Prompt:
Human: I'm Hallie Miller, Evercore's Head of Investor Relations.
At this time, it is uncertain how long our business will be negatively affected by COVID-19 and the associated economics and market downturn.
These factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
We continue to believe that it is important to evaluate Evercore's performance on an annual basis.
As we've noted previously, our results for any particular quarter are influenced by the timing of transaction closings.
It is certainly a very different world today compared to our last earnings call in January.
The vast majority of our firm is working remotely, and we are conducting our earnings call from widely varied locations.
I'll comment on our first quarter results in a few minutes; but first, I want to talk about our firm and how we have approached the COVID-19 pandemic from both an operational and a business standpoint.
Our global team has performed extraordinarily well in very challenging conditions and adapted quickly to our remote working arrangements.
Despite working from more than 1,800 offices globally, we are effectively communicating with our clients and each other.
Roger, John, and I could not be more proud of our entire team.
As we settle into our current work arrangement and acclimate to the current environment, John, Roger and I, and the rest of the management team are focused on four very important priorities.
First, assuring the health and safety of our team and their families.
Second, pivoting our services to address the evolving needs of our corporate, institutional investor, and wealth management clients.
Third, operating collaboratively, effectively and securely, leveraging the technology in both new and old ways.
And fourth, maintaining a strong and liquid balance sheet.
The economic issue that the United States and much of the world faces today is the rapid and unprecedented increase in unemployment, and the equally rapid decline in economic activity.
The statistics related to unemployment are truly sobering.
22 million Americans alone have lost their jobs in the last four weeks and millions more around the world have been similarly affected.
All of us at Evercore feel deeply for those who are out of work because of this pandemic.
Their hardship pains us.
The sharp increase in unemployment undoubtedly pre-stages a substantial decline in global GDP, probably starting in the first quarter and most certainly a deep decline in the second quarter and potentially in the third quarter as well.
We have seen governments and central banks respond in an aggressive and unprecedented way with monetary and fiscal stimulus to mitigate and ultimately reverse the economic decline.
And we are confident that over time the economies around the world will recover but it will take time and the recovery almost certainly will not be as sharp as the decline.
As a consequence, we expect that our business will be negatively affected in the coming quarters.
Advisory business, M&A is our largest revenue contributor and we expect that business to be negatively affected for some period of time.
As John will describe in his remarks, the conditions typically require for a strong M&A activity currently are not present.
Additionally, equity underwriting has virtually disappeared since mid-February.
So, we anticipate a strong return once market stabilizes, similar to what we saw in the second and third and fourth quarters of 2009, following the depths of the global financial crisis.
So, these are the negatives.
On the other hand, the current environment has created opportunities for us as we have rapidly redirected our advisory efforts to adjust to the evolving needs of our clients.
The investments that we have made in our platform over the last several years, both to broaden and diversify our capabilities and to expand our coverage of key sectors in geographies, have significantly expanded the scope of our expertise and are allowing us to continue to provide independent and trusted advice to our clients on the topics that are most relevant to them today.
Our restructuring, debt and equity capital markets advisory businesses are going flat-out.
Additionally, the volatility and increased trading volume of the equity markets has driven a strong increase in secondary revenues in our equities business.
These businesses are smaller than our M&A advisory business and it will take time before the increase in revenue related to restructuring and debt and equity capital markets advisory activities are recognized.
As a consequence, the increase in activity in these areas will not come quickly enough or be of sufficient scale to offset the expected near-term weakness in M&A.
Normally, at this point, I comment on our backlog.
It's way too early in this location to know the overall effect on our backlogs as they are in transition.
Restructuring and debt advisory is building rapidly while M&A transactions are currently being delayed, postponed or put on hold, as buyers and sellers assess the duration and severity of the downturn.
The dialog around M&A however, certainly has not halted as the dialog with financial sponsors is increasing and well capitalized and liquid companies are opportunistically exploring either long sought after assets or new ideas.
While we cannot be sure of the duration and severity of the downturn, I believe that as a relatively young and highly entrepreneurial firm, are ready for the challenges presented by the current environment and that we have already responded effectively.
If we continue to work collaboratively and adapt to the changing needs of our clients and communities, we will emerge from this period well positioned for future long-term growth and market share gain.
Let me now talk about our financial performance in the first quarter.
We reported the second best first quarter revenues in our history, indicative of the revenue generating power of our franchise and our business model in more normal time.
Adjusted net revenues of $435 million increased 4% versus the first quarter of 2019.
In aggregate, our total revenues of $436 million from our investment banking businesses, advisory, underwriting and commissions, increased 10% versus the first quarter of last year.
Advisory fees of $359 million, our largest revenue source, increased 10% compared to the first quarter of 2019, and held up very well compared to our larger competitors, almost all of whom experienced double-digit declines between 10% and 20% in their advisory revenues.
As a general matter, previously announced transactions closed as expected in the quarter.
These results are especially impressive considering the fact that the dollar value of announced M&A transactions globally declined 24% in the first quarter and the dollar value of closed M&A transaction fell by 37% compared to the quarter a year ago.
Due to the strength of our advisory revenues compared to the declines experienced by our larger competitors, we expect to increase again our market share of advisory fees among all publicly reporting firms on a trailing 12-month basis, the 8.6% from 7.9% for the 12-month period ending March 31, 2019, and from 8.3% at the end of 2019.
Underwriting fees were $21.1 million, a decline of 22% from the first quarter of 2019.
This business had a very strong start to the year.
But as COVID-19 began to spread, activity in this business essentially halted in mid-February.
Commissions and related fees of $55.4 million increased 32% versus the first quarter of 2019 or our best first quarter since 2016.
Our Equities team benefited from the heightened volatility and equity trading volumes associated with the market downturn that began in mid-February.
Asset management and administration fees from our consolidated businesses were $15.3 million, an increase of 7% versus the first quarter of 2019.
Our first quarter compensation ratio of 62% was impacted by the revenue decline in other revenue, caused by the shift from gains to losses associated with the investment portfolio that hedges a portion of our deferred cash compensation plan.
The compensation ratios for the first quarter of 2020 and 2019 are essentially the same when the impact of these gains and losses are excluded.
We historically have reflected a compensation ratio in the first quarter based on our best estimates for the full year revenue expectations and compensation requirements and reassess that compensation ratio each quarter to address changes in these expectations.
Given the uncertainty of the current environment, our first quarter compensation ratio is reflective only of our first quarter performance.
We will reevaluate the appropriate amount of compensation and our compensation ratio on a quarterly basis, as we always have, but the likelihood of change will certainly be higher in the current year than in other years, due to the highly uncertain environment for the next two to three quarters.
Non-compensation costs were $82.8 million, up 2.7% from the first quarter of 2019.
The increase reflects higher occupancy costs and expenses associated with certain technology initiatives, many of which are supporting our successful work from home operations today.
The increase in these costs was partly offset by lower professional fees and travel expenses.
As we have reported to you before, we have started a number of initiatives to reduce costs at the end of last year, and these results begin to demonstrate our progress.
Bob will comment further on this.
Adjusted operating income and adjusted net income of $82.5 million and $57.8 million declined 14% and 29% respectively, and adjusted earnings per share of $1.21 declined 27% versus the first quarter of 2019.
Here again, our change in operating income was affected meaningfully by the changes in the value of the hedges for our deferred compensation plans rather than any change in our compensation philosophy, and the larger change in net income and earnings per share was significantly affected by the higher tax rate in the first quarter of 2020 as compared to 2019.
Bob will discuss this in his remarks.
We remain focused on our capital management strategy, and returned $178.1 million to shareholders during the quarter through dividends and repurchase of 1.8 million shares at an average price of $76.57.
Our commitment to offset the dilution associated with equity grants has been substantially completed for the year, so any additional share repurchases in 2020 will be dependent on future earnings and maintaining our strong liquidity position.
Our Board declared a dividend of $0.58, consistent with prior quarters and reflective of our results for the quarter.
Our Board and management will continue to evaluate the dividend on a quarterly basis, as the effect of COVID-19 virus on revenues becomes more clear.
Although the current expectation, absent a steep decline in revenues and a significant reduction in our cash position, is that our current dividend will be maintained.
Our first quarter results demonstrate the continued strength of Evercore's franchise in more normal time.
In each of the last two years, we have generated revenues in excess of $2 billion and experienced operating margins that averaged in excess of 25%.
These results were produced by essentially the same team that we have on the field today, and we really don't see any reason why those results can't be repeated when normal and less disruptive conditions return.
The market environment for much of the first quarter continued to be supportive of M&A and strategic capital raising transactions in most sectors and geographic regions.
As such, the rapid change in environment associated with the global spread of COVID-19 is not generally evident in our first quarter results.
As Ralph mentioned earlier, many of the transactions we announced continued to move toward completion throughout the quarter.
Yet today, the conditions necessary for a healthy M&A market, including stable equity valuations, readily available credit, and CEO confidence and optimism do not exist.
Demand for restructuring and, more broadly, debt advisory and liability management advisory has dramatically increased in the current environment, as companies focus on their most immediate liquidity needs.
Financial sponsors continue to have record levels of dry powder.
But with valuation so uncertain, it is difficult for them to put money to work at the moment.
However, opportunities for innovative assignments do exist and our investment in and build out of our financial sponsors team continues.
The cash equities business tends to perform better when volatility and volumes increase.
The VIX spiked dramatically late in the first quarter, and it remains elevated.
Clearly, three weeks into the second quarter, we faced challenging conditions.
