Prompt:
Human: I'm Rebecca Gardy, Head of Investor Relations at Campbell Soup Company.
Today's remarks have been prerecorded.
These statements rely on assumptions and estimates, which could be inaccurate and are subject to risk.
On Slide 4, you will see today's agenda.
Mark will share his overall thoughts on our fourth quarter and full year performance, as well as end market performance by division.
Mick will discuss the financial results of the quarter and the year in more detail and then provide our guidance for the full year fiscal 2022.
In fiscal 2021, the pandemic continued to present challenges across North America.
But I am so proud of how our teams, particularly our front-line and supply chain teams adapted and rallied to keep each other safe and meet the sustained demand for our products.
On behalf of the entire Campbell leadership team, I am deeply grateful for their dedication and we continue to make their safety and well-being paramount as they work to meet the needs of our customers, consumers and our communities.
As difficult and complex as this time has been, it has also been an extraordinary period for Campbell, and we've made clear meaningful progress advancing our strategic plan.
We've evolved into a different company, one that is stronger, more agile and with growing more relevant brands that are better positioned for the future.
For the full year, I'm pleased to report that Campbell's organic net sales were comparable to fiscal 2020 and grew 3% on a two-year compounded annual growth basis driven by both divisions, reflecting strong end market performance.
In fact, three quarters of our portfolio grew or held market share for the year, reflecting our continued momentum.
Adjusted EBIT lagged fiscal 2020 as we lapped dramatic scale and efficiency from a year ago, and navigated a much higher inflationary environment this year.
However, on a two-year CAGR, adjusted EBIT grew 5% and adjusted earnings per share grew 14% as we de-levered and improved our balance sheet.
Turning to Slide 7, full-year organic net sales were comparable to prior year, which included a positive fourth quarter finish to fiscal 2021 in light of last year's remarkably strong performance.
If you recall, our first half fiscal 2021 was driven by strong elevated end market performance as we continue to gain share and made steady progress on supply to restore the shelf.
The third quarter reflected the challenging comparisons to the prior year as we cycle the demand surge that accompanied the onset of the COVID-19 pandemic and navigated several headwinds, including increased inflation and executional pressures in our Snacks division.
In the fourth quarter, we delivered solid results ahead of our expectations across all three key metrics: net sales, adjusted EBIT and adjusted EPS, and addressed the executional pressures we experienced last quarter.
Organic net sales declined 4% as we lapped a 12% growth than the prior year and delivered 4% growth on a two-year CAGR basis.
Our fourth quarter performance accelerated relative to third quarter, driven by strong end market results, particularly in US Soup and Goldfish, and the continued recovery of our foodservice business.
In Snacks, we delivered sequential operating margin improvement of 270 basis points versus the third quarter despite the continued industry wide supply chain challenges.
An important barometer of the health of our brand portfolio is our end market performance.
For the full year, 75% of our brands grew or held share versus the prior year, and the majority of our brands in our 13 core categories grew ahead of pre-COVID levels.
To note, repeat rates on our brands in all core categories are ahead on a two-year basis.
Total company in-market consumption was minus 1% compared to fiscal 2020, on a 52-week basis.
Importantly, compared to the fiscal 2019 period, consumption grew 10%, driven equally by strength in both our Meals and Beverages and Snacks divisions, as we continue to make material advances in attracting and retaining consumers, especially the critical Millennial cohort.
Turning to our division performance on slide 9, let me begin with Meals & Beverages.
Our 4th quarter organic net sales decline of 9% and end market performance of minus 2% reflects cycling the partial inventory recovery and elevated consumption levels in the prior-year quarter.
Compared to the fourth quarter of fiscal 2020, we continued to grow share in Swanson broth, condensed soup, Prego, ready to serve soup and Pacific Foods.
On a two-year basis, we delivered strong consumption growth of 13% against organic net sales growth of 10%, narrowing the gap as our foodservice business continued to stabilize.
On US Soup, we delivered another quarter of record share growth of nearly 2 points, with gains in all segments.
This included gains from Swanson broth, condensed soup, Well Yes!
and Slow Kettle driven by the continued recovery in our total points of distribution or TPDs.
Our share of TPDs grew for the fourth consecutive quarter this year.
US Soup two-year dollar sales growth of 16% in the fourth quarter exceeded the growth in total shelf stable meals and was just slightly behind total edible growth in that same time period.
Household penetration and repeat rates remain elevated compared to pre-COVID levels.
Condensed soup increased dollar share for the 10th consecutive quarter with the largest driver of share growth coming from condensed eating varieties as we nearly restored the full range of offerings to the shelf.
As our ability to supply improved, we were also pleased to see household gains and ready to serve versus the prior year as a result of the shelf recovery, and favorable at-home consumption behaviors particularly for lunch occasions.
Ready to serve end market consumption grew an impressive 21% on a two-year basis, led by Chunky, Slow Kettle and the successful relaunch of Well Yes!
Pacific Foods continues to strengthen its position as the number one organic soup brand with the fourth quarter marking seven straight quarters of share gains in measured channels.
We expanded distribution and have recovered the majority of our supply, while bringing in more millennials to the category than any other soup or broth brands.
On Swanson broth, we increased our share by 3.7 points, our highest quarter of share growth in over three years, driven by our investment in supply recovery.
This is important as it demonstrates the strength of the brand as we recovered lost share to lower priced players as our supply improved.
Prego delivered its best year of dollar share gains in four years and maintained the number one share position for 27 consecutive months.
The brand grew in market consumption on a two-year basis and delivered 5% growth over the prior year.
Household penetration was elevated versus fiscal 2019 in every quarter and grew 1 points in the fourth quarter.
Overall, the Meals & Beverages division delivered strong end market performance against difficult comparisons to the prior year and achieved share gains in key categories, particularly with millennials.
On Slide 11, we are excited to share with you a glimpse into our Meals & Beverages innovation plans for fiscal 2022.
Our new items focus on new occasions and relevant wellness trends, expanding on the relaunch of our better for you Well Yes!
brand is the launch of Well Yes!
Power Bowls with five unique varieties for both lunch and snack occasions.
We have also expanded our successful Slow Kettle Crunch innovation with four varieties of Campbell's red and white Crunch including our iconic classic tomato soup with Goldfish toppings.
On our Pacific Foods business, we are launching additional plant-based products, including creamy oat milk soups and creamy plant based protein broths.
Finally, if you haven't tried the new chunky spicy chicken noodle it's fantastic and brings variety to the critical at-home lunch occasion.
In addition to our relevant and consumer-driven innovation, another element of our winning soup strategy is a refresh of our Campbell's condensed soup.
We are contemporizing the brand to better match our growing millennial consumer base, while improving the product and its shopability as we continue to support our positioning as a starting point for delicious meals.
We also have continued our journey of simplifying our ingredient lines and improving quality.
It's always tricky when looking to evolve such an iconic design and product but our new graphics and improved ingredient line strike the right balance and have been met with a very positive customer and consumer response.
Let's now turn to Snacks.
This quarter was the second highest 13-week quarter of net sales for the Snacks division since the Snyder's-Lance acquisition.
Organic net sales grew 1% over the prior year quarter and 7% on a two-year basis.
In-market performance declined only 1% year-over-year, but grew 11% on a two-year basis.
Turning to our Snacks Power brands, which continue to fuel performance with in-market consumption growth of 2% this fiscal year and 15% on a two-year basis driven by double-digit consumption growth in the majority of our brands.
Compared to the prior year, we grew share on many of our power brands, most notably Cape Cod potato chips, Snack Factory Pretzel Crisps, Goldfish Crackers and Late July snacks.
Compared to pre-COVID levels, household penetration remains elevated and repeat rates are higher on all Power brands.
Turning to Goldfish, we delivered sustained share growth, increasing for a second quarter in a row by more than 1 point compared to this time last year.
On a one and two-year basis, Goldfish delivered strong results including double-digit consumption growth, increased household penetration and higher repeat rates.
This solid performance on Goldfish was due in part to the successful launch of limited edition Goldfish Frank's RedHot crackers.
Additionally, the reinstatement of promotions improved performance on multi-packs and an effective marketing campaign contributed to our strong results.
We are excited to continue to introduce on trend limited editions on Goldfish with the launch of this week of Goldfish Jalapeno Popper and plans for additional innovation later this fiscal year.
Entering the fourth quarter amid rising inflation, labor shortages and some executional pressures, we better focused our agenda in the Snacks division, driving operational excellence and allocating additional resources throughout the supply chain network.
We are very pleased with the speed and progress we have made to address the executional pressures we experienced in the third quarter.
We head into fiscal 2022 with a stronger foundation and confidence we can continue our significant transformation on this important business.
On Slide 17, we do expect the challenging environment in fiscal 2022 as COVID persists and inflation in labor availability remain highly volatile.
However, we also anticipate our effective pricing actions, supply chain productivity programs and cost savings initiatives to be significant offsets, resulting in an improvement in the second half of the fiscal year relative to the prior year and exiting fiscal 2022 with momentum, as we continue to make progress on our strategic plan.
Mick will provide more details on our fiscal 2022 outlook and assumptions in a moment.
