Prompt:
Human: We have on the call today, Nick Pinchuk, Snap-on's chief executive officer; and Aldo Pagliari, Snap-on's chief financial officer.
Aldo will then provide a more detailed review of our financial results.
As usual, we have provided slides to supplement our discussion.
These slides will be archived on our website along with a transcript of today's call.
Both can be found on our website.
As usual, I'll start the call by covering the highlights of our first quarter.
And along the way, I'll give you my perspective.
On our results, they are encouraging.
In our markets, they're standing firm and on our progress, it's made us stronger than ever before.
And we'll also speak about what it all means.
We believe it means we're getting better and better positioned for more, even while we're still in the midst of a once in a 100-year pandemic.
And after all that, Aldo will move into a more detailed review of the financials.
We believe our first quarter is clear confirmation of Snap-on's ability to continue its trajectory of positive results, further accommodating to the virus environment, overcoming period-to-period variations from business to business, dealing with macroeconomic headwinds and advancing along our runways for both growth and improvement.
Our reported sales in the quarter of $1.0246 billion were up 20.2%, including $19.2 million of favorable foreign exchange and $11.3 million of acquisition-related sales.
Organic sales growth was 16.3%, gains in every group.
It's our third straight quarter of being above our pre-pandemic levels.
And ongoing contributions from our Snap-on Value Creation processes, the principles we use every day, safety, quality, customer connection, innovation, and rapid continuous improvement, or RCI, they all combine to drive that progress.
Progress there was -- opco operating income of $200.9 million was up $62 million from last year, which included $7.5 million of restructuring charges.
Opco operating margin was 19.6%, up from the 2020 level of 16.3% or 17.2% as adjusted for restructuring.
For financial services, operating income of $65.3 million increased 14.8% and the delinquencies were down, even in the midst of a pandemic stress test, during commercial trial of what we could call extraordinary proportion.
And that result combined with opco for a consolidated operating margin of 23.9%, a 300-basis-point improvement as reported and up 220 basis points as adjusted.
First-quarter earnings per share was $3.50, up 40.6% from last year's $2.40.
And excluding the 2020 restructuring charges, earnings per share grew 34.6%.
I said it before, and I'll say it again.
We believe Snap-on is stronger now than when we entered the Great Withering.
And we also believe that our first-quarter results testify to just that, especially when we compare them to 2019 before the virus.
So let's do that.
Versus 2019, our sales in the past quarter grew $102.9 million or 11.2%.
That reflects $15.3 million of acquisition-related sales; $11.6 million of favorable foreign; currency and a $76 million or 8.1% economic gain.
The 2021 opco operating margin of 19.6% was up 50 basis points from the 2019 level as adjusted for a legal settlement in that earlier period, and that 50-point gain was achieved against 80 points of unfavorable currency and acquisition impacts, all while still absorbing the COVID.
Now to our markets.
Auto repair remains quite resilient.
The technicians are rolling.
They know they weather the depth of the COVID shock and have learned to accommodate the virus environment and are moving to psychological recovery.
There's still some air of vigilance, but their activities are robust.
And they know they won't be shocked again by a spike.
They're quite positive regarding the future of driving as people pivot from shared mobility to individual transportation, and it's vehicle repair with the technicians as a strong and resilient market.
You can hear it.
You can hear it in our franchisees' voices and you can see it written clearly across our double-digit numbers.
Also in auto repair, there are shop owners and managers.
There are signs that the auto business is rising.
Demand for new and new cars is high, but dealership repair and maintenance and warranty is still attenuated.
So there is a gradual gain and we're positioned to take advantage with the broader and stronger product line, with innovations like our TRITON-D10 diagnostics and new acquisitions like Dealer-FX putting us deeper into dealerships than ever before and providing us a clearer view of the future repair trends, new technologies, and evolving vehicle platforms.
Dealer-FX puts us at the right place at the right time as things change.
Finally, let's talk about critical industries, where Snap-on rolls out of the garage, solving tasks of consequence.
This is where C&I operates, the most international of our operations.
And these are the customers that have been most impacted by the virus.
They're slower to accommodate and to recover, but they have been recovering.
And in the quarter, the results showed that trend, despite some significant headwinds, including the continuing impact of the virus, the February freeze in Texas, some challenged business sectors like oil and gas, and troubled geographies like Southeast Asia.
Despite that variation, we did see growth in critical industries, improvement in a number of areas, in aviation, and education, and a heavy-duty fleet, they all combined to overcome the continuing turbulence in natural resources.
Also in C&I, SNA Europe, SNA Europe, another quarter of double-digit growth with broad strength across its geographies in places like France, Spain, Italy, Germany, Germany and the Nordic region.
And from our Asia Pacific division, up double digits as well with solid increases in key countries like China and India and Japan.
So overall, I'd describe our C&I markets as improving and representing clear opportunity.
And coupled with our auto repair related businesses, we believe there's clear overall progress along our runways for growth, enhancing the van network, expanding to repair shop owners and managers, extended critical industries and building in emerging markets, leveraging our broadening product line, we're holding our strengthening brand and deploying the increasing understanding of the work.
Understanding of the work that is the hallmark of Snap-on people, even in the throes of the pandemic shock.
About a year ago, as we entered the virus, we recognize the resilience of our markets and the strength of our model, projecting a V recovery, and that's how it played out.
You can see it in the results.
So now let's turn to the segments and discuss those results.
In the C&I group, on a reported basis, including $9.2 million of favorable foreign currency translation and $7.3 million of acquisition-related sales, first-quarter volume rose 15.3% compared to last year.
Organic sales were up 9.5%, double-digit growth in our European hand tool business had a mid-single-digit rise and critical industries led the way.
From an earnings perspective, C&I operating income of $50.7 million, including $1.4 million of unfavorable currency, represents a rise of $19.2 million, compared to the $31.5 million registered in 2020, which included $4.4 million of restructuring.
That all means, on an adjusted basis, an adjusted increase of over 40%, an as adjusted increase of over 40%, and the operating margin was 14.7% and as reported increase of 420 basis points and 290 as adjusted.
Now when compared with 2019, the pandemic-free measuring stick sales were up 7.2%, and that included $10 million or a 3.1% organic gain; $8 million of acquisitions, and $5.2 million for favorable foreign currency.
Once again, C&I demonstrated sequential improvement.
If you go back and look at the numbers, they keep getting closer and closer, now they're above pre-pandemic levels despite the ongoing uncertainty.
It's one of the things I think we want to remember, the virus isn't gone.
We're still bearing it and we didn't have it in 2019 and C&I is above that level.
As part of the trend, we remain committed to extending in critical industries.
That's the C&I sweet spot.
So we'll keep strengthening our position to capture those opportunities as they arise.
And enabling that intent is our expanding lineup of innovative new products, developed especially to make critical work easier.
One example is our CT9010, 3/8-inch drive, 18-volt brushless impact wrench, the newest member of our MonsterLithium family, aimed at tight space sustained power, rugged durability, and precise control.
The 9010 features 320-pound feet of bulk breakaway torque and 240-pound feet of working torque, all the power of technician needs when they're working in confirmed quarters.
It offers a variable speed trigger in three-speed selections in Ford and reverse.
That means greater control, adaptable to any applications, and no overtorque-ing important.
The 9010 advanced design also reduces motor temperature rise, delivering higher durability and great power to rate ratio.
It's been fitted with 100-lumen headlight that helps technicians work in dark environment, just what's needed for those close jobs.
And the 18-volt battery with the five-amp hours ensures consistent output and extended the run time, which translates to less charging and more efficient workday.
And all of this comes -- and this is the best part, I think -- all of this comes in an extremely compact size.
Only six and three-quarter inches in overall length that will fit into the tightest of workspace.
The CT9010 is a great tool.
It's had strong demand, and it's already one of our $1 million hit products.
I don't want to leave C&I without mentioning SNA Europe.
Double-digit sales growth again, progress by the Black ergo tool management system, expanding product customization to the needs of the task, driving progress across -- against the twin headwinds of a difficult proven environment.
Europe is not so easy these days and the uncertainty of Brexit, no small feat.
Well, that's C&I, continuing sequential improvement and positioned for more.
Now on to the tools group.
Sales of $478.3 million, up $102.4 million, including $6.7 million of favorable currency and a $95.7 million or 25% organic gain, double-digit growth, both in the U.S. and the international operations.
The operating margin was 20.7%, yes, 20.7%, up 780 basis points.
Compared with pre-virus 2019, tools group sales grew $68.1 million, 16.6%, including $5.2 million favorable currency translation and $62.9 million or a 15.1% organic gain.
And this year's 20.7% operating margin was up 430 basis points compared with pre-pandemic 2019.
The tools group is responding to the challenges of the day, increasing its product advantage, fortifying its brands, and further enabling its franchisees and the results show it.
We do believe our runway for coherent growth, enhancing the franchise network represents a continuing opportunity.
And there's evidence that we're realizing some of that potential across the van channel in our franchisee metrics, the financial and physical indicators that we monitor closely.
Again, this quarter, they remain clearly favorable.
And based on those metrics, we believe the franchisees have never been stronger.
And they say so.
And our direct interactions at events like this past January's kickoff meeting held this year at a distance.
It was a great affair.
Well attended, strong orders, visible commitment to our brand, watch parties all over the country.
I zoomed into several of myself, and they were brimming with enthusiasm and optimism.
Our franchisees entrepreneurs and professionals all are pumped, confident, and reaching higher.
The tools group quarter that's a strong advantage for us.
The tools group quarter was also marked with Snap-on value creation, customer connection, and innovation, offering new products.
