Prompt:
Human: We will conclude the call with a question-and-answer session.
Today, we will discuss non-GAAP basis information.
Today, we reported our fourth-quarter and full-year 2020 results and issued our final guidance for 2021.
During the fourth quarter, our operating divisions continue to face challenges associated with the ongoing COVID-19 pandemic.
Over the course of the pandemic, we experienced a decline in overall occupancy levels at several of our federal facilities.
Due to the decline in the overall federal population, we have previously announced that the Federal Bureau of Prisons had decided not to renew three of our BOP contracts that are scheduled to expire during the first quarter of 2021.
More recently, the president issued an executive order directing the attorney general to not renew DOJ contracts with privately operated criminal detention facilities.
While we continue to monitor the scope and implementation timeline for this order, we have assumed that it could result in additional nonrenewals of our BOP contracts in 2021 and coming years and we have incorporated this assumption into our guidance.
Marshals Service, which is also under the U.S. Department of Justice, does not own and operate its facilities.
The U.S. Marshals Service contracts for bed capacity which is generally located in areas near the federal courthouses to house pre-trial offenders who have been charged with federal crimes under the laws passed by Congress.
The U.S. Marshals Service contracts for these facilities primarily through -- contracts primarily for this fiscal is through Intergovernmental Service Agreements and to a lesser extent on direct contracts.
The U.S. Marshal Service may determine to conduct a review of the possible application of the executive order on its facilities.
Our GEO care segment has also been impacted by lower occupancy levels across our reentry centers, day reporting programs, and youth services facilities due to COVID-19.
During the fourth quarter, we incurred a non-cash goodwill impairment charge associated with our reentry centers, primarily due to the negative impact the pandemic had on this segment.
Despite these challenges, we believe our company remains resilient and is underpinned by long-term real estate assets and supported by contracts entailing essential government services.
We've provided these essential services to government agencies at the federal and state levels under both Democratic and Republican administrations and during times when either party has been in control of the legislative branch of the government.
Our frontline employees remain focused on providing high quality services inhumane care for all those entrusted to us.
During the past year, our employees have shown incredible commitment and resilience as our company has managed through unprecedented times and we are very proud of their dedication.
From the outset of the pandemic, we have implemented companywide steps to mitigate the risks of COVID-19 to all those in our care and our employees and we continue to evaluate these steps.
Ensuring the health and safety of all those in our facilities and our employees has always been our number one priority.
We also recognize that in addition to the challenges associated with COVID-19, heightened political rhetoric has led to a mischaracterization of our role as a government services provider and it's created concerns regarding our future access to financing.
Our board of directors and our management team are aware of the importance of allocating capital to pay down debt in the current environment.
Consistent with our previous guidance, we paid down approximately $100 million in net debt during 2020.
To continue our focus on paying down debt, our board recently reduced our quarterly dividend payment to $0.25 per share for the quarter.
Our board will continue to evaluate our dividend and capital allocation strategy including our plan capital expenditures with a goal of targeting a minimum of $75 million to $100 million in net debt repayment in 2021 and annually thereafter.
Additionally, we continue to evaluate cost savings opportunities at the corporate and facility levels, and we have identified several company-owned assets that could potentially be sold.
We remain committed to balance our continued creation of value for our shareholders with prudent management of our balance sheet.
Today, we reported fourth-quarter revenues of approximately $578 million and net income attributable to GEO of $0.09 per diluted share.
Our fourth-quarter results reflect a non-cash goodwill impairment charge of approximately $21 million.
This goodwill impairment charges associated with our community-based reentry centers which have been negatively impacted by the COVID-19 pandemic.
Our fourth-quarter results also reflect a $5.7 million pre-tax loss on real estate assets at $2.3 million pre-tax gain on the extinguishment of debt and $2.5 million in pre-tax COVID-19 related expenses.
Excluding these items, we reported fourth-quarter adjusted net income of $0.33 per diluted share.
We also reported fourth-quarter AFFO of $0.62 per diluted share.
Moving to our outlook, the COVID-19 pandemic continues to have a negative impact on several segments of our company.
The pandemic has resulted in lower occupancy levels at several of our facilities and programs beginning last March and continuing through the end of 2020.
As we have previously disclosed, the Federal Bureau of Prisons has decided that it will not renew our contracts for the D. Ray James, Georgia; Rivers, North Carolina; and Moshannon Valley, Pennsylvania facilities due to the decline in the federal prison populations more recently as a result of the COVID pandemic.
The D. Ray James facility contract expired on January 31st and the two other contracts are set to expire on March 31st, and our garden -- our guidance for 2021 accounts for these expirations.
Additionally, the administration has issued an executive order directing the U.S. attorney general to not renew DOJ contracts with privately operated criminal detention facilities.
While we continue to monitor the scope and implementation timeline of this order, our guidance presently accounts for the potential non-renewal of three additional BOP contracts that have option periods expiring in 2021.
The COVID-19 pandemic has also resulted in lower occupancy levels across our other federal reentry and youth facilities.
Our 20 21 guidance assumes the continued impact of COVID-19 in the first part of the year with a slow recovery to more normalized operations by the -- by year end.
Marshals facility in Eagle Pass Texas which began last year.
We expect to achieve normalized operations at these four facilities over the course of 2021.
Taking all these factors into account, we expect full-year 2021 net income attributable to GEO to be in a range of $0.88 to $0.98 per diluted share on total revenues of approximately $2.24 billion to $2.27 billion.
We expect full-year 2021 AFFO to be in a range of $1.98 to $2.08 per diluted share, and we expect full-year 2021 adjusted EBITDA to be in a range of $386 million to $400 million.
For the first quarter 2021, we expect net income attributable to GEO to be in a range of $0.18 to $0.20 per diluted share, our quarterly revenues of $579 million to $584 million.
And we expect first-quarter 2021 AFFO to be between $0.48 and $0.50 per diluted share.
Moving to our capital structure.
At the end of the fourth quarter, we had approximately $284 million in cash on hand and approximately $136 million in borrowing capacity available under our revolving credit facility.
In addition to an accordion feature of $450 million under our credit facility.
With respect to our capital expenditures, we expect total capex in 2021 to be approximately $104 million including $26 million for maintenance capex and $77 million in gross capex.
Our estimated growth capex for the year includes $32 million to upgrade our BI electronic monitoring devices to the new 5G cellular network and $45 million for facility capex.
To continue our focus on paying down debt, our board reduced our quarterly dividend payment to $0.25 per share last month.
In 2020, we paid down approximately one $100 million in net debt consistent with our prior guidance.
Our board will continue to evaluate our dividend and capital allocation strategy including our planned capital expenditures with a goal of targeting a minimum of $75 million to $100 million in net debt repayment in 2021 and annually thereafter.
Additionally, we continue to dialogue with our lenders and creditors and our monitoring credit market conditions.
We are also continuing to evaluate potential cost savings opportunities as well as the potential sale of a number of company-owned assets.
During the first quarter of 2021, we completed the sale of our interest in the Talbot Hall reentry facility with net proceeds of approximately $13 million.
I'd like to provide you a brief update on the 2020 operational highlights for our GEO secure services business unit.
Over the last 12 months, our operational efforts have been focused on implementing mitigation strategies to address the risks associated with the COVID-19 pandemic.
From the start of the pandemic, we began taking steps at our facilities to implement best practices consistent with the COVID-19 guidance that was issued for correctional and detention facilities by the Centers for Disease Control and Prevention.
These practices included the implementation of quarantine, cohorting, and medical isolation procedures.
We also have provided educational guidance to our employees and the individuals in our care and the best preventative measures to prevent the spread of COVID-19.
We have continuously exercised paid leave and paid time off policies to allow our employees to remain at home if they exhibit flu-like symptoms or to care for family members.
We remain focused on implementing increased sanitation measures and deploying personal protective equipment including face masks for all employees and all those in our care.
We have also taken steps to increase testing at our facilities including the deployment of Abbot rapid test devices.
We've administered over 51,000 COVID tests in our facilities at the close of 2020.
We continuously evaluate these steps and we'll make adjustments based on updated guidance by the CDC and other best practices.
Despite the unprecedented challenges associated with the pandemic, our frontline employees have remained focused on providing high-quality services and delivering humane and compassionate care for all those in our facilities.
During 2020, our employees and facilities achieved several important milestones.
Our facility successfully underwent 100 audits including internal audits, government reviews, third-party accreditation, and certification under the Prison Rape Elimination Act.
Our medical services staff undertook over 350,000 quality healthcare related encounters including intake health screenings, sick calls, and offsite medical visits.
During the year, we achieved over 42000 employee training completions in our GTI transportation division safely completed over 14 million miles driven.
We are incredibly proud of our employees for their dedication and daily commitment to operational excellence.