Turning to Slide 19 for the fourth quarter organic net sales, which excludes the impact from the additional week and the impact of the sale of the Plum baby food and snacks business declined 4% as we cycled both the elevated demand in food purchases for at-home consumption, and a partial retailer inventory recovery in the prior year.
Compared to the fourth quarter of fiscal 2019, which we view to be more meaningful given the COVID-19 impact to prior year, organic net sales increased 4% on a two-year CAGR.
Adjusted EBIT decreased 13% compared to prior year, to $267 million driven by lower sales volume, including the impact of the additional week in the prior year quarter and a lower adjusted gross margin, partially offset by lower adjusted marketing and selling expenses and lower adjusted administrative expenses.
Our adjusted EBIT margin was 14.3% compared to 14.6% in the prior year.
Adjusted earnings per share from continuing operations decreased $0.08 or 13% versus prior year to $0.55 per share, partially driven by the estimated $0.04 contribution from the additional week in fiscal 2020.
For the full-year organic net sales, which excludes the impact from the additional week, divestitures hence the impact of currency were comparable to the prior year and grew 3% compared to fiscal 2019 on a two-year CAGR basis.
Compared to prior year, Meals & Beverages organic net sales decreased 1% driven by declines in foodservice, partially offset by growth in V8 beverages.
In Snacks, organic net sales were flat, as gains in our salty snacks portfolio including Late July snacks and Snack Factory Pretzel Crisps and in Goldfish crackers were offset by declines in Lance sandwich crackers and in partner brands within the Snyder's-Lance portfolio.
Full-year adjusted EBIT decreased 3% versus the prior year to $1.4 billion.
The decline reflected lower adjusted gross margin and lower sales volume, including the impact of prior year's additional week, partially offset by lower adjusted marketing and selling expenses and higher adjusted other income.
Our marketing and selling expenses represented 9.6% of net sales compared to 10.9% last year.
Full year 2021 adjusted EBIT margin was 16.6% compared to 16.7% in the prior year.
Full year adjusted earnings per share from continuing operation increased 1% to $2.98 per share.
On the next slide, I'll break down our net sales performance for the fourth quarter.
Organic net sales decreased 4% during the quarter lapping an increase of 12% in the prior year quarter when the demand for at-home consumption remained elevated and retailers partially recovered on the inventory.
The organic net sales decline was driven by a 5 points headwind due to volume declines, partially offset by favorable price and sales allowances and lower promotional spending, which each drove a 1 point gain in the quarter.
The impact of one last week in the quarter subtracted 7 points and the recent sale of Plum subtracted 1 point.
All in, our reported net sales declined to 11% from the prior year stronger than anticipated as in-market demand remained elevated.
Turning to Slide 22, our fourth quarter adjusted gross margin decreased by 420 basis points from 35.6% last year to 31.4% this year, which was generally consistent with our expectations.
Mix and operating leverage had a negative impact of approximately 70 basis points and 40 basis points respectively on gross margin, as we continue to transition from last year's elevated demand.
Net pricing drove a 100 basis point improvement due to lower levels of promotional spending in the quarter as well as favorable price and sales allowances, which do not yet reflect the price increases effective first quarter of fiscal 2022.
Inflation and other factors had a negative impact of 640 basis points with slightly more than half of the decline driven by cost inflation as overall input prices on a rate basis increased by approximately 5%.
The remaining impact was driven by higher other supply chain costs largely due to last year's manufacturing cost efficiencies related to a higher production levels to service the elevated demand, as well as lower mark-to-market gains on outstanding commodity hedges, partially offset by lower COVID-19 related costs.
Our ongoing supply chain productivity program contributed 150 basis points to gross margin, partially offsetting these inflationary headwinds.
Our cost savings program, which is incremental to our ongoing supply chain productivity program added 80 basis points to our gross margin.
Moving on to other operating items, adjusted marketing and selling expenses decreased $91 million or 34% in the quarter on a year-over-year basis.
This decrease was driven by lower advertising and consumer promotion expense, lower selling expenses and lower marketing overhead costs.
A&C declined 52% reflecting our elevated pandemic driven level of investment in the prior year to attract and retain new households.
However A&C was comparable to the fourth quarter of fiscal 2019.
Overall, our adjusted marketing and selling expenses represented 9.3% of net sales during the quarter, a 330 basis point decrease compared to last year.
Adjusted administrative expenses decreased $30 million or 18% with approximately one-half of the decrease, driven by the estimated impact of the additional week in the prior year quarter.
The balance of the decrease reflected lower general administrative costs, higher charitable contributions in the prior year and benefits associated with our cost savings initiatives, partially offset by higher IT costs.
Adjusted administrative expenses represented 7.4% of net sales during the quarter, a 60 basis point decrease compared to last year.
Moving to the next slide, we have continued to successfully deliver against our multi-year enterprise cost savings initiatives.
This quarter, we achieved $25 million in incremental year-over-year savings, which came in ahead of our expectations, resulting in full-year savings of $80 million, with the majority of the savings from the Snyder's-Lance integration.
We remain on track to deliver our cumulative savings target of $850 million by the end of fiscal 2022.
On slide 25, we are providing a total company adjusted EBIT bridge to summarize the key drivers of performance this quarter.
As previously mentioned, adjusted EBIT declined by 13% as the net sales decline, including the impact of the additional week in the prior year quarter and the 420 basis point gross margin contraction resulted in a $84 million and $77 million EBIT headwind respectively.
Partially offsetting this was lower adjusted marketing and selling expenses, contributing 330 basis points to adjusted EBIT margin and lower adjusted administrative and R&D expenses contributing 50 basis points.
The estimated impact to EBIT from the additional week in fiscal 2020 was $22 million.
Overall, our adjusted EBIT margin decreased year-over-year by only 30 basis points to 14.3%.
The following chart breaks down our adjusted earnings per share change between our operating performance and below the line items, a $0.10 impact of lower adjusted EBIT and a $0.01 impact of higher adjusted taxes, partially offset by a $0.03 favorable impact from lower interest expense resulted in better than expected adjusted earnings per share of $0.55, down $0.08 from $0.63 per share in the prior year, of which an estimated $0.04 was driven by the additional week in fiscal 2020.
In Meals & Beverages, declines across US retail products, including US Soup, Prego pasta sauces and Pace Mexican sauces led to a 9% decrease in fourth quarter organic net sales compared to the prior year.
The decline was driven by volume decreases in US retail due to last year's partial retail inventory recovery and increased demand of food purchases for at-home consumption in the prior year quarter.
However for the comparable period in fiscal 2019, organic net sales increased 10%.
In the fourth quarter of fiscal 2021, sales of US Soups decreased 21%, 7 points of which were driven by the additional week in the prior year, while at the same time cycling a 52% increase in the prior year quarter.
Operating earnings for Meals & Beverages decreased 30% to $129 million.
The decrease was primarily due to sales volume declines including the additional week and a lower gross margin, partially offset by lower marketing and selling expenses as well as lower administrative expenses.
The lower gross margin resulted from higher other supply chain costs net of lower COVID-19 related costs, higher cost inflation, including higher freight costs and ingredients and packaging inflation, and unfavorable product mix, partially offset by the benefits of supply chain productivity improvements.
Overall within our Meals & Beverages division, fourth quarter operating margin decreased year-over-year by 290 basis points to 15.2%.
Within Snacks, organic net sales increased 1% to $1 billion, driven by volume gains in Goldfish crackers and our salty snacks portfolio including Snack Factory Pretzel Crisps, Snyder's of Hanover pretzels, and Cape Cod potato chips, partially offset by declines in partner brands and fresh bakery, favorable price and sales allowances and lower promotional spending also contributed to sales growth.
Compared to the fourth quarter of fiscal 2019, Snacks organic net sales grew 7%.
Operating earnings for Snacks increased 7% for the quarter, driven by lower marketing and selling expenses, partially offset by sales volume declines, including the impact of the additional week and a lower gross margin.
The lower gross margin resulted from higher cost inflation and other supply chain costs net of lower COVID-19 related costs, partially offset by the benefit of cost savings initiatives, supply chain productivity improvement, favorable price and sales allowances and lower promotional spending.
Overall within our Snacks division, fourth quarter operating margin increased year-over-year by 170 basis points to 14.2%.
I'll now turn to cash flow and liquidity.
Fiscal 2021 cash flow from operations decreased from $1.4 billion in the prior year to $1 billion primarily due to changes in working capital, mostly from a significant increase in accounts payable in the prior year and lower accrued liabilities in the current year.
Our year-to-date cash for investing activities was reflective of the cash outlay for capital expenditures of $275 million, which was slightly lower than the prior year driven by discontinued operations and the net proceeds from the sale of Plum.
Our year-to-date cash outflows for financing activities were $1.7 billion, reflecting cash outlays due to dividends paid of $439 million as we continue to focus on delivering meaningful return of cash to our shareholders.
Additionally, we reduced our debt by $1.2 billion.
We ended the year with cash and cash equivalents of $69 million.
In June, the Board authorized a $250 million anti-dilutive share repurchase program to offset the impact of dilution from shares issued under our stock compensation programs.
