Prompt:
Human: I'll start by acknowledging the sad and disturbing recent events in the Minneapolis-St. Paul metro area and across the nation that began with the horrific death of one of our community members George Floyd.
Our hearts go out to the family and friends of Mr. Floyd and the communities directly affected.
Regrettably, these events are representative of larger social and systemic issues.
As our communities work together through these tragic circumstances, we must stand for what is right.
The Toro Company has a long-standing focus on the importance of respect for all in our workplaces, in how we conduct business, and in the communities we serve.
In addition to the events of the past week, we all continue to deal with the effects of COVID-19.
We hope all of you and your families are safe during this difficult time.
It was humbling to see how so many people and organizations moved forward without hesitation to do what was needed to help others as the COVID-19 pandemic spread around the world.
In response to the coronavirus, we prioritized the safety, well-being and support of our employees, customers and communities.
In addition to our value of respect for all as previously mentioned, some of our other core people values include carrying relationships, trust and integrity.
Even through significant personal and family challenges, our team has transformed the way we work to protect the safety of one another, support our customers, and help our communities.
I am deeply grateful for all of our employees around the world, many who are coming into our facilities each day, to develop, test, build and ship our products.
The team's flexibility, resourcefulness and resolve is being demonstrated as we've acted to make our facilities safe and implement work-from-home policies.
At the same time, we are maintaining the critical functions of our manufacturing operations.
All of this is vital, given The Toro Company's standing as an essential business.
In support of our communities, we launched a special COVID-19 giving initiative called Together We Can Do More.
Through this initiative, we directly donate and match all employee contributions made to COVID-19 relief efforts.
In addition, The Toro Foundation contributed $500,000 to organizations supporting families and communities most directly affected by the pandemic.
Recognizing the financial strain among our employees and their families, we expanded the availability of the Melrose/Hoffman Employee Critical Need Fund.
Additional voluntary contributions were made to that fund by our leadership team and the Board of Directors.
To quote our legendary former Chairman and CEO, Ken Melrose who sadly passed away last month, everyone has the potential to contribute to achieving the goals of the company.
If you unleash that potential, success will be a natural byproduct.
These words mean a lot coming from Ken who successfully led The Toro Company through some of the most challenging times in our history.
I will turn now to our business and financial review.
From a business perspective, our focus has been on maintaining ample liquidity, growing our position in the market, and balancing short and long-term objectives.
Our results this quarter were net sales sales of $929 million, down 3.4% from the prior year, primarily due to reduced Professional segment retail demand as a result of COVID-19.
We reported adjusted diluted earnings per share of $0.92, down 21.4% from the prior year.
To provide specific information by business segments, in the Professional segment, total net sales were $661 million, down 8.6%.
Sales benefited from incremental contributions from the Charles Machine Works and Venture Products acquisitions.
This quarter, we passed the one-year anniversary of the Charles Machine Works acquisition.
We are fortunate to have this business and its employees as part of our company.
Charles Machine Works added scale and diversification to our portfolio, open access to new markets and provided additional opportunities for synergy and value creation across the company.
We are on track to achieve or exceed our stated synergy targets.
Offsetting the gains from acquisitions were declines in most of our Professional businesses as a result of soft retail demand due to COVID-19.
The declines were most pronounced in commercial golf and grounds which saw fewer shipments of turf equipment and irrigation products.
This was driven by budget deferrals at golf course and municipalities, landscape contractor businesses which had fewer shipments as our channel partners aligned field inventory levels which reduced retail demand and rental specialty and underground construction businesses which have experienced reduced sales volumes as a result of global economic slowdown and impact on the construction and oil and gas markets.
It's important to note the Professional segment performance was tracking consistent with our expectations of modest growth until mid-March.
In April, we experienced additional and significant declines in most of our Professional markets.
We typically do not discuss the current quarter in our earnings calls.
However, we appreciate that this quarter is very different.
So, we'll share some color on what happened in May.
For the Professional segment, it was largely a story of new equipment purchase deferrals and focus on service and repair.
We're seeing continued challenges across golf and grounds, landscape contractor, and rental specialty and underground construction businesses.
These challenges stem more from lower budgets and deferred purchases than from temporary facility closures.