Last month, the president issued an executive order directing the attorney general to not renew DOJ contracts with privately operated criminal detention facilities.
While we continue to monitor the order scope and implementation timeline as we have noted in our recent announcements, the Bureau of Prisons has experienced a decline in federal populations more recently due to COVID-19.
As a result, the BOP has previously announced that it would not renew or rebid three of our existing contracts with the agency.
That contract at our D. Ray James, Georgia facility ended on January 31st.
And our contracts at our Rivers, North Carolina, and Moshannon Valley, Pennsylvania facilities expire on March 31st.
We have three additional company-owned facilities contracted with BOP that have current option periods expiring in 2021.
Our Great Plains, Oklahoma facility at the end of May, and our Big Spring and Flightline facilities in Texas at the end of November.
Given the president's executive order and the decline in federal prison populations, we are preparing operationally for the potential that additional contracts with the Bureau of Prisons may not be renewed with their current option periods expire.
The BOP owns and operates approximately 90% of the beds housing federal inmates.
And since the late 1990s, the agency has used contractor-operated facilities as the swing capacity it needed to deal with overcrowding conditions in the federal prison system.
Contractor-operated facilities have historically been used by the Bureau of Prisons to house almost entirely non-U.S. citizen criminal aliens serving sentences for federal crimes committed in the United States.
Marshals Service which is also under U.S. Department of Justice does not own and operate its facilities.
The U.S. Marshal service contracts for bed capacity which is generally located in areas near federal courthouses to house pre-trial offenders who have been charged with federal crimes under laws passed by Congress.
The U.S. Marshal service contracts for these facilities primarily through Intergovernmental Service Agreements and to a lesser extent direct contracts.
The U.S. Marshal service may determine to conduct a review of the possible application of the executive order in its facilities.
The administration has also taken several executive actions related to immigration.
However, at this time, there have been no directives related specifically to enforcement or detention policies.
Earlier this month the president signed an executive order establishing an inter-agency task force on the reunification of families to identify migrant minors separated from their families.
As we have publicly stated in the past, we do not manage any facilities that house unaccompanied migrant minors.
Our ICE processing centers are highly rated by National Accreditation Organizations and provide high-quality culturally responsive services in a safe and humane environment.
Typical amenities at our centers include flat-screen TVs in the housing areas, multi-purpose rooms, outdoor covered pavilions, and artificial turf soccer fields.
All those entrusted in our care are provided culturally sensitive meals approved by a registered dietitian, clothing, 24/7 access to healthcare services, and full access to telephone and legal services.
Health care staffing at our ICE processing centers is approximately double than that of our state correctional facilities which is needed to provide appropriate treatment for individuals who have numerous and diverse health and mental health needs.
We have provided high quality services for over 30 years under Democratic and Republican administrations, including eight years under President Obama's administration.
I'd like to briefly review the 2020 operational highlights for our GEO care business unit.
Consistent with the efforts undertaken by our GEO secure services facilities, we have been focused on implementing COVID-19 mitigation strategies, all of our residential facilities and GEO reentry and GEO youth services issued guidance consistent with the guidance issued by the CDC.
We put in place quarantine and cohorting policies and procedures and provide educational and preventative guidance to our employees and all individuals in our care.
We have to focus our efforts on increased sanitation measures, testing, and deploying personal protective equipment including facemasks.
We have continuously exercises paid leave and paid time off policies to allow our employees to remain home if needed.
We have also implemented additional screening measures for entry into our facilities.
We continuously evaluate these steps and we'll make adjustments as appropriate and necessary based on updated guidance by the CDC and other best practices.
Despite the challenges associated with the pandemic, we have had several recent positive highlights.
During the second half of 2020, we completed the reactivation of our company-owned park youth center in Alaska under a new 112-bed contract with the Alaska Department of Corrections.
We also activated 11 new-day-reporting program sites with capacity to serve approximately 2,900 participants under a contract with the Tennessee Department of Corrections.
And in Idaho, we activated four non-residential program locations to support up to 500 participants under a new partnership with the Idaho Department of Corrections.
More recently, we're pleased to have been awarded a new contract with the Federal Bureau of Prisons for a 118-bed Residential Reentry Center in Tampa -- and -- in the Tampa, Florida area which we expect to activate during the second half of 2021.
These positive milestones are indicative of the high-quality services delivered by our employees daily.
We are very proud of our frontline employees who have continued to deliver rehabilitation and reentry programming to those in our care through these difficult times, often in innovative ways including through virtual technologies.
We are particularly proud of our continued efforts of our GEO Continuum of Care program.
Our Continuum of Care program integrates enhanced in-custody rehabilitation programs including cognitive-behavioral treatment with post-release support services such as transitional housing, transportation, clothing, food, and job placement assistance.
While we were significantly challenged during most of our 2020, our COC sites achieved several very important milestones.
Our academic programs award -- awarded more than 1,200 high school equivalency degrees and our vocational courses awarded close to 4,000 vocational training certifications.
Our Substance Abuse Treatment programs awarded more than 7,600 program completions.
And we achieved over 34,000 behavioral program completions and more than 31,000 individual cognitive-behavioral sessions.
We also provided post-release support services to more than 3,600 individuals returning to their communities with over 1,300 participants obtaining employment.
We believe that the scope of our Continuum of Care program is unparalleled and represents a significant contribution to criminal justice reforms.
We are very proud of our employees who have demonstrated incredible commitment and dedication during this unprecedented global pandemic.
Despite the significant challenges associated with COVID-19 and new policy changes at the federal level, we believe our company remains resilient and is supported by long-term real estate assets and contracts entailing essential government services.
We've provided high-quality essential services for more than 30 years and they're both Democratic and Republican administrations.
We recognize that a heightened political rhetoric and the mischaracterization of our role as a government service providers created concerns regarding our future access to financing.
And we are aware of the importance of allocating capital to pay down debt in the current environment.
To continue our focus on paying down debt, our board recently reduced our quarterly dividend payment and we'll continue to evaluate our dividend policy and capital allocation strategy.
We -- we remain committed to balance our continued creation of value to our shareholders with prudent management of our balance sheet and capital structure.
 Assistant:

Chosen response:
geo group sees fy2021 revenue $2.24 billion to $2.27 billion.
q4 adjusted ffo per share $0.48.
sees fy 2021 revenue $2.24 billion to $2.27 billion.
board has taken steps to reduce qtrly dividend payments in order to apply excess cash flows toward debt repayment.
'recognize that heightened political rhetoric has led to mischaracterization of our role as a government services provider'.
recognize that 'heightened political rhetoric' has created concerns regarding future access to financing.
sees fy21 net income attributable to geo of $0.88-$0.98 per diluted share.
sees fy21 affo of $1.98-$2.08 per diluted share.
compname reports q4 adjusted ffo per share $0.62.
q4 adjusted ffo per share $0.62 .


Prompt:
Human: Once again, I hope all of you and your families are safe and healthy during these unprecedented times.
As you know, Maurice Marciano was injured in a bicycle accident recently.
He is under great care, but we expect this will be a long recovery process for him.
On behalf of Paul, our Board and our entire Guess?
family, we pray for his fast and full recovery.
Maurice is an amazing person.
He is very strong.
And we all hope to get him back soon.
In the next few minutes, I will speak about the overall environment and our Company, then I will touch on our second quarter results and I will close with how I see our outlook for this year and into the future.
, we are managing through the situation with our eyes on the road and our hands firmly on the steering wheel.
I'm very proud that our teams around the world continue to rise to the challenge imposed by this crisis in an extraordinary way.
I believe that the progress we made in the second quarter, both with our financial results and with our initiatives to better position the Company for the future, demonstrates our team's strong leadership, their relentless hard work and their amazing commitment to our customers and our Company.
Since we last spoke, a few things have changed in the world and in our Company, and some have stayed the same.
Among those things that changed, the most important one is visibility, which has improved meaningfully.
Starting with our store reopenings in all regions, we have had relatively consistent performance for several weeks now.
Almost across the board, we have seen a significant reduction in customer traffic from the comparable prior-year period, partially offset by the improved conversion rates.
Improved visibility is helping us size our expected demand more effectively, and as a result, we can project our inventory needs more accurately, which is key to optimizing future sales, margins and profitability.
Improved visibility helped us to better assess our liquidity, enabling us to capitalize on share repurchases that we think offer a material long-term return opportunity for our shareholders.
And improved visibility gave our Board the confidence to reinstate our quarterly dividend.
The second change relates to customers' lifestyles and shopping behaviors, which clearly have not returned to pre-pandemic conditions.
This, to us, signals that the changes may be more permanent than we originally thought.
While many people feel more comfortable shopping online than in stores, those that do venture out are much more intentional to make a purchase when they visit.