The Company expects to fund the repurchase out of its existing cash flow generation.
We expect to continue to uncertainty around the duration and effects of the pandemic on industry wide supply chain networks, resulting in accelerating inflationary pressures and a constrained labor market.
We expect to partially mitigate these headwinds with well-executed pricing and planned productivity initiatives, as well as our cost savings program.
First half margins, particularly in the first quarter will continue to be impacted by transitional headwind cycling prior year's elevated sales and scale efficiencies with comparisons easing in the second half of the fiscal year.
We expect organic net sales to be minus 1% to plus 1%, adjusted EBIT of minus 8% to minus 5%, and adjusted earnings per share of minus 8% to minus 4% versus the fiscal 2021 results.
Fiscal 2021 results include a $0.12 benefit from mark-to-market gains on outstanding commodity hedges and an approximate $0.02 adjusted earnings per share contribution from Plum.
Importantly, when considering these items, the upper end of our fiscal 2022 adjusted earnings per share range is in line with fiscal 2021 performance.
As you see on Slide 31, we expect core inflation for the year to be high single digits with a more pronounced impact in the second half of fiscal 2022, which we plan to address with price increases in trade optimization, supply chain productivity improvements and cost savings initiatives, and a continued focus on discretionary spending across the organization.
Moving to additional assumptions, we expect ongoing supply chain productivity gains of approximately 2% to 3% for the year excluding the benefit of our cost savings program.
As previously mentioned, we expect to continue to progress on our cost savings program and expect to deliver an incremental $45 million in fiscal 2022, keeping us on track to deliver $850 million by the end of the fiscal year.
Additionally, we expect net interest expense of $190 million to $195 million and an adjusted effective tax rate of approximately 24%, which is largely in line with fiscal 2021.
While cognizant of our current operating environment, we expect to continue to invest in the business, targeting capital expenditures of approximately $330 million, which includes carryover projects from fiscal 2021.
Additionally, we expect the net of adjusted administrative expenses and adjusted other income to increase as a percentage of net sales, reflecting the planned information technology investments and related costs and the cycling of lower administrative items in the prior year.
All in, we expect year-over-year operating margin improvement in the second half of the year.
Overall, as Mark said, we had a positive finish to the year.
We are truly grateful to our teams and for their continued dedication and commitment as we head into fiscal 2022.
In closing, we feel good about how we landed fiscal 2021 amid a difficult environment.
We expect fiscal 2022 will be a complicated transitional year, but I'm confident that with our strong end market momentum and the progress that we've made, we will successfully navigate through it.
I look forward to sharing our view on how we intend to unlock the full growth and value potential of this fantastic company going forward at our Investor Day on December 14.
 Assistant:

Chosen response:
program has no expiration date and is in addition to the $250 million anti-dilutive share repurchase program.
expects to fund the repurchases out of its existing cash flow generation.
campbell soup qtrly organic net sales, which exclude impact from additional week, impact from sale of plum baby food & snacks business, down 4%.
remains on track to deliver annualized savings of $850 million by the end of fiscal 2022.
sees fy2022 organic net sales down 1% to up 1%.
expects q1 to be the most challenging as co continues to cycle the elevated sales and scale efficiency from a year ago.
qtrly adjusted earnings per share from continuing operations $0.55.
campbell soup - sees fy2022 net sales down 2% to flat.
first half fy2022 margins will continue to be impacted by transitional headwinds.
campbell soup - for fy2022, sees core inflation of high single digits for year with more pronounced impact in second half.


Prompt:
Human: As always, we appreciate your interest in Central Pacific Financial Corporation.
The COVID-19 pandemic is top of mind for all of us.
Overall, the state of Hawaii is doing a good job at managing and containing the pandemic.
Hawaii was early to put in place stay-at-home orders and mandatory curfew then quarantine.
Our residents in general are abiding by government orders, as well as hygiene recommendations.
Due to our geographic isolation, Hawaii was able to effectively lock down and protect the state from outside visitors with potential COVID-19 infections.
We believe these measures will slow and contain the spread of COVID-19 in the state and result in a faster recovery.
However, with a complete tourism shut down in Hawaii, we are seeing a dramatic impact on the state's economy.
We are hopeful that we will start to see visitors returning to the island in the late summer to early fall of this year, particularly from Asia as they are closer to recovery from the pandemic.
Central Pacific Financial is committed to supporting our employees, customers and community during this time of crisis.
Our first focus is on our employees.
And therefore we have temporarily closed 13 of our smaller branches to allow for adequate social distancing and our larger remaining branches.
The staff from the temporarily closed branches have been redeployed to work at the remaining branches, assist other areas of the bank or make customer telephone calls.
The majority of our support staff, even at the executive level, have started working remotely on a full-time or rotating basis.
We believe the actions we have taken to date will allow us to meet the needs of our customers and community while ensuring the safety of all employees.
We want to assure you that we are prepared to handle this crisis.
I personally led companies through prior crisis, including the 2011 Tohoku earthquake, tsunami and radiation after-effects while I was in Tokyo leading IBM, Japan and the SARs outbreak in 2002 to 2004 while I was leading BEARINGPOINT ASIA PACIFIC.
Additionally, many of our key team members that helped us through the 2008 to 2009 financial crisis remain with the company and are applying the valuable lessons learned.
Despite COVID-19, our RISE2020 initiatives are continuing.
The revitalization of our building headquarters is proceeding as we continue to support the local construction industry.
We are also pushing ahead with our digital initiatives, including the development of our new online and mobile banking platforms and the replacement of our ATMs. Digital technology is even more critical to our business during crises like this and will remain a high priority strategy for our future.
As a result, we have not had any disruption in our business.
As Paul noted, our remote workforce plan has been rolled out with an overall smooth transition.
We already have virtual private network, VPN technology capability over the last quarter.
And we've expanded VPN access to over 70% of our employees.
In addition to VPN, we are well set up with the latest technologies and enable our operations to continue efficiently.
Our teams are using collaboration tools, including Microsoft Team and several other cloud-based software program.
For our customers, we continue to offer our current online and mobile banking tools and we are making good progress on our new digital offerings as part of our RISE2020 initiatives.
Banking is deemed an essential service and I've been so proud of how our CPB employees have risen to deliver exceptional service in these challenging times.
I'd like to reiterate that our employee and customer safety is of the utmost priority.
We are monitoring our employees' health and well-being very closely.
We are providing personal protective equipment for our frontline staff and have implemented precautionary measures to ensure social distancing in our branches and all work areas.
During the first quarter, our teams remained focused on generating revenue even as the pandemic situation began to escalate.
The Bank grew total loans by $63 million or 1.4% sequential quarter.
The loan growth primarily came from our residential and commercial mortgage loan categories.
We were also able to grow core deposits by $45 million or 1.1% sequential quarter.
Additionally, we were successful in reducing the average cost of total deposits by 5 basis points to 36 basis points.
Going forward, we believe, there are still opportunities for loan and deposit growth as our teams collaborate together to support our consumer and business customers through this unprecedented time.
We have also moved quickly to put in place a number of COVID-19 relief programs for our consumer and business customers.
For our customers, we are offering an employment disruption loan, as well as, consumer and residential mortgage loan payment deferral programs.
For our business customers, we are an SBA approved lender and are participating in the paycheck protection program for PPP, which is part of the Federal CARES Act.
We've seen tremendous demand for the paycheck protection program and have made over 4200 loans totaling nearly $490 million approved by the SBA.
As a result of the PPP loan demand, it was necessary to redeploy employees to handle and assist with the loan processing, including augmenting the loan process by engaging outside resources to assist.
Our PPP team is focused right now to fund the loans that were approved by the SBA, as well as, to prioritize remaining applications that did not get processed in time under the initial funding and of course to submit the applications to SBA when the lender portal reopens.
We are staying in close contact with our customers through increased outreach efforts.
Our bankers are having calls with their key customers as frequently as daily.
W are monitoring our customers' financial health during this challenging time and are providing guidance and the resources they need to help them weather the storm.
Furthermore, we are prudently making loan modifications for certain commercial customers to allow for deferral of loan principal and/or interest for short-term period.
As of April 16, we have made loan payment deferrals on approximately $300 million in total balances which represent less than 7% of our total loan portfolio.
Central Pacific Financial has had a prudent credit risk management philosophy, which we believe will help us weather through this pandemic.
Following our recovery from the Great Recession, we implemented a disciplined approach to credit that included tighter underwriting standards with a focus on making quality loans and maintaining a diversified portfolio.
Our loan portfolio today is well diversified by product and by industry.
While, certain industries we lend to will be impacted by the pandemic, there are other industries and portfolios that we expect to have limited impacts.
The primary industries that will likely experience impacts from the pandemics are summarized on Slide 9 and include accommodation and foodservice, retail trade, wholesale trade, manufacturing and healthcare.
This comprises approximately $378 million or 8% of our total loan portfolio.
A large portion of these balances are to well-established businesses that have weathered through the last downturn.
Secondary industries that may also experience impacts include real estate management and other leasing, transportation, professional and administrative and other industries and services that total approximately $487 million or 11% of our total loan portfolio.
