gene-based therapies.
And we're making progress on our multibillion-dollar content opportunity in our pharmaceutical packaging business.
After introducing Valor Glass vials in 2017, we recently introduced Velocity Vials.
These vials are helping industry-leading drugmakers increase efficiency and throughput to drive faster manufacturing of vaccines to help meet global demand.
Velocity joins Valor and our glass tubing business as we build a comprehensive end-to-end pharmaceutical packaging portfolio.
In fact, our portfolio has enabled the delivery of nearly 5 billion doses of COVID-19 vaccines so far.
And earlier this week, West Pharmaceutical Services, a global leader in injectable drug administration, announced a long-term supply agreement and technology investment in Corning to enhance injectable drug packaging systems.
In automotive, 2021 sales in our Environmental Technologies segment increased 16% to reach an all-time high $1.6 billion despite weakness in the automotive market related to chip shortages.
We're pursuing a $100-per-car content opportunity driven by trends that are reshaping the auto industry and reimagining the car.
We delivered multiple proof points in 2021.
Daimler launched the Hyperscreen dashboard display in the Mercedes-Benz EQS.
The display features a Gorilla Glass cover nearly five feet wide.
Building on this momentum, we entered a new automotive product category with our Curved Mirror Solutions.
This innovation is enabling the augmented reality head-up display in Hyundai's electric crossover, the IONIQ 5.
And Jeep announced a product that brings our tough technical glass into their iconic vehicles.
The new Jeep performance parts windshield featuring Gorilla Glass is now a factory-installed option on the Wrangler and Gladiator.
Additionally, tighter emissions regulations continue to provide a strong content opportunity for our environmental solutions.
Our newest generation of gasoline particulate filters help vehicles, including hybrids, achieve even lower levels of fine particulate tailpipe emissions.
The contributions of our GPF business provide a strong illustration of our More Corning strategy in action.
Since 2017, Environmental Technologies sales have increased more than 40% while global car sales had decreased by 20%.
Let's turn to mobile consumer electronics, where 2021 sales increased 7%, and we surpassed the $2 billion in sales for the first time.
Since 2016, Specialty Materials has added nearly $900 million on a base of $1.1 billion in a smartphone market that has been flat to down.
As we help our customers deliver new value to their users, more of our content is deployed in each device sold.
That is another great illustration of More Corning in action.
Our industry-leading innovations continue to garner widespread accolades.
In fact, Fast Company named Corning the most innovative company in the consumer electronics category for 2021, touting Ceramic Shield, the world's first transparent and color-free glass-ceramic, as "virtually indestructible" and recognizing Gorilla Glass Victus as the toughest Gorilla Glass yet.
We continue to see strong demand for both of these premium products.
In 2021, more than 125 devices, including smartphones, wearables, tablets, and laptops, launched featuring Gorilla Glass.
And we expanded our capabilities into a new category by introducing Gorilla Glass with DX and DX+ to optimize mobile phone cameras.
These composite products create an attractive opportunity to increase our revenue per device.
Finally, in 2021, Apple awarded Corning an additional $45 million from its Advanced Manufacturing Fund.
To date, Corning has received $495 million in total from Apple's fund.
We're investing in multiple new inventions and innovations for mobile consumer electronics, and we're excited about the potential in 2022 and beyond.
Our leadership in large glass puts us in a position of strength.
2021 sales grew 17% to $3.7 billion.
Our volume exceeded glass market growth as we ramped Gen 10.5 facilities that supply glass for large-sized TVs, which are expected to grow at a high-teens compound annual growth rate over the next several years.
In 2022, we expect overall glass supply to remain tight to balanced and the pricing environment to remain favorable.
We continue to believe the retail market will grow, led by higher TV unit sales and growth in average screen size.
Across our markets, long-term growth drivers are strong, and our role is clear.
We lead in capabilities that are vital to progress.
Our approach provides exciting opportunities for Corning inventions to make a positive impact on the world.
And it underscores our commitment to moving the world forward in everything that we do.
Now, let me give you some examples outside of the operational context.
In 2021, we hosted COVID-19 vaccination clinics at Corning sites around the world.
In Reynosa, Mexico, for example, we helped administer more than 100,000 doses of vaccines and boosters to employees and community members.
And we provided more than 200,000 diagnostic tests for employees around the world.
We kicked off a five-year, $5.5 million partnership with the nation's largest historically black university, North Carolina A&T.
Our work will prepare students for STEM careers.
We engaged our board of directors to provide guidance and resources to our Office of Racial Equality and Social Unity, utilizing our members' diverse experience, gender, age, and ethnicity to advance this new initiative.
We achieved gender pay equity globally for all salaried employees, and we expanded the reach of our DE&I office with regional business councils.
And finally, we committed to greenhouse gas goals that align with the Paris Agreement.
And we signed solar contracts at Hemlock that will help the world address its renewable energy goals.
I feel very good about our efforts to bolster equality inside and outside the company and our progress on our sustainability initiatives.
Overall, we continue to build a stronger, more resilient company.
We're in the early innings of exciting industry transformations, and key trends are converging around our capabilities.
You can see it in our results, you can see it in our outlook for 2022 and advancement of new businesses toward significant commercial sales over the next few years.
Of course, to keep advancing during Corning's next 170 years, we must focus on growing and developing our leaders.
We have a new generation who are stepping up to guide this company through a very exciting phase of its history into the future, and I'm working closely with each of them.
To that end, I want to recognize Tony as he prepares to hand over the reins to Ed in just a few weeks.
The strong position we're in today certainly reflects the many contributions he has made throughout more than three decades of excellent service to Corning.
Ed has long played a key role in the growth and financial strength of our company.
Tony and I have worked closely with him during that time, and I look forward to the important contributions he will make in this new position.
Our growth initiatives are succeeding, and we delivered another quarter of excellent year-over-year growth that capped off a truly exceptional year.
For the full year, sales increased 23% and earnings per share was up 49%.
All of our segments grew with four out of five increasing sales by a double-digit percentage.
It was a strong year even compared to pre-pandemic levels.
Since 2019, we have grown sales by 21% and earnings per share by 18%.
We nearly doubled free cash flow to $1.8 billion, which is a conversion rate of 97% for the year.
We achieved double-digit ROIC, and we utilized our strong cash generation to reward shareholders.
We increased our dividend 9%, and we reduced our outstanding shares by 5% through the resumption of share repurchases.
On so many dimensions, we are feeling great.
That said, as you heard from Wendell, our gross margin percentage is not where it should be.
In the fourth quarter, gross margin was 36.5%, down 180 basis points sequentially.
As expected, below-normal auto production and seasonally lower sales in Specialty Materials reduced profitability.
In addition, we restarted idle polysilicon capacity to support Hemlock's new long-term solar contracts, thus incurring temporary start-up costs.
We expect to expand gross margin percent throughout the year.
We negotiated pricing increases in long-term customer contracts to more appropriately share the higher costs that we are experiencing.
These increases take effect and accelerate throughout the year.
As always, we expect to deliver on a robust cost reduction program.
The combined benefits of these efforts should offset the cumulative inflation we experienced over the last year and what we anticipate for 2022.
Our gross and operating margins will also benefit from growing volume.
