Prompt:
Human: Also on the call today are Ryan Campbell, our Chief Financial Officer; Cory Reed, President of Production and Precision Ag; and Brent Norwood, Manager of Investor Communications.
Today, we'll take a closer look at Deere's fourth quarter earnings and spend some time talking about our markets and our current outlook for fiscal 2022.
They can be accessed on our website at johndeere.com/earnings.
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John Deere finished the year with solid execution in the fourth quarter resulting in a 13.6% margin for the Equipment Operations.
Ag fundamentals remained strong through the course of the year and our order books indicate another year of robust demand in 2022.
Meanwhile, the construction and forestry markets also continue to benefit from strong demand and lean inventories leading to the divisions strongest financial results in over 15 years.
Now let's take a closer look at our year-end results for 2021 beginning on Slide 3.
For the full year, net sales and revenues were up 24% to $44 billion, while net sales for equipment operations increased 27% to $39.7 billion.
Net income attributable to Deere and Company was $5.96 billion or $18.99 per diluted share.
Slide 4 shows the results for the fourth quarter.
Net sales and revenue were up 16% to $11.3 billion, while net sales for the Equipment Operations, were up 19%, to nearly $10.3 billion.
Net income attributable to Deere and Company was $1.283 billion or $4.12 per diluted share.
Before I cover our fourth quarter results, I'd like to recognize all of John Deere's 77,000 employees for their tremendous hard work and dedication throughout a year filled with unpredictability.
I'd also like to recognize the ongoing efforts and unparalleled capabilities of the John Deere dealer network that's not only an integral part of our value proposition in the market, but also often called upon in the toughest of times to keep our customers up and running.
Let's start with fourth quarter results for Production and Precision Ag starting on Slide 5.
Net sales of $4.66 billion were up 23% compared to the fourth quarter last year, primarily due to higher shipment volumes and price realization.
Price realization in the quarter was positive by about 7 points.
And currency translation was also positive by roughly 1 point.
Operating profit was $777 million resulting in a 16.7% operating margin for the segment, compared to 15.2% margin for the same period last year.
The year-over-year increase was driven by positive price realization, higher shipment volumes and mix, partially offset by higher production costs.
Also, it's worth noting that last year's results were negatively impacted by employee separation expenses resulting from restructuring activities.
Shifting focus to Small Ag and Turf on Slide 6.
Net sales were up 17%, totaling $2.8 billion in the fourth quarter.
The increase was primarily driven by higher shipment volumes and price realization.
Price realization in the quarter was positive by just over 4 points, while currency translation was minimal.
For the quarter, operating profit was $346 million, resulting in a 12.3% operating margin.
The higher shipment volumes, sales mix and price realization were partially offset by higher production costs, R&D and SA&G.
When comparing to the fourth quarter of 2020, keep in mind, the prior period included $77 million in separation costs and impairments.
Slide 7 shows our industry outlook for Ag and Turf markets globally.
In the U.S. and Canada, we expect industry sales of large Ag equipment to be up approximately 15%, reflecting another year of strong demand.
In fiscal year '21 customer demand driven by the combination of strong fundamentals and advanced fleet age and low inventory outpaced the industry's ability to supply.
With all of these dynamics still present in '22, we expect demand to exceed the industry's ability to produce for a second consecutive year as supply base delays continue to constraint shipments.
Order books for the upcoming year or mostly full except for a few cases where we paused orders to manage supply challenges and allow us to reevaluate inflationary pressure later in the year.
Currently, orders are complete for the years' production of crop care products, while our combine production slots are over 90% full with the early order program still ongoing.
Meanwhile, large tractor orders are sourced well into the third quarter and we expect the remainder of the book to fill out shortly.
We're encouraged that take rates for our mainstay precision technologies like Combine Advisor, ExactApply an ExactEmerge continue to track higher year-over-year.
More recent product introductions such as ExactRate planners and the X9 combine saw significant increases when compared to last year, while our premium and automation software activation take rates are over 85% for our 8 series and 9R Series Tractors.
Additionally, we saw significant increases in customer engagement with our digital tools in 2021.
Engaged acres now stand at over 315 million acres, due in part to a sharp increase in Europe with a number of engaged acres has doubled over the past year.
Likewise, use of our digital features such as expert alerts and service advisor remote has increased by about 30% compared to last year.
In the small Ag and Turf segment, we expect industry sales in the U.S. and Canada to remain flat for the year as supply challenges continue to limit industry production.
Following two years of very robust demand, field inventory levels are at multi-year lows and are unlikely to begin recovering until some time in 2023.
Moving on to Europe.
The industry is forecast to be up roughly 5% as higher commodity prices strengthen business conditions in the arable segment and dairy prices remain resilient even as margins show some pressure from rising input costs.
We expect the industry will continue to face supply base constraints resulting in demand outstripping production for the year.
At this time, our order book extends into the third quarter for Mannheim tractors.
In South America, we expect industry sales of tractors and combines to increase about 5%.
Farmer sentiment and profitability remain steady at all time highs as our customers benefit from robust commodity prices, record production and a favorable currency environment.
Our order books reflect the strong sentiment and currently extends into the second quarter, which is as far as we've allowed it to grow.
Despite limited government sponsored financing programs, private financing is supporting continued strength in equipment demand, while strong farmer balance sheets enable many customers to purchase using cash.
Industry sales in Asia are forecasted to be flat as India, the world's largest tractor market by units, hold steady in 2022.
Moving onto our segment forecast beginning on Slide 8.
For production and Precision Ag, net sales are forecast to be up between 20% and 25% in fiscal year '22.
Forecast includes expectations of about 9 points of positive price realization for the full year.
For the segment's operating margin, our full-year forecast is between 20% and 21%, reflecting consistently solid financial performance across the various geographical regions.
Slide 9 shows our forecast for the Small Ag and Turf segment.
We expect net sales in fiscal year '22 to be up 15% to 20%.
This guidance includes nearly 7 points of positive price realization and roughly 1 point of currency headwind.
The segment's operating margin is forecasted to range between 16% and 17%.
Now let's focus on Construction and Forestry on Slide 10.
For the quarter, net sales of $2.8 billion were up 14%, primarily due to higher shipment volumes and 6 points of positive price realization.
Operating profit moved higher year-over-year to $270 million resulting in a 9.6% operating margin due to positive price realization and higher shipment volumes, partially offset by higher production cost, SA&G and R&D.
The quarter also benefited from the lack of one-time expenses included in the prior period.
Let's turn to our 2022 Construction and Forestry industry outlook on Slide 11.
Both earthmoving and compact construction equipment industry sales in North America are expected to be up between 5% and 10%.
End markets for earthmoving and compact equipment are expected to remain strong in our fiscal year '22 forecast, benefiting from continued strength in the housing market, increased activity in the oil and gas sector, as well as strong capex programs from the independent rental companies.
Demand for earthmoving and compact construction equipment is expected to exceed our production for the year, resulting in continued low inventory levels, especially for compact construction equipment.
In forestry, we now expect the industry to be up about 10% to 15% as lumber production looks to remain at elevated levels throughout the year even though lumber prices have come down from peaks in mid-summer.
Moving to the C and F segment outlook on Slide 12.
Deere's construction and forestry 2022 net sales are forecasted to be up between 10% to 15%.
Our net sales guidance for the year includes about 8 points of positive price realization.
We expect this segment's operating margin to be between 13.5% and 14.5% for the year, benefiting from price, volume and lack of one-time items from the prior year.
Now, let's move now to our financial services operation on Slide 13.
Worldwide financial services net income attributable to Deere and Company in the fourth quarter was $227 million, benefiting from income earned on higher average portfolio and favorable financing spreads, as well as improvements on the operating lease portfolio, partially offset by a higher provision for credit losses.
Results for the prior period were also affected by employee separation costs.