These industries have thus far experienced little impact from COVID-19.
Additional details on our primary and secondary industries can be found on Slide 10.
We also anticipate impacts on our consumer portfolio, which is approximately $560 million or 13% of our total loan portfolio.
We are actively granting 90-day payment deferrals to the borrowers.
Additional details on our consumer portfolio are shown on Slide 11.
We anticipate limited impact on our residential, home equity and investor commercial real estate loans.
The weighted average loan-to-value in these portfolio are 60%, 58% and 53% respectively.
These loans comprise of approximately $3.1 billion or 68% of our total loan portfolio.
Additional details on these portfolios can be found on Slides 12 and 13.
In the final week of March, we aggressively reviewed our commercial loan portfolio and reached out to our customers to determine the initial impacts, if any, of COVID-19 on their businesses.
Through this process, we identified borrowers that were likely to experience financial difficulty and proactively downgraded approximately $65 million in loans from past and special mention.
These loans are primarily accounted for as part of the outstanding loan balance of the primary industries previously mentioned.
It is important to note that all of these loans were performing prior to COVID-19.
As part of our assessment for the downgrade, we reviewed management-end actions taken such as closing businesses and reducing expenses, monthly cash burn and access to cash liquidity and capital and the overall ability to weather through the pandemic in the near term.
We further note that it is still early to reach any firm conclusions and that these loans that were downgraded do not include the expected positive impact from the federal subsidy program.
We are proactively working with our customers and many have already applied and have been approved for the paycheck protection program.
Furthermore, we have also provided assistance with short term payment deferrals as necessary.
Additional details and breakdown by industry can be found on Slide 14.
Overall, our asset quality continues to remain strong.
On the finance side, we have implemented several steps to effectively manage through the current environment.
We will ensure our capital and liquidity positions remain strong.
Through our past experience, we have developed robust capital and liquidity stress tests and comprehensive capital and liquidity contingency plans.
We also decided to temporarily suspend our share repurchase program.
To manage our expenses, as well as protect our employees, we have implemented internal policies to temporarily suspend all business travel, large group meetings, meals and entertainment.
We have also reevaluated or postponed certain consulting projects.
And finally, hiring of new employees is on an exception basis and we are evaluating our compensation plans.
I'd like to now briefly cover the company's financial results for the first quarter of 2020 which is summarized on Slide 15.
Net income for the first quarter of 2020 was $8.3 million or $0.29 per diluted share.
Return on average assets in the first quarter was 0.55% and return on average equity was 6.21%.
Our earnings were impacted by a total provision for credit losses of $11.1 million recognized in the first quarter which related to a new CECL methodology and the effects of the COVID-19 pandemic on the economic forecasts.
We also recorded a CECL day one impact of $3.6 million, which was an adjustment to our opening shareholders equity.
Our pre-tax pre-provision earnings for the first quarter was $21 million.
Net charge-offs in the first quarter totaled $1.2 million compared to net charge-offs of $2.3 million in the prior quarter.
The charge-offs primarily came from the Hawaii consumer loan portfolio.
At March 31, our allowance for credit losses was $59.6 million or 1.32% of outstanding loans.
Net interest income for the first quarter was $47.8 million, which was relatively flat on a sequential basis and the net interest margin remained stable at 3.43%.
First quarter other operating income totaled $8.9 million compared to $9.8 million in the prior quarter.
The decrease was primarily due to lower mortgage banking income and BOLI income, driven by market volatility during the quarter.
This was partially offset by additional fee income of $1.3 million related to an interest rate swap for a commercial real estate client.
Other operating expense for the first quarter was $36.2 million, which was flat to the prior quarter.
Included in the total, there was lower deferred compensation expense due to market volatility, which was offset by higher provision on off-balance sheet credit exposures under CECL.
The efficiency ratio increased to 63.9% in the first quarter compared to 62.8% in the prior quarter.
The increase was primarily due to the decrease in other operating income.
The effective tax rate was 25.3% in the first quarter.
Going forward, we expect the effective tax rate to be in the 25% to 27% range.
The global COVID-19 pandemic is an extremely challenging situation faced by all during this time.
We want to assure you that Central Pacific is prepared and ready to handle the situation.
We have a solid financial, credit, liquidity and capital position to enable us to weather the storm.
We remain committed to our employees, customers and the community and will continue to provide support to all of these areas.
Earlier this month, we ran a highly successful community campaign sponsored by our CPB foundation called KeepHawaiiCooking.
Through this program, our foundation subsidized the cost of 10,000 take-out meals to local families struggling during this time.
The purchase of these meals also provided a much needed support to our local restaurants.
We are further looking at other potential initiatives to help our local economy, one of which is the campaign to continue communication and engagement with visitors, particularly from Japan to keep Hawaii top of mind and encourage their return to Hawaii once the pandemic ends and recovery occurs.
To conclude, we are very focused on flattening the curve with the COVID-19 situation and we are pulling together the company and communities to beat this.
At this time, we'll be happy to address any questions you may have.
 Assistant:

Chosen response:
compname reports q1 earnings per share $0.29.
q1 earnings per share $0.29.
net interest income for q1 of 2020 was $47.8 million, compared to $45.1 million in year-ago quarter.
recognized total credit loss expense of $11.1 million in q1 under cecl methodology.


Prompt:
Human: I'm pleased to report on the Company's solid financial performance for the fourth quarter of 2019 as well as for the full 2019 year.
We continue to generate strong loan and core deposit growth and maintain solid asset quality and capital ratios, both on a sequential quarter and a year-over-year basis.
For the full 2019 year compared to last year, we improved our net interest income, net interest margin, non-interest income and efficiency ratio.
Our profitability and strong capital position enabled us to repurchase 165,700 shares of CPF stock during the fourth quarter.
During the 2019 year, we repurchased 797,000 shares or roughly 2.8% of our common stock outstanding as of the end of 2018.
Combined with cash dividends, we have returned $48.5 million in capital to our shareholders this past year.
We continue to execute with our RISE2020 initiative to enhance customer experience, drive stronger long-term growth and profitability, and improve shareholder returns.
In the fourth quarter, we launched our new website under the cpb.
bank domain name and implemented an end-to-end commercial loan origination system that will drive better efficiency.
The development of our new online and mobile banking platform is progressing well and our employees are excited to pilot the new platform in the first quarter.
Key steps toward our 2020 milestones in the area of the branch and ATM modernization were achieved with construction under way at our main branch headquarters and our new ATM selected.
The Hawaii economy continues to perform well with annual visitor arrivals set to exceed 10 million for the first time ever, continued strength in construction activity and growing importance of military in Hawaii over U.S.'s Indo-Pacific strategy.
Our total assets surpassed the $6 billion mark at year-end and reflected an increase of 3.5% from the previous year-end.
Our balance sheet composition continues to move in the right direction with growth focused in loans and core deposits.
Total loans increased by $82 million or 1.9% over the previous quarter and by $371 million or 9.1% year-over-year.
On a sequential quarter basis, increases were led by $43 million in growth in consumer loans and $41 million in growth in resi mortgages.
On a year-over-year basis, the $371 million loan growth was broad-based in almost all loan categories.
Asset quality continued to be strong with non-performing assets of $1.7 million, which represented 3 basis points of total assets.
Total deposits increased on a sequential quarter basis by 1.6% and year-over-year by 3.5%.
Importantly, core deposits contributed to all that growth with the sequential quarter increase of $103 million or 2.5% led by a 3.7% increase in non-interest bearing demand balances.
The year-over-year increase in core deposits of $243 million or 6.1% was led by a 10.5% increase in savings and money market balances and a 9.3% increase in interest-bearing demand.
The increases in core deposits, both sequential quarter and year-over-year, were offset by planned decreases and higher cost government time deposits.
Our loan-to-deposit ratio was 87% as of the end of the year.
Our efforts in business development and targeted deposit gathering strategies have yield successful results in deposit growth.
We are continuing to ramp up these efforts in 2020, supported by further strengthening of our teams and technology platforms.
Net income for the fourth quarter of 2019 was $14.2 million or $0.50 per diluted share, compared to net income of $14.6 million or $0.51 per diluted share reported last quarter.
Return on average assets in the fourth quarter was 0.95% and return on average equity was 10.70%.
For the full 2019 year, net income was $58.3 million or $2.03 per diluted share, compared to net income of $59.5 million or $2.01 per diluted share in the prior year.
Return on average assets for the 2019 year was 0.99% and return on average equity was 11.36%.
For the full-year 2019, pre-tax pre-provision net revenue totaled $84.2 million, which was a year-over-year increase of $7.1 million or 9.2%.
We are pleased we were able to post solid 2019 results, while investing for our future through our RISE2020 initiative.
Net interest income for the fourth quarter increased by $2.3 million to $47.9 million on a sequential quarter basis, and the net interest margin was 3.43%.
The fourth quarter included $1.1 million in non-recurring interest and dividend income, which positively impacted net interest income and net interest margin.
On a normalized basis, the fourth quarter net interest margin was 3.34%, which represented a 4 basis point sequential quarter increase.