CEOs are assessing a volatile and uncertain environment and dialogues are more focused on operations and liquidity requirements as opposed to strategic and growth initiatives.
Volatility in the market remains high and valuations are in flux.
Many activists have dialed back on large campaigns and are starting fee renewal, paralleling the M&A slowdown, and access to public capital is challenging.
Despite these more challenging conditions, we are confident that the breadth and capabilities that we have, position us well with clients to evaluate all situations, and our independent advice model will be of increasing value in the current environment.
We are focusing our efforts on maintaining constant and high quality dialogs with our clients to assist them in the areas where they currently seek advice, and are working hard to build relationships with new clients, looking to broaden their relationship with an independent advisor.
When the markets begin to show sustained stability, we believe that we will begin to see an increase in proactive attention to strategic matters.
Until then, we are actively communicating and engaging with all of our clients to help them navigate the current environment and be there for them when the eventual recovery comes.
Our performance during the first quarter was solid despite increasingly challenging conditions as the quarter progressed and came to a close.
We sustained our number-one ranking for volume of announced transactions over the past 12 months, both globally and in the U.S., among independent firms.
Among all firms, we were once again number-six globally and number-four in the U.S.
We continued to advise on a large number of the most prominent M&A assignments of the quarter, including three of the four largest transactions in the United States.
Our underwriting business had a very strong first six weeks of the quarter and we are pleased to have served as a joint bookrunner on two of the top-three largest IPOs priced during the quarter.
However, activity has significantly decreased since mid-February.
Our Private Capital Advisory business performed well during the quarter and completed assignments already in progress.
Our Equities business, had a very strong quarter as a result of the heightened volatility and volume associated with the market downturn precipitated by COVID-19.
The strategic investments in senior talent we made last year have contributed to our success.
We've been able to increase our connectivity with investors and advisory clients and provide valuable insights during a period of significant market dislocations.
Our healthcare analysts are digging deep into the science of COVID-19 and collaborating with our macro and other fundamental analysts to determine investment implications across many different sectors.
Our macro analysts are also providing insights on government stimulus programs and the overall state of the economies worldwide.
We've also found more ways to connect with institutional clients and interactions are 35% higher than in prior periods.
Our Advisory clients have had an intense interest in our research, and over the past months we've added more than 1,800 corporate executives to our research distribution.
As we enter a slower market for M&A activity and a more restructuring, debt advisory and liability management focused environment, our business is pivoting to meet the changing needs of our clients.
With a number of sectors and markets badly impaired by COVID-19, our industry M&A bankers are collaborating with our restructuring and debt advisory teams to meet increased activity in these areas.
We've spoken about our flexible business model in the past and we are seeing it in full effect now.
The solutions we are exploring with our clients are broad-based, involving both in and out of court bankruptcies, exchange offerings, and amend and extend agreements and private placements.
The breadth of experience and talent of our independent team enables us to help clients analyze and execute their strategies and solutions.
While major activist campaigns have dialed back, our shareholder advisory business has been working with clients to help them understand the issues they are currently facing, including potential stealth accumulations by activists and hospital raters, capital return decisions, what to do about guidance and balance sheet and liquidity issues.
Many of our private capital advisory assignments are currently on hold as investors are sidelined and are resetting their expectations.
We believe many funds will need help raising money and managing their portfolios, as markets stabilize.
Let me briefly touch on our talented team.
Our greatest asset is our people and every one at Evercore has been working incredibly hard and diligently to make sure the firm is fully functioning in our current remote working environment, and they make sure that our clients are well served in this difficult time.
Our efforts to uphold our core values of client focus integrity and teamwork, remains central to everything we do.
We are pleased with our two new Advisory SMDs we've recruited so far in 2020, and we will remain open to opportunistically adding other high-quality individuals who can bring value to our clients.
We are extremely proud of the promotions across all levels that were announced during the first quarter.
As we move forward, we are very much aware of the difficult road ahead.
We will continue to work together in support of our clients through this downturn and the inevitable recovery.
We are confident that if we continue to collaborate and communicate with each other and adapt quickly with the changing needs of our clients, we will emerge from this downturn, well positioned for future opportunities.
For the first quarter of 2020, net revenues, net income and earnings per share on a GAAP basis were $427 million, $31.2 million and $0.74 respectively.
Net revenue of approximately $40 million was recognized in the first quarter as transactions that closed at the beginning of the second quarter of 2020.
For comparison purposes, net revenue was approximately $34 million in the first quarter of $2019 and $3 million for the first quarter of 2019.
Consistent with prior periods, our adjusted results exclude certain items that relate to our acquisitions and dispositions, and also include the full share count associated with those acquisitions.
Our adjusted results also exclude charges associated with the realignment strategy announced in January.
Specifically, we adjusted for costs associated with divesting of Class J LP Units, granted in conjunction with the ISI acquisition.
For the quarter, we expensed $1.1 million related to those units.
Our adjusted results for the quarter also exclude costs related to the realignment strategy that began in the fourth quarter of 2019.
As we noted last quarter, we expect to incur separation and transition benefits and related costs of approximately $38 million, $22.1 million of which was recorded as special charges in the first quarter of 2020.
Those charges are excluded from our adjusted results.
Last quarter, we noted that we are continuing to pursue opportunities to restructure operations in certain smaller markets.
We have entered into an agreement with the leaders of our business in Mexico to purchase our broker-dealer there, which principally provides investment management services.
Completion of this sale, which is subject to regulatory approval, is expected to occur by the end of 2020.
We continue to review additional opportunities in smaller markets.
And these opportunities could result in further charges in 2020, if pursued to completion.
Our adjusted results for the quarter also exclude special charges of $1.5 million related to accelerated depreciation expense for leasehold improvements and our business realignment initiatives.
Finally, during the quarter, we adopted the new accounting guidance for credit losses, the adoption did not have a material impact on our results.
As we noted, other revenue in the first quarter declined significantly compared to the prior year period as a result of losses on the investment funds portfolio, which is used as an economic hedge against a portion of our deferred cash compensation program obligations.
This amount fluctuates as market values fluctuate and the significant market decline during the quarter drove the loss.
As you will recall from prior discussions, this loss is offset by lower compensation expense over the term of these awards.
Turning to non-compensation costs, our firmwide non-compensation cost per employee was $44,000.1 [Phonetic] for the first quarter, down 6% on a year-over-year basis.
The decrease in non-compensation cost per employee versus last year primarily reflects lower professional fees and travel and related expenses.
We began reviewing our non-compensation costs before the COVID-19 pandemic became an issue.
We continue to adapt our operations in response to the current downturn and remain focused on reducing our non-compensation expense.
We are cutting nonessential costs, including in areas pertaining to travel and entertainment, research and subscriptions, and deferring certain capital projects, so that we are well positioned throughout the downturn as well as in the inevitable recovery.
Our GAAP tax rate for the first quarter was 25.8% compared to 9.1% in the prior year period.
The effective tax rate is affected by a number of permanent differences, including the non-deductible treatment of certain compensation expenses.
The principal driver of the year-over-year difference in the effective tax rate is a lower deduction associated with the appreciation of the firm's share price upon vesting of employee share based awards above the original grant price, as the firm's share price at the time of vesting in 2020 was more in line with the share price or those at the time of grant.
On a GAAP basis, our share count was 42.3 million shares for the first quarter.
On an adjusted basis, the share count was 47.7 million, down versus the prior-year period, driven by share repurchases and a lower average share price.
Finally, we hold approximately $588 million of cash and $264 million in investment securities as of March 31, 2020, with our current assets exceeding current liabilities by approximately $880 million.
By comparison, at year-end, we held $634 million of cash and $624 million in investment securities.
The sequential decline is in line with the seasonal trend driven by bonus payments in the first quarter.
As we continue to navigate in the downturn, we are focused on maintaining our strong and liquid balance sheet and we continue to monitor cash levels, liquidity, regulatory capital requirements, debt covenants and our other contractual obligations regularly.
Evercore celebrated its 25th anniversary in March.
While we have never faced a dislocation like the one we are facing now, we have spent the last 25 years building a firm that has a broad range of capabilities and products to serve our clients in all kinds of markets, including the one that we are in now.
 Assistant:

Chosen response:
compname reports qtrly adjusted earnings per share $1.21.
compname reports first quarter 2020 results; quarterly dividend of $0.58 per share.
evercore inc - qtrly u.s. gaap revenue $427.0 million up 3%.
evercore inc - qtrly u.s. gaap earnings per share $0.74.
evercore inc - qtrly adjusted earnings per share $1.21.
evercore inc - implementing cost reduction initiatives and downsizing or deferring capital investments.
evercore inc - review of operations will generate reductions of about 6% of headcount.
evercore inc - expect impact from covid-19 to be significant.
evercore inc - expects to incur separation and transition benefits and related costs of about $38 million in q1 of 2020.
evercore inc - continue to review additional opportunities in smaller markets.


Prompt:
Human: Just after the close of regular trading, Edwards Lifesciences released first quarter 2021 financial results.
These statements include but aren't limited to, financial guidance and expectations for longer-term growth opportunities, regulatory approvals, clinical trials, litigation, reimbursement, competitive matters and foreign currency fluctuations.
Finally, a quick reminder that when using terms underlying and adjusted, management is referring to non-GAAP financial measures, otherwise, they are referring to GAAP results.
As we anniversary our one year impact of the pandemic on our financial results, I'd like to briefly reflect on the current environment and to discuss our 2021 and longer-term priorities as a company.