Our e-commerce business in North America and Europe delivered high single-digit revenue growth during the second quarter, and gross profit dollars grew more than 20% as margins improved significantly as a result of increased full price selling and improved IMUs.
We are confident that our e-commerce business will accelerate in the second half of the year as we increase our investment in marketing, continue to reposition our product offering and complete our Salesforce platform implementation.
We are encouraged with our digital business in August, which was up in the teens, and again, with improved margins, driven by strong performance in Europe and, to a lesser degree, in North America.
We continue to see that product priorities have shifted toward more casual dressing.
We expect this to evolve over time as people begin to go out again, but we believe that casual and comfortable clothes will remain a key priority for our customers.
Based on this trend, we are investing in the development of a strong assortment of active apparel, outerwear, stretch and sustainable denim and an extensive line of tops and dresses in multiple colors that capitalize on high quality and comfortable knit fabrications.
We are also focused on seasonal lines and essential products and strong lines of accessories, including handbags.
While we reduced marketing spend dramatically during the second quarter, we see an opportunity to increase our investment in the second half of the year to continue to strengthen our brand position and drive traffic.
We are planning multiple campaigns for the season featuring several of our product lines of women's, men's, accessories and kids'.
has recently engaged Italian actor and singer, Michele Morrone, as a new worldwide face of GUESS men's.
Michele Morrone is a lead actor in the movie, 365 Days, one of the top movies of Netflix, currently streaming in 200 countries.
He will be featured in our fall/winter 2020 collection campaign.
We intend to intensify our global efforts in digital media, including social media, and have plans for direct mail, TV advertising and outdoor media, including billboards, buses and others.
One very positive industry development relates to inventory ownership in our market, which seems to be already rebalanced and better aligned with current customer demand.
This should result in a less promotional environment going forward, leading to improved product margins.
We continue to make inventory management a key strategic initiative and made good progress this quarter as we experienced a product margin increase and our inventories are in a good place.
At quarter-end, inventories were down 13%, and we own less clearance inventory than a year ago.
For the rest of the year, we continue to plan our inventory purchases based on expected demand and have built flexibility with fast-track processes and basic product ownership to react to potential higher demand.
We already see opportunities for increased business and believe that we will be able to capitalize on this strategy.
With respect to resource utilization and cost structure, I'm very impressed by our team's ability to do a lot more with less, achieving greater efficiencies and significant reductions in our cost structure, both temporary and permanent.
Katie will spend more time on this later on.
Regarding things that have stayed the same, unfortunately the pandemic is still with us, and we have seen new outbreaks in multiple countries.
People are still very uncomfortable socializing and leaving their homes.
And for now, tourism continues to be non-existent between countries as a result of restrictions and low willingness to travel.
I recently read that in July, the amount of tourism spend in Europe was down 95%, with the Chinese spend down 98%.
For this reasons, we are approaching the second half of the year cautiously.
We continue to make our priority the safety and well-being of our teams, our customers and the communities that we serve.
We closed all California stores in enclosed malls after having them reopened, and we are now reopening many of them again.
We are happy to report that most of our stores worldwide are now reopened.
Our headquarter buildings in North America and in Europe have been operating at 50% capacity and the remaining team members work remotely.
As we closed our second quarter, we were pleased with how we managed the business in light of the circumstances presented by the pandemic.
Our retail sales were better than originally anticipated, and our wholesale businesses, which also performed better than expected, benefited from some product shipments pull-forward from the third quarter into the second quarter as many European customers requested products earlier than expected.
Margins were better than planned as we managed inventories well and benefited from positive rent relief in Europe.
We also managed cost effectively during the period.
All in all, we reported a 41.7% revenue decline, and we almost broke even at the operating level for the period on an adjusted basis.
As we look into the second half of the year, we expect a slow recovery of our retail business, driven by similar metrics to those that we have seen since we have reopened our stores, but with a gradual improvement in customer traffic.
We believe that there is an opportunity to expand the holiday selling period and have worked on plans to begin the season earlier with direct mail, customer appointments, optimizing omnichannel capabilities and focusing on other initiatives to avoid customer congestion during peak periods.
Regarding our wholesale business, during the last week of June, we launched our spring/summer sales campaign with a live event in Lugano, Switzerland, which was attended by over 200 people.
Plus, the event was live-streamed and over 550 people participated.
I believe this was unusual in our industry and was very well received by our customers.
Paul, with the creative teams, have done an incredible job with the collection, and I believe that the product line is the best that I have seen in all my years with Guess?
The response to the line has been very positive, and the customers' interest in our brand is very strong.
We are very excited about the opportunities that we see to gain market share, even in the near term.
This year, we continue our strategic planning implementation work, and I'm very pleased with our progress.
We still believe that our Company is in a strong position to capture the 500 basis points improvement in operating margins that we had targeted last year as most of the improvements are expected to be driven by operational efficiencies that we are confident remain available to us in the near future.
Our brand positioning work is in full force.
Our commitment is to elevate our GUESS and MARCIANO brands, focusing on high quality materials, SKU rationalization and developing one global line for each brand, while addressing market needs with specific products by region.
We continue to believe that our brand DNA and our obsession for inclusivity, sustainability and celebrating customer diversity represent a significant strength in today's environment.
Regarding our customer-centricity initiatives, we implemented Salesforce for our GUESS website in North America and in two European countries, France and the UK.
Tomorrow, we are launching 19 additional countries in Europe and 26 more will be rolled out through the rest of September and October.
We also launched the customer 360 project that I mentioned in our last call, and we continue to upgrade our omnichannel capabilities.
The entire plan should be fully implemented by the end of next year.
We continue to believe that our e-commerce business penetration will grow as a result of this strategic initiative to represent over 23% of our direct-to-consumer business in three to five years, up from 13% last year.
We plan to update our entire strategic business plan in the next few months and share it with you during the fourth quarter and an Investor and Analyst meeting.
In closing, while we are approaching the short term cautiously, we are focused on the long term and we see very bright days ahead.
Our vision for our Company and our brand remain intact.
I strongly believe that the long-term impact of this crisis in our Company will be extremely valuable as we reposition our brand and redesign our business model.
The crisis inspired our team to think differently to challenge every aspect of the business and to architect a simpler, more efficient and capital-light model.
We're building a business that will be better positioned to compete in the future and gain market share globally.
We have a true iconic global brand that has been relevant for consumers all over the world for 40 years.
stayed relevant by adapting its model time and time again.
I believe that companies that adapt their business models to actively embrace new consumer preferences, placing the customer at the center of everything they do, will gain share and overcome this crisis faster.
We fully expect to be one of those companies.
We have a strong team which is even more excited about our future today than I have seen it since I came back to Guess?
I strongly believe that in the next few years we will deliver outsized returns to our shareholders.
Paul and I and our entire leadership team couldn't be more excited about our future.
With that, let me pass it to Katie.
This is our second quarter navigating the Company through what is, no doubt, the most challenging period in our history.
So while consumers remain cautious, we were pleasantly surprised with the initial level of productivity that we saw as our stores reopened across each region during the quarter.
This is a sign not only of a macro recovery, but also the strength of our brand and the effectiveness of the business decisions that we have made over the last few months.
Once again this quarter, we have proven that we can successfully control the middle of the P&L with appropriate reactions to current environment, all while maintaining an emphasis on the long-term health of our brands.
We decreased operating expenses by $70 million, expanded product margins and maintained a very clean inventory position.
And as a result, even with sales down over 40%, we were able to maintain almost breakeven adjusted net earnings and a solid balance sheet.
I'm happy to report that our liquidity position remains strong.
I believe this is a competitive advantage for us, allowing us the flexibility to make appropriate investments to drive our long-term strategy as well as return value to shareholders.
In the first quarter, at the beginning of the pandemic, we took strong actions to preserve our liquidity, not having a clear outlook into what the future held given the uncertainty of the global crisis.
We drew down on our credit facility, extended our ABL and secured additional low interest term loans in Europe.
As the situation began to stabilize during the second quarter, we paid back a significant portion of the borrowings on our drawn revolving lines and seized the opportunity to return incremental value to our shareholders with a $39 million repurchase of our shares.
In addition, we announced today that our Board has decided not to declare any cash dividends from the prior two quarters, and it has approved the resumption of our quarterly dividend program this quarter.
Our long-term capital allocation policy has not changed.
Now let me take you through some of the details on our performance for the quarter.
Let's start with sales.
Second quarter revenues were $399 million, down 42% in US dollars and 41% in constant currency.
Revenues were negatively impacted by store closures in all regions at the beginning of the quarter and lower productivity to prior year at stores once open.
Our stores were closed for approximately 30% of the days in the quarter, and when they were open, traffic was roughly half of our customer flow in the prior year.