Sometimes, just an improvement on an established line, but clearly making work easier, solving problems, delivering productivity gains.
All of these are born out of observing the changing work in shops on an everyday basis.
We're in those shops every day.
We watch the work.
We author the products.
One such add is our KERN681, seven-drawer, single bank EPIQ series roll cab, configured entirely with extrawide 62-inch drawers, greater flexibility and capacity and a standard footprint, making the most of limited shop space.
Our franchisees are already calling an uninterrupted storage.
It's the first large-capacity roll cab with a full complement of extrawide drawers in the industry.
It's made on our Iowa plant.
I saw some of them being made there just last month.
The local team is proud of them.
It comes with two swivels and two rigid casters located right on the corners of the box.
It doesn't seem like much of a change, but that's a clever innovation that provides mobility and tight spaces, while also greatly enhancing box stability.
That's a very important feature for a high-capacity unit, the KER681 EPIQ strength, styling, and styling, 8,000 pounds of low capacity, and more than 45,000 cubic inches of storage space.
The franchisees are saying it's been a clear hit and they're right.
We spent some time over several quarters, working to expand franchisee selling capacity, harnessing social media, improving product training and RCI and Van operations, so it's paid off.
Selling capacity is up.
And you can see it clearly in the three straight gangbusters quarters for our tools group.
I don't need to say any more about them.
Now let's speak about RS&I.
First-quarter organic sales rose 7.6% with varying gains across the board.
Undercar equipment coming back, delivering double-digit rise, diagnostics and information products, independent repair shops, growing at mid-single digits.
And the business focused on OEM dealerships are advancing low single digits.
Operating earnings of $81.4 million, including $1.5 million of unfavorable foreign currency effects, increased $4.1 million from 2020, which included $3.1 million of restructuring costs.
Compared with 2019, sales grew $19.7 million or 6%, including a $10 million or 3.1% organic gain, $7.3 million from acquisitions, and $2.3 million of unfavorable foreign currency.
We clearly see the potential and our runways for growth in the RS&I group, expanding Snap-on's presence in the garage with coherent acquisitions and a growing line of powerful products.
Advanced driver assistance systems, or ADAS, are active and passive aids to keep vehicle passengers safe, things like collision avoidance, lane departure warnings, automatic parking, and crosswind stabilization.
These new features are great.
But what's really music to our ears is that they require periodic calibrations to make sure they're working with precisions, and calibrations can be complicated.
Sensors and cameras vary considerably across vehicle makes and models.
And if you get a faulty recalibration, it leads to rework and it's not good for safety.
So our new John Bean 2.80 of calibration system is the fix, making sure the vehicle is physically aligned correctly, guiding calibration of the sensors, and documenting that the procedure was formed appropriately.
And it does so for the multitude of mix and model seen regularly in OEM and aftermarket shops.
The new Tru-Point is easy to use.
It requires minimal training.
It compensates for the floor irregularities that are so common in garages and bedevils alignment and calibration.
It's quick and efficient and it's OEM compliant.
It's a powerful product right in the crosshairs of automated vehicle technology that's so prominent today.
Progress in diagnostics and information with independent repair shop owners and managers was also clearly evident in our diagnostics business and our RS&I activity.
And in this quarter, the launch of the new TRITON-D10 handheld helped author that positive.
The new TRITON is ultrafast, a two-second boot-up, and it has a best-in-class 10-inch touchscreen.
It's geared to the more capable technician, offering a one-touch full diagnostic cold scan scope capabilities for performance display and guided testing of suspect components that you may want to replace, but you want to make sure there's the problem.
It's loaded with our Fast Track intelligence diagnostics rooted in our proprietary database of over 200 billion vehicle events, a Snap-on only feature that enables quick and accurate diagnosis of even the most difficult and unusual repairs, ensuring an efficient and effective solution for those very, very time-consuming problems.
Just what the capable and senior technician needs.
Now as I've said, we've spent said before, we spent considerable effort working to help franchisees sell the complex tools of today efficiently.
And it's paying off with TRITON.
Following that initial instruction, the demo unit could then be put immediately in the hands of a technician to physically showcase the great benefits of our powerful new tool and it worked.
The launch has been a success.
Our franchisees are comfortable selling new and complex tool, and many are now calling the TRITON-D10 the best diagnostic unit ever.
Finally, RS&I got a nice boost in the quarter, as often as the case by new technologies and OEM dealerships, helped by some significant essential tools and equipment programs supporting the new electric vehicle launches.
We're quite positive about RS&I's future with repair shop owners and managers as the vehicle industry evolves.
It plays to our strength.
So that's the highlights of the quarter, continued in strong progress.
Our third straight period exceeding pre-pandemic levels; C&I, sequential improvement, sequential advancement; RS&I is solid; the tools group, strong and pumped; organic sales rising 16.3%; opco operating margin, 19.6%; EPS, $3.50 a big rise and most important, most important, more testimony that Snap-on has emerged from the turbulence much stronger than when we entered.
It was an encouraging quarter.
Our consolidated operating results are summarized on Slide 6.
The first quarter of 2021 exhibited robust financial performance, particularly as compared to last year when we experienced the initial shock of the virus.
The quarter's results also compared favorably with the first quarter of 2019, which being a prepandemic time period may serve to be the more meaningful baseline.
Net sales of $1.0246 billion in the quarter increased 20.2% from 2020 levels, reflecting a 16.3% organic sales gain, $11.3 million of acquisition-related sales and $19.2 million of favorable foreign currency translation.
Additionally, net sales in the period increased 11.2% from $921.7 million in the first quarter of 2019, including an 8.1% organic gain, $15.3 million of acquisition-related sales and $11.6 million of favorable foreign currency translation.
Consolidated gross margin of 50.1% and compared to 49.5% last year, which included 60 basis points from restructuring costs.
The gross margin contributions from the higher sales volumes will benefit from the company's RCI initiatives were offset by 40 basis points of unfavorable foreign currency effects.
Operating expenses as a percentage of net sales of 30.5% improved 270 basis points from 33.2% last year, which included 30 basis points from restructuring costs.
The improvements primarily reflect the impact of higher sales and cost containment actions, partially offset by higher stock-based costs and 30 basis points of operating expenses related to acquisitions.
Operating earnings before financial services of $200.9 million compared to $138.9 million in 2020, reflecting a 44.6% year-over-year improvement.
As a percentage of net sales, operating margin before financial services of 19.6% improved 330 basis points from 16.3% last year, which included 90 basis points for restructuring costs.
Financial services revenues of $88.6 million in the first quarter of 2021, compared to $85.9 million last year, while operating earnings of $65.3 million increased $8.4 million from 2020 levels, principally due to the higher revenue as well as lower provisions for credit losses.
Last year's provisions included a $2.6 million charge for higher reserves, resulting from the economic uncertainty caused by COVID-19.
Consolidated operating earnings of $266.2 million increased 36% from $195.8 million last year.
As a percentage of revenues, the operating earnings margin of 23.9% compared to 20.9% in 2020, which included 80 basis points from restructuring costs.
Excluding the restructuring costs, operating earnings margin in 2021 increased 220 basis points from last year.
Our first-quarter effective income tax rate of 23.5% compared to 24.2% last year, which included a 10 basis point increase related to the prior-year quarter's restructuring charges.
Finally, net earnings of $192.6 million or $3.50 per diluted share increased $55.4 million or $1.01 per share from 2020 levels, representing a 40.6% increase in diluted earnings per share.
Additionally, net earnings increased $14.7 million or $0.34 per share from 2019 levels, representing a 10.8% increase in diluted earnings per share.
Net earnings in 2020 included restructuring charges of $6 million after tax or $0.11 per diluted share, and net earnings in 2019 included a benefit of $8.7 million after tax or $0.15 per diluted share from a legal settlement.
Excluding these items, diluted earnings per share of $3.50 in 2021 increased 34.6% from 2020 and 16.3% from 2019 levels.
Now let's turn to our segment results.
Starting with the C&I group on Slide 7, sales of $345.7 million increased 15.3% from $299.9 million last year, reflecting a 9.5% organic sales gain, $7.3 million of acquisition-related sales and $9.2 million of favorable foreign currency translation.
The organic gain includes double-digit increases in the segment's European-based and tools business and Asia Pacific operations as well as a mid-single-digit gain in sales to customers in critical industries.
Improvements in year-over-year sales growth were widely seen across Europe as well as in most emerging markets.
Additionally, within Critical Industries, strong sales gains were achieved in aviation, heavy-duty and technical education, while year-over-year declines in the natural resources sector improved from those experienced in the fourth quarter of 2020, but continue to lag pre-pandemic sales levels.
As a further comparison, net sales in the period increased 7.2% from 2019 levels, representing a 3.1% organic sales gain, $8 million of acquisition-related sales and $5.2 million of favorable foreign currency translation.
Gross margin of 38.7% improved 190 basis points from 36.8% in the first quarter of 2020, which included 150 basis points from restructuring charges.
Aside from the improvements resulting from the lower restructuring costs, contributions from higher sales volumes were partially offset by 70 basis points of unfavorable foreign currency effects.
Operating expenses as a percentage of sales of 24% improved 230 basis points as compared to last year, primarily as a result of the higher volumes and savings from cost containment actions.
Operating earnings for the C&I segment of $50.7 million, including $1.4 million of unfavorable foreign currency effects, compared to $31.5 million last year, the operating margin of 14.7% compared to 10.5% a year ago.
Turning now to Slide 8.
Sales of Snap-on tools group of $478.3 million increased 27.2% from $375.9 million in 2020, reflecting a 25% organic sales gain and $6.7 million of favorable foreign currency translation.