For fiscal year 2022, the net income forecast is $870 million as the segment is expected to continue to benefit from a higher average portfolio.
Slide 14 outlined our guidance for net income, our effective tax rate, and operating cash flow.
For fiscal year 2022, our full-year outlook for net income is forecasted to be between $6.5 billion and $7 billion.
The full-year forecast is inclusive of the impact from higher raw material prices and logistics costs, which we estimate will add an additional $2 billion in expenses relative to 2021.
At this time, we expect two-thirds of that increase to manifest itself in the first half of the year as the comparisons get easier in the back half of fiscal year '22.
At this time, our forecasted price realization is expected to outpace both material cost and freight for the entire year, though we will likely be price cost negative in the first quarter.
Moving on to tax.
Our guidance incorporates an effective tax rate projected to be between 25% and 27%.
Lastly, cash flow from the equipment operations is expected to be in the range of $6 billion to $6.5 billion and includes a $1 billion voluntary contribution to our pension and OPEB plans.
Before we open up the line for Q&A, we like to first address a few of the likely questions around the current market dynamics, our financial results and the details around our new labor agreement, as well as provide some thoughts on capital allocation for the next year.
To cover the range of topics, I'll engage today's call participants to provide some additional color, and then we'll open up the line for additional questions.
First, I'd like to start with the current demand environment for large Ag equipment.
Cory, can you provide some additional color on demand for large Ag products and which new technologies are resonating with customers.
We're really encouraged by both the velocity of our order books and the take rates for some of our latest technology.
Demand has been strong since the beginning of 2021 and overall that doesn't look like it's going to let up in 2022.
I touched on this earlier, our order books are either full or near full for most of our North American large ag product lines.
Starting with the combine and EOP.
Our EOP for 2022 production will finish in January, where we'll grow the levels of S-series production and we've already sold out of our planned production for X9 combines.
This is the first year in a multi-year ramp up of production for X9 and we'll ship a 1,000 plus units of X9 9 into North America alone.
We'll further solidify our market leadership in the power class 9 plus combine categories, while also establishing a clear new global benchmark in both productivity and efficiency.
We're also seeing strong demand for some of our newer products, products like ExactRate planter applied fertilizer systems and AutoPath.
ExactRate represents an important first step in the precision application of fertilizer.
Future iterations of this product will be critical in helping us improve nitrogen use efficiency for our customers.
In just its second year we're seeing take rates of that product close to 20%, which is really encouraging.
Similarly, in the first full season, we've seen tremendous feedback from the launch of John Deere AutoPath.
AutoPath leverages John Deere's onboard technology like our Gen-4 displays, SF6000 receivers including the SF3 correction signal and embedded software linked to the John Deere operation center throughout a customer's entire production cycle.
The technology leverages data from planting to know exactly where the row unit traveled to plant seeds and then creates a guidance line for each subsequent path, making in-season fertilizer applications, manual cultivation for weeding or crop protection passes easier and more accurate.
At harvest, it makes it easier to find your guess row and makes that easy for harvest to be even more efficient.
In 2021, we saw take rates of the automation package activation or subscription, which includes AutoPath double, leading to more customers enabled with John Deere's highest value Precision Ag software.
In 2022 and beyond, we'll continue to add value to AutoPath for new features and new technologies as a part of our Precision Ag software package strategies and AutoPath will be foundational for even more automated farming in the future, making every step of our customers' production system even better.
Lastly, See and Spray.
See and Spray Ultimate is going to hit the market this year on a limited basis and we're excited to get it in the more customers' hands.
We view See and Spray as just the first step in a long series of sense and act.
In that journey, we're encouraged by to see early demand for both See and Spray itself and multiple products related to plant-level management in future.
Let's dive a little bit deeper on the fluctuations in North American large ag market share for fiscal year '21 and then let's provide some expectations for this next year in fiscal year '22.
Can you first walk us through the progression of market share that we saw in '21, Corey?
Yes, 2021 was a unique year.
Demand inflected sharply from October of '20 to January '21 timeframe.
And as a result, we experienced pressure on market share early in the year due to our asset-light model.
If you recall, we talked about this dynamic in our fourth quarter earnings call last year and noted that we expected to recover that share quickly and that's exactly what happened.
In fact, we gained 2 points of market share in North America for our large Ag products by year-end and you can see an example of that in the last three quarters of retail sales data for the 100 plus horsepower tractor categories.
So how might market share play out this next year, given that our most recent labor agreement didn't ratify until November 17th?
Yes, it's a great question and while it's too early to forecast with a lot of precision, we see the potential for 2022 to play out very similarly.
We're very likely to see similar pressure in the first quarter as we recover from record low inventories, but also expect a production ramp that helps us maintain and even grow our position as we execute throughout the year.
Let's get into some of the details on our latest labor agreement.
One of the most frequent questions out there is on the incremental cost of the new contract relative to the previous one.
So how should investors think about the impact to our cost structure?
First, it's important to note, we're really glad to have our UAW employees back in our factories and proud of the groundbreaking contract that we put in place.
With respect to its impact on our cost [Technical Issues] side of the contracts period.
Over the six-year contract, the incremental costs will be between $250 million and $300 million pre-tax per year with 80% of impacting operating margins.
So, we experienced a gap between the last contract and the current one resulting in a few weeks of lost production.
How does that impact the quarterly cadence of our financial results?
There are a number of unique items impacting the first quarter.
At first we would -- if you think about first quarter '22, we expect the topline for the equip ops to be pretty similar to the first quarter of '21, missing a few weeks plus of production will neutralize some of the benefits that Corey mentioned in terms of ramping up to higher line rates in December and January.
With respect to margins, there are few things to consider.
In the first quarter, we'll have our toughest price cost comp for the year.
We expect that to be negative in the first quarter, but positive for the full year.
We also expect to experience poor overhead absorption due to the lower volumes as mentioned and there are few other one-time items that will provide some additional drag including ratification bonus and some favorable tax credits that we saw in the first quarter of '21 that don't repeat in '22.
All in, we expect first quarter margins to be mid-to high-single digits for the Equipment Operations with those businesses that have been most affected by the delayed ratification to be below that average looking beyond the first quarter, though we do expect margins for the rest of the year to be more favorable and incrementals more in line with historical averages.
Let's conclude with some discussion around capital allocation.
Ryan, how would you characterize our capital allocation strategy in fiscal year '21 and what might we expect this upcoming year?
With respect to 2021, our strong liquidity position and our cash flow generation really allowed us to execute against all of our cash priorities.
We continue to focus on maintaining our solid A credit rating, but beyond that we invested in our strategic growth priorities, both organically and inorganically.
In addition, we returned over $3.5 billion in capital to shareholders through dividends and share repurchases.
Our two dividend increases are evidence of the confidence we have in the structural improvements we've made in the earnings power of our business.
Overall, our actions in 2021 serve as a good blueprint for how to think about 2022 as we expect to again execute against all of our priorities.
It sounds like we'll continue to see discipline with respect to returning capital, but can you elaborate any further on investing back into our businesses?
The smart industrial strategy that we put in place during 2020 is the foundation for us to focus our resources on the areas that are most differentiated from a customer value perspective.
It's through that lens that we are positioned to increase the level of investment back into our business both organically and inorganically through M&A.
As you can see in our guidance, the R&D investment is up 17% in 2022.
The focus of the increase is on further developing our tech stack, which accelerates our capabilities related to sense and act, autonomy, digital solutions, connectivity and electrification.
We're planning to demonstrate many of our new technologies at our Investor Tech Day in mid 2022.
So stay tuned for that exciting event.
Finally, as it relates to M&A, expect us to continue to be active, aligned with the themes that we've discussed over the last year.
Lastly, is there anything else that you'd like to highlight for investors to expect in 2022?