Overall sales productivity for our retail stores since reopening for the quarter was down 21% in the US and Canada, down 31% in Europe and down 26% in Asia.
We have been seeing traffic declines, partially offset by significantly higher conversion.
And our tourist-centric locations have been experiencing a tougher recovery.
Our e-commerce business in North America and Europe was up [Phonetic] 9% for the quarter.
Our wholesale and licensing partners were experiencing similar decreases in demand, resulting in lower sales in these areas in Q2 as well.
Gross margin for the quarter was 36.9%, 2% lower than the prior year.
Our product margin increased 210 basis points this quarter primarily as a result of higher IMU as well as lower promotions.
However, this was more than offset by occupancy deleverage of 410 basis points on lower sales.
Regarding rent, we are still in negotiations with our landlords to appropriately adjust our rental expenses in line with the store closures and declines in traffic.
As a reminder, in general, we suspended rent payments for April, May and June that all rental expenses are accrued until final agreements are in place at which time the adjustments are made.
This quarter, we [Indecipherable] about $8 million in rent credits for fully negotiated rent relief deals, mostly in Europe.
Adjusted SG&A for the quarter was $148 million compared to $218 million in the prior year, a decrease of $70 million.
A little over half of these savings, we would consider one-time.
For example, we received government support in various countries across the globe like employee payroll stipends during closures.
We put in place value reductions that have since been reinstated.
We pulled back hard on advertising.
And we also saved on some variable costs while our stores were closed like distribution and payroll at both the store and corporate level that we are filling back in to support a more normalized business.
The other half we will continue to benefit from on a go-forward basis.
We have decreased corporate headcount as well as travel and professional fees and other discretionary spending.
We have also adjusted how we staff our stores, allowing for significant savings in labor while maintaining the quality of our customer service and our selling culture on the floor.
Right now, for the most part, we have more buyers than lookers relative to what we have historically seen in our stores.
And these lower traffic levels help us optimize our labor spend while still capitalizing on demand.
We have assessed and continue to assess all aspects of our business to reduce redundancies that we have across regions, and are operating in a leaner and more agile model.
Our eye will be on the middle of the P&L as we focus on maintaining a cost structure that makes sense for our organization in our new normal.
Adjusted operating loss for the second quarter was $900,000 versus a profit of $48 million last year.
Our second quarter adjusted tax rate was 156%, up from 28% last year.
As the total Company's adjusted pre-tax earnings is roughly breakeven for the second quarter, the tax rate changes over prior year and from quarter to quarter are more pronounced than in the past due to the mix of tax jurisdictions.
Inventories were $419 million, down 13% in US dollars and 15% in constant currency versus last year.
After paying back $185 million of borrowings on our committed credit facilities, we ended the second quarter with $328 million in cash and had an incremental $236 million in borrowing capacity.
Capital expenditures for the first six months of the year were $10 million, less than one-third of what we spent in the same period of the prior year.
As we have mentioned, we continue to invest in those initiatives that are mission-critical to our business plan like our digital capabilities.
Free cash flow for the first six months of the year was an inflow of $29 million, an increase of $87 million versus an outflow of $59 million last year.
This improvement included the nonrecurring payment of last year's $46 million EU Commission fine as well as the adjustments this year to our payment terms with our vendors and unpaid rent to landlords while we finalize negotiations.
Given the continued level of uncertainty in the current environment, we are not going to provide formal guidance.
However, let me walk you through some of our thoughts on how we're planning sales for the rest of the year.
As discussed, we were encouraged by our initial reopening performance which was stronger than expected.
However, the continued recovery since opening is moving slower than we anticipated and in some cases, like the Americas, deteriorating from reopening level.
Consumers remain cautious about shopping which will most likely not change for the end of the year given the nature of this crisis.
In August, we saw sales productivity at our retail locations of down 29% in the US and Canada, down 13% in Europe and down 33% in Asia.
E-commerce has picked up quite a bit, driven by Europe, and we are tracking up double-digit there.
We see particular risk for the holiday shopping period where social distancing and consumer caution could impact our high in-store volumes during that time.
As Carlos mentioned, we are mitigating this risk by implementing strategies around elongating the holiday season and reducing congestion during peak times, while still capitalizing on the demand.
Our wholesale and licensing businesses pretty much follow our retail business as our partners are experiencing similar headwinds.
As a result, we expect both Q3 and Q4 revenue performance to prior year to be in the negative mid teens range.
We are obviously hopeful that trends in the back half of the year will turn out better than that, but we are planning our business assuming they will not.
We are confident in our products and our marketing strategy and have the flexibility in our inventory to meet the demand should it exceed our expectations.
In closing, the work that has been done by our teams across the business and around the globe over the last few months has been grueling, to say the least.
But it's so rewarding for our team to see the fruits of their labor in our performance.
And we can see it in our clean inventories, our strong liquidity position, our well-managed expenses and the ongoing sales recovery across our segments.
This fuels momentum and teamwork, and we feel that right now at Guess?
 Assistant:

Chosen response:
q2 revenue $399 million versus refinitiv ibes estimate of $384.8 million.
continued to tightly manage costs and inventory position.
not providing detailed guidance for q3 ending october 31, 2020 or full fiscal year ending january 30, 2021.
expect revenues for third and fourth quarters of fiscal 2021 to decrease in mid-teens range.
during q2 of fiscal 2021, continued to experience lower net revenue compared to the same prior-year period.
finished the quarter with a strong balance sheet and ample liquidity.
ended quarter with inventories down 13% compared to last year.
pandemic has had and is continuing to have a material impact on co's financial performance.
well positioned for second half of year.
as of august 1, 2020 approximately 95% of our stores were open.


Prompt:
Human: including potential impacts from the coronavirus pandemic.
Comments will also reference certain non-GAAP or adjusted measures.
Before turning the call to Carlos, I would like to mention that we will be participating in the fireside chat at the Goldman Sachs Annual Global Retailing Conference on Friday, September 10 at 03:20 PM Eastern.
We hope to see you there.
We are very proud of our team and our accomplishments.
We just closed a great quarter and we plan to review what drove our performance in detail.
But most importantly, I want to share with you where we are today and how we see the future, both short and long-term.
Let me start with our results.
For the second quarter, we reported adjusted earnings from operations of $89 million.
This compares to adjusted operating earnings of $48 million for the LLY period exceeding our pre-pandemic performance by 85%.
This was well ahead of our expectations.
We reported revenues of $629 million, 58% over last year and 8% below the LLY period.
The entire decline to LLY was due to a timing shift of European wholesale shipments into Q3 and permanent store closures, which are accretive to operating profit.
This is in spite of being significantly less promotional during the period in all of our direct-to-consumer businesses.
For the quarter, we delivered that 14% adjusted operating margin.
We expanded our operating margin by over 700 basis points from 7% in the LLY period.
The star of this quarter was the North America Retail segment that reported an operating profit of $38 million versus $6 Million in the LLY period and almost 540% increase.
Our Wholesale and Licensing businesses also outperformed, and Europe and Asia delivered roughly flat operating performance to the LLY period.
Paul and I continue to be thrilled with our team's performance all over the world, adjusting and reacting seamlessly to the fluidity of the current environment.
We are happy to see demand recovering and stores reopened across the globe.
We still see the pandemic's impact on customer traffic and on the supply chain globally.
The labor market has also been impacted as companies are challenged to rehire workers leading to labor shortages and higher wages.
At Guess, we remain laser focused on what we can control.
As a global brand, we have adapted quickly to the changing levels of demand and restrictions across our markets.
We are sizing our inventory buys accordingly, adjusting prices to the perceived value of our products, strategically managing promotional activity and increasing labor rates to attract and retain top talent.
We continue to keep cost very tight by eliminating redundancies and increasing efficiencies.
We have been relentless in mitigating supply chain disruptions.
We are strategically partnering with our vendors to accelerate deliveries when feasible, changing countries of origin when appropriate to increase speed to market and investing in faster transportation modes when it makes sense.
Our strategy is working and our results reflect this.
I am proud to share with you that we published our latest sustainability report this summer, focused on our three pillars to operate with integrity, empower our people and protect the environment.
Some highlights include reaching gender pay parity, increasing our eco-smart Guess penetration to 20% and receiving approval in our ambitious science-based targets for greenhouse gas reductions.
We are confident in our actions here.
In fact, we successfully passed a reasonable assurance review by a big firm making Guess the first in fashion to subject our ESG data to such a high level operator.
We have increased our environmental quality score with the Independent shareholder services to a 1 out of 10, the highest rating possible, as a result of this work.
Let me now spend a few minutes talking about what's going on in the different regions and channels of our business.
In North America, traffic has improved sequentially each quarter, but remains well below historical levels and we continue to see higher conversion rates and higher average spend.