The organic sales increase reflects double-digit gains in both our U.S. and international operations.
Net sales in the period increased 16.6% from $410.2 million in the first quarter of 2019, reflecting a 15.1% organic sales gain and $5.2 million of favorable foreign currency translation.
Gross margin of 45.9% in the quarter improved 320 basis points from last year, primarily due to the higher sales volumes and benefits from RCI initiatives.
Operating expenses as a percentage of sales of 25.2% improved from 29.8% last year, primarily due to the higher sales volumes and savings from cost containment actions.
Operating earnings for the Snap-on tools group of $98.9 million, compared to $48.6 million last year, the operating margin of 20.7%, compared to 12.9% a year ago, an increase of 780 basis points.
Turning to the RS&I group shown on Slide 9.
Sales of $347.6 million compared to $314.6 million a year ago, reflecting a 7.6% organic sales gain, $4 million of acquisition-related sales and $4.8 million of favorable foreign currency translation.
The organic increase includes a double-digit gain in sales of undercar equipment, a mid-single-digit increase in sales of diagnostic and repair information products to independent repair shop owners and managers, and a low single-digit gain in activity with OEM dealerships.
As compared to 2019 levels, net sales increased 6%, reflecting a 3.1% organic sales gain, $7.3 million of acquisition-related sales and $2.3 million of favorable foreign currency translation.
Gross margin of 46% declined from 47.9% last year, primarily due to the impact of higher sales and lower gross margin businesses and 70 basis points of unfavorable foreign currency effects.
As a reminder, undercar equipment as well as facilitation program-related activity, both of which had healthy sales increases in the quarter, typically have a gross margin rate that is below the RS&I segment's average.
Operating expenses as a percentage of sales of 22.6% improved 70 basis points from 23.3% last year, which included 80 basis points of restructuring cost.
Excluding the effects of restructuring benefits from the higher sales volumes were more than offset by 80 basis points of operating expenses related to acquisitions.
Operating earnings for the RS&I group of $81.4 million compared to $77.3 million last year.
The operating margin of 23.4%, compared to 24.6% a year ago.
Now turning to Slide 10.
Revenue from financial services of $88.6 million compared to $85.9 million last year.
Financial services operating earnings of $65.3 million compared to $56.9 million in 2020.
Financial services expenses of $23.3 million decreased to $5.7 million from 2020 levels, primarily due to lower provisions for credit losses resulting from $2.4 million of lower year-over-year net loan charge-offs and the absence of the previously mentioned first-quarter 2020 $2.6 million charge.
As a percentage of the average portfolio, financial services expenses were 1.1% and 1.4% in the first quarters of 2021 and 2020, respectively.
In the first quarter, the average yield on finance receivables of 17.6% in 2021, compared to 17.7% in 2020.
The respective average yield on contract receivables was 8.4% and 9%.
The lower yield on contract receivables in 2021 includes the impact of lower interest business operation support loans for our franchisees.
These loans were offered during the second quarter of 2020 to help accommodate franchisee operations and dealing with the COVID-19 environment.
As of the end of the first quarter, approximately $11 million of these business operating support loans remain outstanding.
Total loan originations of $261.8 million in the first quarter increased $6.2 million or 2.4% from 2020 levels, reflecting a 1.7% increase in originations of finance receivables while originations of contract receivables were up 5.7%.
Moving to Slide 11, our quarter-end balance sheet includes approximately $2.2 billion of gross financing receivables, including $1.9 billion from our U.S. operation.
Our worldwide gross financial services portfolio decreased $25.8 million in the first quarter, primarily due to an increase in net collections.
The 60-day plus delinquency rate of 1.6% for the United States extended credit is down 10 basis points from the first quarter last year and down 20 basis points as compared to the fourth quarter of 2020.
We believe this reflects the typical seasonal delinquency pattern that customarily results in a decline in the first quarter, followed by increases later in the year, usually peaking in the fourth quarter where we compete with the technicians holiday-related discretionary spending.
As it relates to extended credit or finance receivables, trailing 12-month net losses of $43.9 million represented 2.55% of outstandings at quarter end, down seven basis points sequentially and down 44 basis points as compared to the same period last year.
Now turning to Slide 12, cash provided by operating activities of $319.3 million in the quarter increased $105.9 million from comparable 2020 levels, primarily reflecting the higher net earnings and net changes in operating assets and liabilities, including a $32.1 million decrease in inventory.
Net cash used by investing activities of $207.2 million included $200 million for the acquisition of dealer FX and the capital expenditures of $19.3 million, partially offset by net collections of finance receivables of $12.1 million.
Free cash flow during the quarter of $312.1 million was 158% in relation to net earnings.
Net cash used by financing activities of $131 million included cash dividends of $66.7 million and the repurchase of 722,000 shares of common stock from $151.9 million under our existing share repurchase programs, partially offset by proceeds from stock purchase and option plan of $93 million.
As of quarter end, we had remaining availability to repurchase up to an additional $268.7 million of common stock under existing authorizations.
Turning to Slide 13.
Trade and other accounts receivable increased $10.1 million from 2020 year end.
Days sales outstanding of 62 days, compared to 64 days at 2020 year end.
Inventories decreased $16.4 million from 2020 year end and on a trailing 12-month basis, inventory turns of 2.6 compared to 2.4 at year-end 2020.
Our quarter-end cash position of $904.6 million compared to $923.4 million at year-end 2020.
Our net debt-to-capital ratio of 12.4% compared to 12.1% at year-end 2020.
In addition to cash and expected cash flow from operations, we have more than $800 million in available credit facilities.
As of quarter end, there were no amounts outstanding under the credit facility, and there were no commercial paper borrowings outstanding.
That concludes my remarks on our first-quarter performance.
I'll now briefly review a few outlook items for 2021.
We anticipate that capital expenditures will be in the range of $90 million to $100 million.
tax legislation, our full-year 2021 effective income tax rate will be in the range of 23% to 24%.
Well, that's our first quarter.
Another encouraging period, resilient markets through the shock and on the way to psychological recovery.
The third straight quarter of upward trajectory, clear year-over-year achievement and the third straight quarter of results exceeding the pre-pandemic levels of 2019.
The RS&I sales continuing upward with OI margins of 23.4%, attenuated but still strong.
C&I, ongoing sequential growth across the world and OI margins 14.7%, up nicely even from 2019.
And then the tools group.
Sales up organically, 25% versus 2020, up in all product lines and in all geographies, volume up 15.1% versus 2019 and an OI margin of 20.7%.
Finally, financial services in the midst of the greatest stress test, profits up, delinquencies down, rock solid.
And it all came together with Snap-on sales rising organically 16.3% versus 2020 and 8.1% versus '19.
OI margin, 19.6%, up significantly despite the virus, the unfavorable currency and the acquisition impacts.
And the EPS, $3.50, a substantial rise versus both 2020 and 2019.
We do believe that Snap-on is abundant opportunity as the COVID recedes, and the world shifts away from the cities and away from share transportation and as new vehicle technologies make the car park more complex.
And we further believe that we are stronger today than when we entered the storm our advantages of product, brand and people are even greater, and we're in a favorable position to wield those strengths, realize the opportunities and continue our positive trajectory throughout 2021 and beyond.
I want you to know that your work in this withering has made a difference to our company and to our society.
For your efforts in keeping our world and its critical mobility and tact, you have my admiration.
For your contribution to our progress in this first quarter, you have my congratulations.
 Assistant:

Chosen response:
q1 earnings per share $3.50.
projected that capital expenditures in 2021 will be in a range of $90 million to $100 million.


Prompt:
Human: Kessel Stelling, chairman and chief executive officer, will begin the call.
He will be followed by Jamie Gregory, chief financial officer; and Kevin Blair, president and chief operating officer.
During the call, we will reference non-GAAP financial measures related to the company's performance.
And now here's Kessel Stelling.
Just last month, six months, after converting to drive-through appointment only, our retail branch network reopened to walk-in customers.
Although things are far from back to normal, we're fundamentally a relationship bank, and I've enjoyed so much hearing from our front-line team members who take such pride and pleasure in serving our customers in person, even if it's across a plexiglass barrier or from a distance of six feet.
Our team's response to this ongoing pandemic continues to demonstrate what's unique about this company, our culture of service, our focus on customers and communities, our adaptability in changing circumstances and our ability to execute.
All of those, along with continued economic recovery contributed to our strong performance in the third quarter of 2020.
Diluted earnings per share was $0.56 per share compared to $0.57 last quarter and $0.83 a year ago.
Adjusted diluted earnings per share was $0.89 per share compared to $0.23 last quarter and $0.97 a year ago.
The primary difference between reported and adjusted figures for the quarter was a $0.30 per share impact from a goodwill impairment of our mortgage reporting unit that Jamie will detail shortly.
Period-end loan balances of $39.5 billion were down $364 million from the prior quarter, with commercial loan growth partially offsetting declines in the consumer portfolio.
1% of loans had a full principal and interest deferral at the end of the quarter, down from 15% in May.
Total deposits of $44.7 billion were up $471 million from the prior quarter.
Broad-based core transaction deposit growth of $1.6 billion allowed us to accelerate our deposit pricing and remixing strategy, which led to stable net interest income at $377 million.
The net interest margin declined three basis points to 3.10%, slightly better than we expected as headwinds from student loan sales and bond portfolio repositioning completed in the second quarter were partially offset by the favorable trends in deposit pricing and remixing.
Adjusted non-interest revenue of $116 million was strong, up $20 million from the prior quarter.
The improvement was led by quarter-over-quarter increases in net mortgage revenues of $8 million and core banking fees of $5 million.