The sequential quarter normalized net interest margin expansion was driven by increases in average loan balances and decreases in interest-bearing deposit and borrowing costs.
During the fourth quarter, we recorded a provision for loan and lease losses of $2.1 million, compared to a provision of $1.5 million recorded in the prior quarter.
Net charge-offs in the fourth quarter totaled $2.3 million, compared to net charge-offs of $1.6 million in the prior quarter.
The charge-offs primarily came from the Hawaii consumer loan portfolio.
At December 31, our allowance for loan and lease losses was $48.0 million or 1.08% of outstanding loans and leases.
Fourth quarter other operating income totaled $9.8 million, compared to $10.3 million in the prior quarter.
The decrease was primarily due to lower mortgage banking income.
Other operating expense for the fourth quarter was $36.2 million, compared to $34.9 million in the prior quarter.
The sequential quarter increase was driven by higher salaries and employee benefits, and higher computer software expense.
These increases relate to our RISE2020 initiative and also include accruals for incentive compensation.
The efficiency ratio was 62.81% in the fourth quarter, compared to 62.48% in the prior quarter.
The effective tax rate increased to 26.7% due to return to provision adjustments.
Going forward, we expect that effective tax rate to be in the 24% to 26% range.
Overall, we are pleased with another solid quarter and the continued positive momentum as we finished up the 2019 year.
Our team is working hard to deliver on our RISE2020 commitments, and we look forward to sharing our progress with you over the coming quarters.
At this time we will be happy to address any questions you may have.
 Assistant:

Chosen response:
central pacific financial q4 earnings per share $0.50.
q4 earnings per share $0.50.
central pacific financial - net interest income for fourth quarter of 2019 was $47.9 million, compared to $44.7 million in the year-ago quarter.


Prompt:
Human: As always, we appreciate your interest in Central Pacific Financial Corp.
The start of 2021 is a very exciting time for Central Pacific.
We are pleased to announce that we have successfully completed our RISE2020 initiative, which positions us extremely well in the current environment and for the future.
We also completed our RISE2020 milestone on digital banking with the new online and mobile banking platforms that launched in the third quarter and the completion of our full ATM network upgrade in the fourth quarter.
This is part of an exciting new brand design that we just launched.
The new brand reflects both the Company's unique history and our bright future ahead.
We had strong financial results for the fourth quarter and full year of 2020.
While net income was impacted by one-time expenses and higher provisions for credit losses, our core pre-tax pre-provision earnings were solid.
We continue to thoroughly review and regularly monitor our loan portfolio to appropriately manage the credit risk in the pandemic environment.
During the fourth quarter, our total balance of loans on payment deferrals decreased significantly and was down to 3% of total loans, excluding PPP loans at year-end.
Finally, our Board of Directors declared a quarterly cash dividend of $0.23 per share and approved a new share repurchase authorization.
The State of Hawaii continues to manage through the COVID-19 pandemic.
We are vaccinating our residents as quickly as possible and have worked through the first tier of first responders and frontline medical workers.
We have recently opened two mass vaccination sites in Honolulu, as we move to the next tier, which includes the elderly population.
Our COVID infection rate in the State of Hawaii is currently the second-lowest in the nation on a per capita basis.
The tourism economies remained open with the requirement for a negative COVID test to avoid quarantine.
The daily visitor arrival counts have recently been in the 5,000 to 8,000 range per day, but is still significantly down compared to a year ago.
We are optimistic that with the mass vaccination initiative we will start to see a Hawaii economic recovery in 2021.
At Central Pacific, we continue to operate with the highest standards of health, safety and social distancing.
We've successfully consolidated four branches into neighboring branches in 2020, three of which were in-store branches that had too small of a footprint for adequate social distancing.
We expect to retain customers and deposits from these closed branches as we continue to provide exceptional service at our other branches and through our digital channels.
Much of our back office teams continue to work flexible remote schedules and all employees are required to complete a daily online health questionnaire prior to starting work each day.
We believe the actions we've taken will continue to enable us to provide a safe environment for both our employees and customers.
In the fourth quarter, excluding PPP loan pay-offs of $112 million, the bank grew its loan portfolio by $46 million, driven by growth in commercial, construction, residential mortgages, HELOC and commercial mortgages.
Our residential lending team continues to outperform with record levels of production, resulting in $5.4 million in mortgage banking income for the quarter.
For the 2020-year, mortgage banking income was $13.7 million, which was more than double the income from the previous year, augmented by over $1 billion in loan production.
During the fourth quarter, we received and processed a significant amount of PPP forgiveness applications, which resulted in the recognition of $5.4 million in fee income.
We continue to process PPP forgiveness applications and recently started accepting new PPP loan applications for both first draw and second draw loans from our business customers.
Additionally, our team continues to engage and remain steadfast in our support of our customers and for the broader business community impacted by COVID-19.
Core deposits during the fourth quarter increased by $132 million, which is consistent with year-end seasonal inflows augmented by our front-line business development efforts.
For the 2020 year, core deposits increased by $787 million.
Additionally, our cost of total deposits declined by 4 basis points from the prior quarter and is now down to 9 basis points.
Providing best-in-class digital technology for our customers remain the key priority for us.
In 2020, we launched our new consumer mobile and online platforms and completed the rollout of our new ATM fleet.
We are seeing strong adoption and utilization of these new digital tools by our customers.
And just yesterday, we launched a new platform that will allow our customers and other consumers to open a new personal checking or savings account online or apply for a consumer loan online.
Our team is laser-focused on adding additional digital products and services this year and we look forward to updating you in the coming quarters.
At year-end, the loan portfolio totaled $4.96 billion with 55% consumer and 45% commercial.
During the quarter, we continued to monitor the loan portfolio and provided support to our customers as they continue to navigate through the ongoing changes in the marketplace.
We assisted our customers by providing additional loan payment deferrals as needed and we were pleased to see a significant number of borrowers resume making their monthly loan payments.
At quarter-end, the total balance of loans on payment deferrals declined to $120 million or 3% of the total loan portfolio, excluding PPP balances.
Our redeferral rate was 15% and was primarily driven by residential loans where payment deferrals were extended to nine months.
During the quarter, we saw a significant decline in consumer loans on deferral as customers returned to making loan payments.
Of the approximately 4,200 consumer loans that returned to payments, only 7% are granted a short-term loan modifications with 93% resuming payment at contractual terms.
In the commercial and commercial real estate loan portfolios, the total balance of loans on payments deferrals declined to $47 million or 1% of the total loan portfolio, excluding PPP balances.
The highest exposure by industry continues to be Real Estate and Rental & Leasing totaling $33 million, a decline of $14 million sequential quarter.
The loans in the Real Estate and Rental & Leasing industry are supported by low loan-to-value ratios.
The majority of these borrowers are expected to resume making loan payments at the end of their six month loan payment deferrals.
Loan payment deferrals for our high-risk industries totaled $12 million or 0.3% of the total loan portfolio, excluding PPP balances.
As of January 20th, our total balance of loans on payment deferrals decreased further to $101 million or 3% of total loans, excluding PPP balances.
Additional details on our loan payment deferrals can be found on Slides 20 and 21.
During the quarter, criticized loans declined by $4.5 million sequential quarter to $192 million or 4.2% of the total loan portfolio, excluding PPP balances.
Special mention loans declined by $6.3 million to $142 million or 3.1% of the total loan portfolio, excluding PPP balances and classified loans increased by $1.7 million to $50 million or 1.1% of the total loan portfolios, excluding PPP balances.
We sold a classified and non-accrual commercial real estate loan at par of $4.2 million and settled a payoff of another classified and non-accruals commercial real estate and commercial loan at 92 [Phonetic] or $2.9 million.
Approximately 32% of special mention balances and 10% of classified balances also received PPP loans.
Additional details on loans rated special mention and classified can be found on Slides 22 and 23.
Overall, we continue to believe our proactive approach to working with our customers and our disciplined credit management and diversified loan portfolio has allowed us to remain strong and our asset quality to remain stable through these unprecedented time.
This will continue to serve us well into the future.
Net income for the fourth quarter of 2020 was $12.2 million or $0.43 per diluted share.
Return on average assets in the fourth quarter was 74 basis points and return on average equity was 8.87%.
For the full 2020 year, net income was $37.3 million or $1.32 per diluted share.
Return on average assets was 0.58% and return on average equity was 6.85%.
Pre-tax pre-provision earnings for 2020 was $88.2 million compared to $84.2 million in 2019.
2020 pre-tax pre-provision earnings were the highest CPF has generated since the Great Recession.
Our 2020 earnings were impacted by higher provision for credit loss expense due to the current COVID-19 pandemic.
Additionally, in the fourth quarter, there were several one-time expenses which totaled $5.9 million.
Net interest income for the fourth quarter was $51.5 million, which increased from the prior quarter due to accelerated recognition of PPP's fee income as PPP loans were forgiven by the SBA.
Net interest income included $6.3 million in PPP net interest income and net loan fees compared to $3.4 million in the prior quarter.
The net interest margin increased to 3.32% in the fourth quarter compared to 3.19% in the prior quarter.