Yes, 2022 is shaping up to be a very important year for us.
We put in place the new strategy and are well positioned to accomplish our goals.
On that note, we do have a set of goals both related to business and sustainability that will sunset this year.
Accordingly, we'll be rolling out our next suite of goals that will highlight the opportunity we have and what we think we can accomplish over the rest of the decade.
Importantly, we are uniquely positioned and that there is direct alignment between our creation of customer value, improving our own earnings and delivering more sustainable outcomes for the environment.
So, Brent expect us to see -- expect to see a comprehensive suite of goals that really brings all of those elements together.
Now, we're ready to begin the Q&A portion of the call.
The operator will instruct you on the polling procedure.
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 Assistant:

Chosen response:
compname reports q4 sales up 16% to $11.33 bln.
compname reports net income of $1.283 billion for fourth quarter, $5.963 billion for fiscal year.
q4 earnings per share $4.12.
q4 sales rose 16 percent to $11.33 billion.
full-year 2022 earnings forecast to be $6.5 to $7.0 billion, reflecting healthy demand.
anticipate supply-chain pressures will continue to pose challenges in our industries.
looking ahead, we expect demand for farm and construction equipment to continue benefiting from positive fundamentals.
construction & forestry sales moved higher for quarter primarily due to higher shipment volumes and price realization.
small agriculture and turf sales increased for quarter due to higher shipment volumes and price realization.
production and precision agriculture sales increased for quarter due to higher shipment volumes and price realization.
sees 2022 construction & forestry net sales up 10% to 15%.
sees 2022 small agriculture & turf net sales up 15% to 20%.
sees 2022 production & precision agriculture net sales up 20% to 25%.
fiscal-year 2022 net income attributable to deere & company for financial services operations is forecast to be about $870 million.


Prompt:
Human: Our call today will include remarks from our CEO, Roger Hochschild; and John Greene, our Chief Financial Officer.
As we conclude our formal comments, there will be time for a question-and-answer session.
During the Q&A session, please limit yourself to one question; and if you have a follow-up question, please get back into queue, so we can accommodate as many participants as possible.
Our strong fourth quarter results were the capstone to good performance in a very challenging year, proving the value and resilience of our digital banking business model.
While the economic impacts of the coronavirus pandemic were expansive, our business stood up to these challenges and we are in $799 million after-tax for the fourth quarter and over $1.1 billion for the full year.
Our fourth quarter results underscore the capital generation of our model.
While our revenues were down 4% year-over-year, our outstanding credit performance combined with the actions we took to reduce our funding costs and control our expenses, enabled us to exit the year with a 30% ROE in the fourth quarter.
Looking back on the full year, our operating results highlight the strength of our business and the execution of our team.
We proactively adapted to the many ways in which the pandemic has altered our operating environment, including changes in consumer spending patterns, repayment trends and borrowing habits.
Discover has always provided best-in-class customer service and this did not change with the pandemic.
While other issuers faced significant challenges with long hold times, there was no disruption to our outstanding service as we leveraged our digital capabilities and our 100% U.S.-based customer service.
We kept average hold times under five minutes through the trough of the downturn and they quickly returned to normal levels of under one minute.
Additionally, our operational flexibility allowed us to keep our employees safe with nearly all employees continuing to work-from-home since mid-March.
Similarly, our history of conservative credit management and the resilience of our prime customer base positioned us well as we entered this period of economic stress.
We also took quick action at the onset of the pandemic to mitigate credit risk by tightening new account underwriting criteria, reducing promotional rate offers and pulling back on credit line increases, and we added $2.4 billion to reserves as the macroeconomic outlook deteriorated.
As expected, the tightening of our underwriting criteria combined with elevated payment rates impacted our loan growth and our total loans decreased 6% year-over-year.
However, we took substantial market share in private student lending and gain share in card lending.
Our digital bank operating model combined with disciplined expense management has historically generated industry-leading efficiency, but in 2020, we took additional action to control costs and delivered on our commitment to cut $400 million from planned expenses despite absorbing several one-time items that have occurred during the year.
Excluding the one-time items, expenses were down nearly 2% year-over-year.
We achieved this while still investing in analytics, automation and core technology capabilities to support long-term growth and efficiency improvement.
For example, we've invested in new analytics to optimize acquisition marketing to our core customers and we enhanced customer engagement through more targeted offers and interactions.
Our payments business was also well positioned heading into last year's sudden economic decline.
Our PULSE debit business had a strong year with volume up 10% from 2019, reflecting the impact of stimulus funds and higher transaction sizes as debit became a critical way of procuring goods during the pandemic.
Our Discover proprietary network was down 2% for the year and exited the fourth quarter at plus 5%, in line with card sales volume.
While Diners Club volume declined, reflecting the impact of the pandemic on global T&E spending, we signed five new international network partners as we continue to expand global acceptance.
As we look into 2021, we believe there is a significant amount of uncertainty around the timing and shape of the economic recovery and some of the impacts from last year's downturn have yet to be fully realized.
For this reason, we anticipate deterioration in our credit performance in the back half of this year.
Nonetheless, we see reasons for optimism.
After bottoming in April, our card sales steadily rebounded throughout the year and returned to growth in the fourth quarter.
We saw improvement across all categories, especially in grocery and retail, which now represent more than half of our sales mix.
This favorable sales trend has also continued into the first half of January.
In this environment, we will remain disciplined on expense management but also committed to making investments for growth and efficiency and anticipate higher marketing expenses relative to 2020 levels.
We also anticipate resuming a more normal pattern of capital return.
Earlier this week, our Board of Directors approved a new $1.1 billion share repurchase plan and we may begin buybacks as soon as the first quarter, subject to the Federal Reserve's limitations.
In conclusion, 2020 presented us with unparalleled challenges but our business model has well positioned, and I couldn't be more pleased with how the team here at Discover responded.
I'm confident that the actions we took strengthened our business and will drive long-term value for our shareholders and customers.
While there is still uncertainty around the pace of the recovery, I'm optimistic that 2021 will be a better year.
I'll now ask John to discuss key aspects of our financial results in more detail.
I'll walk through our fourth quarter results, starting on Slide 4.
We earned $799 million in net income or $2.59 per share.
These results included several one-time expenses, totaling $137 million.
Excluding these, earnings per share would have been $2.94.
There were a number of factors, both positive and negative, that influenced our performance during the year.
Importantly, our results for 2020 reflect proactive management of our funding and operating cost and our conservative approach to credit management.
These factors helped offset the revenue impacts of elevated payment trends and lower sales volumes.
However, we're seeing some positive signs with a return to sales growth in the quarter and continued expansion of our net interest margin.
In the fourth quarter, net interest income was down 2%, reflecting a 5% decline in average receivables and lower loan yield.
This was mostly offset by decreased funding costs driven by lower market rates and management of our deposit costs.
Non-interest income was 14% lower, driven by higher rewards costs from strong engagement in the 5% category this quarter, a one-time write-off of certain real estate facilities and lower loan fee income also contributed to the year-over-year decrease.
The provision for credit losses was $305 million lower than the prior year due to meaningful improvement in credit performance.
There was no change to reserve levels in the current quarter, whereas the prior year included an $85 million reserve build.
Operating expenses increased 8% year-over-year driven by one-time items related to software write-offs, charges for penalties and restitution, and costs of a voluntary early retirement program.
Compensation expense also contributed to the increase.
These were partially offset by lower marketing costs and decreased professional fees.
Excluding one-time items, expenses were down 4% from the prior year.
Turning to loan growth on Slide 5.
Total loans were down 6% from the prior year driven by a 7% decrease in card receivables.
Lower card receivables were the result of three factors.
First, payment rates continue to be elevated.
While this has reduced loan balances, it has had a favorable impact to credit performance.