Adjusted non-interest expense of $269 million was down $8 million from the prior quarter, led by an improvement of $5 million in employment expenses.
Provision for credit losses of $43 million were down $98 million from the prior quarter.
The ACL ratio increased six basis points to 1.80%, excluding P3 balances.
The past due NPA and net charge-off ratios remained relatively stable.
The CET1 ratio increased 40 basis points to 9.3%, following strong core performance in the settlement of transactions we executed in the second quarter.
The total risk-based capital ratio increased 46 basis points to 13.16%, the highest level since 2014.
Jamie will now share more detail about the quarter.
Before moving to Slide 4, I'd like to provide an update on goodwill.
We have been conducting evaluations of goodwill in response to market volatility and expectations for a lower for longer interest rate environment referenced by the FOMC in August.
As a result, there has been a goodwill impairment for our mortgage reporting unit of $45 million.
This is a noncash charge that has no impact to cash, liquidity, tangible book value or regulatory capital ratios.
Beginning on Slide 4.
Total loans declined $364 million in the third quarter as commercial loan growth helped offset reductions from P3 loan payoffs of $77 million and strategic asset dispositions of single service loans.
Excluding the impact of asset dispositions and P3 payoffs, we had net loan growth of $245 million in the quarter.
Commercial loans, excluding P3 balances, increased $291 million.
Although pipelines are lower than they were pre-COVID, we continue to see demand, especially in middle market businesses and our higher growth and higher opportunity markets, such as Atlanta, Birmingham and South Florida.
Consumer loans declined $578 million, led by the disposition of roughly $185 million of non-relationship mortgages, along with continued declines in our lending partnership portfolios.
Additionally, a portion of the decline can be attributed to the continuation of our GreenSky strategy, which we highlighted last quarter, and which to some degree, is offset by an increase in balances within our held-for-sale portfolio.
While we will continue to evaluate opportunities to efficiently manage our balance sheet, there are currently no existing plans for material dispositions, such as those we made the last two quarters.
We expect loans, excluding the impact of P3 forgiveness, to be relatively flat in the fourth quarter.
As shown on Slide 5, we had total deposit growth of $471 million.
More importantly, we're continuing to strategically reposition the portfolio.
Broad based core transaction deposit growth of $1.6 billion offset the strategic declines in time deposits of $1.2 billion and broker deposits of $381 million.
We estimate approximately $2.3 billion or 80% of deposit balances associated with P3 loans remained on the balance sheet at the end of the quarter.
The cost of deposits fell by 14 basis points from the previous quarter to 39 basis points due to a combination of rates paid and deposit remixing.
For context, this compares to a low of 26 basis points in the third quarter of 2014.
We continue to believe there are further opportunities to reduce deposit costs through CD turnover, repricing and remixing.
These activities in an environment of lower for longer interest rates, combined with strong growth in core customer deposits, should allow us to get our total deposit cost to the 26 basis point lows of the prior cycle.
Slide 6 shows net interest income of $377 million, stable from the previous quarter and included $12 million in fee accretion from our P3 loan portfolio.
There are $74 million of P3 processing fees remaining.
Earlier this month, the SBA announced a streamlined forgiveness process for certain P3 loans of $50,000 or less.
Approximately 7% of our P3 balances fall within this threshold.
There is approximately $10 million in fees associated with these loans, which will be accelerated when we receive the forgiveness proceeds.
Net interest margin was 3.10%, down three basis points from the previous quarter.
Consistent with our expectations, the current level of interest rates, combined with a nine-basis-point headwind from bond repositioning and student loan sales executed in the second quarter, put downward pressure on NII and NIM in the third quarter.
However, these headwinds were partially offset by a handful of factors, including further declines in deposit pricing and favorable deposit remixing trends.
Our guidance from the previous quarter largely remains the same, and we continue to expect modest downward pressure on NIM as the repricing within our fixed rate asset portfolio is partially offset by continued declines in overall deposit costs and further improvements in managing liquidity costs.
Excluding the potential impacts from P3 forgiveness, we expect NII and NIM will decrease slightly in the fourth quarter.
It was another strong quarter for non-interest revenue, which is shown on Slide 7.
Core banking revenue improved by $5 million from the second quarter, primarily due to increased transaction activity as most components are gradually returning to pre-COVID levels.
Net mortgage revenue of $31 million remained elevated, primarily due to increase in secondary revenues driven by higher loan sales and gain on sale.
Secondary mortgage production was $654 million in the third quarter, which is an increase of $19 million or 3% from the second quarter's record production.
We continue to see positive momentum in other fiduciary service business, including brokerage and trust.
Assets under management of $17.5 billion grew 6% from the previous quarter.
Other income for the quarter included a valuation adjustment for tax credits and gained from the previously mentioned mortgage portfolio sales.
In the fourth quarter, we expect stable revenues from core banking fees, fiduciary services and capital markets income.
We expect to see declines in mortgage revenue and other income.
Slide 8 includes non-interest expenses, which were $317 million or $269 million adjusted.
Adjustments include $3 million in restructuring charges, primarily related to branch optimization, as well as the $45 million goodwill impairment previously discussed.
This goodwill impairment is limited to the mortgage reporting unit and results from a combination of factors, including the extended duration of lower market valuations, high volumes and refinancings that have reduced mortgage yields and the clarity around longer term policy actions designed to keep interest rates low.
Total employment expenses were $5 million less than the previous quarter, primarily due to lower commissions, lower headcount and reduced COVID-related staffing expenses.
Total COVID-related expenses for the quarter were minimal.
We expect further headcount reductions in the fourth quarter as part of the normal attrition and a voluntary retirement offer we recently extended.
The voluntary retirement offer is expected to result in a onetime fourth-quarter expense of approximately $14 million and have a two-year payback.
These savings are part of the Synovus forward initiatives and will help offset expected increases to other line items such as travel and advertising in 2021 as banking activity returns closer to normal.
We continue to focus on what we can control, which includes prudent expense management.
Excluding the upfront expenses associated with Synovus Forward initiatives, we expect adjusted NIE in the fourth quarter will be in line with the third quarter.
Key credit metrics are on Slide 9.
There were slight increases in NPA, NPL and past due ratios from the previous quarter, but we currently do not see widespread deterioration in the portfolio.
Our comprehensive reviews have largely isolated the elevated risks to certain segments, including hotels and full service restaurants, and we continue to work with borrowers who have been most negatively impacted by the pandemic.
Provision for credit losses of $43 million includes net charge-offs of $28 million or 29 basis points.
Downgrades in the hotel portfolio, one of the hardest hit industries, accounted for $603 million of the increase in criticized and classified loans.
There were $125 million in hotel loans that had principal and interest deferrals at the end of the quarter, which represents about 8% of the total hotel portfolio.
Our latest economic outlook includes an unemployment rate of about 8% as of year-end before declining modestly in 2021.
This, along with credit migration and other portfolio activity resulted in an allowance for credit losses of $665 million, up $15 million from the previous quarter.
The allowance for credit loss ratio increased six basis points to 1.8%, excluding P3 loans.
The amount of provision for credit losses going forward will continue to fluctuate based on a number of factors, including economic outlook, loan growth, loan mix, risk rate migration, as well as the timing and impact of future government stimulus.
Heightened levels of uncertainty and those factors could result in reductions of allowance less than net charge-offs.
As the outlook becomes more stable and uncertainty declines, we expect changes in allowance to rely more heavily on the traditional factors previously mentioned.
Preliminary capital ratios on Slide 10 continued to build from a combination of earnings and balance sheet activities completed over the past several months.
These balance sheet activities include the settlement of our second-quarter bond repositioning and our ongoing efforts to reduce single service loan portfolios as we prioritize our balance sheet for core client relationships.
CET1 increased 40 basis points to 9.3% this quarter, that's an increase of 35 basis points from the end of 2019 and was accomplished while increasing the reserve by $382 million.
The total risk-based capital ratio of 13.16%, up 46 basis points from the second quarter was the highest since 2014.
We remain focused on supporting our overall capital position and are targeting the higher end of our CET1 operating range of nine to nine and a half percent, given the heightened uncertainty in the current economic environment.
We expect core earnings will continue to support our capital position and allow us to achieve our strategic objectives, with consideration for our anticipated balance sheet growth and the payout objectives we've outlined previously.
As a reminder, we do not expect any share repurchases for the rest of the year.
I'd like to begin on Slide 11 with an update on deferments.
At the end of the third quarter, we had $337 million in loans on a full principal and interest deferral, which was less than 1% of total loans.
The aggregate amount in deferment was well below the 3 to 5% range we estimated last quarter and down significantly from the 15% we referenced in our first quarter 10-Q filing.
We attribute the lower P&I deferral activity this quarter to the strength of our borrowers and improving economic environment and support provided through various government stimulus programs.
Of the $337 million in deferment at the end of the quarter, 50%, or $169 million were in the consumer book.
These were predominantly consumer mortgage loans, which are largely comprised of physician and private wealth customers.
The $169 million in deferments represents approximately 2% of total consumer loans.
Commercial deferments as of 9/30 were $168 million, or 54 basis points of the total commercial portfolio.
Full P&I deferments were largely concentrated in the hotel and full-service restaurant segments, which comprise 85%, or $143 million of commercial deferments at the end of the quarter.
We have not only seen a significant reduction in the level of deferments.
We are also seeing strong performance from those that have exited a deferral status.
94% have made a payment, while another 5 to 6% have not had a payment due or were in a grace period at the end of the quarter.
Only approximately 20 basis points of loans that exited a deferral status were past due are moved to nonaccrual status at the end of the third quarter.