I'd also like to touch on Edwards' response to the pandemic and our efforts to better support our patients, employees and the community.
Recall that our sales were dramatically impacted in the last few weeks of Q1 2020 as procedures fell due to COVID disruptions.
One year later, after an extraordinarily difficult global crisis, I'm encouraged by the signs of recovery and although we recognize that many people are still struggling around the world.
Our sales growth this quarter was better than expected across all product lines.
Although we expect the pandemic will impact the global healthcare system based on the environment as we exited the quarter, we have continued confidence in our positive 2021 outlook.
We continue to believe that 2021 will be an important growth year for Edwards with mid-teen sales growth highlighting the importance of treating structural heart patients even during this pandemic.
We also anticipate meaningful progress on expanding large under-appreciated and underserved transcatheter opportunities in 2021.
Recently, we achieved several important milestones.
Let me mention four.
Just last week, in transcatheter aortic valve replacement or TAVR, we received approval to initiate a pivotal trial for patients suffering from moderate aortic stenosis.
Also earlier this month, we received approval to begin treating patients at low surgical risk in Japan with SAPIEN 3.
And in Transcatheter Mitral and Tricuspid Therapies, or TMTT, I'm pleased to announce that the first patients were recently treated with EVOQUE Eos, our next-generation Transcatheter Mitral Replacement System.
Also in TMTT, we initiated the TRISCEND II US pivotal trial for transcatheter tricuspid replacement.
Looking beyond 2021, we remain confident in our long-term strategy and our pipeline of innovative therapies.
Our patient-focused culture drives us and motivates our employees around the world every day.
Our R&D targets breakthrough therapies that can create significant value for patients and health systems enabling strong organic sales growth and exceptional shareholder returns.
Despite COVID disruptions, we've continued to invest aggressively for future growth.
As a reminder, about a third of our research and development investments today are focused on generating a robust body of guideline changing clinical evidence and although clinical studies slowed during the pandemic, our dedicated clinician partners are eager to accelerate enrolment in this important research.
Regulators have also been supported in addressing the impact of the pandemic and its impact on clinical studies.
Finally, I want to provide some perspective on how we've maintained our focus on creating long-term value as we navigated the pandemic over the last year.
We continue to invest in our people, in our infrastructure.
During a time when widespread uncertainty impacted many families across the globe, we have prioritized protecting our employees and have grown our team.
We enhanced employee benefits, rewarded performance and protected incentives.
We also moved ahead on expanding Edwards research and production facilities around the world.
We adjusted our agreements to support hospitals as they navigated COVID and additionally, we provided extra support to the communities where our employees live and work.
In fact, we recently converted one of our facilities into a mass COVID vaccination site to support the community of 3 million people, where our company is headquartered.
As a company, we expect that Edwards will be positioned even stronger and be able to help more patients than ever before as the world emerges from the pandemic.
Now, turning to our first quarter results.
We reported $1.2 billion in sales this quarter, up 5% on a constant currency basis from a year ago.
Recall that our guidance assumed Q1 sales would be in line with the first quarter of last year, which was largely unaffected by COVID.
We were pleased with how sales improved as the quarter progressed.
In TAVR, first quarter global sales were $792 million, up 4% on an underlying basis.
The SAPIEN 3 Ultra platform remains differentiated with low complication rates, ease of use and significant potential for length of stay efficiency.
Our average selling prices were stable and we estimated that global TAVR procedure growth was comparable with our growth.
In the US, our Q1 TAVR sales were flat with fourth quarter and year-ago results and we estimate that overall US procedure growth was comparable.
Consistent with our guidance on the Q4 earnings call in late January, COVID stressed the global healthcare system during the winter months.
We are encouraged, however, that US TAVR procedures grew as COVID hospitalizations decrease and vaccinations increased during the quarter.
Small and medium-sized centers played a valuable role in serving patients during the quarter.
We continue to activate new centers this quarter as we have been throughout the pandemic.
This demonstrates the clear interest of many smaller centers to provide state-of-the-art care for structural heart patients.
Outside the US, in the first quarter, we estimated TAVR procedures grew in the low-double digits on a year-over-year basis and Edwards growth was comparable.
Although we are off to a strong start, the slow vaccination progress outside the US provides uncertainty for the remainder of the year.
Edwards underlying TAVR growth in Europe versus the prior year was in the mid-single digit range.
Edwards growth in countries with lower TAVR adoption rates outpaced countries where the therapy is more established.
Although TAVR centers were more prepared to treat patients, patient flow was disrupted due to regional lockdowns and uncertainty among patients about the urgency of their disease.
Sales growth in Japan and other countries was strong as aortic stenosis remains an immensely undertreated disease and we remain focused on increasing the availability of TAVR therapy.
As previously noted, we received approval earlier this month in Japan for SAPIEN 3 in patients at low surgical risk.
We anticipate increased treatment rates when reimbursement is approved later this year.
In addition to geographic expansion of our TAVR therapies, we remain dedicated to pursuing indication expansions.
Our groundbreaking early TAVR trial is focused on patients who have severe aortic stenosis, but without recognized symptoms and who do not meet the current guidelines for valve replacement.
We expect enrollment to increase as we and participating sites are motivated to complete enrollment of the trial this year.
I'm also pleased to report that we received FDA approval for a pivotal trial for TAVR in moderate AS patients as we expect enrollment to begin later this year.
Based on recent trials, we're learning on what was once thought of as the benign precursor to severe aortic stenosis may actually be associated with higher rates of morbidity and mortality than previously recognized.
Thus, we believe TAVR may be a future treatment option for these patients.
Separately, last week, we received SAPIEN 3 CE Mark approval to begin treating patients with a previously repaired or replaced valve in the pulmonic position.
Looking ahead to the upcoming virtual EuroPCR meeting next month, we expect long-term follow-up data from our European Registry on SAPIEN 3 as well as the late-breaking clinical trial results on low risk bicuspid patients.
In summary, based on the strength we saw at the end of the first quarter, we have confidence that the underlying TAVR sales will grow in the 15% to 20% range in 2021.
We expect continued near-term COVID-related regional disruptions and a more normalized second half of the year.
We remain confident that this large global opportunity will exceed $7 billion by 2024, which implies a compounded annual growth rate in the low double-digits.
We're enrolling five pivotal trials across our differentiated portfolio of technologies to support patients suffering from tricuspid and mitral valve disorders.
This quarter, we progress with the enrollment of our three CLASP pivotal trials for PASCAL.
We continue to expect approval for patients with DMR late next year.
This is expected to be the first commercial approval of the PASCAL system in the US.
We've also begun treating patients with EVOQUE TR in the TRISCEND II randomized pivotal trial in accordance with the FDA's breakthrough pathway designation.
This trial will evaluate the safety and effectiveness of the EVOQUE tricuspid valve replacement system for patients with severe tricuspid regurgitation.
In addition, the first patients were recently treated with our next-generation Transcatheter Mitral Replacement System called EVOQUE Eos through the MISCEND study.
This study will evaluate the safety and performance of EVOQUE Eos, which is designed to advance the treatment of patients with mitral regurgitation with low profile valve delivered through a sub-30 French transfemoral delivery system.
We believe our two platform replacement strategy with SAPIEN M3 and EVOQUE Eos strongly positions us to be the leader in treating these underserved patients.
These include longer-term outcomes for transcatheter mitral repair from our CLASP trial and the first report of 30-day outcomes with EVOQUE tricuspid replacement from our TRISCEND study.
Turning to our results.
First quarter global sales were $16 million, driven by continued adoption of our PASCAL system and activation of more centers across Europe.
Assuming diminishing COVID-related impact, we expect to ramp up sales throughout the year.
We remain confident in our 2021 sales guidance of $80 million as we advance commercialization, staying focused on physician training, procedural success and patient outcomes.
Adoption and favorable real-world clinical outcomes remain key drivers to transforming treatment.
In summary, we are making meaningful progress toward our 2021 milestones and we continue to estimate the global TMTT opportunity to reach approximately $3 billion by 2025.
We remain committed to transforming the treatment of patients with mitral and tricuspid valve disease around the world.
In Surgical Structural Heart, first quarter 2021 global sales was $213 million, increased 7% on an underlying basis over the prior year.
Despite a soft start associated with COVID, we are encouraged by the improvement across all regions over the course of the quarter.
Notably, growth was lifted by premium products and improved as declining COVID cases enabled more hospitals to resume treating surgical structural heart patients.
We remain very encouraged by the steady global adoption of Edwards RESILIA tissue valves, including continued adoption of the INSPIRIS RESILIA aortic surgical valve.
We anticipate that adoption will be bolstered by the five-year data from our COMMENCE clinical trial presented at the recent meeting of the Society of Thoracic Surgeon, which demonstrates the excellent durability of this tissue technology.
And we're pleased that in the first quarter, we initiated sales of INSPIRIS in China.
Sales in the US also continue to gain traction with KONECT RESILIA, the first preassembled aortic tissue valve conduit for patients who require replacement of the valve, route and ascending aorta, a critical unmet patient need.
Finally, we're pleased to announce that we received regulatory approval with reimbursement in Japan for our MITRIS RESILIA valve, a new mitral valve incorporating our newest tissue technology.
Yesterday, in Japan, we performed our first commercial cases with this differentiated innovation.
In summary, we have confidence in our full-year 2021 underlying sales growth in the high single-digit range for Surgical Structural Heart, driven by market adoption of our premium technologies.