For golf, most play has resumed and demand for rounds has been robust.
However, lower food and beverage and event revenue has negatively affected club budgets, putting pressure on new equipment purchases.
For our municipal grounds customers, budgets have been lowered or diverted to non-ground support which has resulted in reduced equipment demand.
The repair and defer story is the same with landscape contractors.
However, with the lessening of stay-at-home restrictions, there were some improvements in these categories starting in late May.
In rental, specialty and underground construction, 5G infrastructure and broadband spending increased modestly in May with high demand for system capacity as a result of stay-at-home orders.
Underground infrastructure, rehab and repair projects remained steady.
However, this is being offset by continued construction and oil and gas project softness, reduced capital spending from national rental accounts resulting in new equipment purchase deferrals and lower dealer retail.
In the Residential segment, sales were up 12.9% in the second quarter.
This was mainly driven by incremental shipments to our expanded mass retail channel and strong retail demand.
Some of the demand drivers were favorable spring weather, new products and consumers focusing on home and garden improvements during stay-at-home orders.
Our product sales through captive and partnered e-commerce sites were up significantly in the second quarter.
For May, Residential segment momentum continued, driven by the same trends.
Regarding operations, all of our facilities are currently open with some operating at reduced capacity.
During the second quarter, some sites closed temporarily due to government orders or to manage inventory levels.
We will continue to align production to customer demand, comply with government orders and ensure the safety of our teams.
We had no supplier-related shutdowns in the quarter.
Regarding cash and financial flexibility, we continue to have a strong balance sheet and ample liquidity.
We took measures in the quarter to ensure that we have sufficient cash given the economic climate.
For the remainder of fiscal 2020, we are taking, across the board, pay cuts inclusive of leadership and eliminating merit increases and discretionary retirement plan contributions.
We also reduced expenses and paused new hires except for critical positions.
At the same time, we have preserved jobs and retained key talent.
We continue to benefit from productivity initiatives and enterprise synergy opportunities as a result of recent acquisitions.
As with past periods of economic challenge, we know what works and how to play to our strengths.
Our culture and business management approach are well adapted to respond to uncontrolled external variables.
While certain factors do lie out of our control, our diverse portfolio and flexibility, help us adjust to shifting situations, while continuing to provide long-term growth and sustained free cash flow.
We will continue to invest in the future for the benefit of all of our stakeholders.
The Toro Company is comprised of a balanced portfolio of products that enhance our customers' productivity across the seasons.
The company has a strong balance sheet that enables us to allocate capital effectively among a variety of alternatives, including new product development, acquisitions, dividends, debt pay down and share repurchases.
Q2 was no exception.
While the COVID-19 pandemic affected our results, we were able to adjust our operations and move the business forward.
We reported net sales of $929 million in the quarter, a 3.4% decrease from the second quarter of fiscal 2019.
Diluted earnings per share was $0.91 for the quarter compared to $1.07 last year.
Adjusted diluted earnings per share was $0.92, down 21.4% compared to the second quarter of fiscal 2019.
For the first six months of fiscal 2020, net sales increased 8.4%.
Diluted earnings per share was $1.55 compared to $1.62 in the first six months of fiscal 2019.
Year-to-date adjusted diluted earnings per share was $1.56 compared to $1.69 a year ago.
Before I review segment results, I'll cover liquidity.
Back in March, we entered into a three-year term loan agreement for $190 million.
This was to refinance our revolving credit facility borrowings, incurred in connection with Venture Products acquisition which closed on March 2.
With the funding of this new term loan, the company now has liquidity of approximately $800 million including cash and cash equivalents of $200 million and availability under our revolving credit facility of approximately $600 million.
We have no significant debt maturities until April 2022.
We continue to work closely with our banking partners and monitor credit markets.
Receivable collections continue to track similar to last year.
All of this gives us confidence in our ability to weather the current and potentially extended period of macroeconomic uncertainty.
I'd like to provide more color and some of the actions we've taken so far to maintain the strength of the company given the unprecedented speed and depth of the pandemic.
From a demand perspective, we've executed business continuity plans and work to ensure product availability in areas where demand remains strong such as in our Residential segment.