Our operating leverage is such that additional volume drives good incremental profitability and becomes even more apparent as we offset inflation.
We expect volume increases throughout the year.
As our volumes increase and our pricing actions take effect, our gross margin percent will grow.
As a reminder, the first quarter is usually our lowest volume quarter of the year.
We expect Specialty Materials to improve on its normal cycle, with Q1 typically being the lowest quarter of the year.
Environmental Technologies sales will improve with the resolution of the chip shortage, which we expect to happen later in the year.
And Optical Communications will grow as we fill the capacity that we're adding to meet growing demand.
For the year, we expect price increases, cost reductions, and volume growth.
Putting this all together, we expect Q1 to be the lowest gross margin percent quarter every year and for gross margin to grow from there.
Now, let's take a closer look at performance in each of our businesses during the fourth quarter and the full year.
Let's begin with Optical Communications.
Fourth-quarter sales were up 7% sequentially, exceeding $1.2 billion.
Net income increased to 12%.
For the full year, sales grew 22% to $4.3 billion, and net income was up 51%.
We grew significantly faster than the passive optical market.
National and regional carriers increased capital spending on 5G and broadband projects.
Additionally, enterprise sales were up as customers increased spending on data center builds.
Full-year net income grew 51% driven by the incremental volume despite cost headwinds related to materials and logistics.
We're entering 2022 with a sales run rate 25% higher than where we started in 2021, and we have a strong order book.
We continue to see significant public and private investments in fiber infrastructure as operators worked to expand capacity, capability, and access.
And we expect a large, multiyear wave of growth.
In fact, we believe private carrier and public infrastructure investments will push the market into double-digit growth.
We're adding capacity to capture the growing demand, and we feel really good about our position as the only large-scale, end-to-end manufacturer of optical solutions.
In the fourth quarter, sales were $942 million, up 12% year over year, and net income was $252 million, up 16% year over year.
For the full year, sales were $3.7 billion, up 17% year over year.
Net income reached $960 million, up 34% year over year.
The pricing environment was favorable throughout the year, and our excellent operational performance allowed us to continue to lead the market.
In the third quarter, we provided detail about our perspective on the display industry based on three main factors: retail demand, panel makers' production, and glass makers' ability to supply panel makers.
Our fourth-quarter performance and first-quarter outlook reaffirm our expectations.
We continue to expect that glass at retail will grow in 2022 by high single digits driven by TV unit and screen size growth.
We expect display glass pricing to be flat sequentially in the first quarter and supply demand balance for display glass to be tight.
We expect glass supply demand to remain tight to balanced in 2022 and the pricing environment to remain favorable.
Overall, we are very pleased with Display's performance in 2021, and we feel good about our outlook for 2022.
We're operating from a position of strength, and we intend to build on our momentum as we move forward.
In Environmental Technologies, fourth-quarter sales were $353 million, down 9% sequentially and 21% year over year.
Fourth-quarter net income was $54 million, down 10% sequentially and 42% year over year on lower sales volume.
These declines were driven by auto production constraints created by the semiconductor chip shortage that began in the second quarter of last year.
As expected, this negatively impacted profitability for the segment and the company.
Now, even with this temporary setback caused by the chip shortage, for the full year, we were able to deliver double-digit sales growth, enabled by our content-driven growth strategy.
Full-year sales were nearly $1.6 billion, up 16% year over year, primarily driven by strength in heavy-duty diesel and greater adoption of gas particulate filters.
For the full year, net income was $269 million, up 37% year over year.
As we look ahead, we're confident that our content-driven approach will continue to drive outperformance.
And when the automotive market rebounds with the resolution of the chip shortage, we expect significant growth from current levels.
Turning to Specialty Materials.
Sales were $518 million, down 7% sequentially on normal seasonality.
Sales were down 5% year over year versus a strong Q4 in 2020 following the launch of Ceramic Shield.
Fourth-quarter net income was $92 million, down sequentially and year over year, driven by the lower sales volume.
Full-year sales were up 7% and exceeded $2 billion driven by continued strong sales of premium cover materials.
Demand also remained strong for advanced optics content used in semiconductor manufacturing as the broader end market continues to experience robust growth.
Despite sales being up, full-year net income was down as we invested strongly in new innovations that will be commercialized in the coming year.
We have grown sales every year since 2016 through our More Corning approach despite smartphone unit sales maturing.
Over that five-year period, we've added nearly $900 million in sales on a base of $1.1 billion.
Looking ahead, in 2022, we expect sales to grow faster than our underlying markets driven by continuing adoption of our innovations and growth in advanced optics, specifically in products for EUV lithography.
And as I mentioned earlier, we expect sales to increase from the seasonal low levels we expect in the first quarter.
And finally, turning to Life Sciences, we had a great year with total sales topping $1.2 billion, up 24% year over year.
Fourth-quarter sales were $317 million, up 16% year over year.
This strong performance was driven by ongoing demand to support the global pandemic response, continued recovery in academic and pharmaceutical research labs, and strong demand for bioproduction vessels and diagnostic-related consumables.
Full-year net income was $194 million, up 40%.
Fourth-quarter net income was $49 million, up 17% year over year.
Looking ahead to 2022, we expect our strong growth to continue driven by COVID-19 vaccine rollouts, strong research funding, lab utilization returning to pre-pandemic levels, and growth in the bioproduction segment.
I also want to spend a minute on our other segment.
As a reminder, the majority of sales in our other segment are in Hemlock Semiconductor Group.
During the year, Hemlock saw new demand for solar-grade polysilicon.
With the increased activity and interest in U.S.-based solar manufacturing, customers have turned to Hemlock, a leader in polysilicon manufacturing.
So, in addition to selling polysilicon for use in semiconductors, Hemlock was able to sell solar polysilicon from inventory.
Going forward, solar remains a strong revenue opportunity for Hemlock.
In the fourth quarter, we signed long-term take-or-pay supply contracts with customer deposits that start to shift in 2022.
As a result, we restarted idle capacity with minimal capital investment to meet this demand.
As I mentioned earlier, gross margins were impacted in the fourth quarter as we incurred temporary costs to restart solar polysilicon capacity.
This will improve throughout the year as solar production increases.
Additionally, our auto glass and pharmaceutical packaging emerging businesses are also in the other segment, and both businesses significantly grew sales during the year as well.
Stepping back, we made strong progress across all of our businesses in 2021.
We entered new product categories, announced collaboration with key industry leaders, and contributed to significant industry advancements.
We're building a strong foundation for future growth.
This, combined with our consistent focus on innovation and deep commitment to RD&E, is what continues to fuel and sustain Corning's leadership position across its markets.
Looking ahead, we expect Corning sales and earnings per share to grow year over year in the first quarter.
We expect sales to be in the range of $3.5 billion to $3.7 billion and earnings per share in the range of $0.48 to $0.53.
Sales are down sequentially due to typical seasonal volume declines.
For the full year, we expect sales of approximately $15 billion and profit to grow faster than sales.
Before I turn things over to Ed, I'd like to take a moment to express my gratitude.
First, to all Corning employees whose dedication and commitment to this great company is such an inspiration.