In addition to the full P&I deferment program, we have continued to work with other borrowers who have been impacted during the current crisis to provide flexibility in payment terms, which may include modifications such as interest only or amortization extensions.
Inclusive of these modifications, we estimate that total loans with accommodations, as of the end of September, remained below 3%, which was at the low end of the range we projected last quarter for full P&I deferrals.
Moving to Slide 12 and the COVID-sensitive industries.
We shared on the second-quarter earnings call, a second round deferral estimate for each of these industries.
Consistent with the loan portfolio in aggregate, these industries also had a lower than estimated level of P&I deferments at the end of the third quarter.
As we mentioned on the previous slide, the hotel and full-service restaurant segment had a total of $143 million with a full principal and interest deferment as of 9/30, well below the original estimates.
The hotel industry continues to be a segment that has been hit the hardest by the change in customer behaviors, which was reflected in the downgrades Jamie mentioned earlier.
But the vast majority of our portfolio continues to pay as agreed.
Despite the results to date, we continue to closely manage and monitor this portfolio as we do not see the normalized return of revenues in the near term.
We have, however, conducted in-depth reviews of the loans in the hotel portfolio.
And from a longer-term perspective, we feel that we are very well positioned in several ways.
These include low loan-to-value, high-quality hotel properties with great brands and sponsorship from guarantors with strong liquidity.
As it relates to the restaurant industry, we have seen signs of recovery since the reopening efforts of April and May.
Quick service and fast casual restaurants in our portfolio have largely recovered based upon our cash inflow data, and in some cases, are outperforming pre-COVID levels.
Synovus has $365 million of full-service restaurants, and using our portfolio cash inflow data, we estimate they are operating at an average of 85% of revenue compared to the prior year.
There were $18 million of full-service restaurant deferrals at the end of the third quarter.
It is worth noting that we do not have any shopping center customers in a second round deferral.
While we continue to closely monitor this portfolio, our customers have experienced improving rent collections during the last quarter, overall, due largely to the strength of the grocery pharmacy, discount and home improvement segments.
We are also seeing stronger recovery in in-line service provider tenants that alleviate much of the concern from spring and early summer.
Retail trade, art, entertainment and recreation, as well as oil-related industries also had no deferments in the second round, and we continue to be optimistic as to the ability for our customers to weather the short-term cash flow reductions experienced during the economic shutdown.
While the deferral trends are extremely positive to this point, we are keenly aware, additionally mandated closings from COVID surges in our markets would have the potential of impacting cash flows and would affect these segments more quickly and severely.
Therefore, we will continue to closely monitor and manage our exposure within these industries.
Moving to Slide 13.
It provides an update on our portfolio's cash inflows, consistent with what we shared on last quarter's call.
The graph shows continued improvement in year-over-year cash inflows, which serve as a proxy for revenues.
During the third quarter, we saw the portfolio year-over-year inflows improve from being down 6% in June to being up 3% in July and then settling in essentially flat with the prior year in August.
These results are largely consistent with various industry metrics, as well as the conversations we're having with our customers throughout our footprint.
In addition to cash flow improvements, we have also seen our customers making the necessary adjustments within their expense bases to further reduce the impact that crisis is having on their bottom line.
We've included trends for some of the industries that were considered to be more sensitive to COVID, including accommodations, retail trade, food services and other services.
Results in these segments show consistent trending with the portfolio as a whole, but also note the differing impact within industry segment, which has served as the basis for many of the K-shaped recovery scenarios that had been developed and discussed more recently.
We continue to use this data to inform our bankers, as well as support our COVID specific deferment and portfolio management programs.
As I close out my section, let me transition to a business and Synovus Forward update, which we've highlighted on Slide 14.
We have maintained three primary focuses on the business front in 2020.
Number one, proactively manage the credit environment through the current economic downturn.
As I've shared on the previous slides, we feel good about our progress and results to date in this area.
Number two, utilize our relationship banking approach to continue to serve our customers, expand share of wallet and attract new relationships.
Despite the challenges presented by the pandemic, we have continued to drive core loan, deposit and assets under management growth, while improving service levels and adding new technology to support our customers' changing needs.
Throughout 2020, we have accelerated the deployment of new digital tools and capabilities with enhanced servicing and online origination functionality, with the overarching goal of making it easier to do business with us, as well as the changing business dynamics associated with COVID.
Digital user enrollment is up 10% year to date, and we've experienced a 30% increase in the number of deposits being handled outside of our branch network.
We have achieved this success as we partner with existing and new fintechs to efficiently and effectively deliver these enhanced capabilities.
We fully recognize and remain committed that when we get to the other side of the current challenges we face, we want to be even better positioned to grow and win in our marketplace.
And that brings me to the third area of focus, Synovus Forward, we remain focused on the execution of this program to drive incremental efficiencies and sources of new revenue now and in the years to come.
Our original financial objective of an incremental $100 million of pre-tax income remains the baseline for execution.
We are beginning to realize the benefit of several of these initiatives while we kick off additional initiatives that will have 2021 deliverables and run rate benefits.
As we progress with these, we will continue to update and fine-tune the size and timing of the benefits.
On the expense front, we are executing on the $25 million third-party spend program with work streams continuing to be implemented through the early part of 2021.
Our plan for 13 branch closures in 2020 remains on track with additional back office real estate consolidation planned for 2021.
We are also in flight with our overall organizational efficiency program.
This program is a comprehensive portfolio consisting of many initiatives that will deliver reductions in personnel and other expenses, as well as cost avoidance and additional areas throughout the remainder of 2020 and 2021.
Execution on these initiatives are under way, as Jamie noted, the reduction in headcount during the third quarter.
Another example of progress is the voluntary retirement program, which we announced during the third quarter and will largely be completed in the fourth.
As Jamie mentioned, it is expected to have a onetime charge of approximately $14 million and have an earn-back period of less than two years.
We will continue to update and provide further details as we execute on the overall organizational efficiency program, and we remain confident in our ability to generate up to $65 million in savings overall.
As we previously noted, we will continuously evaluate the underlying economic environment to gauge the size and the timing of our overall expense management program.
While we've been more focused on the efficiency initiatives out of the gate, we are progressing with revenue opportunities that were identified during the diagnostic phase with continued confidence in the pre-tax income range of 35 to $55 million.
We have kicked off our pricing for value and customer analytics work streams.
These initiatives have the potential to begin creating revenue enhancement in 2021 through the repricing of solutions and products, as well as enhancing tools and capabilities to improve sales and retention efforts.
The dedicated teams leading these efforts are adjusting and enhancing the program on a continuous basis.
As we complete the programs and the execution and in-flight phases, we have additional initiatives that will commence, which are all part of our longer-term strategic road map and change management plans.
Before we move to Q&A, Slide 15 highlights a few accomplishments from the quarter that we believe are just as important as the numbers we've reviewed today.
I'll not cover each one in detail, but just to summarize, we expanded the talent and expertise of our already strong and diverse board.
We were named by Forbes as the best employer for women.
We celebrated as two of our senior-most female leaders in our executive and board levels were recognized for their contributions to our company and our industry.
And we formed a council comprised of some of our most senior African-American leaders to ensure accountability for continued progress in promoting racial equality.
We made significant investments in education, including donating $1 million to the United Negro College Fund to provide scholarships for African American students, who want to attend historically black colleges and universities or other higher learning institutions across our five state footprint.
We've continued supporting our communities through increased outreach and financial investments as organizations, schools, individuals, families and entire communities face unprecedented challenges, and we continue to deliver financial education across the footprint through our now virtual Raise the Banner program.
And finally, we've remained active participants in multiple CARES Act stimulus programs to help our customers recover sooner rather than later.
We're proud of these actions, and we believe they reflect our deep sense of responsibility for leading and strengthening the communities we serve.
 Assistant:

Chosen response:
compname announces q3 earnings per share $0.56.
q3 adjusted earnings per share $0.89.
q3 earnings per share $0.56.
non-cash goodwill impairment charge of $44.9 million, or $0.30 per share in quarter.


Prompt:
Human: This conference call is the property of SYNNEX Corporation and may not be recorded or rebroadcast without our prior permission.
And so now, I'll cover some of the key highlights from Q3, and discuss Q4 guidance.
In the face of continuing economic uncertainty in these unprecedented times, our revenue, net income and diluted EPS, all exceeded our expectations, reflecting our resiliency and ability to do what we do best.
Our GAAP results announced today, while continuing to be impacted by COVID, have not been adjusted for COVID-19 costs.
Where appropriate, I will reference the financial impact COVID-19 had on Q3 results.
On a consolidated basis, total revenue was a third quarter record of $6.5 billion, up 4% compared to $6.2 billion in the same quarter last year.
On a constant currency basis, revenue was up 5% compared to the prior year quarter.
Our consolidated gross profit dollars totaled $708 million, down 2% or 18 million versus a year ago, and gross margin was 11% compared to 11.7% a year ago.
Total adjusted SG&A expense was $448 million or 7% of revenue, down $8 million compared to the year ago quarter.
Consolidated non-GAAP operating income was $260 million, down $10 million or 4% compared to a year ago.
Non-GAAP operating margin of 4% was lower by 34 basis points, compared to the prior year period.
Now shifting gears to Q3 operating performance by business segment.
First on Technology Solutions revenue was $5.3 billion, up 5% or $258 million over the prior year quarter.
Technology Solutions' gross margin was 5.6%, and that was 37 basis points lower than the prior year quarter, primarily due to product mix.
Operating income of $132 million was down $6 million compared to a year ago.
Non-GAAP operating income was $142 million, down 5% or $7 million compared to the prior year quarter.