We are in the midst of back-to-school and we have solid demand for denim, activewear and knits.
In addition, we have seen sequential sales growth for our dresses category, which was positive to LLY for the first time since that pandemic began.
Both our Guess and Marciano brands are experiencing increases in sales of dressing, apparel and accessories as the customer is returning to social life.
We have also been successful with our handbags and wear-now products and our men's business has been particularly strong.
In Europe, we had a stronger start to the second quarter, which leveled off as the delta variant spread in many countries there.
Activewear continue to outperform in this region, both for women and men and we saw substantial pop in denim in Q2 as well as improved demand for dresses and outerwear.
We are encouraged by the progress that most countries in Europe have made with vaccination levels and we remain optimistic about the recovery of this region in the second half of the year.
In Asia, our customer traffic is the most challenged due to the virus and the trends remain relatively consistent in Q2 versus Q1.
The product categories that have performed better in this environment includes sweaters, denim and outerwear.
While we have made good progress in several areas of the operation, our challenges with topline performance remain.
We are reassessing our team and we are making leadership changes to reorganize the business today.
Our e-commerce business grew 11% in North America and Europe for the quarter versus last year.
Growth here was more moderate than prior quarters as we were a lot less promotional.
I'm pleased that we continue to significantly improve profitability in this channel.
In the back half of the year, we will be strategically investing more in marketing to support further growth in this business.
Our European wholesale business is performing well.
We are currently shipping our fall-winter season, which had orders up high-single digits.
As I mentioned, some of the products are delayed coming in.
So, they will ship in Q3 versus Q2.
The spring-summer season campaign is underway and we estimate that the order book will be higher than LLY with strong growth, particularly in our kids and footwear collections.
We're also very pleased with our Americas Wholesale business, which grew 19% in sales and 54% in operating profit versus LLY.
Denim had a great quarter and delivered strong performance at Macy's.
We're also having success in apparel for both men and women and accessories, particularly handbags.
Our global licensing business also recorded significant revenue growth of 18% versus the LLY period.
We have a big business here, primarily driven by handbags, eyewear, footwear and fragrances.
Regarding our strategic plan, I want to spend a few minutes updating you on our progress with our brand elevation and customer centricity initiatives.
I will start with our brand innovation strategy, which touches almost every aspect of our business.
Paul has been driving this very ambitious initiative with our product and creative teams.
His strong leadership and the work that the teams put into this to transform our model have been extraordinary and many major milestones have already been conquered.
We are focused on higher quality and sustainability across the board.
In addition, the new assortments have been priced based on the products perceived value.
Our visual merchandising on the images and photography in all the new marketing campaigns, catalogs and websites have been optimized to showcase our brand more effectively.
And our product development, marketing, visual merchandising and buying are integrated more closely than ever before.
We [Indecipherable] deep in these key styles to increase full price selling and maximize sales.
The last important step for elevating the brand is to improve the customer experience across the Guess ecosystem, including our stores, our websites, wholesale distribution and through our licensees.
We are mobilizing our field and business units to address this and we plan to upgrade our technology and tools to deliver superior service to our customers.
Some examples of these upgrades in store technology include enhanced WiFi networks, extended payment methods and mobile check outs.
These projects should be complete by the end of next year.
Regarding customer centricity, let me start with our customer base.
As you know, we resonate across three distinct customer groups: heritage, Millennials and Generation Z and we develop our product assortment to support the unique lifestyle needs of these customers.
With Gen Z, specifically, we have a separate strategy including differentiated product development, marketing and customer engagement.
This is our brand partnerships group led by Nicolai Marciano.
Product collaborations and events drive this business.
We had great success here pre-pandemic with key collaborations such as J Balvin.
But as you can imagine, the pandemic impacted our ability to execute this event-driven marketing campaign.
Now, we are able to restart these collaborations.
In fact, this past weekend, we had a successful event with Babylon and influential skate and streetwear label on our campus in LA where we hosted over 6,000 people over three days.
Regarding our digital business, we continue to make progress in optimizing our user online experience via the e-commerce platform that we implemented last year.
For example, in Europe, we are seeing improved conversion rates, especially from mobile, which represents over 80% of our traffic.
Our average web session duration increased over 20%, bounce rate decreased 10% and loading time versus our previous platform is 70% faster.
And during the quarter, we implemented some upgrades to the platform resulting in an increase in our add to basket sessions of over 30%.
We continue to work on implementing omnichannel capabilities in Europe as well as upgrade North America's current capabilities.
We plan to complete this project by mid-year next year.
The last pillar of our customer centricity strategy is related to customer data capture, segmentation and analytics.
We have built out a high-performance platform, but we're still operating on an extremely limited capacity to process and utilize our customer data.
We're now working on a platform, which includes powerful tools to fuel data collection, consumer insight analysis, personalized marketing and client telling.
We can use these tools to maximize sales from our existing customer base, as well as efficiently target new customers.
This implementation is underway and will be completed by next year.
This will be a game changer, allowing us to use our data to unlock a ton of value.
Now, let me talk about our outlook.
When I came back in early 2019, we identified several opportunities for value creation.
At that time, the most significant of these were in margin expansion.
We laid out a plan to increase operating margin by about 450 basis points to 10% in five years.
We used the pandemic as an accelerator to transform our business and not only are we expecting to reach our 10% target this year, but we are now increasing our operating margin target to 12% by fiscal year 2024, when we plan to deliver $2.8 billion in revenue.
I'm excited to share with you that this would yield a return on invested capital of over 30%.
I'm confident in this outlook and this is why.
We see clear opportunities for revenue growth from category expansions in areas like denim, Marciano, handbags, dresses and outerwear to new store development to digital sales growth.
Our margin expansion has come from concrete changes to our business model, including IMU improvements, store portfolio optimization and cost reductions.
And while we are currently operating in what might be on abnormally low promotional period industry wide, this company will never go back to the levels of promotional activity that it had pre-pandemic.
Our balance sheet is in a very good position, which allows us to fund our business needs, as well as return value to shareholders.
We announced today that our Board has authorized a share repurchase program of $200 million.
In closing, when I was invited to come back to Guess, I came back with high expectations, I knew that the company had an amazing global brand with tremendous potential and I felt that I could contribute to realize that potential.
But like Steve Jobs said I couldn't connect the dots looking forward and I had to trust my gut.
When I look back at what happened in the last two and a half years, I couldn't be more proud of what we have accomplished in the face of a pandemic of my partnership with Paul and of the transformation of our business into a company with an elevated global brand and a strong business model.
This is a company that is poised to gain significant market share, a company ready to deliver high return on invested capital fueled by high margins and a capital-light model.
A company with an amazing team ready to take the business to the next level of growth and profitability.
Today, I am thrilled to connect the dots looking backward and I couldn't be happier I trusted my gut to come back to my home.
With that, let me pass it to Katie to review our financials in more detail.
I want to start with something you can't see in the numbers.
Of course, I'm thrilled that we almost doubled operating profit from pre-pandemic levels this quarter, even in the midst of a challenging environment.
But first I want to mention how proud I am to be part of this team at Guess.
It's a team that works hard and works smart to execute our strategy and achieve our goals.
Now, let me take you through the details on the quarter.
Second quarter revenues were $629 million, up 58% to last year in U.S. dollars and 51% in constant currency.
We were down 8% compared to LOI.
This was slightly short of our expectations, as a result of timing in our European wholesale business worth about 4% to LLY, where delays in product receipts moved some shipments a few weeks into the third quarter.
Overall, the 8% revenue decline to LLY was driven by the impact of permanent store closures worth roughly 5% of revenue and the shift in wholesale shipments in Europe.
I want to note that our promotions were well below pre-pandemic levels across all of our direct-to-consumer businesses, which is impacting our sales level versus LLY, significantly driving our profit.
Let me get into a bit more detail on sales performance by segment.
In Americas Retail, revenues were down 6% versus LLY, better than our expectations.
This decline was entirely driven by permanent store closures, which were worth about 8% of the sales to LLY.
Store comps in the U.S. and Canada were up 5% in constant currency.
Same-store sales were solid positive in the U.S., but the recovery in Canada is moving a bit more slowly.
Although traffic is still materially negative, from Q1 to Q2, we saw improved trends there.
Our conversion remains high and AUR increased substantially in Q2 with strategic price increases and more full price selling.
The gap between the performance of our tourist-centric stores and non-tourist-centric stores is still wide, but narrowed significantly in Q2 versus Q1.
This suggests that at least domestic travel is picking up, the total travel still remain significantly below historical levels.
In fact, our non-tourist stores in the U.S. and Canada had positive double-digit same-store sales growth this quarter.
The profitability that we have brought in the segment is super exciting and worth noting.
Operating margin in Q2 was 20% versus only 3% two years ago and operating profit is 6 times what it was in LLY even on lower sales.