Second, to those of you on the call and all our shareholders for being with -- being on this journey with us.
We're working hard every day to maintain your trust and reward your confidence in us.
I'm proud to have played a role in building the strong foundation Corning has today.
It's truly been a wonderful journey.
As Ed takes the reins in just a few weeks, I'm fully confident in his ability to build on this foundation and continue creating value for all our shareholders.
I'm looking forward to connecting with you in the days and months ahead so we can expand on the thoughts I share today and address any questions you may have.
Before I start, I'd like to say that it's been an honor working alongside Tony all these years.
Under his tenure, we met or exceeded all the goals of our four-year strategy and capital allocation framework.
And today, we're performing well against the subsequent goals we outlined in our strategy and growth framework in 2019.
Our execution has created a stronger, more resilient Corning, and that provided vital -- proved vital as the pandemic unfolded.
Our solid footing enabled us to preserve our financial strength throughout 2020, and it kept us well-positioned for growth in 2021.
Throughout it all, Tony's focus on financial stewardship has been central to our results, and I plan to sustain that disciplined approach.
So, let me walk through my priorities as CFO as I work to ensure that Corning continues to be an excellent steward of capital.
We expect another strong year of cash generation in 2022, and our financial priorities remain unchanged.
We will continue to invest our cash to support organic growth, extend our leadership, and reward shareholders.
First, we will continue to invest for growth primarily through RD&E and capex.
RD&E is fundamental to our long-term success, and our allocation will be consistent with previous years.
In 2022, we expect to keep capex consistent with 2021.
Our investments include adding capacity to meet growing demand, introduce new innovations and improve productivity.
Shareholder returns also remain a key priority.
In 2022, we expect to increase our dividend per share by approximately $0.10.
And we expect to continue opportunistic share repurchases, building on the 5% of outstanding shares we repurchased in 2021.
In the near term, improving gross margin is my top priority.
We expect improvement throughout 2022 as sales grow and our pricing actions take hold.
Overall, I'll close today saying that I'm optimistic about our growth trajectory for 2022 and excited to step into the CFO role.
We're building on a strong foundation.
Our capabilities are relevant to major trends playing out across the industries we serve.
Our More Corning approach is working.
And we're executing effectively through some very volatile end markets, expanding relationships and commitments with our customers, and extending our leadership position.
I look forward to updating you on our progress throughout the year.
Shannon, we are ready for the first question.
And I ask that, folks, please try to keep it to one question, so we can get to as many as we can.
 Assistant:

Chosen response:
qtrly optical communications sales grew 24% yoy to $1.21 billion.
sees q1 core earnings per share $0.48 to $0.53.
q4 core earnings per share $0.54.
sees q1 sales $3.5 billion to $3.7 billion.
sees q1 core earnings per share of $0.48 to $0.53.
q4 core sales rose 12 percent to $3.7 billion.
corning - expects growth in optical communications on market access platform in 2022 & beyond, including from u.s. infrastructure investment & jobs act.
qtrly display technologies sales were $942 million versus $841 million last year.
sees fy 2022 sales about $15 billion.
2022 capital expenditures are expected to remain at approximately 2021 level.
in 2022, corning expects overall glass supply to remain tight to balanced and pricing to remain favorable.
qtrly display technologies net sales $942 million, up 12%.
revised pricing terms take effect throughout 2022, and we expect gross margin to expand accordingly.


Prompt:
Human: Joining the call today are Gary Coleman and Larry Hutchison, our co-Chief Executive Officers; Frank Svoboda, our Chief Financial Officer; and Brian Mitchell, our General Counsel.
Some of our comments may also contain non-GAAP measures.
In the second quarter, net income was $200 million, or $1.92 per share compared to $173 million or $1.62 per share a year ago.
Net operating income for the quarter was $193 million or $1.85 per share, an increase of 12% per share from a year ago.
On a GAAP reported basis return on equity as of June 30 was 9% for the first half of the year and 9.7% for the second quarter.
Book value per share was $83.59.
Excluding unrealized gains and losses on fixed maturities, return on equity was 12.4% for the first half of the year and 13.5% for the second quarter.
In addition, book value per share grew 9% to $55.66.
In our life insurance operations, premium revenue increased 9% from the year ago quarter to $728 million.
As noted before, we have seen improved persistency and premium collections since the onset of the pandemic.
Life underwriting margin was $179 million, up 11% from a year ago.
The increase in margin is due primarily to the higher premium and lower amortization related to the improved persistency.
For the year, we expect life premium revenue to grow between 8% to 9% and underwriting margin to grow 5% to 6%.
In health insurance, premium revenue grew 4% to $296 million and health underwriting margin was up 16% to $74 million.
The increase in underwriting margin was primarily due to improved claims experience and persistency.
For the year, we expect health premium revenue to grow between 4% and 5% and underwriting margin to grow around 9%.
Administrative expenses were $68 million for the quarter, up 10% from a year ago.
As a percentage of premium, administrative expenses were 6.6% compared to 6.5% a year ago.
For the full year, we expect administrative expenses to grow 8% to 9% and be around 6.7% of premium due primarily to increased IT and information security cost, higher pension expense, and a gradual increase in travel and facility costs.
We experienced strong sales growth during the second quarter and we continue to make progress on agent recruiting.
I will now discuss current trends at each distribution channel.
At American Income Life, life premiums were up over the year ago quarter to $348 million and life underwriting margin was up 16% to $108 million.
The higher underwriting margin is primarily due to improved persistency and higher sales in quarters.
In the second quarter of 2020, sales were limited due to the onset of COVID.
In the second quarter of 2021, net life sales were $73 million, up 42%.
The increase in net life sales is primarily due to increased agent count and productivity.
The average producing agent count for the second quarter was 10,478, up 25% from the year ago quarter and up 6% from the first quarter.
The producing agent count at the end of the second quarter was 10,406.
The American Income Agency continues to generate positive momentum.
At Liberty National, life premiums were up 6% over the year ago quarter to $78 million, while life underwriting margin was down 16% to $16 million.
The decline in underwriting margin is due primarily to higher policy obligations.
Net life sales increased 67% to $18 million and net health sales were $6 million, up 52% from the year ago quarter due primarily to increased agent count and increased agent productivity.
The average producing agent count for the second quarter was 2,700, up 13% from the year ago quarter, while down 1% from the first quarter.
The producing agent count at Liberty National ended the quarter at 2,700.
We continue to be encouraged by Liberty National's progress.
At Family Heritage, health premiums increased 9% over the year ago quarter to $85 million and health underwriting margin increased 18% to $22 million.
The increase in underwriting margin is due primarily to improved clients experience and improved persistency.
Net health sales were up 41% to $19 million due to increased agent productivity.
The average producing agent count for the second quarter was 1,220, down 2% from the year ago quarter and down 5% from the first quarter.
The producing agent count at the end of the quarter was 1,171.
The agency emphasized Asia productivity during the first half of the year.
The focus is shifting more toward recruiting for the remainder of the year.
In our direct-to-consumer division at Global Life, the life premiums were up 6% over the year ago quarter to $249 million and life underwriting margin increased 22% to $34 million.
The increase in margin is due primarily to improved persistency.