We continue to believe the current $1.8 billion Surgical Structural Heart market will grow in the mid-single digits through 2026.
In Critical Care, first quarter sales of $196 million increased 4% on an underlying basis, driven by increased sales of technologies for both the operating room and intensive care units.
HemoSphere orders increased as hospital capital spending began to show signs of recovery.
Demand for our products used in high-risk surgeries remain strong and our ClearSight non-invasive finger cuff used in elective procedures also recovered to near pre-COVID levels.
Our TruWave disposable pressure monitoring devices used in the ICU remained in demand due to elevated hospitalizations in both the US and Europe at the beginning of Q1.
We continue to expect full year 2021 underlying sales growth in the high single-digit range for critical care.
We remain excited about our pipeline of critical care innovations as we continue to shift our focus to smart recovery technologies designed to help clinicians make better decisions for their patients.
Well, we are encouraged by the start to our year.
Despite COVID still impacting the global healthcare system in the first quarter, we were able to post positive year-over-year sales growth across all of our product lines and regions as our advanced therapies helped patients globally.
Total sales grew 5% year-over-year on an underlying basis, which was better than the flat growth we expected when we gave guidance for the first quarter back in January.
This stronger-than-expected sales performance fell through to the bottom line, resulting in adjusted earnings per share of $0.54, which was 8% higher than the first quarter of 2020.
The improvement in our sales performance during the quarter was choppy, but we exited the quarter in a stronger position and that gives us continued confidence in our outlook for the balance of the year.
While macro conditions remain variable across our key geographies, we're projecting total sales in the second quarter to grow sequentially to between $1.25 billion and $1.33 billion resulting in adjusted earnings per share of $0.54 to $0.60.
As our business continues to rebound from the impact of COVID, we expect sales to strengthen and expenses to grow as travel and clinical trials ramp up.
We are maintaining all of our previous sales guidance ranges for 2021.
For total Edwards, we expect sales of $4.9 billion to $5.3 billion; for TAVR, $3.2 billion to $3.6 billion; for TMTT, approximately $80 million; for Surgical Structural Heart, $800 million to $900 million; and for Critical Care, $725 million to $800 million.
And based on our first quarter earnings, we are raising full year adjusted earnings per share guidance to $2.07 to $2.27, up from $2 to $2.20.
So, now I'll cover additional details of our results.
For the first quarter, our adjusted gross profit margin was 76% compared to 76.7% in the same period last year.
This reduction was driven by a negative impact from foreign exchange and incremental costs associated with responding to COVID, partially offset by improved manufacturing efficiencies.
We continue to expect our 2021 adjusted gross profit margin to be between 76% and 77%.
Selling, general and administrative expenses in the first quarter were $331 million or 27.2% of sales compared to $308 million in the prior year.
This increase was primarily driven by the strengthening of OUS currencies, primarily the euro and personnel-related costs, partially offset by reduced travel spending resulting from COVID.
As I mentioned earlier, we anticipate our spending will increase during the year as travel restrictions subside and we resume a more normalized operating environment.
We continue to expect full year 2021 SG&A as a percentage of sales, excluding special items, to be 28% to 29%, similar to pre-COVID levels.
Research and development expenses in the quarter grew 10% to $207 million or 17% of sales.
This increase was primarily the result of continued investments in our transcatheter innovations.
For the full year 2021, we continue to expect R&D as a percentage of sales to be in the 17% to 18% range, similar to pre-COVID levels as we invest in developing new technologies and generating evidence to expand indications for TAVR and TMTT.
Turning to taxes, our reported tax rate this quarter was 13.1%.
This rate included a 290-basis-point benefit from the accounting for stock-based compensation.
We continue to expect our full year rate in 2021, excluding special items, to be between 11% and 15%, including an estimated benefit of 4 percentage points from stock-based compensation accounting.
Foreign exchange rates increased first quarter reported sales growth by 280 basis points or $30 million compared to the prior year.
At current rates, we now expect an approximate $60 million positive impact or about 1% to full year 2021 sales compared to 2020.
FX rates negatively impacted our first quarter gross profit margin by 150 basis points compared to the prior year.
Relative to our January guidance, FX rates positively impacted our first quarter earnings per share by about $0.01.
Free cash flow for the first quarter was $195 million defined as cash flow from operating activities of $301 million, less capital spending of $106 million.
Before turning the call back over to Mike, I'll finish with an update on our balance sheet and share repurchase activities.
We continue to maintain a strong and flexible balance sheet with approximately $2.1 billion in cash and investments as of March 31, 2021.
We repurchased 3.6 million shares for $303 million during the first quarter and have approximately $300 million remaining in our share repurchase authorization.
We plan to continue to execute our strategy of offsetting dilution from incentive stock compensation as well as opportunistically reducing our shares outstanding over time.
Average shares outstanding during the first quarter were 631 million, down approximately 1 million from the prior quarter.
We continue to expect average diluted shares outstanding for 2021 to be between 630 million and 635 million.
So with that, I'll pass it back to Mike.
We remain confident in our long-term patient-focused strategy on our innovation pipeline.
To serve the many patients suffering from structural heart disease, we have never stopped investing in our people, our innovative technologies and our new growth capacity.
As a company, we expect that Edwards will be positioned even stronger and in a position to help more patients than ever as the world fully emerges from this pandemic.
So, Diego, with that, we're ready to take questions now.
In order to allow for broad participation, we ask that you please limit the number of questions to one, plus one follow-up.
If you have additional questions, please reenter the queue and management will answer as many participants as possible during the remainder of the call.
 Assistant:

Chosen response:
compname reports qtrly earnings per share of $0.54.
qtrly earnings per share $0.54.
continued confidence in sales outlook; fy 2021 adjusted earnings per share guidance of $2.07 to $2.27 increased $0.07.
sees q2 2021 total sales to be between $1.25 and $1.33 billion & adjusted earnings per share of $0.54 to $0.60.
qtrly sales grew 8% to $1.2 billion; underlying sales grew 5%.
overall, full year 2021 sales guidance remains at $4.9 to $5.3 billion.
qtrly global transcatheter aortic valve replacement sales of $792 million, up 7% on reported basis.
remains confident that tavr global opportunity will exceed $7 billion by 2024.
continues to anticipate underlying tavr sales growth in 15 to 20 percent range in 2021.


Prompt:
Human: Just after the close of regular trading, Edwards Lifesciences released second quarter 2021 financial results.
These statements include, but aren't limited to: financial guidance and expectations for longer-term growth opportunities, regulatory approvals, clinical trials, litigation, reimbursement, competitive matters and foreign currency fluctuations.
Finally, a quick reminder that when using terms underlying and adjusted, management is referring to non-GAAP financial measures.
Otherwise, they are referring to GAAP results.
"We were encouraged by the clear signs of recovery during the second quarter.
Vaccine adoption in key regions have contributed to an increasing number of patients seeking and, most importantly, receiving treatment.
At Edwards, our dedication of providing innovative solutions for people fighting cardiovascular disease around the world motivates our employees every day.
We never stopped our aggressive pursuit of breakthrough technologies with the potential to help an even broader group of patients.
Last year, we noted that we're in the midst of the onset of this tragic global pandemic.
There were more than 20,000 patients around the world who were treated with our SAPIEN valves in that second quarter.
This quarter, more than 30,000 patients were treated with SAPIEN valves, an indication that more patients are benefiting from our life changing technologies than ever before.
The comparisons of 2020 are challenging as last year marked an extraordinary time for structural heart patients, especially during the second quarter, when the COVID surge overwhelmed hospitals and undermined regular ongoing care.
Patients and their doctors around the world were forced to weigh the risk of COVID versus the severe effects of progressive heart valve disease.
Fortunately, we are now experiencing encouraging signs of increased patient confidence to visit their position.
Turning now to our recent results.
We are pleased to report better than expected second quarter sales of $1.4 billion, up 44% on a constant currency basis from a year ago period.
All four product groups delivered large increases in sales led by TAVR.
Total company sales increased sequentially versus Q1.
And importantly, sales grew 11% on a two year compounded annual basis, compared to the strong pre-pandemic second quarter of 2019.
While hospital heart teams have not been reporting significant backlogs, we believe that procedure rates in Q2 were lifted because patients who previously postponed their doctor visits returned and were treated.
We are raising our full year outlook for 2021.
We remain cautious about the mix trends of the recovery from the pandemic and additionally, we expect a more pronounced summer seasonality associated with the pent-up demand for vacations.
Yet, given the better than expected year-to-date performance and momentum exiting the quarter, we now expect total sales growth to be in the high teens versus our previous guidance of mid-teens.
In TAVR, second quarter global sales were $902 million, up 48% on an underlying basis versus the year ago period or 14% on a two year compounded annual basis.
We estimate global TAVR procedure growth was comparable with Edwards' growth in the second quarter.
Globally, our average selling price remains stable as we continue to exercise price discipline.
We continue to be optimistic about the long-term potential of TAVR because of its transformational impact on the many patients suffering from aortic stenosis and because many remain untreated.
In a recent article in the American Journal of Cardiology reported, it reported on the survival of severe AS patients since the introduction of TAVR in 2008.
The analysis included clinical data on 4,000 patients obtained at the mass general and concluded that in the TAVR era overall survival of patients with severe AS has doubled.
The long-term potential, along with the rebound in procedures reinforces our view that this global TAVR opportunity will exceed $7 billion by 2024, up from more than $5 billion today.