This is an incredible base of which to grow in North America.
In Europe, revenues were down 5% versus LLY.
Our retail business continues to be pressured by pandemic-related traffic declines.
Store comps for Europe were down 20% in constant currency, impacted by negative traffic; however, this was partially offset by solid conversion rates and significant AUR increases.
Absent the shift in shipment timing, that we mentioned earlier, our European wholesale business continues to show healthy trends with an order book above pre-pandemic levels.
In Asia, revenue was down 43% to LLY, almost half of this decline was driven by permanent store closures.
Our store comps were down 30% in constant currency, with negative sales comps in South Korea and China, more moderate than other areas in the region like Japan, Taiwan and Hong Kong, Macau, where they're struggling more with the pandemic.
Our Americas Wholesale sales were up 19% to LLY.
We are happy with our momentum in this business.
Operating margin expanded almost 600 basis points to LLY here, resulting in a lift of over 50% for operating profit in this segment.
Licensing revenues also outperformed and were up 18% to LLY in Q2 to provide strong performance in our perfume and footwear.
And as you know, this is an extremely high margin business, which delivered a 92% operating margin this quarter.
Total company gross margin for the quarter was 46.8%, almost 800 basis points higher than two years ago.
Our product margin increased 370 basis points this quarter versus LLY, primarily as a result of lower promotions and higher IMU.
Occupancy rate decreased 420 basis points.
This quarter we booked over $7 million in rent credits for fully negotiated rent release deals, mostly in Europe.
The remainder of the decrease is attributable to lower rent and permanently closed stores.
Adjusted SG&A for the quarter was $206 million, compared to $218 million two years ago, a decrease of $12 million or 6%.
We continue to benefit from changes to our expense structure and a decrease in expenses related to permanent store closures versus LLY.
In addition, there was a one-time benefit of about $4 million from government subsidies, namely in Europe, which was partially offset by higher variable expenses related to the growth of our e-commerce business.
Adjusted operating profit for the second quarter was $89 million versus $48 million in Q2 two years ago.
Our balance sheet continues to strengthen.
I will take you through some details comparing now to last year, not LLY.
We ended the second quarter with $459 million in cash a $131 million higher than last year's balance at the end of Q2.
Inventories were $430 million, up 3% in U.S. dollars and 1% in constant currency versus last year.
Inventory management has been a key capability for us and we continue to act swiftly and strategically here.
We feel good about our inventory position and believe we have the right assortment to satisfy customer demand.
Year-to-date capital expenditures were $22 million, up from $10 million in the prior year, but significantly below pre-pandemic levels.
We generated $18 million of free cash flow in the first half of the year.
Our ability to generate cash gives us the runway to invest in our business, as well as return value to shareholders.
We announced today that our Board of Directors has authorized a new $200 million share repurchase program.
This new program includes the $48 million remaining under the Company's previously authorized repurchase program and we will use it opportunistically.
So, now let's talk about our go-forward expectations.
The current environment is still uncertain.
So, we will not provide formal guidance, but I will walk you through how we're thinking about both for short and longer term future.
Again, I'm going to anchor our commentary to LLY.
We are maintaining our revenue expectations for the full year at down mid-single digits.
We expect the third quarter to be slightly negative to flat with help from shifted wholesale shipments from Q2.
In terms of profit, adjusted operating margin for the third quarter is expected to be about 250 basis points better than LLY.
Gross margin is expected to expand by around 600 basis points to LLY, driven primarily by lower occupancy costs, lower promotions and improved IMU.
We anticipate that the adjusted SG&A rate will be at 350 basis points as cost savings are offset by business mix and reinvestments in business expansion initiatives including marketing.
And with the rest of the industry, we are seeing some cost pressures, particularly in freight and labor, which are built into these numbers.
For the full fiscal year 2022, we are raising our expectations for operating margin and profit.
We now expect operating margins to reach approximately 10% for the year versus adjusted operating margin of 5.6% in LLY.
This represents margin expansion of roughly 450 basis points to our pre-pandemic business despite a lower revenue base and we are confident in our ability to sustain these profitability levels, as well as deliver top line growth.
As a result, we are raising our operating margin target and our long-term plan to reach 12% by fiscal year 2024 with revenues in that year expected to hit $2.8 billion dollars, consistent with our previous call.
This implies an operating income of $335 million in fiscal year 2024, $185 million more than adjusted operating profit in fiscal year 2020.
Adjusted earnings per share is expected to be around $3.50 per share, versus a $1.45 in fiscal year 2020.
This would be a record level of adjusted earnings per share for the Company.
Our team is motivated and I'm proud to say that we are running this company for the future, not just for now.
 Assistant:

Chosen response:
increases share repurchase authorization to $200 million.
increasing long-term operating margin goal to 12% and adjusted earnings per share to $3.50 by fiscal 2024.
guess inc - expect revenues in q3 of fiscal 2022 to be slightly negative to flat versus q3 of fiscal 2020.
for fy fiscal 2022, assuming no additional covid-related shutdowns past q2, expect revenues to be down mid-single digits versus fiscal 2020.


Prompt:
Human: With me on the call is Ronald Kramer, our Chairman, and Chief Executive Officer.
Such statements are subject to inherent risks and uncertainties that can change as the world changes.
Finally, from today's remarks, we'll adjust for those items that affect comparability between reporting periods.
We are pleased with our third quarter performance, which was slightly above our expectations.
Revenue increased 2% over the prior-year quarter of 4% excluding the impact of the SEG disposition.
Adjusted EBITDA was $76 million, excluding unallocated costs and adjusted earnings per share was $0.43.
We are executing well in a very complex operating environment.
I want to spend a minute discussing it before moving to the segments.
Demand remained very healthy across our product categories supported by a strong housing market, repair and remodel activity, and consumer spending.
We're currently carrying record levels of backlog in both the CPP and HBP segments due to transportation disruptions and tight labor availability, which limited our ability to catch up with demand.
We implemented price adjustments and continually work through efficiency programs to mitigate rapidly rising input costs, and we'll continue to work with our suppliers and customers to implement further price adjustments.
Our businesses are proven to be resilient and we are reiterating our full-year guidance.
Our AMES strategic initiative that will consolidate operations, increase automation, support e-commerce growth, and create a new global data and analytics platform for AMES by the end of 2023 is on track.
We expect this to further improve margins in the years ahead.
We reiterate our expectation to realize annual cash savings of $30 million to $35 million and inventory reductions of the same magnitude when the benefits of the initiative are fully realized.
As we navigate through the second year of managing our businesses during the global pandemic, we continue to prioritize protecting employees even the restrictions in the United States, Canada, United Kingdom, and Australia are evolving.
We are closely monitoring the situation due to the spread of the COVID-19 delta variant and we'll make adjustments as needed to be responsive to government guidelines and to ensure the safety of our employees and customers.
Turning to the segments, in Consumer and Professional Products, we saw a robust demand across all geographies and product lines, shipping delays related to the availability of transportation impacting US revenue and EBITDA was impacted by the implementation of price adjustments, which as expected lagged input cost increases.
In the Home and Building Product segment, we continue to see strong demand for both residential and commercial door products.
Sales increased from the prior-year quarter driven by increased volume and favorable pricing and mix.
EBITDA also increased benefiting from the increased sales, partially offset by the timing of price adjustments versus increasing input costs.
In Defense Electronics, Telephonics revenue decreased from the prior year primarily driven by reduced volume resulting from the timing of deliveries on communications and radar systems as well as the divestiture SEG partially offset by volume increases in Naval and Cybersystems.
EBITDA increased over the prior year's actions taken to reduce operating expenses took effect and performance in Naval and Cybersystem programs improved.
Backlog in the quarter was $375 million compared to $341 million in June 2020 excluding SEG with trailing 12-month book-to-bill of 1.1 times.
We continue to see a bright future for the Telephonics intelligence, surveillance, and reconnaissance products in the years ahead.
Turning to the balance sheet, we continue to have a solid capital structure with X1 flexibility.
We have $221 million in cash and $362 million available on our revolving credit facility, putting us in an excellent position to execute on our organic growth initiatives and to capitalize on an active pipeline of acquisition opportunities while returning cash to shareholders through our quarterly dividends.
We've delivered to 2.9 times marking 1.5 turns of improvement over the prior-year period.
Earlier today, our Board authorized an $0.08 per share dividend payable on September 16, 2021, to shareholders of record on August 19.
This marks the 40th consecutive quarterly dividend to shareholders, which has grown at an annualized compound rate of 17% since we initiated it in 2012.
I'll start by highlighting our third quarter consolidated performance.
Revenue increased 2% to $647 million or increased 4% when excluding the SEG divestiture.