Net life sales were $42 million, down 14% from the year ago quarter.
This decline was expected due to the extraordinary level of sales activity seen in the second quarter of last year during the onset of COVID.
While sales declined from a year ago, we are pleased with this quarter's sales activity as it was 23% higher than the second quarter of 2019.
At United American General Agency, health premiums increased 3% over the year ago quarter to $116 million and health underwriting margin increased 16% to $18 million.
The increase in margin was due to improved loss ratios and lower amortization.
Net health sales were $12 million, up 1% compared to the year ago quarter.
It is still somewhat difficult to predict sales activity in this uncertain environment, but I will now provide projections based on trends we are seeing and knowledge of our business.
We expect the producing agent count for each agency at the end of 2021 to be in the following ranges: American Income Life, 3% to 6% growth; Liberty National, 1% to 8% growth; Family Heritage, a decline of 1% to 9%.
Net life sales for the full year 2021 are expected to be as follows: American Income Life, an increase of 13% to 17%; Liberty National, an increase of 26% to 32%; direct-to-consumer, a decrease of 10% to flat.
Net health sales for the full year 2021 are expected to be as follows: Liberty National, an increase of 12% to 18%; Family Heritage, an increase of 4% to 8%; United American Individual Medicare Supplement, a decrease of 1% to an increase of 9%.
We now turn to the investment operations.
Excess investment income, which we define as net investment income less required interest on net policy liabilities and debt, was $60 million, a 2% decline from the year ago quarter.
On a per share basis, reflecting the impact of our share repurchase program, excess investment income grew 2%.
For the full year, we expect excess investment income to decline 1% to 2%, but to grow around 2% on a per share basis.
In the second quarter, we invested $116 million in investment grade fixed maturities, primarily in the financial, municipal and industrial sectors.
We invested at an average yield of 3.69%, an average rating of A, and an average life of 35 years.
We also invested $72 million in limited partnerships that invest in credit instruments.
These investments are expected to produce incremental yield and are in line with our conservative investment philosophy.
For the entire fixed maturity portfolio, the second quarter yield was 5.24%, down 14 basis points from the second quarter of 2020.
As of June 30, the portfolio yield was 5.23%.
Invested assets are $19.1 billion, including $17.5 billion of fixed maturities at amortized cost.
Of the fixed maturities, $16.7 billion are investment grade with an average rating of A- and below investment grade bonds are $764 million compared to $802 million at the end of the first quarter.
The percentage of below investment grade bonds to fixed maturities is 4.4%.
Excluding net unrealized gains in the fixed maturity portfolio, the low investment grade bonds as a percentage of equity was 13%.
Overall, the total portfolio is rated A- compared to BBB+ a year ago.
Consistent with recent years, bonds rated BBB are 55% of the fixed maturity portfolio.
While this ratio is in line with the overall bond market, it is high relative to our peers.
However, we have little or no exposure to higher risk assets such as derivatives, equities, residential mortgages, CLOs and other asset-backed securities.
Because we invest long, a key criteria in utilizing our investment process is that an issuer must have the ability to survive multiple signposts.
We believe that the BBB securities that we acquire provide the best risk-adjusted, capital-adjusted returns due in large part to our unique ability to hold securities to maturity regardless of fluctuations in interest rates or equity markets.
Low interest rates continue to pressure investment income.
At the midpoint of our guidance, we are assuming an average new money rate of around 3.45% for fixed maturities for the remainder of 2021.
While we would like to see higher interest rates going forward, Globe Life can thrive in a longer lower for longer interest rate environment.
Extended low interest rates will not impact the GAAP or statutory balance sheets under current accounting rules since we sell non-interest sensitive protection products.
Fortunately, the impact of lower new money rates on our investment income is somewhat limited, as we expect to have an average turnover of less than 2% per year in our investment portfolio over the next five years.
First, I want to spend a few minutes discussing our share repurchase program, available liquidity and capital position.
The parent ended the second with liquid assets of approximately $545 million.
This amount is higher than last quarter, because in June, the company issued a 40-year $325 million junior subordinated note with a coupon rate of 4.15%.
Net proceeds were $317 million.
On July 15, the company utilized the proceeds to call our $300 million 6.125% junior subordinated notes due 2056.
The remaining proceeds will be used for general purposes.
In addition to these liquid assets, the parent company will generate excess cash flows during the remainder of 2021.
The parent company's excess cash flow, as we define it, results primarily from the dividends received by the parent from its subsidiaries less the interest paid on debt and the dividends paid to Global Life's shareholders.
We anticipate the parent company's excess cash flow for the full year to be approximately $365 million.
Of which, approximately $185 million will be generated in the second half of 2021.
In the second quarter, the company repurchased 1.2 million shares of Global Life Inc. common stock at a total cost of $123 million at an average share price of $101.05.
The total spend was higher than anticipated as we took advantage of the sharp drop in share price at the end of the quarter and accelerated approximately $30 million of purchases from the second half of the year to repurchase shares at an average price of $95.62.
So far in July, we have spent $32 million to repurchase 343,000 shares at an average price of $93.81.
Thus, for the full year through today, we have spent approximately $246 million to purchase 2.5 million shares at an average price of $97.96.
Taking into account the liquid assets of $545 million at the end of the second quarter, plus approximately $185 million of excess cash flows that we are expected to generate in the second half of the year, less the $32 million spent on share repurchases in July and the $300 million to call our junior subordinated note, we will have approximately $400 million of assets available to the parent for the remainder of the year.
As I will discuss in more detail in just a few moments, we believe this amount is more than necessary to support the targeted capital levels that's in our insurance operations and maintain the share repurchase program for the remainder of the year.
As noted on previous calls, we will use our cash as efficiently as possible.
We still believe that share purchases provide the best return or yield to our shareholders over other available alternatives.
Thus, we anticipate share repurchases will continue to be a primary use of the parent's excess cash flows.
It should be noted that the cash received by the parent company from our insurance subsidiaries is after they have made substantial investments during the year to issue new insurance policies, expand our information technology and other operational capabilities as well as acquired new long-duration assets to fund future cash needs.
As we progress through the remainder of the year, we will continue to evaluate our available liquidity.
If more liquidity is available than needed, some portion of the excess could be returned to shareholders before the end of the year.
However, at this time, the midpoint of our earnings guidance only reflects approximately $120 million of share repurchases over the remainder of the year.
Our goal is to maintain our capital at levels necessary to support our current rating.
As noted on previous calls, Globe Life has targeted a consolidated company action level RBC ratio in the range of 300% to 320%.
At December 31, 2020, our consolidated RBC ratio was 309%.
At this RBC ratio, our insurance subsidiaries have approximately $50 million of capital over the amount required at the low end of our consolidated RBC target of 300%.
This excess capital, along with the roughly $400 million of liquid assets we expect to be available at the parent, provide sufficient liquidity to fund future capital needs.
As we discussed on previous calls, the primary drivers of potential additional capital needs from the parent company in 2021 relate to investment downgrades and changes to the NAIC RBC factors related to investments, commonly referred to as C1 factors.
To estimate the potential impact on capital to changes in our investment portfolio, we continue to model several scenarios and stress tests.