And beyond 2024, bolstered by two pivotal trials currently being enrolled, we believe the impact of treating this deadly disease before symptoms and before the disease becomes severe has the potential to transform the lives of even more patients.
In the U.S., our TAVR sales grew sequentially over Q1 and over 50% on a year-over-year basis.
Our U.S. TAVR volumes were well above pre-COVID levels as our two year compounded annual growth rate was in the mid-teens.
We estimate that our share of procedures was stable.
We are encouraged that U.S. TAVR procedures grew as vaccinations increase and patients decided to seek treatment during the quarter.
Growth was broad based across both high and low volume centers.
Outside the U.S., in the second quarter, our sales grew approximately 40% on a year-over-year basis and we estimate that total TAVR procedure growth was comparable.
On a two year compounded annual basis, we estimate that sales grew in the low double-digits in the second quarter versus 2019.
And although we are encouraged by the strong results, vaccination progress outside the U.S. creates uncertainty for the remainder of the year.
Long-term goal, we see excellent opportunities for OUS growth as we believe international adoption of TAVR therapy remains quite low.
TAVR procedure and Edwards' growth in Europe, also rebounded significantly on a year-over-year basis.
Edwards' growth was driven by the continued strong adoption of our SAPIEN platform and was broad based across all countries.
Patient flow recovered throughout the quarter, although it remains suboptimal in several countries and uncertainty among patients about the urgency of their disease.
In Japan, we continue to see strong TAVR adoption, driven by SAPIEN 3 and broad growth across centers of all sizes.
We remained focused on expanding the availability of TAVR therapy throughout the country, driven by the fact that aortic stenosis remains an immensely undertreated diseases among this large elderly population.
As previously announced, we received the approval earlier in the second quarter for SAPIEN 3 in patients at low surgical risk and we continue to anticipate increased treatment rates in Japan when reimbursement is approved in Q3.
Now, turning to several recent TAVR clinical trial highlights, last week at the TVT Conference, data on the Vancouver's TAVR Economic Study were presented which further demonstrated the favorable economic value of our SAPIEN 3 platform, a comparison of 1100 patients was conducted to assess the economic impact of next day discharge.
The SAPIEN 3 platform with a minimalist approach achieved better patient outcomes 30-days post-procedure and enhanced resource utilization, which resulted in meaningful cost improvements.
Also at TVT, results from the PARTNER 3 bicuspid registry showed similar outcomes to other TAVR patients, as well as significant improvement in patient symptoms and quality of life.
We remain as optimistic as ever about the long-term growth opportunity as patients and clinicians increasingly understand the significant benefits of TAVR therapy, supported by the substantial body of compelling evidence.
In summary, based on the strength that we saw in the second quarter, we have confidence that the underlying TAVR sales will grow around 20% in 2021 versus our previous expectation of 15% to 20% growth.
Turning to TMTT; we continue to be very pleased with our clinical outcomes as they remain a key driver to treating many patients in need and unlocking the significant long-term growth opportunity.
We continue to be committed to ensuring procedural success and employing a high touch clinical support model.
We are progressing in the enrollment of five pivotal trials across our differentiated portfolio to support therapy for patients suffering from mitral and tricuspid regurgitation.
We have initiated use of the PASCAL precision platform and are currently enrolling CLASP and early physician feedback has been positive.
We remain on track for U.S. approval of PASCAL for patients with DMR late next year.
We advanced our clinical experience with transcatheter replacement as we continued enrollment with our TRISCEND 2 pivotal trial for EVOQUE tricuspid replacement.
We also continue to treat patients with both our transcatheter mitral replacement therapies through the ENCIRCLE pivotal trial for SAPIEN M3 and the MISCEND Study for EVOQUE Eos.
In mitral, an analysis of EuroPCR of over 2,100 commercially treated patients provided further evidence of the efficacy, safety, and ease of use of the PASCAL platform.
In addition, two year results from the CLASP study of PASCAL highlighted strong and sustained MR reduction, as well as high survival rates for both FMR and DMR patients.
And in tricuspid, 30-day outcomes for our TRISCEND study for the EVOQUE tricuspid valve replacement system demonstrated favorable technical feasibility and safety, along with significant improvements is tricuspid regurgitation and quality of life for patients.
Similarly, outcomes for PASCAL tricuspid valve repair resulted in significant TR reduction, low complication rates, and sustained functional and quality of life improvements at six months.
Turning to the financial performance in TMTT, global sales of $22 million were driven by the continued adoption of our PASCAL platform, as we activated more centers across Europe.
We now expect 2021 TMTT sales of $80 million to $100 million, up from our previous sales guidance of $80 million.
We continue to estimate the global TMTT opportunity to triple to approximately $3 billion by 2025 and we are pleased with our progress toward advancing our vision to transform the lives of patients with mitral and tricuspid valve disease.
In Surgical Structural Heart, record second quarter global sales of $237 million was up 42% on an underlying basis versus a year ago period.
Revenue growth was lifted by increased adoption of our premium RESILIA technologies around the world and rebounding surgical aortic treatment rates in the U.S.
We were encouraged by steady improvement in global surgical procedure volumes, as we progress through the quarter.
We experienced strong year-over-year adoption of Edwards RESILIA tissue valves including continued adoption of the INSPIRIS RESILIA aortic surgical valve, the KONECT RESILIA aortic tissue valve conduit, as well as our new MITRIS RESILIA surgical mitral valve, which was launched in Japan in the second quarter.
We believe the adoption of RESILIA tissue valves will be further bolstered by the four year mitral data from our COMMENCE clinical trial presented at the recent meeting of the American Association of Thoracic Surgery, as well as the growing body of RESILIA clinical evidence, which demonstrates excellent durability of this tissue technology even in the high pressure mitral position.
In summary, given the strength of our year-to-date performance, we are raising our full year Surgical Structure Heart guidance, we now expect underlying sales growth in the mid-teens versus our previous expectation of high-single-digit growth.
We continue to believe the current $1.8 billion Surgical Structure Heart market will grow in the mid-single-digits through 2026.
In Critical Care, second quarter global sales were $215 million, up 27% on an underlying basis versus the year ago period.
Growth was driven by balanced contributions from all product lines led by HemoSphere sales in the U.S. as hospital capital spending continues to show signs of recovery.
Demand for products used in high-risk surgeries remains strong, and demand for the ClearSight non-invasive finger cuff used in elective procedures accelerated following its recovery to pre-COVID levels in the first quarter.
And Smart Recovery received FDA clearance for the software algorithm that powers our Hypotension Prediction Index, HPI on HemoSphere and the Acumen IQ cuff.
The non-invasive Acumen IQ cuff provides clinicians with an important new tool to reduce hypotension in a broader range of patients including those that do not require an arterial line.
In summary, given the strength of our year-to-date performance, we are raising our full year Critical Care guidance to low-double-digits versus our previous expectation of high-single-digit growth.
We remain excited about our pipeline of Critical Care innovations as we continue to shift our focus to smart recovery technologies designed to help clinicians make better decisions for their patients.
I am pleased with the momentum we experienced as we exited the first quarter continued in the second quarter across all of our product lines.
While we are expecting some headwinds due to the summer vacation schedule and flare-ups of COVID in various regions, we are optimistic about favorable business conditions for Edwards.
Total sales grew 49% year-over-year, as patients increasingly were more confident about pursuing treatment in the second quarter.
Of course, the unusually high growth rate also reflects depressed sales in last year's second quarter due to COVID.
Our underlying two year compounded growth rate in the second quarter was 11%, another indicator that conditions are improving.
The much stronger than expected sales performance lifted by unexpectedly high procedure volume fell through to the bottom-line resulting in adjusted earnings per share of $0.64.
Based upon our strong start to the year and positive outlook, we are raising our previous sales guidance ranges for 2021.
For total Edwards, we now expect sales of $5.2 billion to $5.4 billion, for TAVR $3.4 billion to $3.6 billion, for TMTT, $80 million to $100 million, for Surgical Structural Heart, $875 million to $925 million, and for Critical Care, $800 million to $850 million.
Now, regarding second half margins, we are intending to resume a higher rate of spending as commercial activities increase, especially as we continue to build our clinical and field teams to support our planned new product introductions in multiple regions.
In addition, we expect growth in research and development expenses as our clinical trial activities increase.
The combination of these actions contributes to our more moderated guidance for margins in the second half.
We expect our full year adjusted earnings per share guidance at the high-end of our previous range of $2.07 to $2.27.
While public health conditions remain uncertain, we are projecting total sales in the third quarter to grow sequentially to between $1.29 billion and $1.37 billion resulting in adjusted earnings per share of $0.50 to $0.56.
Now, I will cover additional details of our results.
For the second quarter, our adjusted gross profit margin was 75.9%, compared to 74.4% in the same period last year when we experienced lower sales and substantial cost responding to COVID.
This increase was also driven by a more profitable product mix, partially offset by a negative impact from foreign exchange.
We continue to expect our 2021 adjusted gross profit margin to be between 76% and 77%.
Selling, general, and administrative expenses in the second quarter were $374 million or 27.2% of sales, compared to $275 million in the prior year.
This increase was primarily driven by personnel-related costs including performance-based compensation, increased commercial activities compared to the COVID impacted prior year, and the strengthening of OUS currencies, primarily the euro.
We are planning to see a ramp up in the expenses noted above in the second half as COVID-related restrictions subside to support continued growth.
We continue to expect full year 2021 SG&A expenses as a percent of sales, excluding special items to be 28% to 29%.