Second, promotional balances have continued to decline due to actions we took early in pandemic to tighten credit.
And third, an increase in transactor activity.
Looking at our other lending products.
In student loans, we had a strong peak origination season, increasing market share in leading to 7% loan growth.
Personal loans were down 7% as a result of actions we took early in the pandemic to minimize potential credit losses.
Moving to Slide 6.
Net interest margin continued to improve, up 34 basis points from the prior year and 44 basis points from the prior quarter to 10.63%.
Compared to the third quarter, lower deposit pricing was the primary driver of the improvement in net interest margin.
We cut our online savings rate another 10 basis points from the third quarter as we continue to actively manage funding costs lower.
Online savings rates, 12 month and 24-month CDs are all down to 50 basis points.
Lower interest charge-offs and a favorable mix of promotional rate balances also contributed to the margin expansion from the prior quarter.
These factors offset the impact of the high level of balance sheet liquidity that we are currently carrying.
While this is depressing, our net interest margin today, it should benefit margin as we deploy this liquidity into future loan growth.
Average consumer deposits increased 18% from the prior year.
We continue to see steady demand for our consumer deposit products, which were up $1 billion from the prior quarter.
All of the growth from the third quarter was from indeterminate maturity accounts, which allows us to immediately capture the benefit of deposit rate decreases.
Turning to Slide 7.
We continue to optimize our mix -- our funding mix.
And our goal remains to have 70% to 80% of our funding from deposits.
We also have an opportunity to benefit from higher rate funding maturities over the next couple of years.
Both of these items are expected to benefit net interest margin in future quarters.
Looking at Slide 8.
As Roger noted, we delivered on our commitment to reduce planned expenses by at least $400 million during the year, and I'm pleased to say that we accomplished this goal despite several one-time expense items that occurred in 2020.
Total operating expenses in the fourth quarter increased $94 million or 8% from the prior year, driven completely by $137 million in one-time expense items.
Excluding these, operating expenses would have been down $43 million or 4% year-over-year.
Yet, even as we remain disciplined on costs, we continue to invest in analytical capabilities that we expect will drive future growth and efficiency improvements.
Looking at some of the individual line items.
Employee compensation was up $57 million or 13%, driven by a one-time item related to a voluntary early retirement program as well as staffing increases in technology and higher average salaries and benefits.
Marketing and business development expense was down $75 million or 32%.
Most of the reduction was in brand marketing and card acquisition as we aligned marketing spend and tightened credit criteria in response to this changing economic environment.
Professional fees decreased $22 million or 10%, mainly driven by lower third-party recovery fees related to courts operating at limited capacity.
On Slide 9, you can see our credit metrics for the quarter.
Once again, credit performance was very strong and total charge-offs below 2.4% and credit card net charge-offs nearly 2.6%.
The card net charge-off rate was 78 basis points lower than the prior year, while the net charge-off dollars were down $180 million or 28%.
Compared to the third quarter, net card charge-off rate declined 82 basis points.
The 30-plus delinquency rate was 55 basis points lower than last year and increased 16 basis points from the prior quarter.
Credit also remained strong in our private student loan portfolio with net charge-offs down 31 basis points year-over-year.
Excluding purchased loans, the 30-plus delinquency rate improved 40 basis points from the prior year and 9 basis points compared to the prior quarter.
In our personal loan portfolio, net charge-offs were down 147 basis points and the 30-plus delinquency rate was down 29 basis points year-over-year.
To wrap up credit, this was another quarter of strong performance across all of our lending products driven by the actions we've taken in underwriting, line management and collections, the resiliency of our prime customer base and the impact of government stimulus.
We believe that losses will increase in the second half of 2021 and into 2022.
However, the timing and magnitude of losses could be impacted by any additional government assistance or material shifts in the economic environment.
Moving to the allowance for credit losses on Slide 10.
We held allowance flat to the prior quarter.
While the macro environment has improved, the outlook remains uncertain.
Similar to our past approach, we modeled several different economic scenarios.
The primary assumptions in our economic model were a year-end 2021 unemployment rate of about 8% and GDP growth of about 2.7%.
We did not include any additional stimulus beyond what has already been provided to consumers.
Our economic scenarios also consider the increasing number of COVID cases, the timing of the vaccine rollout and the recent increase and unemployment claims.
Turning to Slide 11.
Our Common Equity Tier-1 ratio increased 90 basis points sequentially to 13.1%, remaining above our 10.5% internal target and well above regulatory minimums.
We have continued to fund our quarterly dividend at $0.44 per share.
Regarding share repurchases, as Roger indicated, earlier this week, we received authorization from our Board of Directors to repurchase up to $1.1 billion of common stock.
And we intend to begin share buybacks in the first quarter, subject to the Federal Reserve regulatory limitations.
Moving to Slide 12 and some perspectives on how to think about 2021.
We anticipate modest positive loan growth for the year.
We see opportunities for customer acquisition, but the level of growth will be dependent on payment rate trend and the timing and pace of the broad economic recovery.
With respect to our net interest margin, as I previously mentioned, we expect we will continue to see benefits to margin from lower deposit rates and maturity of higher rate funding.
We also remain committed to disciplined expense management and we'll continue to invest to drive profitable long-term growth and efficiency improvement.
This includes increased marketing investments for new customer acquisition as well as investments in advanced analytics and technology capability.
In terms of credit performance, as I've already noted, we expect losses to increase in the second half of 2021 and remain elevated into 2022.
Finally, our capital allocation strategy has not changed, and we remain committed to returning capital to shareholders through dividends and buybacks.
In summary, we had a solid fourth quarter with strong credit performance across the portfolio, net interest margin expansion driven by lower funding costs, flat reserves; and excluding one-time items, operating expenses were down year-over-year.
I'm very pleased with our execution throughout 2020 and Discover's efforts to protect employees and provide uninterrupted best-in-class service to our customers.
The quick actions we took at the onset of the pandemic and our investment in core capabilities protected and strengthened the Discover franchise in 2020.
The challenges we faced, demonstrate the resiliency of Discover's digital banking business model; and while uncertainty remains, we are well positioned for growth as our economy continues to recover.
 Assistant:

Chosen response:
compname posts q4 earnings per share $2.59.
q4 earnings per share $2.59.
board of directors approves repurchase of up to $1.1 billion of common stock.
new repurchase program expires on december 31, 2021.
total loans ended the quarter at $90.4 billion, down 6% year-over-year.
credit card loans ended the quarter at $71.5 billion, down 7% year-over-year.
qtrly payment services volume was $70.1 billion, up 6% year-over-year.
net interest income for the quarter decreased $47 million, or 2%, from the prior year period.


Prompt:
Human: This release is available on the Company's website at dhigroupinc.com.
Lastly, during today's call, management will be referring to specific financial measures, which include adjusted EBITDA, adjusted EBITDA margin and net debt, which are not prepared in accordance with U.S. GAAP.
As always, we appreciate your interest in DHI.
I want to begin by saying a few words about COVID-19 and our response to this global pandemic.
Our foremost concern at DHI is to ensure the health and safety of our DHI community.
As such when the pandemic began to unfold in mid-March, we at DHI jumped into action to aid our communities by launching COVID-19 resource centers on each of our brand sites to assist both clients and candidates alike with information relevant to their needs in these challenging times.
These sites provide information on virtual career fairs, open remote job posts, real-time hiring trends, industry insights, articles, and hiring resources.
We also launched a campaign to provide free recruitment services to U.S. hospitals to help them find technologists in fields like electronic medical records, healthcare administration and computer system processing.
Also, all of our employees have been working from home using the best possible remote communication and collaboration tools and our team members, including sales and support, marketing and product development continue to be highly effective.
In fact, our product development team actually gained efficiency working from home this quarter, delivering dozens of new product releases.