In our base case, we anticipate approximately $370 million of additional NAIC 1 notch downgrades.
In addition, we anticipate full adoption by the NAIC of the new Moody's and NAIC C1 factors for 2021.
Combined, our base case approximately $105 million of additional capital will be needed at our insurance subsidiaries to offset the adverse impact of the new factors and additional downgrades in order to maintain the midpoint of our consolidated RBC targets.
Bottom line, the parent company has ample liquidity to cover any additional capital that may be required and still have cash available to make our normal level of share repurchases.
As previously noted, we will continue to evaluate the best use of any excess cash that could remain, and we will consider returning a portion of any excess to shareholders before the end of the year.
We should be able to provide more guidance on that in our call next quarter.
At this time, I'd like to provide a few comments relating to the impact of COVID-19 on second quarter results.
In the first half of 2021, the company has incurred approximately $49 million of COVID death claims, including $11 million in the second quarter.
The $11 million incurred is $10 million less than incurred in the year ago quarter and is in line with our expectations for the quarter.
The total COVID death benefits in the second quarter included $4.6 million incurred in our direct-to-consumer division or 2% of its second quarter premium income, $1.5 million incurred at Liberty National or 2% of its premium for the quarter and $3.5 million at American Income or 1% of its second quarter premium.
At the midpoint of our guidance, we anticipate approximately 20,000 to 30,000 additional COVID deaths to occur over the remainder of 2021.
As in prior quarters, we continue to estimate that we will incur COVID life claims of roughly $2 million for every 10,000 U.S. deaths.
We are estimating a range of COVID death claims of $53 million to $55 million for the substantially unchanged from our previous guidance.
Finally, with respect to our earnings guidance for 2021, in the second quarter, our premium persistency continued to be very favorable and was better than we anticipated, leading to greater premium, higher policy obligations and lower amortization as a percent of premium.
At this time, we now expect lapse rates to continue at lower than pre-pandemic levels throughout the remainder of 2021, leading to higher premium and underwriting income growth in our life segment.
We also increased the underwriting income in our health segment to reflect the favorable health claims experience we saw in the second quarter.
Finally, the impact of our lower share price results in a greater impact from our share repurchases and results in fewer diluted shares.
As such, we have increased the midpoint of our guidance from $7.36 to $7.44 with an overall range of $7.34 to $7.54 for the year ended December 31, 2021.
Those are my comments.
Those are our comments.
 Assistant:

Chosen response:
sees fy operating earnings per share $7.34 to $7.54.
q2 operating earnings per share $1.85.
q2 earnings per share $1.92.
for full year and at mid-point of our guidance, we estimate covid life claims will be between $53 million to $55 million.


Prompt:
Human: It's good to be with everyone today.
I've had the chance to meet a number of team members across our stores, fulfillment centers, and home office, and I look forward to meeting more in the coming weeks and months.
We appreciate how everyone is stepping up and embracing GameStop's new operating principles.
Since you last heard from us in June, our refreshed board of directors and new management team have settled in.
We now have unified leadership, fully focused on two long-term goals: delighting customers and delivering value for stockholders.
In addition to focusing on long-term opportunities, we took a number of steps over the past quarter to fortify the company's infrastructure and technology.
We are focused on positioning GameStop to scale while obsessing over competitive pricing, expansive selection, and fast shipping.
Our actions included continuing to add technology talent across the organization, including individuals with experience in e-commerce, UI, UX, operations, and supply chain.
We also continued to expand our fulfillment network by adding a 530,000-square-foot facility in Reno, Nevada.
This new facility, which is expected to be operational next year, will position us to further expand selection and expedite shipping.
With this addition, the company's fulfillment network will span both coasts of the continental U.S. for the first time.
Our new 700,000-square-foot facility in York, Pennsylvania also began shipping orders during the quarter.
We grew our catalog by adding new products and leading brands across consumer electronics, collectibles, toys, and more.
We signed a lease on a new customer care facility in South Florida and started adding talent to that team as we continue to build out customer care operation in the U.S. Lastly, we further strengthened our balance sheet and capital position by raising more than $1.1 billion in net proceeds from the June ATM program.
Let me now turn to our financial results for the quarter.
Net sales increased 25.6% to $1.183 billion, compared to $942 million during the same period in 2020.
We achieved this growth while overcoming a roughly 9% reduction in our global store fleet due to de-densification efforts and ongoing store closures across certain international markets due to the pandemic.
We believe net sales is the primary metric by which stockholders should assess the company's execution.
SG&A was $378.9 million, or 32% of sales, compared to $348.2 million, or 37% of sales, in last year's second quarter.
Adjusting for severance and certain other costs, our adjusted SG&A was $372.3 million, or 31.5% of sales, compared to $336.9 million, or 35.8% of sales, during the same period last year.
The 430 basis points of leverage was primarily driven by store reopening after widespread shutdowns due to the pandemic in Q2 2020.
We reported a net loss of $61.6 million, or $0.85 per diluted share, compared to a net loss of $111.3 million, or loss per diluted share of $1.71, in the prior-year second quarter.
Our adjusted net loss was $55 million, or $0.76 per diluted share, compared to adjusted net loss of $92 million, or a loss of $1.42 per diluted share, in the fiscal 2020 second quarter.
Our global store count was 4,642 at the end of the quarter.
Turning to the balance sheet, we ended the quarter with cash and restricted cash of $1.775 billion, which is just over $1 billion higher than the end of the second quarter last year.
As we announced in June, we raised approximately $1.1 billion in net proceeds through the issuance of 5 million shares of common stock under an ATM.
We intend to continue using those proceeds for general corporate purposes, as well as for investing in growth initiatives and maintaining a strong balance sheet.
As a result of the ATM, total shares outstanding are now approximately 75.9 million.
At the end of the quarter, we had no borrowings under our asset-based revolving credit facility and no long-term debt other than a $47.5 million low-interest unsecured term loan associated with the French government's response to COVID-19.
Debt levels compared to the second quarter of last year were down $424.7 million.
Capital expenditures for the quarter were $13.5 million, bringing year-to-date capex investments to 28.2 million, a number we anticipate will increase as the company continues investing in growth initiatives.
In the second quarter, cash flow from operations was an outflow of $11.5 million, compared to an inflow of $192.8 million during the same period last year, largely due to the investments in inventory we are making to drive sales growth.
In terms of our outlook, we are not providing formal guidance at this time.
 Assistant:

Chosen response: q2 sales $1.183 billion versus refinitiv ibes estimate of $1.12 billion.


Prompt:
Human: It was an important period of foundation building, significant investment, and cultural change at GameStop.
While we are still in the early stages of our transformation, we believe the steps taken over the last several months will be key value drivers for quarters and years down the road.
The first year of our transformation was about starting to turn GameStop into a customer-obsessed technology company, one that has wider offerings, more competitive pricing, faster shipping, stronger customer service, and an easier shopping experience.