Research and development expenses in the quarter grew 24% to $225 million, or 16.4% of sales.
This increase was primarily the result of continued investments in our transcatheter innovations including increased clinical trial activity.
We are pointing ramp up expenses in the second half as we invest in developing new technologies and generating evidence to expand indications for TAVR and TMTT.
For the full year 2021, we continue to expect research and development expenses as a percentage of sales to be in the 17% to 18% range.
During the second quarter, we recorded a $103 million net reduction in the fair value of our contingent consideration liabilities which benefited earnings per share by $0.14.
This gain was excluded from the adjusted earnings per share of $0.64 that I mentioned earlier.
This reduction reflects accounting adjustments associated with reduced expectations of making future milestone payments for previous acquisitions.
This accounting impact does not impact our 2021 guidance.
Turning to taxes, our reported tax rate this quarter was 10.3%.
This rate included a larger than expected 590 basis point benefit from the accounting for stock-based compensation.
We continue to expect our full year rate in 2021 excluding special items to be between 11% and 15% including an estimated benefit of 5 percentage points from stock-based compensation accounting.
Foreign exchange rates increased second quarter reported sales growth by 450 basis points or $29 million, compared to the prior year.
At current rates, we now expect an approximate $70 million positive impact or about 1.5% to full year 2021 sales, compared to 2020.
Foreign exchange rates negatively impacted our second quarter gross profit margin by 180 basis points compared to the prior year.
Relative to our April guidance, FX rates positively impacted our second quarter earnings per share by a penny.
Free cash flow for the second quarter was $457 million, defined as cash flow from operating activities of $526 million, less capital spending of $69 million.
Before turning the call back over to Mike, I'll finish with an update on our balance sheet and share repurchase activities.
We continue to maintain a strong and flexible balance sheet with approximately $2.6 billion in cash and investments as of June 30.
Average shares outstanding during the second quarter were 630 million, down from the prior quarter as we repurchased 1.3 million shares during the second quarter for $112 million.
In the first half of the year, we repurchased 4.9 million shares at an average price of $85.
In May, we obtained Board approval to increase our share repurchase authorization and currently have approximately $1.2 billion remaining under the program.
We now expect our average diluted shares outstanding for 2021 to be at the lower end of our 630 to 635 million guidance range.
And with that, I'll pass it back to Mike.
So, we are pleased with our performance in the first half of 2021.
To serve the many patients suffering from Structural Heart Disease, we never stopped investing in our people, our innovative technologies and our new growth capacity.
As patients and clinicians increasingly recognize the significant benefits of transcatheter-based technologies, supported by the substantial body of compelling evidence, we remain optimistic about the long-term growth opportunity.
Our foundation of leadership, combined with a robust product pipeline positions us well for continued success.
This event will include updates on our latest technologies, the use on longer term market potential, as well as our outlook for 2022.
Please look for more information on our website next month.
With that, we are ready to take questions now, Diego.
In order to allow for broad participation, we ask that you please limit the number of questions to one, plus one follow-up.
If you have any additional questions, please reenter the queue and management will answer as many participants as possible during the remainder of the call.
 Assistant:

Chosen response:
compname reports quarterly earnings per share of $0.78, quarterly adjusted earnings per share of $0.64.
qtrly earnings per share $0.78; qtrly adjusted earnings per share was $0.64.
2021 sales guidance raised to $5.2 billion to $5.4 billion from $4.9 billion to $5.3 billion.
qtrly sales grew 49% to $1.4 billion; underlying sales grew 44%.
qtrly reported transcatheter aortic valve replacement sales of $902 million, up 52% on a reported basis.
projects q3 sales to be between $1.29 billion and $1.37 billion, adjusted earnings per share of $0.50 to $0.56.
edwards lifesciences sees fy underlying tavr sales growth of around 20% versus previous sales growth expectation of 15% to 20%.
recorded reduction in fair value of contingent liabilities in quarter, a $0.14 benefit that was excluded from adjusted eps.
raising fy 2021 adjusted earnings per share guidance to the high end of the previous $2.07 to $2.27 range.


Prompt:
Human: Just after the close of regular trading, Edwards Lifesciences released fourth quarter 2020 financial results.
These statements include, but aren't limited to financial guidance and expectations for longer-term growth opportunities, regulatory approvals, clinical trials, litigation, reimbursement, competitive matters, and foreign currency fluctuations.
Finally, a quick reminder that when using the terms underlying and adjusted, Management is referring to non-GAAP financial measures, otherwise they are referring to GAAP results.
Before we discuss fourth quarter's results and our expectations for 2021 and beyond, I want to spend a minute reflecting on 2020.
Structural heart patients were severely impacted beginning in March, experiencing significant difficulties entering the system, which also had a profound impact on second quarter procedures and even though healthcare systems adapted to the challenge, the resurgence of COVID that began late in the year continues to impact structural heart patients, who need care.
Despite unprecedented challenges throughout the year, I'm proud of our team's steadfast dedication to our patient-focused strategy.
We continue to invest in developing solutions that extend lives, improve the quality of life and offer greater value for the healthcare system.
Along those lines, we celebrated some exciting milestones in 2020 that directly impacted patients.
In TAVR, despite headwinds, more than 100,000 patients benefited from treatment with SAPIEN valves worldwide.
In Surgical Structural Heart, we launched our KONECT aortic valved conduit and Inspiris became the leading aortic surgical valve worldwide.
We've seen early positive clinical evidence across the TMTT platform, physician feedback is encouraging and patient outcomes have been distinguished.
And in Critical Care, we met the increased demand for core pressure monitoring products due to the pandemic, and we're proud that we were able to help over 1 million patients globally with our monitoring technology.
To support our innovation and growth, we continued to invest in our people and our infrastructure.
During the year when job losses impacted many families across the globe, Edwards prioritized protecting our employees and we grew our team to 15,000 worldwide.
We continue to make strategic R&D investments that enabled us to fuel progress and despite this unique environment and extraordinary prior year growth, underlying sales grew 1% in 2020 to $4.4 billion, which is a reflection of the life-threatening needs of the patients that Edwards serves.
Looking into 2021, while we expect the pandemic to continue to impact the global healthcare system, we remain optimistic about the year ahead.
As we indicated at our investor conference, we expect full year sales between $4.9 billion and $5.3 billion representing mid-teens underlying growth on a year-over-year basis.
Based on our year-to-date experience, we expect Q1 sales to be slightly down sequentially, although in line with the first quarter of last year, which was largely unaffected by COVID.
Our 2021 guidance continues to assume COVID will stress the global healthcare system, it leads through the winter months with procedures ramping later in the year.
This expectation assumes that vaccines are effective and widely administered by mid-year 2021 and hospitals continue to improve their ability to treat non-COVID patients, who need care for conditions such as aortic stenosis and even though we expect the COVID impact on sales at the start of the year, we are continuing to invest now in our innovations that have the tremendous opportunity to enhance patients' lives and bring significant value to the healthcare system.
We recognize the uncertain impact and timeframe for recovery from this unique global challenge, but we remain confident that our patient-focused strategy of continued investment positions us well and even stronger when the world emerges from the pandemic.
Now turning to our quarterly results, consistent with our guidance at our investor conference last month, fourth quarter sales of $1.2 billion were in line with the year ago period when Edwards' grew nearly 20% on an underlying basis, reflecting the strength, even during the ongoing pandemic.
Full-year 2020 global sales -- global TAVR sales of 2.9 billion increased 4% on an underlying basis over the prior year.
2020 growth reflected increased sales in every region lifted by greater awareness of the benefits of TAVR therapy and increased adoption of our leading technologies.
Based on the strength of the SAPIEN platform, we retained our strong leadership position while also maintaining our disciplined price strategy.
In the fourth quarter, global TAVR sales were $776 million, up slightly from the year ago period.
We estimate global TAVR procedure growth was comparable with our growth and globally, average selling prices were stable.
Although the rollout was somewhat impacted, SAPIEN 3 Ultra now represents more than two-thirds of our global TAVR sales and physician feedback on ease of use and improved paravalvular leak performance remains outstanding.
In the U.S., our Q4 TAVR sales were approximately level with the third quarter and declined in the mid-single digit range versus last year.
We estimate overall Q4 U.S. procedures declined at a comparable rate.
Recall that our U.S. TAVR sales in the year ago period increased nearly 40% driven by the strong PARTNER 3 evidence that led to a third quarter 2019 indication expansion and improved patient access under an updated TAVR NCD.
We expect these factors to resume lifting treatment rates, as the pandemic subsides.
Growth at smaller TAVR centers, which are providing local access to aortic stenosis patients was more than offset by declines in larger accounts, where referrals have been disrupted by the resurgence of COVID.
Outside the U.S., in the fourth quarter, we estimated total TAVR procedures grew in the high single digits on a year-over-year basis and Edwards growth was comparable.
Edwards' underlying TAVR growth in Europe versus the prior year was in the mid-single digit range.
Growth was driven by continued strong adoption of our SAPIEN platform and was more pronounced in countries that were more severely impacted by the first wave of COVID in 2020.
Outside of the U.S. and Europe, we continue to see very good TAVR adoption in the fourth quarter.
Sales growth in Japan, Australia, and Korea were strong, where therapy adoption is still low.
In Japan, we continue to anticipate providing SAPIEN 3 for low-risk patients prior to the end of this year.
In China, which was a minor contributor to Q4 sales, we remain focused on growing our dedicated clinical support team to assist leading hospitals, as they build their TAVR programs.