The increase was due to the aforementioned PPP fee income recognition.
The NIM normalized for PPP was 3.17 in the fourth quarter compared to 3.26 in the prior quarter.
The decrease is due to lower loan and investment yields and the new subordinated debt interest expense.
Fourth quarter other operating income totaled $14.1 million compared $11.6 million in the prior quarter.
The increase was primarily due to higher mortgage banking income of $1.1 million sequential quarter.
Additionally, in the current quarter, we realized a gain on sale of securities of $0.2 million compared to a loss on sale of securities of $0.4 million in the prior quarter.
Other operating expense for the fourth quarter was $45.1 million, which was an increase of $8.1 million compared to the prior quarter.
The increase was largely driven by one-time expenses totaling $5.9 million which related to employee incentives and benefits, branch consolidation costs, litigation settlement, debt prepayment fees, and other one-time expense accruals.
Additionally, in the current quarter, there was higher deferred compensation expense related to equity-market volatility and higher computer software expense related to our technology initiative.
The efficiency ratio increased to 68.8% in the fourth quarter compared to 60.9% in the previous quarter, primarily due to the one-time expenses.
Excluding one-time expenses of $5.9 million, the fourth quarter efficiency ratio would have been 59.8%.
Net charge-offs in the fourth quarter totalled $1.8 million compared to net charge-offs of $1.3 million in the prior quarter.
At December 31st, our allowance for credit losses was $83.3 million or 1.83% of outstanding loans, excluding PPP loans.
This compares to 1.79% coverage as of the prior quarter-end.
The buildup of credit reserves was largely driven by the economic forecast utilized in our CECL methodology.
The effective tax rate was 23.7% in the fourth quarter.
And going forward, we expect the ETR to continue to be in the 24% to 26% range.
Our liquidity and capital positions remain strong and we continue to perform robust stress testing.
With the $55 million subordinated note offering we completed in the fourth quarter, our CPF total risk-based capital ratio increased to 15.2% as of December 31st.
In summary, Central Pacific continues to make positive forward progress on our strategy, while at the same time managed well through the COVID-19 pandemic.
We have a solid financial, credit, liquidity and capital position.
As the economic recovery gradually begins, we remain committed to supporting our employees, customers and the community.
At this time, we'll be happy to address any questions you may have.
Back to you, operator.
 Assistant:

Chosen response:
q4 earnings per share $0.43.
net interest income for q4 of 2020 was $51.5 million, compared to $47.9 million in year-ago quarter.


Prompt:
Human: We appreciate you joining us today to review our fourth quarter and annual 2020 results.
We at Chesapeake Utilities continue to operate effectively in this new normal, serving our customers and keeping employees as safe as possible as we await the full availability of the COVID-19 vaccination in the coming months.
As shown on slide two, participating with me on the call today are Jeffry Householder, President and Chief Executive Officer; and Jim Moriarty, Executive Vice President, General Counsel, Corporate Secretary and Chief Risk and Compliance Officer.
We also have other members of our management team joining us virtually.
Our objective today is to provide insight into our fourth quarter and annual 2020 results, review the estimated impact of COVID-19 on our business in 2020 as well as update you on our progress on key strategic initiatives and our outlook for the future in regards to new opportunities.
Moving to slide three.
We had a very strong year in 2020.
As shown on slide four, earnings growth from continuing operations increased 13.2%, resulting in our 14th year in a row of record earnings.
We also achieved a consolidated return on equity above 11%, which is something we've done each year since 2005.
Our consistent earnings track record is a significant accomplishment and represents top quartile performance among our peer group over an extended period.
I note that we achieved these financial results in a year where our total capital investments once again approached $200 million, representing 18% of total capitalization.
This has been an extraordinary year.
It's a testament to the dedication of our employee team that we were able to identify safety and operating procedures that enabled us to continue throughout the year uninterrupted delivery of the essential energy services Chesapeake provides.
One of the significant concerns I had as the pandemic intensified was the potential loss of momentum in the completion of our capital growth projects.
Our team is able to find ways to safely keep projects on schedule.
And our investments in 2020 will deliver strong margin and earnings growth for years to come.
Our stock also proved to be resilient during the pandemic-related market downturn.
We maintain significant value relative to the losses in the broader utility market.
Toward the end of the year, subsequent to our inclusion in the S&P 600 Small-Cap Index, and reflecting our strong, consistent financial performance, the Chesapeake stock price increased above pre-COVID-19 levels.
A key part of our total shareholder return is our strong dividend.
Chesapeake Board followed our long-standing practice of closely correlating annualized dividend growth to our earnings growth and declared an annualized dividend of $1.76 per share, an 8.6% increase and the 17th consecutive year of increased dividends.
We've now doubled our annualized dividend per share over the past 10 years.
At the same time, we've been able to reinvest a significant portion of our earnings back into the business to propel future earnings through additional capital investments.
As shown on slide five, at year-end, the Chesapeake Utilities' total shareholder return exceeded 15%, the top level of performance among other gas utilities for the year.
While our total shareholder return was strong for 2020, I believe it is equally important to consider the longer-term value creation as well.
Including 2020, our total shareholder return compound annual growth rate over one-, three-, five-, 10- and 20-year historic periods has exceeded 13% for each period, representing long-term upper quartile performance compared to our peer group.
In fact, we are at the 100th percentile among our peers for the whole periods.
slide six highlights the significant growth experienced by the company over the past decade.
We've doubled our market capitalization twice over the past 10 years, and 2020 was another step down on the path to continue growing our business.
We ended the year with Chesapeake Utilities' market capitalization at $1.9 billion, more than doubling from 2015.
Net income for 2020 was $71.5 million or $4.28 per share compared to $65.2 million and $3.96 per share for 2019.
Shown on slide seven, the company's net income from continuing operations for 2020 was $70.6 million or $4.21 diluted earnings per share.
This represents an increase of $9.5 million or $0.49 a share above 2019 results.
We had significant margin growth in 2020, totaling over $25 million.
Our margin results would have been even higher, but they were partially offset by $4.3 million lower gross margins due to a decline in customer consumption driven primarily by weather and the unfavorable net impact of the COVID-19 pandemic.
A significant margin impact resulted from our policy to provide assistance to customers during the pandemic and stop nonpaid service disconnects.
We now have received authorization in each of our regulated jurisdictions to create regulatory assets to defer COVID-19-related net expenses.
In 2020, we deferred a total of $1.9 million in distribution utility expenses.
The after-tax impact of COVID-19 in 2020 was approximately $1 million or $0.06 per share.
We're continuing to review the various cost impacts associated with COVID, and we'll adjust as necessary these estimates in the future.
Our growth strategy is fairly straightforward.
We manage our regulated businesses to provide stable, predictable earnings or a foundation, as we like to say internally, over the long term and continually seek opportunities to expand our footprint.
We look for nonregulated investments that can augment these utility results and which meet three fundamental criteria: investments that are, one, related to our core energy businesses; two, meet our higher than utility return targets; and three, exhibit risk profiles consistent with our existing nonregulated businesses.
We seek to provide total shareholder return in the upper quartile of our peers in both short- and long-term performance, the product of earnings and dividend growth driven by capital projects that can achieve an adequate return on investment on our prescribed targets.
On slide eight, we've identified the primary drivers of growth that we have been constantly pursuing, and we had significant noteworthy activity in almost all of these areas in 2020.
Slide nine outlines some of our key business accomplishments last year, and let me highlight a few of those accomplishments.
We continue to make progress on our business transformation initiative.
At the beginning of 2019 with a market capitalization of approximately $1.3 billion, we set an aggressive internal goal to double the size of our company in five years.
That may seem ambitious, but we had already achieved that level of growth twice over the previous 10 years.
To do it again, we need to make sure our organizational structure, our processes, our employee skills, diversity, technology, we're able to keep pace with our growth objectives.
We've taken significant actions toward this goal, simplifying our organization and business unit management structure and achieving greater process standardization across our units.
I don't think you can underestimate the impact of COVID-19 on our business.
The pandemic has been a tragic and painful experience across the planet.
However, responding to the challenges has forced us to identify and address weaknesses in our safety practices, our processes, our technology our training and our organizational structure.
COVID-19 has significantly accelerated our business transformation process and introduced several new elements such as remote work, facility design into our planning.
While we're strengthening our operational and business practices, we know that it's important to hold on to the culture and traditions that are at the core of our success and have made this company a special place for all of us to work.
Chesapeake Utilities was once again recognized as a top workplace in Delaware and Florida and earned the inaugural 2021 Top Workplaces USA award for midsized companies.
We appreciate this national recognition awarded by a third-party based on feedback and survey results from our employees.
We saw solid earnings contributions from all of our business units last year.
Our results reflect increased earnings from the Hurricane Michael regulatory settlement, new pipeline expansion projects, the acquisitions of Boulden Western natural propane operations and the Elkton Gas natural gas distribution system.
Organic growth in our natural gas distribution operations, continued pipeline replacement, increased margin from Marlin Gas Services, higher retail propane margins, increased rates for Aspire Energy.
We also had gains on two property sales that helped to offset some of the pandemic cost increases.