With that said, here is a brief recap of what changed in fiscal year 2021: we installed a new management team comprised of technology veterans and introduced a more equity-focused executive compensation structure to increase alignment with stockholders; we refreshed the Board with stockholders and individuals who possess records of value creation, while reducing individual director compensation; we ended relationships with high-priced external consultants who were costing the company millions of dollars per year; we hired hundreds of new individuals with e-commerce, operations and technology experience, while eliminating many redundant and unnecessary roles; we recapitalized the company's balance sheet after raising approximately $1.67 billion in capital; we expanded our product catalog to seize more market share in areas such as PC gaming, personal electronics and virtual reality; we invested in our fulfillment network by standing up new facilities on the East Coast in York, Pennsylvania, and on the West Coast in Reno, Nevada; we invested in our systems and tech stack after years of decay and neglect; we invested in U.S.-based customer service and established a new facility in South Florida; we invested in a dedicated blockchain team and new capabilities to drive the development of initiatives such as our NFT marketplace, which we expect to launch by the end of the second quarter; we see significant long-term potential in the more than $40 billion market for NFTs.
In keeping with our focus on the customer, we are going to continue taking steps to create new offerings and make targeted bets in blockchain gaming and cryptocurrency.
We recognize that our special connectivity with gamers provides us a unique opportunity in the Web 3.0 and digital asset world.
We have learned from the mistakes of the past decade when GameStop failed to adapt to the future of gaming.
It is important to stress that GameStop had become such a cyclical business and so capital starved that we have had to rebuild it from within.
We've also had to change the way we assess revenue opportunities by starting to embrace, rather than run from, the new frontiers of gaming.
Although there is a lot more hard work and necessary execution in front of us, GameStop is a completely different company today than it was at the beginning of the fiscal year.
Shifting to the fourth quarter, I want to briefly touch on a few areas.
We continued to establish new and expanded brand relationships, including with PC gaming companies such as Alienware, Corsair, and Lenovo.
This helped grow our PC gaming sales by 150% for the full year.
We also formed a partnership with Razer to support sustained growth in PC gaming and console accessories such as controllers and headsets.
We now have more than 100 Razer SKUs, including the company's latest laptop.
We grew PowerUp Rewards Pro members by 31.8% on a year-over-year basis, taking total membership to approximately 5.8 million.
We launched a redesigned app, which includes an enhanced user interface, improved scalability for a larger product catalog, and more functionality to support exclusive offers and promotions.
We entered into a partnership with Immutable X that is intended to support the development of our NFT marketplace and provide up to $150 million in IMX tokens upon achievement of certain milestones.
We have commenced discussions with an array of layer ones and layer twos about prospective partnerships that include development benefits and financial incentives.
If and when more deals come to fruition, we will announce them.
Let me now turn to our financial results.
Net sales were $2.25 billion for the quarter, compared to $2.12 billion in the fourth quarter of 2020 and $2.19 billion in the fourth quarter of 2019.
This was the first quarter in which our growth topped pre-pandemic levels.
For the full year, net sales were $6.01 billion, compared to $5.09 billion for fiscal year 2020.
As indicated in the past, long-term sales growth is the primary metric by which we believe stockholders should assess our execution.
SG&A was $538.9 million for the quarter or 23.9% of sales, compared to $419.1 million or 19.7% of sales in last year's fourth quarter.
We reported a net loss of $147.5 million, or $1.94 per diluted share, compared to a net income of $80.3 million, or income per diluted share of $1.18 in the prior-year fourth quarter.
For the full year, SG&A was $1.71 billion, compared to $1.51 billion for the last fiscal year.
We had a net loss of $381.3 million for fiscal year 2021, relative to $215.3 million for fiscal year 2020.
Turning to the balance sheet.
We finished the year with cash and cash equivalents of over $1.27 billion, roughly $760 million higher than the company's cash position at the close of last year.
We are maintaining a sizable cash position, even while continuing to invest heavily in inventory to drive pragmatic growth and meet demand amid global supply chain issues.
We intend to build up our cash position by the end of fiscal year 2022, assuming the operating environment permits.
At the end of the year, we had no borrowings under our ABL facility and no debt other than a $44.6 million low-interest, unsecured term loan associated with the French government's response to COVID-19.
Capital expenditures for the quarter were $21.3 million, bringing full-year capex to $62 million.
Capex may remain elevated as we make pragmatic investments in our infrastructure and tech.
In the fourth quarter, cash flow from operations was an outflow of $110.3 million, compared to an inflow of $164.8 million during the same period last year.
In order to meet customer demand throughout the holiday season, we maintained a higher inventory level.
We believe our inventory level remains prudent given our operating headwinds and increased customer demand.
We ended the year with $915 million in inventory, compared to $602.5 million at the close of fiscal year 2020.
To put things into context, the combination of supply chain issues and the omicron variant had a sizable impact on this past year's holiday season.
We made the conscious decision to lean in and absorb higher costs in order to meet customer demand.
We felt and continue to feel that investing in our customers and rebuilding brand loyalty right now is in the company's best interest over the long term.
With respect to an outlook, we're not delivering guidance at this time.
We do not feel it's prudent to provide guidance during the early stages of our transformation and with the current global backdrop.
What we are comfortable saying is that we anticipate growth across our stores, e-commerce properties, and blockchain gaming offerings.
In closing, we know the investments and sacrifices made in fiscal year 2021 will take time to yield tangible value, but we are completely comfortable with that.
If GameStop is going to once again become a market leader in gaming and also realize new revenue opportunities across emerging communities, we needed to lay a lasting foundation rather than taking shortcuts.
That is what we did over the past year as we started to transform into a technology company.
I'll wrap up there for today.
As always, we appreciate the enthusiasm and support from our customers, employees, and stockholders.
 Assistant:

Chosen response: qtrly diluted loss per share $1.94.


Prompt:
Human: Today, we will discuss our operational and financial results for the three months ended March 31, 2021.
Avi Goldin, our Chief Financial Officer will follow with a deeper dive into the quarter's financial results.
As we discussed when we reported last quarter's earnings, the first quarter was impacted by unusually severe weather events that led to massive spikes in wholesale electricity prices in Texas and Japan.
The severe winter storms in Texas and Japan had an aggregate negative impact on income from operations of approximately $15.5 million.
In Texas, where the impact of the storm this quarter was approximately $13 million, our industry has borne a disproportionate share of the financial burden.
We remain hopeful that perspective legislation and regulatory changes and/or litigation will provide material relief.
Because of our ongoing commitment to financial strength and liquidity, while avoiding debt, our balance sheet remains in good shape.
Moreover, we have set ourselves the goal of finishing the year with a stronger balance sheet than we had at the start, despite the impact of the first quarter's weather events.
Our underlying business remain very strong.
On a consolidated basis, we achieved a record first quarter revenue and added to our meter and RCE counts, even though the first quarter is a historically slow quarter for customer acquisition.
RCEs increased by 10,000 to 450,000 and meters increased by 7,000 to 572,000.
At Genie Retail, absent the Texas storms impact, our domestic business would likely have achieved record adjusted EBITDA despite the challenges of the pandemic environment.
GRE's revenue reached a new high as consumption per meter again increased significantly compared to the year-ago quarter and churn remained subdued.
At GRE International, we ramped up our investment to expand our customer base in Sweden and dealt with wholesale price spikes, most notably in Japan, but to a lesser extent in Scandinavia.
But to put that in perspective, across all of our international markets, our businesses are maturing.