Non-GAAP operating margin was 2.7%, 29 basis points lower than a year ago.
Technology Solutions COVID-19 related net incremental expense was approximately $8 million for the quarter, primarily made up of an increase in allowance for doubtful accounts, staffing and work from home costs.
Now to Concentrix; Concentrix revenue was $1.2 billion, up 24 basis points over the prior year quarter.
Concentrix gross margin was 35.5%, up 308 basis points sequentially, and down 126 basis points compared to the year ago quarter, primarily due to the impact of COVID-19.
Non-GAAP operating income in the quarter was $118 million, down $3 million in absolute dollars or 2% compared to a year ago.
Non-GAAP operating margin was 10.1% compared to 5.9% in fiscal Q2 and 10.4% a year ago.
Net Concentrix COVID-19 related incremental expenses were approximately $13 million for the quarter.
Now moving back to our consolidated results; third quarter net total interest expense and finance charges were $29 million, a reduction of $14 million compared to a year ago quarter.
The decrease was driven by a reduction in our average outstanding borrowings, compared to the prior year quarter, as well as a lower interest rate environment.
For the fourth quarter, we expect interest expense to be approximately $29 million.
Total non-GAAP net income was $173 million, up $3 million or 2% over the prior year period, and non-GAAP diluted earnings per share was $3.33, up $0.03 or 1% over the same period a year ago.
The effective tax rate for the third quarter was 25.2% compared to 25.3% a year ago.
For the fourth quarter of fiscal 2020, we expect the effective tax rate to be approximately 25%.
Turning to the balance sheet, our accounts receivable totaled $3.6 billion and inventories totaled $2.8 billion on August 31, 2020.
Our cash conversion cycle for the third quarter was 38 days, 11 days lower from a year ago and improved eight days from last quarter and led to a preliminary cash flow from operations of $321 million.
The improvement was supported by continued collaboration with our partners and faster churn on our inventory.
At the end of Q3, including our cash and credit facilities, SYNNEX had approximately $2.8 billion in total liquidity available to fund operations.
I also wanted to provide an update regarding the Concentrix spin.
We remain on track for a calendar Q4 spin, and believe the most natural date for the spin to be December 1.
As is consistent with our year-end, and as a good clean start for 2020, for both Concentrix and SYNNEX.
As we see it today, the estimated the SYNNEX Corp gross debt will be approximately $2.6 billion with Concentrix receiving approximately $1.1 billion and SYNNEX receiving approximately $1.5 billion.
The majority of cash on hand, which we estimate will be approximately $700 million at spin, will be held by SYNNEX.
The use of cash in Q4 will be for normal seasonal use and debt pay down.
As we have previously discussed, we want both companies to be well positioned among its peers from a leverage and liquidity standpoint.
These debt balances are estimates and could change based on Q4 performance.
We are well down the path with our bankers in securing third party financing for Concentrix, and are confident in the capital structure of both businesses.
SYNNEX and Concentrix will have the appropriate dry powder to support growth and M&A opportunities.
Now moving to our fourth quarter outlook; we expect revenue to be in the range of $6.45 billion to $6.65 billion.
Non-GAAP net income is expected to be in the range of $191 million to $204 million.
Non-GAAP diluted earnings per share is expected to be in the range of $3.68 to $3.93 per diluted share, on weighted average shares of approximately $51.5 million.
Non-GAAP net income and non-GAAP diluted earnings per share guidance excludes after-tax costs of approximately $37.5 million or $0.72 per share, related to the amortization of intangibles and acquisition-related and integration expenses.
In previous discussions with you, we've let you know about one of our valued [Phonetic] customers, that will be moving to a consignment model.
The transition date remains fluid and will not begin in early 2021.
As we learn more and have proper visibility to a start date, we will certainly let you know.
I want to start off by expressing my appreciation to all our stakeholders across the globe for their continued commitment and dedication in partnering with us, as we have jointly faced a multitude of challenges and economic issues in 2020.
Our associates delivered a phenomenal result in Q3, for which I am truly grateful.
We are all a bit worn down by the ongoing pandemic, but the SYNNEX spirit and determination continues to inspire me.
I see the positive impact we are having on our communities and the strong support our teams are providing to each other, our partners and customers.
Along with executing a great quarter, the team also made significant progress on our proposed spin of Concentrix to a stand-alone public company.
The Concentrix F-10 document is available for your review.
Third party financing is in final stages, and most of the remaining spend related activities are nearing completion.
Thus, we believe we are in a solid position to close this transaction in calendar Q4.
Now moving to our third quarter results; in our TS distribution business, better-than-expected revenue was driven by strong demand in education, state and local, and e-commerce channels.
This was driven by ongoing work, learn and shop from home needs.
We also experienced a slight improvement from our second quarter in office environment and SMB sales.
Consistent with Q2, we saw higher demand in notebooks, Chromebooks, cloud, collaboration and security products.
From a year-over-year perspective, we experienced some softness in product support in the office environment, such as desktop, PCs, printers, supplies, and on-premise datacenter equipment.
From a geographic perspective, North America was the strongest performer, but all geos net or performed better than expectations during the quarter.
Overall, TS distribution grew year-over-year.
In our TS Hive business, we delivered a sequential improvement and a year-over-year increase in revenue, as we continue to support our largest customers in Q3.
The mix of programs delivered was more skewed toward higher volume, lower margin products, but overall we are pleased with the high results in Q3.
Our Concentrix business also exceeded our expectations in Q3, despite the known challenges.
I'm very pleased with how we have performed, and I will now turn over the call to Chris, to discuss Concentrix in more detail.
We are very pleased with our continued momentum, both on our business execution and on being ready to spin, as Marshall indicated early December.
We delivered very solid results, returning to a pre-COVID revenue growth trajectory and double digit adjusted operating margin.
The third quarter revenue for Concentrix totaled $1.16 billion, slightly higher than the same quarter last year.
On a sequential basis, third quarter revenue increased across all our delivery regions.
This would not have been possible, without addressing COVID-19 challenges across three separate areas aggressively.
First, providing a flexible safe workplace that incorporates both at home and at-office elements, to nimbly meet our clients' demands.
Second, our strong technology solutions, that support clients regardless of the channels they choose.
And third, driving a culture of security and integrity, backed up by innovations like our recently announced SecureCX offering.
SecureCX is a proprietary platform that incorporates advanced technology, to ensure close to the same level of security at home, as available in an office.
This is just the latest innovation from our staff of well over 1,000 skilled engineers and developers.
Concentrix has been enabling technology in few solutions like this, for well over a decade, and we will continue to lead by investing in this space.
We continue to be happy with our execution also around vertical mix.
The communication vertical is now approximately 21% of revenue, representing an impact of 4% to our year-over-year growth rate, but giving us a much more balanced portfolio.
As expected, our travel, transportation and tourism clients during the quarter have been impacted by COVID-19, resulting in an additional 2% impact on growth.
More than offsetting these headwinds was strong growth with clients in our technology, healthcare, financial services and e-commerce verticals, which represent about two-thirds of our business on a combined basis.
New business signings were very encouraging in the quarter, coming in at a record level of expected annualized contract revenue.
This heightened demand is based on the values that our clients place in the strengths of our best-in-class CX platform, and our ability to meet their evolving needs.
We continue to take share with strong signings across our strategic verticals, and win new business that has historically not been outsourced.
Even with our record signings, our pipeline remains strong and growing.
We continue to watch the COVID developments daily, and are ready to recalibrate with our clients, as their needs change.
Now moving to profitability; adjusted operating income for the quarter was $118 million or 10.1%, nearly reaching the year-ago level.
The return to double-digit operating margin reflects revenue over performance, with lower variable spend, despite $13 million of additional net COVID-19 cost impacts.
Cash flow from operations in the third quarter totaled approximately $91 million.
Capital expenditures totaled approximately $37 million.
We generated positive free cash flow, despite the impact of prior quarter revenue reductions that reduced our collections in the third quarter.
Capital expenditures we see trending slightly higher than historical norms to support growth and reconfiguring some of our facilities due to COVID-19.
Turning to our outlook for the fourth quarter; we remain focused on keeping our staff safe, overdelivering for our clients, so that we remain their partner of choice, and emerging from the pandemic stronger, so that we can drive sequential improvement in both revenue and profitability.
In the fourth quarter, we expect more sequential revenue growth than last year, resulting from the strong new business signings in the third quarter, in addition to seasonal increases.
As a result, we expect fourth quarter revenue to increase by at least 2% year-over-year on a constant currency basis, and we expect our adjusted operating margin to be above 12.5%.
We continue to feel confident in our ability to achieve and exceed industry growth rates, while increasing our adjusted operating margin over time.
Now turning to our spin from SYNNEX, estimated to be on December 1, we believe that we are ready to go.
We intend to announce our Board of Directors in an updated Form 10 Registration Statement in early October.
We are very proud, that the Board will reflect the diversity we have in our business.
As Marshall indicated, we will have less than approximately two times debt to EBITDA when we separate, giving a strong liquidity and meaningful flexibility to invest in organic and inorganic growth.
As always, we have a disciplined approach to both.
We believe the spin-off would result in benefits for the shareholders, our team members and our clients.
A pre spin event will be held for analysts early November, with one-on-one meetings with investors shortly thereafter.
I look forward to updating you in the coming weeks on the incredible opportunity and our superior ability to lead in the customer experience industry.
The effort, resourcefulness and dedication are a tribute to our people, our culture and our diversity that we'll be able to take advantage of, as we enter this new chapter of Concentrix.
Turning to our fourth quarter outlook.
Our priority continues to be on the safety and health of our associates.