As I mentioned earlier, we continued our strong record of investment growth in 2020.
Capital expenditures totaled $196 million.
We advanced multiple pipeline expansion projects, most notably, the Callahan Pipeline in Florida went into service early and under budget, producing $30.9 million in incremental margin in 2020.
Customers in our service territories continue to prefer natural gas as their energy of choice, and our regulated natural gas customer growth in both Florida and the Delmarva Peninsula, as a result, continues to be more than twice the national average.
We also completed the acquisitions of the two propane companies, I mentioned earlier, the Boulden propane in Delaware and Western Natural Gas in Florida and the Elkton natural gas system in Maryland.
The integrations of these acquisitions were completed seamlessly, and they all contributed to our bottom line in 2020.
We worked hard last year to rebalance our capital structure and achieve our 50% equity target.
We obtained $89.7 million of new equity from our ATM program and various stock plans, which was certainly helpful as Chesapeake Utilities -- the S&P 600 small-Cap index in September.
We also retained $42.4 million of earnings in 2020, increasing stockholders' equity to $697.1 million and achieving the 50% of total capitalization.
Turning to slide 10.
Net income for the quarter was $22.4 million compared to the same quarter of last year.
As I'm sure you all recall, during the fourth quarter of 2019, we exited the natural gas marketing business and recognized gains on the sales associated with that exit.
As a result, I will focus our discussion today largely on continuing operations, although our consolidated earnings both for the quarter and annually in 2020 were strong despite the absence of any onetime gain.
In terms of continuing operations for the quarter, our income from continuing operations grew by $4.5 million or 27%.
EPS for the fourth quarter compared to the fourth quarter last year grew by $0.20 to $1.24 per share from $1.04, representing growth of 19% because of the equity issued in the fourth quarter of 2020.
Net income for 2020 for the year was $71.5 million or $4.26 per share compared to $65.2 million or $3.96 per share for 2019.
The company's net income from continuing operations for 2020 was $70.6 million or $4.21 per share.
This represents an increase of $9.5 million or $0.49 per share above 2019 results of $3.72 or 13.2% growth.
Higher income was the result of increased performance across the enterprise, as Jeff highlighted earlier, coupled with expense management.
Chesapeake Utilities is committed to gross margin growth through new project development and efficient operations, as shown on slide 11.
For 2020, gross margin increased 7.7% while operating -- other operating expenses were up less than half of that growth at 2.7%.
Keep in mind, the 7.7% increase in gross margin is inclusive of $4.3 million of milder weather that we experienced and $5.3 million of lower margin associated with COVID-19.
If you exclude the COVID-19 impact, our operating income growth would have been, on a consolidated basis, 12.2% versus reported 6.1%; for our Regulated Energy segment, 11.3% versus reported of 6.4%; and for our Unregulated Energy segment, 12.1% versus 3.6%.
In terms of expense growth, I mentioned our laser focus on managing expenses in the midst of the pandemic and in support of our continued collaboration across the company.
Excluding the incremental expenses associated with new acquisitions, where there was also a corresponding margin growth, our other operating expense growth was 1.3% on a consolidated basis, 1.6% for our Regulated Energy segment and 0.8% for our Unregulated Energy segment.
All of this remaining increase is attributable to higher insurance costs.
Overall, our effective cost management helped to offset unfavorable expense impacts of COVID-19 and keep our operating costs flat, taking into consideration the acquisitions and the insurance.
Finally, depreciation, amortization and property tax increased $14.5 million associated with our continued property expansions and new investment related to our growth initiatives.
And what you can see is that excluding weather and the negative impacts of COVID-19, gross margin increased $34.9 million or $1.52 per share.
However, there's some offsetting impacts of expenses associated with the acquisition and also associated with Hurricane Michael.
Higher earnings for 2020 reflect increased earnings from the Hurricane Michael regulatory settlement reached with the Florida PSC, and that's $0.23 per share after associated depreciation and amortization of regulatory assets.
Pipeline expansion projects added $0.35 per share.
Contributions from the acquisitions of Boulden, Elkton and Western Natural Gas added $0.09 per share net of their incremental expenses.
Organic growth in the natural gas distribution operations added $0.15 per share.
Marlin had increased margin that added an additional $0.08 per share.
Our propane distribution operations generated higher retail propane margins that contributed $0.08 per share.
Rate increases for Aspire added $0.06, and we had incremental margin from our Florida GRIP program that included $0.05 per share.
And lastly, margins from some of Eastern Shore's capital improvements and nonservice expansion projects also added $0.05 per share.
These increases were offset by lower gross margin again due to a decline in customer consumption driven primarily by weather $0.19 per share and the net unfavorable impact of the COVID-19 pandemic or $0.06 per share.
The estimated consolidated net impact that COVID had on our earnings reflects the establishment of regulatory assets in the fourth quarter associated with the net incremental expense incurred by our natural gas and electric distribution businesses to continue to provide our essential services as well as the tax benefits that resulted from implementing the CARES Act.
Given the various components and the magnitude of the settlement on our results for the year, we thought it would be useful to lay out the details.
The settlement agreement allowed FPU to, first, refund the overcollection of interim rates through the fuel charge; second, record regulatory assets for storm costs in the amount of $45.8 million, including interest, which will be amortized over six years; third, we cover those storm costs through a surcharge for a total of $7.7 million annually; and finally, collect an annual increase in revenue of $3.3 million to recover capital costs associated with new plants and a regulatory asset for the cost of removal and undepreciated plants.
The new base rates and storm surcharge were effective November 1, 2020.
On an annual basis, the settlement contributed $3.8 million in net income after tax or $0.23 per share, as I mentioned previously.
I'd like to spend a few moments highlighting our capital spending in 2020 and our initial forecast for 2021.
As you can see on slide 14, spending in 2020 totaled $196 million, within the guidance that we provided for the year.
We continue to invest in growth projects and opportunities in the normal course as we work within the guidelines of COVID-19 safety requirements.
Our regulated distribution and transmission businesses represented 75% of new capital additions in 2020.
The initial forecast for 2021 capital expenditures remains at similar levels, ranging between $175 million and $200 million.
Again, the investment is concentrated with about 80% budgeted in new regulated energy assets.
For the five years ended December 31, 2020, capital expenditures totaled $1 billion.
In terms of guidance through 2022 of $750 million to $1 billion, we are expecting to invest over $850 million by the end of 2021, exceeding our lower end estimate of $750 million and already reaching 85% of the $1 billion higher end of the range.
Jeff will touch on our expanded guidance through 2025 in just a few minutes.
slide 15 represents recent pipeline investments completed in 2020 or scheduled for completion in 2021.
And these projects in tandem with the associated distribution system expansions are one of the largest drivers of our capital spending in 2020 and projected 2021.
These pipeline expansions represent $116 million and span our footprint, including in Florida, Ohio and on Delmarva.
Incremental gross margin is estimated to be $21.7 million once these projects are fully in service by the fourth quarter of 2021.
Further pipeline expansions will continue to be a growth driver as we undertake economically viable extensions that enable our distribution systems to continue to capitalize on the increasing demand for new natural gas services to residential and commercial customers.
Our latest projects and initiatives table is shown on slide 16, and I think you all are pretty familiar with this.
And it shows our pipeline expansion, CNG and RNG transportation, acquisitions and regulatory initiatives.
Key projects are expected to generate approximately $66 million and $73 million for the years 2021 and 2022, respectively.
Pipeline expansions are expected to generate $7 million in incremental margin in 2021, shy by $1 million of the incremental $8 million added in 2020.
The Hurricane Michael proceedings settlement accounted for $11 million in incremental margin in 2020 and remains at that level for 2021 and 2022.
We particularly note the margin estimate of $10.5 million for 2022 from the recent acquisitions of Boulden, Elkton and Western Natural Gas approximately double the 2020 gross margin contribution.
In total, the incremental margin growth from these projects and initiatives represents approximately $27 million for 2020, $16 million for 2021 and $7 million for 2022.
As a reminder, we only include definitive projects in this table once they reach maturity and do not include organic margin growth from distribution, customer additions, rate adjustments in our unregulated businesses, etc.
Accordingly, the RNG transportation margin, for example, will be adjusted as new projects are definitive and announced.
Just -- the growth we've experienced and ensure we have the capital capacity to fuel our future growth, we maintain a strong balance sheet with access to sufficient, competitively priced capital.
As you can see on slide 17, as of the end of the year, total capitalization was $1.4 billion comprised of 50% stockholders' equity, 36% long-term debt at fixed rate and 14% short-term debt, including outstanding borrowings under our revolver and the current portion of long-term debt.
During 2020, we added a net incremental $204 million of permanent capital, including in our stockholders' equity and long-term debt.
Our recent equity issuance moved us to our target equity to total capitalization range beginning at 50%.
We continue to utilize our traditional equity plans in 2020 to issue stock and increase equity beyond our earnings retained and reinvested in the business.
We successfully utilized our first ATM program and various stock plans to raise just under $90 million in new equity gross proceeds and issued $90 million in new long-term debt at an average rate of 2.98%.
We also restructured and enhanced our short-term debt facilities to provide additional capacity while also streamlining the administration of this funding source.