Adjusted for the storms impact in Japan and gross margins increasing, and we expect that the growth capital requirements for these businesses will decline significantly during the year.
With that in mind, we are continuing our strategic review of our International business, carefully balancing the advantages of near-term cash generation with the need for capital to optimize long-term growth.
We expect to have more to say on that in the coming quarters.
Turning now to our former Genie Energy Services segment, we have renamed it Genie Renewables.
The change reflects the increasing prominence of our solar-related businesses within the segment and the rapid growth of the renewables market.
In the first quarter, even though Genie Renewables revenue decreased, gross margin improved significantly, while SG&A decreased materially.
The improvements reflect our shift in focus toward our Renewables businesses with higher margins.
Looking ahead, we are working to expand the geographic footprint for our solar solutions businesses and are evaluating opportunities to increase the vertical integration of those solutions.
This shift will enable us to capture more of the commercial solar value chain.
We believe that the segment's results will be the beginning of a continued trend of growth and profitability.
Wrapping up, I want to emphasize that had it not been for two exceptionally challenging winter storms, this would have been a terrific quarter.
Across the company, we are incredibly excited about the remainder of the year.
Our underlying business remains strong.
Our global customer base is at its all-time peak, our business is increasingly diversified and we are developing multiple promising growth opportunities with tremendous potential, while evaluating the best units in which to invest in continued growth.
Given our positive outlook, we were pleased to purchase nearly 147,000 shares in a private transaction following the quarter close.
While we have paused our dividend, we will continue to consider alternative means to return value to our stockholders.
My remarks today cover our financial results for the three months ended March 31, 2021.
Throughout my remarks, I compare first quarter 2021 to the results for the first quarter of 2020.
Focusing on the year-over-year, rather than the sequential comparisons, removes some consideration of the seasonal factors that are characteristic of our retail energy business.
As Michael mentioned, our revenue in this quarter was the highest in our history.
Bottom line results would have been similarly strong had it not been for the losses incurred as a result of the winter storm Uri in Texas and extreme weather in Japan.
Nevertheless, our careful forward hedging and demand management programs, the diversification of our business operations and a strong balance sheet enable us to not only manage through the volatility, but to finish the quarter with sufficient capital and liquidity to finance and prioritize our growth initiatives.
Consolidated revenue increased 30% to $135 million.
Revenue at Genie Retail Energy increased 15% to $91 million.
Electricity and natural gas consumption per meter increased, boosted by the shift to work-from-home as a result of COVID-19 pandemic, as well as colder winter weather, including the impact of winter storm Uri.
These factors more than compensated for decreased per unit average revenue on sales in both electricity and natural gas.
At Genie Retail Energy International, revenue increased to $42 million from $7 million in the year-ago quarter.
The $35 million increase predominantly reflects our purchase of the outstanding stake in our Orbit joint venture in the U.K. during the fourth quarter of 2020 and the consolidation of its results.
For comparison purposes, Orbit Energy generated $19.6 million in revenue in the year-ago quarter.
Additionally, expansion of our customer bases in Scandinavia and the U.K. also contributed meaningfully to the revenue increase.
Genie Renewables revenue was $2.5 million, a decrease from $18 million in the year-ago quarter when Prism Solar delivered the bulk of a large solar panel order.
Consolidated gross profit decreased $11.4 million to $17.5 million.
We estimate that the winter storms in Texas and Japan together impacted gross profit by approximately $15.5 million and, except for their impact, the quarter's results would have been very strong.
Consolidated SG&A increased to $24.1 million from $19.5 million.
The increase was entirely incurred at GRE International and reflects the consolidation of Orbit Energy, including Orbit's customer acquisition expense.
Consolidated loss from operations totaled $6.6 million compared to income from operations of $9.2 million in the year-ago quarter, a decrease of $15.8 million.
Adjusted EBITDA was negative $4.5 million compared to positive $10.3 million in the year-ago quarter, a decrease of $14.9 million, primarily due to the Texas and Japan weather and the consolidation of Orbit Energy.
At GRE, income from operations decreased to $1.2 million from $13 million.
Adjusted EBITDA decreased to $1.5 million from $13.3 million.
Absent the impact of winter storm Uri in Texas, GRE's adjusted EBITDA would have been approximately $14.5 million, a record for a domestic supply business.
The first quarter results again benefited from the increased consumption per meter we've seen since the pandemic as a result of the shift to work-from-home.
At GRE International, loss from operations was $6.7 million compared to $2.5 million in the year-ago quarter.
For comparison purposes, Orbit Energy's loss from operations in the first quarter of 2020 was $3 million.
The winter storm in Japan contributed approximately $2.5 million, a $4.1 million decrease.
The balance primarily reflected increased supply costs at Lumo.
Genie Renewables income from operations increased to $559,000 from $342,000 a year earlier.
In the year-ago quarter, our gross margin was 9% primarily generated by the Prism Solar panel deliveries.
As Michael mentioned, we are now focusing on higher margin opportunities within Genie Renewables.
The first quarter 2021 results suggest there's some early success as our gross margin increased to 45%.
Genie Energy's loss per diluted share was $0.09 compared to earnings per share of $0.20 in the year-ago quarter.
Turning now to the balance sheet.
At quarter end, cash, restricted cash and marketable equity securities totaled $41.7 million.
Working capital was $35.4 million and non-current liabilities were $3.5 million.
That concludes my discussion of our financial results.
All in all, our financial standing is in good order and our underlying business is very strong.
In the balance of 2021, we expect to accelerate cash generation, strengthen our balance sheet and invest prudently in growth opportunities.
Now, operator, back to you for Q&A.
 Assistant:

Chosen response:
compname reports q1 loss per share of $0.09.
q1 loss per share $0.09.


Prompt:
Human: Today we will discuss our operational and financial results for the three months ended June 30, 2020.
As in prior quarters, my remarks will focus on our operational results and key performance indicators.
Avi Goldin, our Chief Financial Officer will follow with a deep dive into the quarter's financial results.
Genie Energy generated the highest level of adjusted EBITDA of any second quarter in the Company's history and much improved financial results compared to the difficult year-ago quarter.
Operationally, our businesses also performed very well despite the challenges of the COVID-19 impacted environment.
Globally, our retail energy provider businesses which generated 94% of our revenue added 64,000 RCEs year-over-year and 20,000 sequentially to reach 421,000 RCEs with solid growth in both our domestic and international markets.
Global meters served increased by 88,000 year-over-year and 4,000 sequentially to 536,000.
The increases in meters served were driven by expansion at Genie Retail International, including those of our Orbit Energy joint venture in the UK.
Here in the US, Genie Retail Energy added 25,000 RCEs year-over-year and 13,000 sequentially to reach 343,000 RCEs.
Domestic meters served declined by 4,000 year-over-year and 10,000 sequentially to 374,000.
The robust increase year-over-year in domestic RCEs relative to the decrease in meters served reflect our sustained focus on acquiring higher consumption meters, warmer than average weather in the second half of the quarter and the COVID-19 driven shift to work from home.
These factors combined to increase electric per meter consumption by 26% compared to the year-ago quarter.