For our business, in general, we see positive signs of continued recovery, as economies open further.
However, we are still cautious, as there are many differences from geo to geo and within geos.
For Technology Solutions, we expect an overall seasonal improvement for Q4.
We anticipate TS distribution will be up sequentially, partially offset by a decline in TS Hive.
TS distribution will be driven by continued strength in remote enablement, the federal buying season, improvement in delayed on-premise projects, and overall continued investment in digital transformation.
We expect a solid quarter for TS Hive, though we will be comparing to an exceptional Q4 last year.
As well, given the unpredictability of this business, we tend to use the low end of internal expectations in our guidance calculations.
As Marshall indicated, COVID related expenses declined in Q3 and are expected to decline in Q4.
As we stated in our last call, a portion of these costs will be part of our normal TS run rate going forward.
Over time, we expect to find ways to offset these amounts, while running in the most effective and efficient business possible.
For Concentrix, as Chris indicated, we expect to have a seasonally strong Q4.
Our return to growth, positive cash flow, and a solid pipeline, are among many aspects that I am pleased about, as Concentrix moves toward becoming an independent business.
I'm also pleased and excited for the independent TS as well, our ongoing opportunities to improve our core operation, the many investments we have in place to organically grow our business, and the opportunities that exist for inorganic investments, give me confidence in our business, and the services we provide to our partners.
As well, our goal of growing faster than the market and increasing our profit at a higher rate will continue.
We appreciate everything you have done for SYNNEX during this challenging period.
Our thoughts continue to be with those who have been affected by COVID-19, please stay safe and healthy.
As well, we are, with all those who are working for positive change on social issues.
I appreciate the SYNNEX team members, who have been of service in these and other important areas.
 Assistant:

Chosen response:
compname reports q3 adjusted earnings per share of $3.33.
sees q4 2020 non-gaap earnings per share $3.68 to $3.93.
sees q4 2020 revenue $6.45 billion to $6.65 billion.
qtrly adjusted earnings per share $3.33.
qtrly technology solutions revenue was $5.3 billion, up 5.1%.
qtrly concentrix revenue was $1.2 billion, up 0.2%.


Prompt:
Human: Such statements are based on certain estimates and expectations and are subject to a number of risks and uncertainties.
We encourage you to read the risks described in the company's public filings and reports, which are available on the SEC's or the company's corporate website.
Now I would like to turn the conference over to Karen Colonias, Simpson's President and Chief Executive Officer.
I'll begin with a summary of our full-year 2020 results before turning to a discussion on our key fourth quarter performance drivers and initiatives.
Brian will then walk you through our financials and fiscal 2021 business outlook in greater detail.
I am extremely proud of our strong financial and operational performance in 2020 which we delivered in a highly challenging operating environment amid the COVID-19 pandemic.
Our net sales improved 11.6% over 2019 to $1.28 billion, the highest in the company's history, driven by strong sales volume.
As a result, we generated record earnings of $4.27 per diluted share, up 43.3% over 2019.
These results would not have been possible without the hard work and dedication of all our Simpson employees.
Their diligence including strict adherence to protocols to help minimize the spread of COVID-19 has enabled us to continue operating our business with minimal disruptions from the pandemic.
On behalf of the entire Simpson management team, we applaud them for their tremendous efforts.
The health, safety and well-being of all our employees remains our Number 1 priority and we will strive for continuous improvement to ensure Simpson remains a safe and rewarding place to work.
Our record 2020 results were further supported by our commitment to position Simpson for long-term sustainable and increasingly profitable growth.
In October of 2017, we unveiled a three-year 2020 plan with aggressive targets to maximize our operating efficiencies and drive long-term shareholder value.
Since then, we've made significant progress against our goal, some of which we updated in July of 2019 to reflect changes in the macroeconomic landscape.
While we elected to withdraw these financial targets in April 2020 due to the significant level of uncertainty surrounding COVID-19, we continued to execute based on the same underlying principles, focusing on operating efficiencies and cost savings to guide us through the COVID-19 pandemic.
At the same time, we did experience certain tailwinds in our business as a result of the COVID-19 related macroeconomic conditions, namely we had favorable steel prices, temporary reduction in travel and related operating expenses, and an increase in repair and remodel activity.
Due to the culmination of these factors, we were able to meet or exceed nearly all of our ambitious 2020 plan objectives.
We are very proud of these accomplishments and I'd like to spend a few minutes discussing those with you.
Our first 2020 plan objective was a continued focus on organic growth.
Our goal was to achieve a compounded annual growth rate in net sales of approximately 8% from 2016 to 2020.
As of the year end of 2020, we had well exceeded this target, achieving a compounded annual growth rate over 10% relative to our 2016 baseline.
Milestones that helped support this goal included price increase for the majority of our US wood connector products in the third quarter of 2018, the signing of one of our largest US homebuilding companies onto our builder program resulting in 23 of the Top 25 US builders now engaged on our program, strong repair and remodel trends associated with the COVID-19 pandemic and the return of Lowe's as the home center customer in mid-2020.
Our second objective involved rationalizing our cost structure to improve companywide profitability.
We aimed to reduce our total operating expense as a percent of net sales from 31.3% in 2016 to a range of 26% to 27% by the end of 2020.
We tackled this through a combination of zero based budgeting, lowering our indirect procurement costs and other cost reduction measures we took in both Europe and in our concrete business.
In addition, specifically in 2020, we experienced solid cost savings from our expense management practices as well as one-time benefits from the reduced travel and trade show costs as a result of the COVID-19 restriction.
These factors combined with strong topline growth enabled us to exceed our operating expense target.
For the full year of 2020, we recorded operating expenses as a percent of net sales of 25.6%, representing 570 [Phonetic] basis points of improvement compared to 2016.
Our next plan was to improve our operating income margin to a range of 16% to 17% by the end of 2020.
We exceeded this target as our gross margin significantly benefit from lower material costs and limited spending on operating expenses due to the COVID-19 restrictions.
We reported an operating income margin of 19.9% for 2020, a 350 basis point improvement compared to 16.4% in 2016.
At the consolidated level, our gross margin improvement was supported by enhanced gross margins in our concrete business, another 2020 plan goal.
Following the unveiling of the 2020 plan, we implemented a new concrete strategy in late 2017 by narrowing our concentration to six distinct product categories.
By focusing on these higher margin products to increase profitability, we exceeded our goal of improving our global concrete gross margin from 34.7% in 2016 42% in 2020.
Our final profitability goal was to improve our operating income margin in Europe.
We've made substantial progress in Europe over the past few years, including rolling out our fastener lines in the Nordic region and in France, the consolidation of our European management team to create efficiencies as well as significant cost cutting initiatives.
As a result, we achieved an operating income margin of 7% excluding our SAP costs of approximately $2.5 million in 2020.
While this is lower than our original target range of 8% to 9%, we are pleased with the results, which reflect approximately 350 basis points of improvement versus the 2016 numbers.
Our third objective focused on improving our working capital management and overall balance sheet discipline.
Since the onset of the 2020 plan, we've made headway on this front, primarily through inventory reductions and the implementation of lean principles throughout our operation.
We've completed a three-phase SKU reduction program, eliminating upwards of 12,000 non-moving or slow-moving items and converted our customers over to replacement products.
In addition, we carried out rapid improvement events at many of our US production facilities, resulting in efficiency enhancements as well as improved management of inventory and purchasing practices.
As we move forward, we remain committed to driving continuous cost management and improved efficiencies through our lean initiatives.
However, consistent with our strategy, it is critical that we balance our inventory purchases with our liquidity needs in order to maintain our commitment to product availability standards and an exceptional customer service experience.
The final element of our 2020 plan was focused on maximizing shareholder value with the goal of improving our return on invested capital from 10.5% in 2016 to a range of 15% to 16% by the end of 2020.
Through our solid operational execution, combined with the enactment of the US Tax Cuts and Jobs Act of 2017, which lowered our effective income tax rate beginning in 2018, we surpassed this target, ending 2020 with the return on invested capital of 20%.
Beyond this, we continued to return capital to our shareholders in the form of dividends and share buybacks.
In 2020, we returned $116.2 million to our stockholders through the payments of $40 million in dividends and $76.2 million in share repurchases.
Since the onset of the 2020 plan, we have returned over 83% of our cash generated by operations to our shareholders, far exceeding our target of 50% I'm extremely proud of all that we've accomplished in these past three years and by executing on the 2020 plan, we achieved solid organic growth, we've rationalized our cost structure to improve companywide profitability and we've improved our working capital management and balance sheet position, in turn creating value for all key Simpson stakeholders.
Now let's turn to a brief information on our fourth quarter results and operating initiatives.
Our fourth quarter consolidated net sales grew 12% year-over-year to $293.9 million on significantly higher volume.
Gross margin increased to 42.1% from 41.9% in the prior year quarter, primarily related to strength in Europe, where we experienced lower material and warehouse costs.
Our solid gross margin combined with effective expense management and reduced costs from travel and other restrictions as a result of the COVID-19 drove a 7.8% year-over-year increase in our income from operations to $39.5 million and earnings of $0.68 per diluted share.
The increase in sales volume we experienced in the fourth quarter was primarily related to ongoing momentum in the home center distribution channel, which includes both our home centers and co-op customers.
We are continuing to experience a shift in consumer behavior toward home renovations as a result of the pandemic.
Sales from home center distribution channels where we see much of our repair and remodel business improved over the prior year period.
Growth was supported by our product rollout of our connectors, mechanical anchors and fastener product solutions into all 1737 Lowe stores, which we completed during the fourth quarter.
As a reminder, Lowe's returned to Simpson as a home center customer beginning in the second quarter of 2020.