I'll dive more into these product releases later in the call, but first let me provide a quick update on the current market environment for tech jobs.
The pandemic is certainly challenging the way we all live and work.
We saw job postings drop in the early part of the quarter but come back to the trailing 12-month average levels in June and July as companies became more confident in their hiring strategies.
Many firms serving highly impacted industries have paused or reduced their hiring plans and we believe that our bookings are highly correlated to the state of geographical restrictions and reopenings, which certainly remain in flux.
It's clear that our collective future will be more online and businesses will accelerate their efforts to digitize.
These efforts will, of course, require technologists.
A recent report released by Microsoft in July predicts that the worldwide digital jobs will grow from 41 million in 2020 to 190 million in 2025.
Of the 149 million new digital jobs created, 98 million are forecast to be in software development.
With our technology skill of data model in technology focused marketplaces, we stand ready to capitalize on this trend.
Now let me provide some more detail regarding the product development efforts I mentioned earlier.
During the second quarter, our product development team continued to deliver a high pace of product innovation.
With the release of Dice recruiter profile, we took the first leap forward in Dice's transformation from a job board to a full-scale career marketplace.
Dice Recruiter Profile allows our client recruiters to enrich their brands with photos, personal information, details of our corporate culture and important news, as well as information about latest hires, upcoming events and future hiring needs, all of which create more transparency and personalize the recruiter define the role.
Candidates can now discover the recruiters that are aligned with their interests and use recruiter profile information to better engage on job postings and respond to outreach.
With the Dice Marketplace, we're creating a trusted environment where recruiters and candidates can learn much more about each other to facilitate more effective career discussions.
We also launched Dice Remote Jobs.
The pandemic has demonstrated that candidates can successfully work from home and want to do so and that more jobs are predicted to be remote-qualified in the future.
Remote job opportunities has been the top requested feature by both clients and candidates since the start of the pandemic and the views for these job postings have been significantly higher than non-remote job postings.
This is an excellent opportunity for employers to tap into pools of remote workers across the United States to increase talent pipelines and diversify their workforce and we at DHI want to be the leader in the technologist's part of this important trend.
We also launched ClearanceJobs Automated Recruiter Workflow in the quarter, which we believe is a true game-changer.
Workflow is an easy to use set of tools that allow our recruiter to automate routine tasks in their day, including talent sourcing, pipelining, engagement, marketing and rewards [Phonetic].
When specific candidate activities occur, they trigger automated pre-planned actions and responses.
As an example, if a recruiter is looking for an Oracle database administrator in California, when a new candidate with the correct profile registers on the database, Workflow will automatically connect the recruiter with the new candidate, tag them in their pipeline, produce an email introduction and generate a text notification that all of this has been completed.
Our internal estimates indicate that this powerful set of tools can eliminate approximately 3.5 hours of administrative task time per recruiter per day.
ClearanceJobs is the only career site in the world that incorporates this capability.
ClearanceJobs continues to be DHI's test-bed for key market-leading features like this one of a kind technology.
We also launched eFinancialCareers Enhanced Candidate Profile during the quarter.
eFC candidates can now expose a richer profile, equivalent to that offered on ClearanceJobs to recruiters specializing in their respective field.
And in mid-July, we launched eFC Follow, Voice and Video.
These features complete the eFC marketplace delivering a rich set communication tools for recruiters and professionals to engage in career discussions.
Now finance and tech professionals and recruiters can connect virtually with video and voice calling as well as instant messaging all through the eFC platform.
We have many new releases planned for the remainder of the third quarter.
Dice is completing a design for its own enhanced candidate profile and messaging system with an expected launch by year-end.
We are working on delivering calendaring integration for ClearanceJobs, and for eFC we will be releasing a modern new brand identity starting with their B2B site.
We continue to transform our sales organization this quarter with the addition of a new customer success leader, a new Dice agency program leader and the relaunch of managed services as sourcing services, with a focus on delivering vetted candidates for targeted client searches.
Much like other trends in our business, we have seen a steady improvement in the demand for sourcing services since April.
Turning to sales performance by brand.
For all of our brands we were experiencing a check mark shaped recovery, not a V-shaped recovery.
Dice's current bookings are trending toward their performance pre-pandemic, although our new business teams, including the Dice Commercial Accounts team remain challenged due to the extra conservatism of potential new clients in this environment.
Despite this challenge, the commercial sales team has been heads down training and improving its core practices.
They are becoming more sophisticated in their go-to-market approach and as a result, brought in the largest new business deal in the history of our Company.
This deal with a large U.S. government agency is worth $270,000 in annual contract value.
To put this in perspective, we typically sign new business deals in the $7,000 to $10,000 range.
This success, along with the momentum we saw in signing new customers in the weeks leading up to the start of the pandemic in mid-March gives us great confidence that our focus on commercial accounts will be the cornerstone for our growth as the business environment normalizes.
Our renewals with existing Dice clients, while impacted in the quarter as a result of the pandemic, are slowly returning to expected levels, and existing clients have told us that they cannot find appropriate technologists without our platform.
It's important to note that this dip in renewal-based bookings during the quarter will manifest itself in lower revenue for the remainder of the year, as we recognize each booking as revenue monthly across the duration of the contract.
ClearanceJobs has been relatively unaffected by the pandemic as its performance is generally correlated to the U.S. DOD budget.
We are very fortunate that the 2021 Defense Authorization bills appear to be moving forward toward approval.
We continue to work hard on expanding CJ's addressable market through direct sales to U.S. government agencies and have booked $0.5 million in new contract revenue through the first half of the year.
We expect ClearanceJobs to add several new government customers as we make our way through the rest of this year.
Finally eFinancialCareers remains our most challenged brand.
From the Hong Kong protests last summer, to the uncertainty of Brexit last fall, to the current pandemic; eFC clients have faced significant challenges that have certainly affected our bookings.
The global banking community is still working out the hiring plans in light of the indeterminate effect of the pandemic on loan portfolios.
We are fortunate that eFC is generally focused on larger banking institutions and counts 50% of the global 100 banks as clients.
These institutions believe in an online banking future and continue to hire technologists even now.
There is no question, however, that the uncertainty in the banking industry has weighed down eFC's performance to date and will continue to do so at least through the remainder of the year.
As I conclude my remarks, I want to reiterate that we are successfully executing on our plan to build career marketplaces for matching tech professionals with employers.
We believe we have created a better online platform than our competitors for matching companies with the highest quality tech professionals.
And with our proven go-to-market strategy, we believe we can capitalize on the millions of new technologist jobs expected over the next five years and grow our revenue at or above the market rate of growth.
While this growth won't happen overnight and COVID-19 certainly presents uncertainty, we are confident in our business plan and the continued progress we are making toward achieving our goal.
I'll start by going through the financial results, then add a few comments about the business.
For the second quarter, we reported total revenues of $33.8 million, which was down 8% from the first quarter and down 9% year-over-year when you exclude the impact of foreign exchange.
Dice revenue was $20.5 million in the second quarter, down 9% sequentially and down 12% year-over-year.
We ended the second quarter with 5,450 Dice recruitment package customers, which is down 7% sequentially and 11% year-over-year.
During the quarter, we did not see any notable changes to customers' leaving the platform relative to other quarters.
However, we did see lower new customers being added.
This gives us comfort that our core customers continue to see the value in our platform even during these challenging times.
We maintained our average monthly revenue per recruitment package customer versus the year ago quarter at $1,131 or $13,572 on an annual basis.
This is important as over 90% of Dice revenue is recurring and comes from recruitment package customers.
Our Dice customer renewal rate was 57% for the second quarter, down 13 percentage points year-over-year and our revenue renewal rate was 61%, which was down 19 percentage points when compared to the same period last year.
These lower renewal rates have a minimal impact on in-quarter revenues, but do impact contracted revenue and will result in lower revenue during the term of the related contracts.