Adjusted EBITDA decreased 7% to $65 million and adjusted EBITDA margin decreased 100 basis points to 10%.
Gross profit on a GAAP basis for the quarter was $170 million, increasing 3% compared to the prior-year quarter.
Excluding restructuring-related charges, gross profit was $171 million increasing 3.5% compared to the prior-year quarter with gross margin increasing 30 basis points to 26.4%.
Third quarter GAAP selling, general and administrative expenses were during $126 million compared to $114 million in the prior-year quarter.
Excluding restructuring-related charges, selling, general and administrative expenses were $122 million or 18.9% of revenue compared to $112 million or 17.7% in the prior-year quarter, primarily driven by restoration of selling and marketing expenditures and increased distribution and transportation costs.
Third quarter GAAP net income was $17 million or $0.31 per share compared to the prior-year period of $22 million or $0.50 per share excluding items that affect comparability from both periods, current quarter adjusted net income was $23 million of $0.43 per share compared to the prior year of $26 million or $0.59 per share.
Keep in mind, the equity offering in August 2020 impacted current quarter adjusted EBITDA by approximately $0.08.
Corporate and unallocated expenses, excluding depreciation were $11 million in the quarter in line with prior-year third quarter.
Our effective tax rate, excluding items that affect comparability for the quarter, was 31.2% and for the year-to-date period was 31.1%.
Capital spending was $10 million in the third quarter compared to $12 million in the prior-year quarter, depreciation and amortization totaled $15.8 million compared to $15.5 million in the prior-year quarter.
Regarding our balance sheet and liquidity.
As of June 30, 2021, we had net debt of $835 million and leverage of 2.9 times calculated based on our debt covenants.
This is a 1.5 turn reduction from our prior-year third quarter and a 0.5 turn reduction from our 2020 fiscal year end.
As a reminder, Griffon uses cash in the first six months of its fiscal year, which will be more than offset by the generation of significant cash flow in the second half.
Our cash and equivalents were $221 million and debt outstanding was $1.06 billion.
Borrowing availability under the revolving credit facility was $362 million subject to certain loan covenants.
Regarding our 2021 guidance with our third quarter behind us, we're continuing to see strong demand for products across our portfolio recovering consumer activity and the strong housing markets are contributing to the constructive macro environment and homeowners continued to focus on outdoor living and repair and remodel projects continue.
While we are seeing the expected headwinds from cost inflation, supply chain disruptions, and a tight labor market, we are managing through those effects and we expect an excess of $2.5 billion of revenue and continue to expect $320 million of adjusted EBITDA, excluding unallocated and one-time charges.
As we entered the final quarter of our fiscal year, we're seeing strong demand trends across all of our segments.
We continue to successfully manage through this dynamic environment, driven by the exceptional dedication perseverance, and performance of our 7,500 employees.
Over the last three years since the sale of our plastics business in the purchase of ClosetMaid and CornellCookson, we fundamentally strengthened Griffon.
During this period, our revenue and adjusted EBITDA have increased at a compounded annual growth rate of 11% and 20% respectively.
Adjusted earnings per share have grown from $0.67 to $1.91 on a trailing 12-month basis, which is a 42% compound annual growth rate.
Most importantly over this period, we've generated $212 million in free cash flow and reduced our leverage by almost three full turns to 2.9 times.
We're very pleased with our progress creating long-term shareholder value.
We expect significant additional benefits to come as we execute on our strategic initiatives to improve margins and take advantage of our balance sheet firepower to invest in our businesses and capitalize on acquisition opportunities.
Our best is yet to come.
Operator, we'll take any questions.
 Assistant:

Chosen response:
q3 earnings per share $0.31.
q3 adjusted earnings per share $0.43.


Prompt:
Human: I am Patrick Suehnholz, Greenhill's Head of Investor Relations.
And joining me on the call today is Scott Bok, our Chairman and Chief Executive Officer.
These statements are based on our current expectations regarding future events that, by their nature, are outside of the firm's control and are subject to known and unknown risks, uncertainties and assumptions.
Or a discussion of some of the risks and factors that could affect the firm's future results, please see our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
We reported first quarter revenue of $68.9 million, operating profit of $7.2 million and net income per share of $0.09.
Our quarterly revenue was 3% higher than last year and our operating profit and earnings per share compared to a loss last year.
Given that this quarter followed one where we had our best quarterly revenue ever, we see these as respectable results that mark a solid start to the year.
We are also pleased that after quarter end, we further accelerated the pay down of our debt and that we have made good progress toward our recruiting goals.
I will now comment very briefly on our operations as we continue through the pandemic, then on the state of each of our businesses, then speak on each of our key financial metrics.
As I've said in each recent quarterly call, our firm has operated well throughout the pandemic.
At this point, most of our offices have at least some people back from home, and some are operating fairly normally.
In-person attendance will naturally grow as more people get vaccinated and the virus risk declines, both generally and particularly for our people, most of whom I expect have been or will be vaccinated.
To the extent people are still working from home and may be for some time to come, we have proven that we can be very effective at both executing for existing clients and winning new clients in that format.
But we do think working from the office is better for our team's productivity, efficiency, training, morale and other reasons.
So our goal is to get largely back to that over the next few months in most of our office locations.
Turning to our businesses.
M&A activity is stronger than it has been in recent years in each of our main markets.
It is particularly strong in the U.S. where it is running at a record pace.
We see this in the fact that we are winning a significantly larger number of assignments than we did last year just pre-pandemic or the year before, which benefited from a good economy and no unusual health risks.
The timing of deal announcements and completions is what determines quarterly results.
So those results vary as they always have, given the serendipitous nature of deal timing.
But we feel like we're off to a good start this year in all respects.
Consistent with industrywide statistics, the U.S. is the most active part of the firm, but we are also very busy in place is the were less active last year, like Australia and Canada.
Our hope and expectation is that as other countries emerge from the pandemic period as the U.S. appears to be now, we will see economic and deal activity rebound sharply there just as we are seeing it in the U.S. now.
With respect to restructuring activity, I said last quarter that activity had slowed considerably from last year's frenetic pace, and that continues to be the case.
There will come a time when financing markets will tighten simply because that's always the case.
And there will then be another surge of restructuring activity.
In the meantime, we are supplementing our traditional restructuring activity with an increased emphasis on financing advisory work.
The debt markets have become far more diverse in recent years with the proliferation and growth of so-called alternative lenders.
We can be very helpful to our clients in accessing that market.
Lastly, after a very slow period last year, the market for private capital advisory transactions is again very active.
In our private capital advisory business, we are busy in Europe and Asia doing transactions in the secondary market, including many larger, more complex assignments for the general partner of a private equity fund, is accessing the secondary market to achieve strategic goals.
In the U.S., we've made good progress rebuilding our team.
And as part of that, we have taken steps to build a primary fundraising business, which we think can be productive in its own right, but also highly complementary to the secondary business.
We expect very shortly to have a fully functioning global team for the private capital advisory business, encompassing primary capital raising, secondary sales and general partner-led fund restructurings.
We have other recruits well in progress and expect this year to be an important year in terms of M&A recruiting with an emphasis on the U.S. market and on adding incremental industry sector expertise.
For a wide range of reasons, we are seeing a lot of good candidates.
Now turning to our costs.
Our compensation costs were lower than last year in absolute terms, but our compensation ratio was higher than our target range.
Our objective is to bring the ratio down to the target range for the full year.
Where we end up, as always, depends heavily on our revenue outcome for the year.
Our non-compensation costs were lower than last year and are running at a rate consistent with our target.
There were a few unusual expenses this quarter, primarily related to foreign exchange losses, and we continue to look for opportunities to drive costs lower even post pandemic.
Our interest expense continues to trend lower, given declining debt levels and continued low short-term interest rates.
Our tax rate of 26% for the quarter after adjusting for the impact of charges related to the vesting of restricted stock is consistent with our guidance.
We ended the quarter with $87.9 million of cash and $326.9 million of debt.
We paid down another $20 million of that debt since quarter end.
We also declared our usual $0.05 quarterly dividend and bought back just under a million shares and share equivalents for a total cost of $14.5 million.
We have $35.5 million of repurchase authority available for the year ahead through next January.
As I said last quarter, our principal focus is on deleveraging, but we also intend to purchase shares in a prudent manner to further enhance the upside potential for continuing shareholders.
Our employees currently own about half of the economics of the firm through stock and restricted stock and thus are fully aligned in trying to drive shareholder value in the quarters and years to come.
With that, I'll be happy to take any questions.
 Assistant:

Chosen response:
compname reports q1 earnings per share of $0.09.
q1 revenue rose 3 percent to $68.9 million.
q1 earnings per share $0.09.


Prompt:
Human: I am Patrick Suehnholz, Greenhill's Head of Investor Relations.