Our sales were further supported by solid US housing starts, as we generally experience a multiple month lag in the demand from the time of the start, in the fourth quarter, we benefited from strong third quarter 2020 housing starts which grew over 11% year-over-year.
In addition, while we typically see lower seasonal sales in the fourth quarter related to holiday closures and winter conditions, in 2020, the fourth quarter, we experienced a very mild winter.
This enabled construction activity to continue late into the year, further bolstering our net sales.
Turning now to Europe.
Sales continued to recover nicely following government-ordered shutdowns to our operations in the United Kingdom and France due to COVID-19 in late March.
Sales were assisted by strong demand trends and our ability to meet our customer needs through our solid inventory management practices.
We believe our sales benefited in Europe during the fourth quarter as many of our competitors experienced supply chain issues.
During this time, we were able to offer customers the important products they required to keep up with demand and to maintain job site on schedule.
I'd also like to note that while the United Kingdom has reimplemented shutdowns due to the most recent COVID-19 surge, we have been deemed an essential business and all of our major production and distribution facilities have remained open and operational with remote work being promoted where possible, such as in our corporate offices.
In regards to, [Indecipherable] implementation, the rollout continued to progress despite travel limitations related to COVID-19.
In the fourth quarter, we completed the SAP rollout at our UK branch and Gallatin, Tennessee locations, both of which are now live.
Most recently, we successfully transitioned all of our Canadian-based sales organization over to SAP, thus completing the full SAP rollout in North America, a very important milestone.
This year we will continue working on the SAP transition in our European locations and the rest of the world and we currently anticipate a companywide completion in 2022 and we will continue to monitor and update our timeline should circumstances change.
Now I'd like to briefly touch on our capital allocation structure.
We are very grateful to be able to operate as a supplier to other essential businesses with only minimal disruptions due to the pandemic.
As our business continues to generate strong cash flow, we remain focused on appropriately balancing our growth and stockholder return priorities.
We are also very pleased to be in a position to pay off our line of credit borrowing in pool, as well as declare our quarterly dividend as we have done consistently since 2004.
While the challenges of the COVID-19 pandemic continue to impact our broader economy, exiting 2020 we feel confident in the bright future that we believe lies ahead for Simpson.
With another quarter of strong year-over-year growth in housing starts, which were up over 11% in the fourth quarter of 2020, we believe housing will continue to be a key element of the economic recovery in the coming years ahead and we are well positioned to capitalize on this environment.
At the same time, we continue to pursue our strategy of diversification, positioning our business to be less vulnerable to US housing market through key investments and adjacent products in markets and we also remain focused on growth, including M&A opportunities that would complement our existing product offering, manufacturing footprint or strengthening our software capabilities.
Our success in achieving the 2020 plan target has created a very strong foundation for Simpson, successfully positioning our company for long-term sustainable and increasingly profitable growth.
But now we are ready for our next chapter.
Today, I'm pleased to announce that on Tuesday, March 23, we plan to host a Virtual Analyst and Investor Day to provide more insight and details surrounding the elements of our business strategy in 2021 and beyond.
Additional information about this event will be released in the coming days.
I'm pleased to discuss our fourth quarter financial results with you today.
Now turning to our results.
As Karen highlighted, our consolidated net sales were strong, increasing 12% to $293.9 million.
Within North America segment, net sales increased 9.8% to $249.1 million primarily due to higher sales volumes in our home center distribution channel, which includes our home center and co-op customers.
Sales volumes were supported by the return of Lowe's along with increased repair and remodel activity.
Our net sales further benefited from other distribution channels, which experienced increased demand from new housing starts and repair and remodel activity.
In Europe, net sales increased 24.9% to $41.8 million primarily due to higher sales volumes in local currencies.
Wood construction products represented 85% of total sales compared to 83% and concrete construction products represented 15% of total sales compared to 17% last year.
Consolidated gross profit increased by 12.4% to $123.7 million, which resulted in a stronger Q4 gross margin of 42.1% compared to last year.
Gross margin increased by 20 basis points, primarily due to lower material and warehouse costs, which were partially offset by higher labor costs.
On a segment basis, our gross margin in North America declined to 43.2% compared to 43.9%, while in Europe, gross margin increased to 25.3% compared to 29.9%.
From a product perspective, our fourth quarter gross margin on wood products was 41.8% compared to 40.8% in the prior year quarter and was 39.6% for concrete products compared to 43.7% in the prior year quarter.
Now turning to our fourth quarter costs and operating expenses.
Research and development and engineering expenses increased 10% to $12.9 million primarily due to personnel costs, stock-based compensation, product testing and cash profit sharing expenses.
Selling expenses decreased 1.2% to $27.8 million due to lower travel and entertainment and advertising and trade show expenses, partly offset by higher personnel costs, cash profit sharing, sales commissions and stock-based compensation expense.
On a segment basis, selling expenses in North America were down 2.1% and in Europe, they were mostly flat.
General and administrative expenses increased 10.9% to $43.6 million primarily due to increases in cash profit sharing, stock-based compensation and software subscriptions and licenses.
Total operating expenses were $84.3 million dollars, an increase of $5.1 million or approximately 6.5%.
As a percentage of net sales, total operating expenses were 28.7%, an improvement of 150 basis points compared to 30.2%.
Our solid topline performance combined with our stronger Q4 gross margin and diligent management of costs and operating expenses helped drive a 7.8% increase in consolidated income from operations to $39.5 million compared to $36.6 million.
In North America, income from operations decreased 1.8% to $36.1 million.
In the fourth quarter of 2019 North America income from operations included a $5.6 million gain on the sale of a selling and distribution facility.
In Europe, income from operations increased 145.8% to $1.3 million primarily due to increased gross profit.
On a consolidated basis, our operating income margin of 13.4% decreased by approximately 50 basis points.
Our effective tax rate increased to 25.6% from 22.3% due to the release of foreign valuation allowances in 2019.
Accordingly, net income totaled $29.6 million or $0.68 per fully diluted share compared to $28.1 million or $0.63 per fully diluted share.
Now let's turn to our balance sheet and cash flow.
Our balance sheet remained healthy with ample liquidity to operate our day-to-day operations.
At December 31, cash and cash equivalents totaled $274.6 million, an increase of $44.4 million compared to December 31, 2019 after paying down the remaining $75 million on our revolving credit facility during the quarter.
As of December 31, 2020, the full $300 million on our primary line of credit was available for borrowing.
Our inventory position of $283.7 million at December 31 increased by $23.6 million from our balance at September 30 as we continue to see higher levels of construction activity along with the unprecedented demand we've experienced through the pandemic.
We continue to be highly selective in regard to inventory purchases through careful management and purchasing practices along with maintaining our high level -- high levels of customer service and on-time delivery standards As a result of our improved profitability and effective working capital management, we generated strong cash flow from operations of $77.5 million for the fourth quarter of 2020, an increase of $21.1 million or 37.4%.
For the full year of 2020, we generated $207.1 million of cash flow from operations, which increased nearly $1.5 million.
During the fourth quarter, we used approximately $17 million for capital expenditures.
For the full year of 2020, capital expenditures were approximately $37.9 million, in line with our reduced expectations as a result of our focus on cash preservation in mid-2020 due to COVID-19.
We were also pleased to have paid $40.4 million in dividends in fiscal 2020 including $10.2 million in the fourth quarter.
In addition, we repurchased approximately 1.05 million shares of our common stock in 2020 at an average price of $72.33 per share for a total of $76.2 million.
This includes approximately 151,000 shares of our common stock that we repurchased during the fourth quarter at an average price of $89.49 per share for a total of $13.5 million.
As our authorization for repurchases of common stock expired at year-end, on December 16, our Board of Directors authorized the repurchase of up to $100 million of our common stock, which went into effect on January 1, 2021 and runs through December 31, 2021.
In addition, on January 22, our Board of Directors declared a quarterly cash dividend of $0.23 per share, which will be payable on April 22, 2021 to stockholders of record as of April 1, 2021.
Based on business trends and conditions as of today, February 8, we are initiating guidance for the full year ending December 31, 2021 as follows.
Operating margin is estimated to be in the range of 16.5% to 18.5%.
The effective tax rate is estimated to be in the range of 25% to 26% including both federal and state income taxes and capital expenditures are estimated to be in the range of $50 million to $55 million including approximately $10 million to $13 million, which will be used for maintenance capex.
As of today, the magnitude and duration of the COVID-19 pandemic and its impact on general economic conditions remains uncertain.
It's important to note that the potential economic impact related to COVID-19 on our operations, raw material costs, consumers, suppliers and vendors may have a material adverse impact on our 2021 financial outlook should conditions materially change from the current environment.
We will continue to monitor the impact of COVID-19 on our operations, which were not significantly impacted in the fourth quarter of 2020.
In summary, despite the COVID-19 related challenges in the marketplace and ongoing uncertainty, we were very pleased with our fourth quarter financial results and operating performance.
Our industry-leading position, geographic reach and diverse product offerings combined with our strong balance sheet and liquidity position gives us confidence in our ability to maintain operational excellence and support current and future demand trends.
As Karen mentioned, we look forward to updating you on our go-forward business strategy in 2021 and beyond during our Virtual Analyst and Investor Day on March 23.
 Assistant:

Chosen response:
compname reports q4 earnings per share $0.68.
q4 earnings per share $0.68.
q4 sales $293.9 million versus refinitiv ibes estimate of $276.1 million.
sees fy 2021 operating margin is estimated to be in range of 16.5% to 18.5%.
capital expenditures are estimated to be in range of $50 million to $55 million for 2021.