And while we did see lower in-period renewal rates, that is customers renewing prior to or at contract termination, we are maintaining an ongoing dialog with these non-renewal customers with the expectation that they will resign when there is further recovery in the economy.
In addition, we hired a new leader for our Client Success organization who is implementing new processes around on-boarding and ongoing touch points that should have a positive impact on both customer and revenue renewal rates.
As we look at Dice, our strategy continues to be on larger customer relationships through moving upstream in terms of our marketing efforts, sales activities and go-to-market approach.
We believe this will put us in the best position for stability and growth.
Currently, approximately 15% of our customers generate 50% of our recruitment package revenue though no one customer makes up even 1% of revenue.
We think this is a good balance of a strong stable revenue base without having significant customer concentration risk.
ClearanceJobs' second quarter revenue was $7.1 million, an increase of 3% sequentially and 18% year-over-year.
This continued solid double-digit revenue growth year-over-year is reflective of ClearanceJobs' strong innovative products and competitive differentiation.
Second-quarter revenue for eFinancialCareers was $6.2 million, down 15% from the first quarter and 21% year-over-year, when excluding the impact of foreign exchange rates.
As expected, COVID negatively impacted our performance for eFinancialCareers during the quarter.
In the U.K., which is our largest geography by revenue for eFC, we were impacted by the COVID shut down and U.K. furloughs, which have been extended through October of this year.
In the APAC region, eFC's second largest geography, we continued to experience difficulties primarily due to the impact of the pandemic.
Turning to operating expenses.
Second quarter operating expenses were $31.3 million, representing a decrease of $1.7 million or 5% year-over-year.
This decrease in operating expenses was primarily the result of the comprehensive cost management exercise which began in late March and continues currently.
For the second-quarter, sales and marketing expense decreased $1.5 million year-over-year to $12.3 million.
The majority of our cost savings was associated with the reduced digital marketing spend for candidates, given that there has been a larger amount of candidate engagement naturally during the work from home environment.
And even while we accelerated the deployment of new product features in the second quarter, our product development expense decreased $617,000 year-over-year to $3.8 million, as a result of higher capitalization rates associated with these projects.
Income tax expense for the second quarter was $430,000, resulting in an ineffective tax rate of 19%, which is lower than our expected statutory rate of 25% due to the allocation of income between jurisdictions.
We recorded net income for the second quarter of $1.9 million or $0.04 per diluted share compared to net income of $3.1 million or $0.06 per diluted share a year ago.
This quarter's earnings per share had a $0.01 detriment primarily from severance and related costs that negatively impacted net income.
Last year's earnings had a $0.02 detriment from disposition related costs, including the loss on the sale of a business and discrete tax items.
Excluding those items, on a normalized basis, earnings per share for the quarter was $0.05 versus $0.08 last year.
Adjusted EBITDA margin for the second quarter was 23%, up from 21% in the first quarter and down from 24% in the second quarter last year.
As we stated on our last call, our goal is to manage the business to approximately 20% adjusted EBITDA margins.
We were able to exceed that due to the quick action we took to both support our customers and revise our spending, along with the ongoing management of the overall cost structure.
We generated $7.1 million of operating cash flow in the second quarter compared to $11.1 million in the prior year quarter.
From a liquidity perspective, at the end of the quarter, our total debt was $37 million.
We had $27.5 million of cash resulting in net debt of $9.5 million.
Even with the incremental borrowing in the first quarter, we still have significant borrowing capacity available to us under our credit facility.
Liquidity continues to be a key area for us.
During the quarter, several customers requested flexibility on billing terms and with our strong liquidity position, we were able to provide this flexibility with the intent of retaining active customers and working with them through their challenges.
More recently, we have seen the number of requests drop significantly, which is clearly a positive sign.
Deferred revenue at the end of the quarter was $47.2 million, down 15% from the first quarter.
This is due to the impacts of COVID-19 as well as more contracts having a monthly or quarterly payment terms as a result of the flexible billing terms I just discussed and the normal seasonality of bookings.
When we add the unbilled portion of our contracts to deferred revenue, our committed contract backlog at the end of the quarter was down 11% from the end of the second quarter last year.
During the quarter, we repurchased approximately 1.3 million shares for $3.4 million or $2 56 per share.
We used $2.9 million of the $7 million buyback program, which ran through May of this year and $530,000 under the new $5 million share buyback program.
We continue to believe that buyback is a recognition of the strength in the long-term prospects of our business.
Consistent with our previous programs, we will continue to evaluate investment opportunities in the business against buying back shares while also using it as an opportunity to offset the impacts of our employee equity incentive programs.
As we look ahead, bookings are improving across all teams.
But as Art mentioned, this appears to be more of a Nike swoosh shaped recovery than a V-shaped recovery.
For Dice, while there is still great uncertainty due to the pandemic, we've seen a stable number of tech job postings in the past few weeks as companies continue to use technology in their business model.
With regard to ClearanceJobs, we expect them to continue to grow because of their success is correlated to the U.S. Department of Defense budget which, relatively speaking, has been immune to the environment we find ourselves in.
For eFinancialCareers, while it operates in multiple geographies, we continue to expect significant headwinds in our two largest regions, the U.K. and APAC as a result of the furloughs in the U.K. due to COVID and in addition to COVID, the ongoing geopolitical issues in Hong Kong.
While we have relationships with approximately 50% of the global 100 banks providing us more stability in the current environment, we have seen our smaller customers continue to be impacted.
As we've mentioned, we continue to evaluate our entire cost structure and have reduced non-headcount-related expenses, both operating expenses and capital expenditures.
This includes such areas as contractor and consulting spend, marketing spend and third-party vendors spend, while being very disciplined around any headcount additions.
With regards to marketing, we believe we can still achieve our candidate and client metrics with lower spend as overall digital advertising rates have come down.
We remain confident in our ability to manage our expenses appropriately for any revenue changes that might occur.
Looking forward, we will operate the business in a manner that maintains our employee base and allows us to continue investing in our business to drive long-term revenue growth and to support our customers in these challenging times.
As such, while not providing specific guidance, we continue to manage the business to margins in the 20% range.
Let me sum up by saying that while we continue to find ourselves in very challenging times, we feel our business model provides us some protection and predictability and we are confident in the investments we have made in innovation and sales.
We remain focused on the continued execution of our business plan and look forward to reporting on our progress throughout the rest of 2020.
It is a pleasure to be part of such a great team.
 Assistant:

Chosen response:
compname posts q2 earnings per share of $0.04.
q2 earnings per share $0.04.
q2 revenue $33.8 million.


Prompt:
Human: A playback of today's call will be archived on our Investor Relations website located at investors.
dicks.com for approximately 12 months.
And finally, a few admin items.
First, a note on our same-store sales reporting practices.
Our consolidated same-store sales calculation include stores that we temporarily closed last year as a result of COVID-19.
The method of calculating comp sales varies across the retail industry, including the treatment of temporary store closures because of COVID-19.
Accordingly, our method of calculation might not be the same as other retailers.
Next, as a reminder, due to the uneven nature of 2020, we planned 2021 off of the 2019 baseline.
Accordingly, we will compare 2021 sales and earnings results against both 2019 and 2020.
And lastly, for your future scheduling purposes, we are tentatively planning to publish our fourth quarter 2021 earnings results before the market opens on March 8, 2022, with our subsequent earnings call at 10:00 a.m. Eastern Time.
We're extremely pleased to announce another very strong quarter in which we delivered significant sales and earnings growth over both last year and 2019.
Our strategies continue to work as we reimagine the athlete experience in our core business and with the new concepts.
We have driven strong profitable growth at DICK's.
And earlier this year, we launched two DICK'S House of Sport stores, highly experiential destinations that are redefining sports retail.