The COVID-19 pandemic has impacted several key aspects of GRE's business operations with a mixed financial impact.
Our customer base is predominantly residential.
So, we benefited from the increased demand for electricity as customers work from their homes rather than offices.
On the other hand, like other retail providers, we suspended our face to face customer acquisition programs in March as public health measures were implemented to combat COVID-19.
As a result, gross meter adds decreased to 40,000 this quarter from 69,000 in the prior quarter and from 91,000 in the year-ago quarter.
While we are in tenth [Phonetic] on growing GRE's meter base over the long term, the decline in meter adds has two positive short-term impacts, both customer acquisition expense and customer churn rates have decreased significantly.
GRE's churn rate decreased to 3.9% in the second quarter from 4.7% in the first quarter.
That's partly because new customers tend to have higher rates of churn than longer tenured customers.
So we would expect to see churn rates fall after the pace of gross meter addition slows.
But also COVID-19 halted not just our own face to face customer acquisition programs, but also our competitors' programs.
This effectively eliminate the key churn driver.
Looking ahead at GRE, we expect to see a modest rebound in meter acquisition beginning in the third quarter.
Public health restrictions have begun to ease in some of our markets, which allows us to resume face to face sales and marketing.
We'll also be entering some new utility territories.
Turning now to Genie Retail Energy International.
RCEs increased 40,000 year-over-year and 7,000 sequentially to 79,000.
Meters served increased by 93,000 year-over-year and 14,000 sequentially to 161,000 meters.
We generated solid year-over-year growth in each of our overseas markets, the UK, Scandinavia and Japan.
At June 30, GRE International held 30% of our global meters served and nearly 18% of our global RCEs.
I'm very pleased by the progress we made to diversify our customer base.
Also this quarter, we successfully leveraged Lumo's expertise and platform to enter the Swedish retail supply market and began acquiring customers there.
At Genie Energy Services, Genie Solar had a record quarter generating positive adjusted EBITDA for the first time, while Diversegy is close to breakeven.
As I mentioned last quarter, we are refining Prism Solar's business model to more closely align with the current business environment.
GES recorded an impairment of $800,000 in the second quarter related to the writedown of an asset impacting income from operations but not adjusted EBITDA.
At GOGAS, we have had to again postpone the final well tests at OPEC [Indecipherable] drilling site.
Because of COVID-19 restriction in the central member of our technical team and not being able to get a visa.
I'm reluctant to offer a new timeframe for completion of the test, when the execution depends on factors outside of our span of control, but I will provide an update for you when we discuss our third quarter results.
Before turning the call to Avi, I want to highlight that given our continued favorable outlook and strong cash generation in recent quarters and after raising our dividend last quarter, we resumed repurchasing our shares in the second quarter while continuing to pay the dividend at the increased rate.
And also a big shout out to the Genie team that again an outstanding job of growing our business and significantly enhancing our bottom line results, although working from home.
Now, here is Genie's CFO, Avi Goldin to discuss our financial results.
My remarks today cover our financial results for the three months ended June 30, 2020.
Throughout my remarks I will compare second quarter 2020 results to the second quarter of 2019, focusing on the year-over-year rather than sequential comparison removes from consideration to seasonal factors that impact our retail energy business.
Keep in mind that the second quarter is typically characterized by relatively low energy consumption.
After the peak heating season in first quarter and before the third quarter's peak air conditioning months in July and August.
Results are driven by the electric side of the business with minimal gas consumption.
The second quarter's financial results were strong, particularly in comparison to the year-ago quarter.
As you may recall, the second quarter of last year was heavily impacted by mild weather and a mark-to-market within our hedge book.
We express confidence that the business would rebound in our performance since then has justified that contents.
In the trailing 12-month period, the Company has achieved its highest level of consolidated operating income and adjusted EBITDA.
As Michael discussed, the COVID-19 pandemic has resulted in mixed operating impacts increasing electricity consumption while decreasing churn and slowing the pace of gross meter additions.
In addition, the decline in overall commercial industrial power consumption in our markets has helped mitigate price volatility.
Despite the increase in residential consumption.
As we have noted before, predictable commodity price environments tend to favor our business model.
Consolidated revenue in the second quarter increased by $15.1 million to $76.1 million.
The increase was powered by higher per meter electricity consumption resulting from the general acquisition of higher consumption meters, warmer weather than the year-ago quarter and increased residential electricity consumption from residential customers as part of the transition to work from home during COVID-19.
At Genie Retail Energy, revenue increased by $12 million to $66.5 million.
Electricity sales accounted for nearly all of the increase.
Electricity consumption increased 35% from the year-ago quarter, more than offsetting a modest decrease in revenue per kilowatt hours sold.
Overseas, at Genie Retail Energy International, revenue increased by $2.2 million dollars to $5 million reflecting meter base growth at Lumo and Scandinavia and Genie Japan.
During the quarter, we provided Orbit with an additional $1.5 million of capital, resulting in a net loss of Orbit Energy of that amount compared to a net loss of $867,000 a year ago quarter.
Our Genie Energy Services division increased revenue by $859,000 to $4.6 million.
Consolidated gross profit in the second quarter, more than doubled from the year-ago quarter increasing by $10.5 million to $19.5 million.
As I noted in my opening, we had a difficult quarter a year ago.
The operating environment was weak on lower consumption and mark-to-market loss on our forward hedge book.
This quarter we benefited from the strong consumption levels at Genie Retail Energy, and our consolidated gross margin rebounded to 25.6% from 14.7% in the year-ago quarter.
The decrease in meter acquisition expense of GRE helped us to reduce consolidated SG&A expense by $2.3 million to $16 million.
The rebound in GRE's margin and reduced customer acquisition spend helped drive a $12 month dollar improvement in our consolidated income from operations, which is $2.7 million compared to a loss from operations of $9.3 million in the year-ago quarter.
Adjusted EBITDA reflects the equity net loss of equity method investees of $1.2 million was positive $3.5 million, compared to negative $9.1 million a year ago.
Earnings per share was $0.06 per diluted per share compared to a net loss of $0.29 per share in the year-ago quarter.
Our balance sheet continues to provide us with strategic flexibility.
At June 30, we had $51.8 million dollars in cash, cash equivalents and restricted cash and working capital of $49.1 million.
Cash provided by operating activities in the second quarter was $16.4 million compared to cash used in operating activities of $3.1 million in the second quarter of 2019.
The swing is attributable in large part to the change in year-over-year income as well as the unwind of cash collateral that was posted in the first quarter of 2020.
That was returned in the second quarter in support of the HELOC.
As Michael mentioned, we continue to be diligent about returning value to our shareholders.
This quarter, we repurchased over 200,000 shares of Genie Class B common stock for $1.5 million.
To wrap up, we met the various challenges of the COVID-19 environment, posted a strong second quarter, significantly improving on the financial results of the same period a year-ago, strong consumption per electricity meter and reduction in customer acquisition spend keyed substantial year-over-year improvement in our bottom line results.
This concludes my discussion of our financial results.
Now operator, back to you for Q&A.
 Assistant:

Chosen response:
compname reports q2 earnings per share $0.06.
q2 earnings per share $0.06.
q2 revenue rose 24.7 percent to $76.1 million.