In addition to geographic expansion of our TAVR therapies, we remain focused on indication expansion.
We talked at our recent Investor Conference about our early TAVR trial, which is focused on the treatment of asymptomatic patients.
Enrollment is now two-thirds complete and we remain optimistic that the trial will be fully enrolled in 2021.
Separately, we continue to plan to initiate an important pivotal trial for moderate aortic stenosis to determine the optimal time to treat patients, who have this progressive disease.
We believe that some patients may benefit from earlier treatment, when they have moderate AS rather than risking irreversible damage as the disease progresses.
We're optimistic about the potential of this trial and we anticipate FDA approval to begin enrollment this year.
In November 2020, we are pleased that the American Heart Association announced the launch of an initiative, called Target Aortic Stenosis, a quality improvement program aimed to develop optimal standards of care.
The program features a learning collaborative comprised of experts and volunteers from pilot hospital locations around the nation.
AHA noticed that if left untreated, the condition worsens and patients with severe aortic stenosis have a survival rate as low as 50% at two years.
Aortic stenosis is also a risk factor for heart failure, a costly disease projected the cost the US Healthcare System $70 billion in 2030.
In summary, we continue to anticipate 2021 underlying TAVR sales growth in the 15% to 20% range, as we shared at our Investor Conference.
We expect continuing COVID related challenges early in 2021, turning to a more normalized growth environment in the second half of the year.
We remain confident in this large global opportunity will exceed $7 billion by 2024, which implies a compounded annual growth rate in the low double-digit range.
Turning to Transcatheter Mitral and Tricuspid Therapies or TMTT, we've made meaningful progress moving from early stage development to clinical use across all of our platforms with over 3,000 patients treated to-date.
To transform treatment and unlock the significant long-term growth opportunity, we remain focused on three key value drivers, a portfolio of differentiated therapies, positive pivotal trial results to support approvals and adoption and favorable real-world clinical outcomes.
In Europe, PASCAL leaflet repair continues to deliver excellent results.
In Q4, we continued the introduction of PASCAL Ace for mitral and tricuspid patients and we're pleased with the early real world results and positive physician feedback regarding its differentiated features and narrower profile.
We plan to make both PASCAL Ace and PASCAL available on a single next generation platform called the PASCAL Precision System.
This new system is designed to elevate the user experience with enhanced maneuverability, navigation, and stability enabling improved procedural precision.
From a clinical perspective, in this challenging near-term environment, we are experiencing a negative impact to clinical trial enrollment.
However, our team and research partners are highly motivated to build on the differentiated data presented in 2020 and expand our body of clinical evidence in this exciting field.
We will look forward to presenting meaningful follow-up data across our portfolio at medical meetings later this year.
We progressed in the enrollment of our three CLASP pivotal studies.
We also received approval for use of the Edwards PASCAL Precision System in these pivotal studies.
The company is still expects U.S. approval of PASCAL for patients with DMR late next year.
We continue to enrolling SAPIEN M3 pivotal study and Circle designed to demonstrate strong safety and efficacy for transcatheter mitral replacement and we're on track to initiate our first clinical experience with our next generation EVOQUE Mitral Replacement System.
The EVOQUE tricuspid replacement study, TRISCEND continue to enroll in Q4 and we're on track to initiate the TRISCEND II randomized pivotal study based on FDA's Breakthrough pathway designation.
We look forward to bringing this important treatment option to more patients that are in significant need.
Turning to recent news, we commenced CMS for ensuring mitral valve disease patients have improved access to therapy options through the updated NCD.
This update, which includes coverage with Evidence Development achieves the balance of patient access with high quality outcomes.
Fourth quarter global sales were $13 million, representing sequential improvement versus Q3.
Full year 2020 sales were $42 million.
We expect continuing COVID related challenges early in 2021, but we anticipate a ramp up through the rest of the year.
We maintain our beliefs that the total TMTT sales will approximately double in 2021.
We continue to estimate the global TMTT opportunity to reach $3 billion by 2025 with significant growth beyond.
We remain committed to transforming the treatment of these patients and believe our portfolio strategy positions us well for ultimate leadership.
In Surgical Structural Heart, full-year 2020 global sales of $762 million decreased 10% on an underlying basis over the prior year, in line of our guidance, with our guidance of 5% to 15% decline.
Fourth quarter sales of $204 million held steady with Q3 and declined 2% year-over-year on an underlying basis, which was below our previous expectation for positive growth.
Over the course of the quarter, hospitals experience an influx of COVID patients limiting surgical procedures.
Despite this impact, we are encouraged that the U.S. achieve positive growth in Q4, driven by adoption of our newest premium technologies.
We remain very encouraged by the steady global adoption of Edwards Premium RESILIA tissue valves, including the Inspiris aortic surgical valve and the recently launched KONECT aortic valved conduit.
In the fourth quarter, Inspiris valve utilization grew in all regions, and we continue to add new centers.
Sales in the U.S. are ramping for KONECT, the first preassembled ready to implant aortic tissue valve conduit for patients, who require replacement of the aortic valve, root, and the ascending aorta, which is a critical unmet patient need.
We continue to focus on comprehensive physician training and robust data collection for the HARPOON Beating Heart Mitral Valve Repair System.
We are seeing favorable patient outcomes with faster surgery and recovery times with this minimally invasive therapy.
The U.S. pivotal trial is now under way and the first patient was treated in December.
In summary, we expect full-year 2021 underlying sales growth in the high single-digit range for surgical structural heart driven by market adoption of our newest technologies.
After a challenging start, we expect improving year-over-year comparisons, as we progress through the year.
We are excited by our ability to provide innovative surgical treatment options for more patients and to extend our global leadership in premium Surgical Structural Heart technologies.
We believe the current $1.8 billion Surgical Structural Heart opportunity will grow mid single digits through 2026.
In Critical Care, full year 2020 global sales of $725 million decreased 3% on an underlying basis versus the prior year, in line with our guidance of flat to down 5%.
Fourth quarter Critical Care sales of $198 million decreased 2% on an underlying basis, driven by the decline in HemoSphere orders in the U.S., as hospitals limited their capital spending.
Sales of our TruWave disposable pressure monitoring devices used in the ICU were lifted by the increased COVID hospitalizations late in the fourth quarter in both the U.S. and Europe.
Demand for our products used in more intense surgeries remains strong, but were more than offset by the impact of delayed elective procedures.
In summary, we expect full-year 2021 underlying sales growth in the high single-digit range for critical care.
We remain excited about our pipeline of Critical Care innovations, as we continue to shift our focus to smart recovery technologies designed to help clinicians make better decisions for their patients.
Now, I'll ask Scott to provide some more detail on the company's financial results.
Today, I'll provide a wrap-up of 2020 including detailed results from the fourth quarter as well as provide an update on guidance for the first quarter and full year of 2021.
Despite the wave of COVID that began during the fourth quarter, we are pleased that we were able to achieve our sales guidance ranges across all product lines.
Sales in the fourth quarter were flat year-over-year on an underlying basis and adjusted earnings per share grew 2% to $0.50 versus the prior year.
GAAP earnings per share was similar at $0.49.
For the full year 2020, sales increased 1% on an underlying basis to $4.4 billion, adjusted earnings per share was flat at $1.86 and we generated over $700 million of adjusted free cash flow.
During 2020, we achieved cost efficiencies, but we intentionally did not take any actions to significantly impact our employees or reduce investments supporting our long-term strategy.
I'll now cover the details of our results and then discuss guidance for 2021.
For the fourth quarter, our adjusted gross profit margin was 75.3% compared to 75.8% in the same period last year.
This reduction was driven by a negative impact from foreign exchange and incremental costs associated with responding to COVID, partially offset by lower performance-based compensation.
We continue to expect our 2021 adjusted gross profit margin to be between 76% and 77%.
Our rate should be lifted by an improved product mix, partially offset by a negative impact from foreign exchange.
Selling, general and administrative expenses in the fourth quarter were $339 million or 28.4% of sales, compared to $347 million in the prior year.
This decrease was primarily driven by reduced spending resulting from COVID and lower performance-based compensation, partially offset by the impact from foreign exchange.
We continue to expect full year 2021 SG&A as a percentage of sales, excluding special items to be 28% to 29%, which is similar to pre-COVID levels.
Research and development expenses in the quarter grew 1% to $196 million or 16.4% of sales.
This small increase was primarily the result of higher investments in TMTT and costs associated with discontinuing our SUTRAFIX program, partially offset by reduced performance-based compensation.
For the full year 2021, we continue to expect R&D as a percentage of sales to be in the 17% to 18% range, similar to pre-COVID levels, as we invest in developing new technologies and generating evidence to expand indications for TAVR and TMTT including enrolling seven clinical trials.
Turning to taxes, our reported tax rate this quarter was 13.1% or 13.9% excluding the impact of special items.
This rate included a 350 basis point benefit from the accounting for stock-based compensation.
Our full-year 2020 tax rate, excluding special items was 12.5%.
We continue to expect our full year rate in 2021 excluding special items to be between 11% and 15%, including an estimated benefit of 5 percentage points from stock based compensation accounting.
Foreign exchange rates increased fourth quarter reported sales growth by 150 basis points or $18 million compared to the prior year.
At current rates, we now expect an approximate $100 million positive impact or about 2% to full year 2021 sales compared to 2020.
FX rates negatively impacted our fourth quarter gross profit margin by 150 basis points compared to the prior year.