The innovations we've made in our Golf Galaxy business are performing extremely well.
And our second Public Land store recently opened, focusing on the outdoor activities.
Looking ahead, I couldn't be more excited about the future of DICK's Sporting Goods.
We now expect to deliver comp sales of over 20% for 2021, and remain very confident in the long-term prospects of our business.
Before diving into our Q3 results, I think it's important to recognize that our current success is a result of a transformational journey that began in the back half of 2017 when we started to make meaningful changes across our business.
We also improved our service and selling culture, made our stores more experiential and reallocated floor space to regionally relevant and growing categories.
These changes fueled improved results and significantly improved our comp sales trajectory, well before the pandemic.
For years, we've also invested in technology and data science to build our best-in-class omnichannel platform.
This allowed us to quickly capitalize on athlete needs and strong consumer demand throughout 2020, and deliver our full-year comp sales increase of nearly 10%.
We announced today that we've raised our full-year guidance for the third time this year, and now expect our comp sales to increase between 24% and 25%.
During a time when consumers are making lasting lifestyle changes with an increased focus on health and fitness and greater participation in outdoor activities, we believe that DICK's Sporting Goods has become synonymous with sport in the United States.
Nearly, our entire category portfolio has rebaselined meaningfully higher versus pre-COVID sales levels.
We've capitalized on strong consumer demand and have gained considerable market share in key categories, driven by enhanced product access, service, and omnichannel capabilities.
Looking ahead, we are well positioned to continue gaining share and we remain optimistic about the long-term demand trends in our most important categories like athletic apparel, footwear, team sports and golf.
We also remain very optimistic about longer-term EBT margin, driven by a number of permanent changes versus pre-COVID levels.
These changes include a highly differentiated product assortment that is less susceptible to broader promotional pressures; more granular management in promotions and significantly higher profitability of our eCommerce channel.
Now getting back to our Q3 results.
Consolidated same-store sales increased 12.2% on top of a 23.2% increase in the same period of last year, and a 6% increase in Q3 2019.
Driven by our strong sales and gross margin rate expansion, on a non-GAAP basis, our third quarter earnings per diluted share of $3.19, increased 59% over last year and 513% over Q3 2019.
Our Q3 comps were supported by broad-based growth across our business, as our strong execution, diverse category portfolio and world-class omnichannel platform helped us continue to capitalize on and meet robust consumer demand despite a dynamic global supply chain.
We're continuing to see strong retention of the 8.5 million new athletes we acquired last year, and we added another 1.7 million new athletes during this quarter.
Our active athlete database is at a record high.
Our increasingly differentiated product assortment, combined with our disciplined promotional strategy and cadence is continuing to drive significantly higher merchandise margin rate.
During the quarter, we expanded our merchandise margin rate by 301 basis points versus 2020 and by 578 basis points versus 2019.
As we discussed previously, we're focused on enhancing the athlete experience across our entire omnichannel ecosystem.
In our stores, we continue to make DICK's a great place to work, as we know that our people are our competitive differentiator and a great teammate experience drives a great athlete experience.
In fact, we recently earned a place on Fortune's list of Best Workplaces in Retail for 2021.
We're also engaging our athletes with new and elevated service standards and making our stores more experiential.
These strategies are working and continue to set us apart within the marketplace.
During the quarter, our brick-and-mortar stores comped up approximately 15% versus last year and delivered a 31% sales increase when compared to 2019.
Importantly, our stores continue to be the hub of our omnichannel strategy, enabling over 90% of our total sales and fulfilling approximately 70% of our online sales in Q3.
Moving to our eCommerce business.
During the quarter, we were pleased to deliver online sales growth of 1%, which was on top of a 95% increase in the same period last year.
Our online sales remained substantially above pre-COVID levels, increasing nearly 100% when compared to the same period in 2019.
Importantly, we also continue to drive a significant improvement in the profitability of our eCommerce channel by leveraging fixed costs, sustained athlete adoption of in-store pickup and curbside, as well as fewer and more targeted promotions.
Beyond our omnichannel platform, our portfolio of brands is a tremendous asset.
We continue to invest substantially in our highly profitable and growing vertical brands.
Key brands including DSG, CALIA and VRST are driving exclusivity within our assortment and gaining meaningful traction with our athletes.
At the same time, while many national brands continue to narrow distribution and focus more on their most strategic partners, DICK's offers them something unique and valuable.
We are rooted in sport and can showcase an entire brand of portfolio, including apparel, footwear and hard lines across our over 800 stores and online.
Our brand partners continue to make significant investments in our business every year and provide us with increasing allocations of exclusive and differentiated products.
These top-of-the-line products are highly coveted and rarely promoted, driving significant sales and margin momentum.
Our strategic partnerships with key brands have never been stronger, and we're making big bets with important brand partners.
To that end, we recently announced a groundbreaking new partnership with Nike that we see as truly transformative for the sports industry.
Through this collaboration, DICK'S and Nike will create unmatched value for our athletes through exclusive products, experiences, content and other specialized offers.
Together, we'll embrace our collective strengths and capabilities to expand our reach, connect with even more athletes and most importantly serve them better.
Our companies have a long and successful history of working together, and this demonstrates a deepening of the DICK's and Nike relationship.
This partnership is aimed at driving growth for both companies, while serving our customers in a personalized way.
At DICK's, part of our strategy is to lead with mobile, and we're excited to launch this partnership through a connected marketplace exclusively in our DICK's mobile app.
Looking ahead, we will explore additional opportunities to work with Nike and our other strategic partners across our respective physical and digital properties to further enhance convenience, experiences and content for our athletes.
Now, I'd like to provide a few updates on our newest concept.
First, we remain very pleased with our first 2 DICK's House of Sport stores in Rochester and Knoxville.
House of Sport is built around experience, service, community and product, setting an unparalleled standard for sports retail and athlete engagement.
Moving forward, we are excited to continue to refine and grow House of Sport, while pulling key learnings into the rest of the DICK's chain.
We're also excited by the early results of our first two Golf Galaxy performance centers located outside of Boston and Minneapolis, St Paul.
Golf Galaxy Performance Center has been completely redesigned and equipped with TrackMan and BioMech golf technologies.
We've also invested in talent to ensure our teammates become trusted advisors to golf enthusiast of all levels.
In addition to innovating within our core business, we also launched Public Lands, a new omnichannel specialty concept to better serve outdoor athletes.
Our first Public Lands store recently opened here in Pittsburgh, and our second store opened in Columbus just a few weeks ago.
We also launched publiclands.com, a complete eCommerce experience for the outdoor enthusiasts.
While it's still early, Public Lands is off to a strong start and we are very enthusiastic about this growth opportunity and its goal to get more people outside, exploring and protecting Americas Public Lands.
Before concluding, I want to spend a moment on the supply chain.
Amidst the very dynamic environment, our team has done an excellent job working with our vendor partners and with our vertical brand manufacturers to ensure a robust flow of product to meet strong demand.
We ordered aggressively to get ahead of this disruption and our quarter ending inventory levels increased 7.3% compared to the end of the same period last year.
While there will continue to be inventory challenges across the marketplace, our fourth quarter is off to a strong start and we feel that we are well positioned within our industry this holiday season.
In closing, we have exciting growth opportunities ahead of us.
And as Ed said, we are very confident in the longer-term prospects of our business.
As we continue to execute against our strategic priorities and reimagine the athlete experience, we believe the investments we've made to transform our business will strengthen our leadership position within the marketplace.
Our teammates are at the center of this transformation.
After joining the company in 2017 as SVP of Finance and Chief Accounting Officer, Navdeep was appointed to the CFO position last month.
Navdeep's impact on our business has been phenomenal.
Over the last four years, he has led most of the finance functions in the organization and he has become a trusted partner to our entire executive team.