Joining me on the call today is Scott Bok, our Chairman and Chief Executive Officer.
These statements are based on our current expectations regarding future events that, by their nature, are outside of the firm's control and are subject to known and unknown risks, uncertainties and assumptions.
For a discussion of some of the risks and factors that could affect the firm's future results, please see our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
We reported fourth quarter revenue of $140.7 million, which was our best quarterly performance ever, an operating margin of 57% and net income of $2.71 per share.
For the year, we had revenue of $311.7 million, an operating margin of 18% and net income of $1.36 per share.
Our quarterly revenue was up 32% and earnings per share was up 158% from the same period last year.
For the full year, our revenue was up 4% and earnings per share was up 202% from the prior year.
In sum, we had a very strong finish to the year, resulting in very respectable pandemic year results on the top and bottom line, all consistent with our commentary on the past couple of quarterly investor calls.
Clearly, quarterly revenue, of the scale we achieved requires a lot of things to go right.
We generated multiple, very significant M&A completion fees, multiple very significant restructuring completion fees and a long list of smaller fees to go with them.
We also benefited more than usual from accounting rules in relation to revenue recognition that came into effect a few years ago and sometimes require revenue from completion fees to be booked before the transaction triggering that fee is fully completed.
But just to make clear that our very strong quarter was not simply a matter of transaction timing, our earnings per share for the quarter was greater than the analyst consensus forecast for the fourth quarter and the next four quarters ahead combined.
In other words, our profit in one quarter exceeded what was expected for five quarters.
Looking at our full year results.
We benefited from particularly strong results from our European M&A business and our U.S. restructuring business.
We also benefited from an expanding array of financing advisory roles that are neither traditional M&A nor traditional restructuring.
Our private capital advisory business made a meaningful contribution as well, albeit considerably less so than in the prior year.
Our revenue for the year was highly concentrated in a few busy areas, as many regions and sectors were heavily impacted by the pandemic and related constraints in economic activity and thus produced only modest revenue.
Importantly, we see nearly all of those areas has poised for significant improvement in 2021, given current market conditions and what we can see in our pipeline of assignments.
Turning to our costs.
Our compensation ratio for the year was 62%, moderately above our target level as we invested much of our non-compensation savings in rewarding our strong performers in what was the challenging year for all.
For the quarter, the compensation ratio was unusually low, as we work to achieve a reasonable full-year cost level.
We did similarly in last year's fourth quarter.
As noted in the past, we will have some quarterly volatility, but aim to manage annual compensation cost to a target level.
Our non-compensation costs were down 18% from the prior year, despite the fact that we incurred rent expense on two New York headquarters locations for much of the year as we built out new space.
Some of those cost savings flowed from reduced travel due to pandemic-related restrictions, and we believe those cost savings will continue for much of this year.
Even after that, we expect to have considerably lower travel expense than we had historically.
Separate from travel, our cost savings resulted from a wide variety of management initiatives, and we expect the benefits of those moves to be sustained for the long-term.
As a result, we expect our 2021 non-compensation cost to be materially lower than they were in 2020, when it-turn they were substantially below the level in 2019.
As one example, the rent expense for our headquarters in 2021 should be $7 million less than it was in 2020, given we have both more expensive space and some months of duplication in the year just ended.
Notwithstanding those savings, we will have a higher quality space and room for more bankers than we did in our prior headquarters location.
Given the significant opportunities we have found to reduce non-compensation costs, we see increased potential to attain our goal of a 25% operating margin like we achieved for many years of our history, and that is our goal.
Our interest expense for the year was $15.5 million, well below last year's level, as we benefited from a lower interest rate premium post our refinancing last year, lower market interest rate levels, reduced debt outstanding, and the absence of a refinancing charge.
For the quarter, interest expense was $3.5 million, as we continue to benefit from low market rates and debt reduction.
And our borrowing cost is currently around 3.4% and should remain low, based on market expectations of continued low interest rates and our interest expense should continue to decline in line with our pay down of debt.
Our income taxes were considerably lower than last year, as our income was skewed to lower rate jurisdictions.
The opposite of last year when it was skewed to higher rate jurisdictions.
We also benefited to some degree from various tax law changes that were put in place during 2020 as a result of the pandemic.
Going forward, we continued to expect an effective tax rate of around 25%, excluding any charge or benefit relating to the impact of share settlements on vesting restricted stock and assuming no major changes in tax laws in the primary places we operate.
The actual rate could end up somewhat higher or lower in any given year, depending on where we earn most of our income in such year.
We ended the year with $112.7 million of cash and debt of $326.9 million, meaning we had net debt of $214.2 million.
During 2020, we made principal payments of $38.8 million on our term loan, including a discretionary payment of $20 million at year-end.
There are no mandatory principal payments due until March of 2022, but we intend to continue paying down our debt on an accelerated basis as our cash flow allows.
Given the uncertainty created by the pandemic, we purchased only 489,704 shares in the open market in 2020, plus another 764,529 share equivalents in connection with tax withholding on vesting restricted stock units for a total cost of $23.3 million.
Our Board has authorized $50 million in repurchases of shares and share equivalents for the year ahead through January 2022.
While our principal focus will be on deleveraging, we intend to purchase shares on a prudent manner in an effort to further enhance the upside potential for continuing shareholders.
In that regard, note that, our employees own about half of the economics of the firm through stock and restricted stock.
So we are fully aligned with shareholders, as we seek to maximize value through the prudent use of the cash that we generate.
We also declared our usual quarterly dividend of $0.05 per share.
We entered 2021 in what feels like a favorable environment for our business.
With respect to M&A, a positive economic outlook, driven by unprecedented fiscal and monetary stimulus, combined with high stock prices, low borrowing costs, very substantial dry powder of private equity funds, a plethora of special-purpose acquisition companies looking for deals, and a variety of other factors should drive increased deal activity.
In particular, we expect increased M&A revenue in most of our international offices as well as in the certain sectors like industrials, where activity was low in 2020.
At the same time, while restructuring activity has cooled considerably from 2020's frenetic pace, more debt restructuring should be needed for the many industries and companies adversely affected by the continuing pandemic.
In addition, we are seeing significant opportunity to advise on various kinds of debt and equity financings and expect those assignments to provide a meaningful part of our near-term revenue.
In sum, we would be very disappointed if we fail to generate meaningful revenue growth in 2021.
And given our expectations of lower cost, higher revenue should result in margin expansion and increased earnings.
I will now make a few comments on our strategy.
Our overarching objective is to increase the scale, diversity and consistency of our revenue sources, while maintaining appropriate discipline on expenses.
As always, we will look to recruit M&A bankers who bring us incremental industry sector expertise or regional capabilities.
We have an active pipeline of good prospects in that regard.
With respect to restructuring advice, we see our strategic initiative of the past few years to significantly expand our team as a major success but we believe, there remains the potential to expand even further.
In particular, we want to play more advisory roles on debt and equity financing transactions.
We've had increasing success in broadening the range of transactions on which we advice and we see this as an opportunity that will continue even in periods where there's much less bankruptcy-related activity than we have seen off-late.
In our private capital advisory business, we have strong teams in Europe and Asia, and are in the process of rebuilding in the U.S., with an increased focus on higher value-added transactions.
In terms of strategic initiatives, we are aiming to enhance our focus on advising financial sponsors on a wide variety of transactions.
Historically, we focused heavily on serving public companies and we've enjoyed great success with that constituency, However, over time, we came to realize though we've had increasing interaction with financial sponsors across our M&A, restructuring and private capital advisory businesses.
We are now aiming to organize those efforts in a more systematic way designed to generate more revenue and we have already put significant resources into this initiative.
We are hopeful that it will be at least as successful as the restructuring advisory team expansion, that was our primary strategic focus over the last couple of years.
In closing, I want to mention two landmark events in the life of our firm.
First, this week, we are opening our new headquarters in the newly renovated Rockefeller Center building on Sixth Avenue, that is known to many as the old Time Life Building.
We look forward to welcoming clients there once the pandemic is subsided.
Second, a couple of weeks ago, we passed the 25-year mark in the life of our firm.
It is obviously not the time for celebrations of any kind, but it is worth noting the fact that our firm has proven resilient through numerous challenges over that quarter of a century, the dot com bubble bursting, the September 11 terrorist attacks, the financial crisis of 2008 and now a major pandemic.
Our strong culture is the source of our resilience and both our global team and our brand will emerge from the pandemic stronger than ever.
With that, I'm happy to take any questions.
 Assistant:

Chosen response:
compname reports q4 earnings per share of $2.71.
compname reports fourth quarter earnings per share of $2.71 and full year 2020 earnings per share of $1.36.
q4 revenue rose 32 percent to $140.7 million.
q4 earnings per share $2.71.