Free cash flow for the fourth quarter was $287 million, defined as cash flow from operating activities of $400 million, less capital spending of $113 million.
Now turning to the balance sheet, we have a strong balance sheet with approximately $2.2 billion in cash and investments as of the end of the year.
In addition, we have an undrawn line of credit of up to $1 billion.
We have public bonds outstanding of about $600 million that don't mature until 2028.
Average shares outstanding during the fourth quarter were 632 million, relatively consistent with the prior quarter.
We now expect average diluted shares outstanding for 2021 to be between 630 million and 635 million.
So before turning the call back over to Mike, I'll finish with financial guidance for 2021.
We are maintaining all of our previous sales guidance ranges for 2021.
For total Edwards, we expect sales of $4.9 billion to $5.3 billion.
For TAVR, we expect sales of $3.2 billion to $3.6 billion.
For TMTT, we expect sales of approximately $80 million.
We expect Surgical Structural Heart sales of $800 million to $900 million and Critical Care sales of $725 million to $800 million.
For the full year 2021, we continue to expect adjusted earnings per share of $2 to $2.20.
For the first quarter of 2021, we project total sales to be between $1.1billion and $1.2 billion and adjusted earnings per share of $0.43 to $0.50.
And so with that, I'll pass it back to Mike.
While a year like 2020 could threaten to cause persistent disruptions, our strategy of patient-focused innovations remains unwavering.
As we look to 2021 and beyond, I'm as excited as ever about the work happening at Edwards and more importantly what we envision for the future of patient care.
I continue to believe we are poised for success and that our innovation and cultural imperative to put patients first will drive strong organic sales growth and create long-term value.
With that, we're ready to take questions.
In order to allow for broad participation, we ask that you please limit the number of questions to one plus one follow-up.
If you have additional questions, please reenter the queue and Management will answer as many participants as possible during the remainder of the call.
 Assistant:

Chosen response:
compname reports q4 earnings per share $0.49.
q4 adjusted earnings per share $0.50.
q4 earnings per share $0.49.
q4 sales $1.2 billion versus refinitiv ibes estimate of $1.19 billion.
full year 2021 sales guidance for edwards remains $4.9 billion to $5.3 billion.
continues to expect full year 2021 adjusted earnings per share of $2.00 to $2.20.
for q1 of 2021, co projects total sales to be between $1.1 billion and $1.2 billion, and adjusted earnings per share of $0.43 to $0.50.


Prompt:
Human: This is Michael Haack.
Let me start today by acknowledging that we had another solid quarter of increasing earnings, and while shaping up to be an exceptional fiscal year for Eagle Materials.
Our results reflect that we are entering into a cyclical phase for our businesses, where the demand for all of our products are strong.
There are two overreaching reasons for this.
One relates to market conditions, which are on an improving trajectory in most respects.
The second relates to Eagle's high-performing, well thought geographically advantaged operations that can take advantage of these market opportunities.
Let me start with some foundational comments about market conditions.
Housing construction is an important driver for both sides of our business, and single-family starts are especially important for Gypsum Wallboard.
There are positive short-term, mid-term, and long-term dimensions to the robust housing-related demand for our materials.
As for the short term, Wallboard is installed on walls and ceilings in the later phase of the building construction process after framing has occurred.
This means that the recent increase in starts and permits will have the greatest impact in the months ahead.
Pandemic has resulted in a surge in home buying, and that demand that has been swelling over more than a decade of under-building is now being realized.
What is more remarkable is, even with the improved rate of home construction, we as a nation, still do not have a balanced supply and demand picture for housing.
Home inventories on the market remain at all time lows.
We believe the annual housing supply demand imbalance is unlikely to be rectified by new construction before 2022.
This is in part due to the pace of what is possible for homebuilders to get into production.
This supply demand pressure will challenge housing affordability, but given the Fed's commitment to keep interest rates low for an extended period, this should translate into a multi-year construct -- a continuation of favorable mortgage rates environment.
Another important end-use segment for us is repair and remodeling.
Research shows that purchasers of existing homes spend money on remodeling materials in the wake of their home purchase, to make the home their own and more fully conform to their needs and tastes.
Longer-term trends also favor our geographic positioning.
The exodus from states such as California, New York, and New Jersey to states in the Sunbelt, from Carolina to Arizona and in the U.S. Heartland, including Texas and Colorado, is expected to continue.
This migration aligns well with our network of facilities within Eagle Materials.
We have the in-place capacity to flex with the demand growth for Wallboard without additional capital investment.
We expect to benefit from higher volumes, higher margins, and restrain cost due to our ownership positions in adjusting [Phonetic] raw materials and paper.
Now let me turn to the market outlook, as it relates to the Heavy side.
Infrastructure spend drives about half the U.S. cement demand, with residential being the next most important driver.
State budgets have been the lion's share of infrastructure spend for many years.
We do not want to minimize the pressure that some state budgets are experiencing.
But our analysis of the sources of state revenue, including sales taxes, property taxes, income taxes, and corporate taxes suggest to us that many states and cities would not be as severely affected as some might fear.
This is especially relevant for many of the states in which we operate.
What our analysis shows is that income and sales tax which account for more than half of the state and the local revenues fell in calendar Q2, but states developed pre-COVID levels in Q3.
The states still have choices on what to do with this money.
But we maintain our expectation that even without federal support to states and cities, trend demand for cement will be sustained in low single-digits across much of our footprint.
Of course, state DOT's could receive further federal support with the new administration, and this would provide an uplift to infrastructure construction activity.
To be clear, that activity, that multi-year federal funding bills generate generally takes years to materialize, hence demand for our products.
Non-residential is the smallest end-use segment for Heavy, and we continue to see short-term pressure.
Non-residential construction continues to be depressed by the potential dangers posed by many indoor activities.
The pipeline for office projects has been significantly and involves a very geographic-dependent.
Spending on manufacturing buildings is beginning to see some improvement, and warehouse construction trends to be strong in many of our geographies.
Now let me address the second factor mentioned, which is the high-performing low-cost network of plants we have created to take advantage of the market opportunities that are presenting themselves to us.
Opportunities which we do see [Phonetic] in our view should continue for some time.
The only limitations in our ability to capture these opportunities are in cement.
We are operating at very high levels of capacity utilization today, and we are facing a tightening cycle that would challenge our resourcefulness to squeeze out every bit of production through optimization of grinding, seasonal storage, and market selection.
Whereas in Wallboard, we have headroom for earnings expansion through volume and price growth.
Going forward, we expect price will be the most important earnings growth lever for us in cement.
Against this positive backdrop, uncertainties abound.
The most important of these relate to the pandemic and getting it under control.
Because of this, I do not have an update today on timing for the spin, and I won't until there are some increased visibility that we are past the potentially more disruptive effects of this pandemic.
We are hopeful that vaccines will be a game changer.
The optimist and we believe that risks for the business talk to the upside, and that the best is yet to come.
Eagle's third quarter revenue was $405 million, an increase of 18% from the prior year.
This increase primarily reflects contribution from the Kosmos Cement business we acquired in March.
And adjusting for the acquisition in the sale of our Northern California Concrete and Aggregates business, organic revenue improved 7%, reflecting increased cement and Wallboard sales volume and price.
Third quarter earnings per share from continuing operations were $1.94, an improvement of 87%.
Excluding the non-routine charge, third quarter earnings per share increased 28%.
Turning now to segment performance, let's look at Heavy Materials results for the quarter highlighted on the next page.
The Heavy Materials sector includes our Cement, Concrete, and Aggregates segments.
Revenue in this sector increased 21%, driven primarily by the contribution from the Kosmos Cement business.
Organic cement sales prices improved 4%, and sales volume was flat with our facilities continuing to operate at very high utilization rates.
Operating revenues increased 31%, again reflecting the addition of the Kosmos Cement business.
And organic operating earnings increased 8%, reflecting primarily higher net cement sales prices.
Our Concrete and Aggregates business continued to benefit from higher organic sales volume and lower diesel fuel costs, with the margins improving significantly from the prior year.
Moving to the Light Materials sector on the next slide.
Third quarter revenue in our Wallboard and Paperboard business was up 8%, reflecting record third quarter Wallboard sales volume and a 1% increase in Wallboard sales prices.
For a perspective, the December average price was [Indecipherable] per thousand square feet versus the quarterly average of $148.
Quarterly operating earnings in the sector increased 1% to $48 million, reflecting the increased Wallboard sales volume and prices, partially offset by higher input costs, namely recycled fiber costs.
Looking now on our cash flow, which remained strong.
During the first nine months of the year, operating cash flow increased 69%, reflect the earnings growth, disciplined working capital management, and the receipt of our IRS refund.
Capital spending declined to $46 million.
Finally, a look at our capital structure.
During the quarter, we continued to prioritize debt reduction as a primary use of cash, providing us significant financial flexibility in the light of pandemic-related uncertainties and potential opportunities.
At December 31, 2020, our net debt-to-cap ratio was 41%, down from 60% at the end of our fiscal year.
And our net debt-to-EBITDA leverage ratio was well below 2 times.
We ended the quarter with $143 million of cash on hand, and total liquidity at the end of the quarter was $888 million, and we have no near-term debt maturities.
We'll now move to the question-and-answer session.
 Assistant:

Chosen response:
compname reports third quarter results earnings per share from continuing operations of $1.94 on revenue of $405 million.
q3 earnings per share $1.94 from continuing operations.
q3 revenue $405 million versus refinitiv ibes estimate of $385.1 million.