He has also driven companywide productivity efforts, served on our long-term Strategic Committee and he played a really critical role in securing financing at the outset of COVID.
Prior to DICK's, Navdeep spent 11 years at Advance Auto Parts in various leadership roles, most recently serving as Senior Vice President of Finance.
Earlier in his career, Navdeep held a variety of management roles at Sprint Nextel and he served as a lieutenant in the Indian Navy.
Navdeep's keen financial acumen and strategic vision will be instrumental to the continued growth and success of DICK's.
And with that, Navdeep, it is my pleasure to hand it over to you.
With three quarters of the year now behind us, our consistent, strong results have demonstrated our ability to serve our athletes in a very differentiated way, while driving toward another record sales and earnings here in 2021.
Let's begin with a brief review of our third quarter results.
Like Lauren said, we are excited to report a consolidated sales increase of 13.9% to approximately $2.75 billion.
Consolidated same-store sales increased 12.2% on top of a 23.2% increase in the same period last year, and a 6% increase in Q3 of 2019.
Our strong comps were driven by growth across each of our three primary categories of hardlines, apparel and footwear, as well as an 8.5% increase in transaction and a 3.7% increase in average ticket.
When compared to 2019, consolidated sales increased 40%.
Our brick-and-mortar stores comped up approximately 15% versus 2020, and delivered a 31% sales increase when compared to 2019, with roughly the same square footage.
Our eCommerce sales increased 1% versus last year on top of a 95% online sales increase in the third quarter of 2020.
Compared to Q3 of 2019, our eCommerce sales increased 97%.
As a percent of total net sales, our online business has grown from 13% in 2019% to 19% in the current quarter.
eCommerce penetration was 21% last year.
Moving to gross profit.
Gross profit in the third quarter was $1.06 billion, or 38.45% of net sales, and improved 354 basis points compared to last year.
This improvement was driven by merchandise margin rate expansion of 301 basis points and leverage on fixed occupancy costs of 111 basis points from sales increase.
The increase in merchandise margin was primarily driven by fewer promotions due to our increasingly differentiated assortment and disciplined promotional strategy, as certain categories in the marketplace continue to be supply constrained.
We also saw a favorable sales mix.
In addition, we were able to pass through selective price increases to help cover merchandise cost increases from higher supply chain and input costs.
As expected, these improvements were partially offset by higher freight costs resulting from global supply chain disruptions and our prioritization of inventory availability over costs.
Compared to 2019, gross profit as a percent of net sales improved 886 basis points, driven by merchandise margin rate expansion of 578 basis points due to fewer promotions, as well as leverage on fixed occupancy costs of 370 basis points, which again was partially offset by higher freight costs.
SG&A expenses were $631.9 million, or 23% of net sales, however, leveraged 151 basis points compared to last year due primarily to the increase in sales.
SG&A dollars increased $40.8 million, due primarily to current year cost increases to support the growth in sales.
In the prior year quarter, SG&A included $43 million of COVID-related costs.
However, in the current year, we transitioned our hourly teammates to compensation programs with a longer-term focus, including increasing and accelerating annual merit increases and higher wage minimums, partially offsetting last year's COVID-related costs.
Compared to 2019 and on a non-GAAP basis, SG&A expenses as a percentage of net sales leveraged 325 basis points due primarily to the increase in sales.
SG&A dollars increased $116.8 million due to increase in store payroll and operating expenses to support the increase in sales, as well as hourly wage rate investments.
Driven by our strong sales and gross margin rate expansion, non-GAAP EBT was $415.6 million, or 15.12% of net sales, and increased $171.8 million, or 501 basis points from the same period last year.
Compared to 2019, non-GAAP EBT increased $355.6 million, or approximately 1,200 basis points as a percentage of net sales.
In total, we delivered a non-GAAP earnings per diluted share of $3.19.
This compares to a non-GAAP earnings per diluted share of $2.01 last year, a 59% year-over-year increase, and a non-GAAP earnings per diluted share of $0.52 in 2019, a 513% increase.
On a GAAP basis, our earnings per diluted share were $2.78.
This included $7.7 million in non-cash interest expense, as well as 12.8 million additional shares that we have designed to be offset by our bond hedge at settlement, but are required in the GAAP diluted share calculation.
Both of these are related to our convertible notes we issued in Q1 of 2020.
Now looking to our balance sheet.
We are in a strong financial position, ending Q3 with approximately $1.37 billion of cash and cash equivalents, and no borrowings on our $1.855 billion revolving credit facility.
Our quarter-end inventory levels increased 7.3% compared to end of Q3 last year.
Looking ahead, we continue to aggressively chase product to meet demand and prioritize inventory availability over costs.
As part of this, we expect elevated freight expenses to continue at least in the fourth quarter and have included the impact of this within our outlook.
To reiterate Lauren's comment, while there will continue to be supply chain challenges across the marketplace, we feel that we are very well positioned within our industry this holiday season.
Turning to our third quarter capital allocation.
During the quarter, net capital expenditures were $54.1 million.
We paid $503 million in dividends, which included a special dividend of $5.50 per share that we announced last quarter.
We also repurchased 2.17 million shares of our stock for approximately $273 million at an average price of $125.80.
We have approximately $605 million remaining under our share repurchase program.
Year-to-date, we have returned nearly $1 billion to shareholders through dividends and share repurchases.
Looking ahead, we will continue to invest in the profitable growth of our business, while maintaining an appropriate level of cash on the balance sheet.
Returning capital to shareholders will also continue to be an important component of our capital allocation strategy.
Now, let me move on to our fiscal 2021 outlook for sales and earnings.
While still early, Q4 is off to a strong start.
Taking this into account, along with our significant Q3 results, an expectation of a continued strong consumer demand and our confidence in our ability to navigate the global supply chain challenges, we are raising our consolidated same-store sales guidance and now expect the full-year comp sales to increase by 20% to 25% compared to our prior expectation of up 18% to 20%.
This is on top of 9.9% increase in consolidated same-store sales last year and a 3.7% increase in 2019.
At the midpoint, our updated comp sales guidance represents a 39% sales increase versus 2019 compared to our prior expectation of up 33%.
On a non-GAAP EBT basis, we expect the full-year results to be in the range of $1.89 billion to $1.92 billion compared to our prior outlook of $1.61 billion to $1.67 billion, which at midpoint and on a non-GAAP basis is up 333% versus 2019 and up 160% versus 2020.
At the midpoint, non-GAAP EBT margin is expected to be approximately 15.7%.
Within this, gross margin is expected to increase versus both 2019 and 2020, driven by leverage on fixed expenses and higher merchandise margins.
This assumes higher freight costs and fewer promotions compared to both 2019 and 2020 for the fourth quarter.
SG&A expenses is expected to leverage versus both 2019 and 2020, due to the significant projected increase in full-year sales.
In total, we are raising our full-year non-GAAP earnings per diluted share outlook to a range of $14.60 to $14.80, compared to our prior outlook of $12.45 to $12.95.
At the midpoint and on a non-GAAP basis, our updated earnings per share guidance is up 298% versus 2019 and up 140% versus 2020.
In closing, the work that we have done over the past several years to rearchitect our strategy, operations and financial, sets us up well to deliver improved value to our shareholders over the long term.
 Assistant:

Chosen response:
compname reports q3 sales up 14% to $2.75 bln.
compname reports record third quarter sales and earnings; delivers 12.2% increase in same store sales and raises full year guidance.
q3 same store sales rose 12.2 percent.
sees fy non-gaap earnings per share $14.60 to $14.80.
q3 non-gaap earnings per share $3.19.
q3 sales rose 13.9 percent to $2.75 billion.
total inventory increased 7.3% at end of q3 of 2021 compared to end of q3 of 2020.
q3 2021 earnings per diluted share of $2.78.