We will continue to add capacity that supports our strategic growth plans and look forward to updating you on our progress.
At the end of 2020, we completed our latest annual strategic plan update.
I've been telling our employees that this is a fantastic time to be in the energy delivery business and to be part of Chesapeake Utilities.
There's certainly no denying that we are in extraordinary times with the energy industry transitioning to a lower carbon world.
We faced many challenges raised by opponents to fossil fuels.
Those challenges will require that we respond effectively, finding ways to meaningfully reduce our carbon footprint.
At the same time, we need to meet customer demands for cleaner energy and continue to contribute to the economic well-being of the communities we serve.
We believe that far from limiting our growth potential, these challenges present significant opportunities for investment and expansion.
On slide 18, we've highlighted our key strategic platforms for growth.
These are the principal areas of investment focus that will drive our growth over the next few years.
First is we want to optimize the earnings growth in our existing businesses through organic growth, regulatory initiatives and increased opportunities for collaboration and efficiency across our operating units.
Our recent strategic plan update identified hundreds of millions of dollars of investment opportunities within our existing units.
These opportunities represent organic growth without significant acquisition.
Second, we continue to see opportunities for interstate and intrastate pipeline projects across Delmarva, Florida, Ohio and other states.
Many of these pipelines will increase capacity to meet the growing demand for natural gas as our distribution systems continue to expand.
Our service areas have experienced tremendous growth during the pandemic.
Third, we think further growth in our propane gas business is likely, primarily through acquisitions in the Mid-Atlantic and Southeast, along with the expansion of our propane AutoGas business.
Fourth, we continue to expand Marlin Gas Services' core CNG offerings to a larger market area.
In addition, we're aggressively pursuing RNG transport opportunities across the U.S. And recently, we added several LNG tankers to our CNG fleet to increase our transport capacity capabilities.
Marlin offers a unique opportunity to pursue RNG transport agreements and, at the same time, help us identify potential renewable investment opportunities.
Our fifth platform for growth is renewable energy investment, which we discuss on slide 19.
Over the past year, we've announced our participation in several renewable energy projects.
Each of these projects is advancing, and we're actively working to finalize the scope and extent of our investment and participation levels.
Let me update you on our progress and describe some of our emerging projects.
On the Delmarva Peninsula, we're working at Bioenergy Devco and CleanBay renewables on several poultry waste-to-energy R&D projects, the two projects that are furthest along are the Bioenergy Devco Georgetown Delaware facility and CleanBay's Westover Maryland project.
As the developers complete final design and financing brand use permitting activities before construction begins, we have various agreements in place at the respective plants for gas processing, fuel off-take, Marlin transport, pipeline construction to take away RNG and deliver thermal gas for organic fertilizer production, the development of solar photovoltaic systems to provide renewable power to one of the sites, potential construction of a renewable gas CHP at one site and other potential investment opportunities.
Most of the Chesapeake investment opportunities included in that list are currently either under contract or we have an LOI in place and are negotiating final terms.
In Florida, we're working with the solar turning to investigate the opportunity to utilize a blend of RNG and hydrogen to operate our Eight Flags combined heat and power plant on Amelia Island.
In fact, yesterday, we executed a letter of support with solar turbines to participate in our hydrogen research and development project.
Our goal is to utilize a significant percentage of hydrogen to fuel that turbine within the next few years.
Our CNG vehicle fueling station outside the port of Savannah, Georgia is under construction.
We're working on several landfill gas processing sites that would enable us to transport RNG to the site of use as a renewable vehicle fuel.
CNG offers an attractive vehicle fuel choice, but the opportunity to provide renewable CNG will support premium fuel margins as increasingly of interest to the trucking and marine port vehicle markets.
We announced an agreement with Fortistar to construct a pipeline in Ohio, connecting a landfill RNG gas processor to our Aspire gathering system.
Construction on the pipeline is scheduled to begin soon, and in-service is scheduled for later this year.
We're also working on a host of other renewable investment projects, and we're not quite at the stage of public announcement.
These projects include several additional landfill gas processing facilities, additional agricultural waste RNG projects, solar generation for our electric system and other opportunities.
And I look forward to updating you as the details are finalized.
I should note that our renewable energy investment strategy is aligned with the same strategic objectives and financial discipline that we've applied to all of our investment opportunities over many years.
We're looking for investments that are linked to our core businesses, aligned with our financial targets and meet our tolerance for risk.
We are not simply seeking renewable investments for the sake of having a renewable investment.
Our current capital and earnings investment guidance was originally issued for the five-year period 2018 through 2022.
Given our updated strategic plan and the margin growth already announced and included in our major projects table, yesterday, we announced an extension of our capital and earnings per share guidance.
As you can see on slide 20, we're resetting our five -year capital guidance for the period 2021 to 2025 to $750 billion.
I'm excited that our latest strategic plan update gives us a high degree of confidence that we have significant investment opportunities ahead of us.
On slide 21, we're also extending our earnings per share guidance for an additional three-year period through 2025.
Our projected diluted earnings per share range in 2025 is $6.05 to $6.25.
The 2025 guidance range represents an average earnings per share growth of approximately 10% from our initiation of guidance at the end of 2017.
As shown on slide 22, Chesapeake Utilities continues to build on our bedrock commitment to ESG, a focus on environmental stewardship, dedication to social justice and to sound governance principles.
This is how we work every day.
Our recognition as a top workplace for the ninth consecutive year in the areas we serve, as well as our recognition in the top workplace inaugural USA awards, speaks volumes about our diverse and inclusive culture, one which continues to promote the growth and development and engagement of our employees and our communities.
Our vibrant and inclusive culture could not have been any more evident than in 2020 when we collectively responded to the challenges presented by the COVID-19 pandemic and to the opportunities that were presented for social justice actions.
Strong corporate governance has been essential to creating long-term value and safeguarding our commitments to all stakeholders.
Our Board and its committees have adopted guidelines and other policies that have provided a framework for ongoing effective governance.
Active and informed engagement, which is critical to our people, beginning with our Board and extending throughout the company could not be more important as we continue together to chart the road ahead.
Our responsibility to operate in a safe and environmentally friendly manner furthers our stewardship and facilitates sustainable practices across our organization.
Our team, with input from the Board of Directors, discusses key risks and mitigating factors identified as part of our vibrant enterprise risk management program.
Embedded within our ERM program are ESG-related areas and emerging risks.
In regards to safety, we are committed to providing a safe workplace for our employees and to make safety a priority in our interactions with each other, our customers and the communities we serve.
It is part of our culture and an important strategic initiative, both in the short term and the long term.
Safety is not only our top priority.
It is also the center of who we are.
One of the latest accomplishments in this regard is the completion of our safety town facility in Dover, Delaware to provide both hands-on and classroom training for our operations technicians.
We are also excited about our inaugural sustainability report, which will be provided later this year and is the next step in our long-standing ESG stewardship highlighting the unwavering dedication and commitment of the Chesapeake team.
We are committed to providing a work environment that values diversity and background, experience and skill sets as highlighted on slide 23.
In continuing our bedrock commitment to equity diversity and inclusion, our newly formed Equity Diversity and Inclusion, or EDI, Council, is instrumental to helping guide our path forward.
The vision of our EDI Council is for all employees to embrace and share their diverse experiences and backgrounds with the mission to help improve the communities we serve and to make us a better company.
The EDI Council is central to who we are and who we want to be and will further enhance the collaboration around our workplace culture that is the engine driving our business.
The EDI Council continued to be busy in 2020, fostering the rollout of employee resource groups throughout the company.
The talent, skills and ideas that these groups have brought to the forefront have been inspiring and provide the place for our employees to be -- to feel that they are supported by each other and by the company.
We work hard every day to also help ensure that the communities we serve continue receiving the value and benefits of clean, plentiful and affordable energy delivery services so that no one is left behind.
Whether it is ceasing nonpay disconnects, working with our customers to craft payment plans that enable them to bring their accounts current or providing funds for local community aid organizations to help in the midst of the pandemic, we are doing our part.
In addition, we have donated record levels to aid local organizations.
We are very excited about the projects under way by our diverse and engaged teams to reduce the carbon footprint of the communities we serve.
Our commitment remains steadfast to take the steps necessary to deliver energy where and when it is needed while continuing to advance our environmental stewardship.
Our announced projects in RNG are just the beginning.
These are examples of how we are doing our part to help build a more sustainable future for the communities we serve.
You will see us pursuing many more of these opportunities in the future.
We believe natural gas is a key component to the country's long-term energy strategy.
We also believe that the markets we serve value the energy services we deliver, whether natural gas, propane or electricity, and our customers have spoken loudly in this regard.
At the same time, we have opportunities given our business mix, expertise and strategic approach to capitalize on new opportunities like RNG that provide the bridge from the here and now to a more sustainable future.
We'll continue to execute our strategy, focused on delivering top quartile performance and significant shareholder return.
And we are committed to identifying and delivering innovative solutions for the delivery of clean, reliable and safe energy to our customers.
 Assistant:

Chosen response: q4 earnings per share $1.24 from continuing operations.