Additionally, we scaled back production in areas where demand was weaker.
As Rick discussed, we have taken actions to align costs with near-term demand and we'll continue to look for ways to make our cost structure more flexible and competitive.
Meanwhile, we focus on maintaining productivity and synergy intiatives which were driven by recent acquisitions and then extended across the enterprise.
Now, to the segment results.
For the second quarter, Professional segment net sales decreased 8.6% to $661 million.
The top line benefited from the Charles Machine Works and Venture Products acquisitions which together added incremental net sales of $142 million.
Professional segment sales declined compared to the second quarter of 2019, due to lower shipments driven by COVID-related demand pull back.
Until mid-March and the impact of COVID-19, sales were tracking to modest growth in line with our expectations.
We saw a modest sales decline in the second half of March and a more significant reduction in April as compared to prior-year performance.
For the year-to-date period of fiscal 2020, net sales increased 6.6% compared to the same period of fiscal 2019.
Professional segment operating earnings for the second quarter decreased 29.2% to $106 million, reflecting a 460 basis point decline in segment operating earnings as a percent of sales, primarily due to manufacturing variance as a result of COVID-19 related facility closures and social distancing initiatives, incremental marketing, engineering and administrative costs as a result of the Charles Machine Works and Venture Products acquisitions, higher warranty expense and unfavorable product mix.
This was partially offset by favorable net price realizations, productivity and synergy gains, lower commodity and tariff costs and decreased incentive compensation expense.
Year-to-date Professional segment operating earnings declined 12.3% compared to the same period in the prior fiscal year.
Professional segment operating earnings decreased 360 basis points to 16.6%.
Residential segment net sales for the second quarter were up 12.9% $262 million, mainly driven by incremental shipments of zero turn riding and walk power mowers to the expanded mass retail channel as well as strong retail demand.
Year-to-date fiscal 2020 net sales increased 13.4% compared to the same period of fiscal 2019.
Residential segment operating earnings were up 68.5% to $37 million.
This reflects a 470 basis point year-over-year increase in segment operating earnings to 14.2%.
This improvement was largely driven by productivity and synergy gains, lower commodity and tariff costs, lower freight costs and SG&A leverage.
This was partially offset by unfavorable manufacturing variance and higher warranty expense.
Year-to-date Residential segment operating earnings increased 67.2% to $58.7 million.
On a percent of sales basis, segment earnings increased 440 basis points to 13.7%.
Moving to our operating results.
We reported gross margin for the second quarter of 33%, a decrease of 40 basis points over the prior year period.
Excluding acquisition-related charges and one-time costs associated with the inventory writedown of the Toro branded underground business, adjusted gross margin decreased 100 basis points to 33.4%.
The decrease in adjusted gross margin was primarily driven by manufacturing variance due to production downtime and inefficiencies as a result of COVID-19 related closures and product mix with higher Residential segment net sales compared to Q2 of 2019.
This was partially offset by productivity and synergy gains, favorable net price realizations within our Professional segment and lower commodity and tariff costs.
For the first six months of fiscal 2020, gross margin was 35.1% compared with 34.3% in the prior year period.
Adjusted gross margin was 35.3% compared with 34.9% in the first six months of fiscal 2019.
SG&A expense as a percent of sales increased 40 basis points to 19.5% for the quarter due to incremental marketing and engineering costs as a result of the Professional segment acquisitions as well as higher warranty expense.
These cost increases were partially offset by decreased incentive compensation costs and lower transaction and integration costs.
SG&A expense as a percent of sales for the first six months of fiscal 2020 was 22.3%, up 130 basis points from the prior year period.
Operating earnings as a percent of net sales decreased 80 basis points to 13.5% for the second quarter.
Adjusted operating earnings as a percent of net sales decreased 240 basis points to 14%.
For the first six months of fiscal 2020, operating earnings as a percent of net sales were 12.8% compared to 13.3% a year ago.
Adjusted operating earnings as a percent of net sales for the first six months of fiscal 2020 were 13.1% compared with 14.7% a year ago.
Interest expense increased $2 million and $5.4 million for the second quarter and year-to-date, respectively, compared to a year ago.
These increases were due to higher debt outstanding related to the Professional segment acquisitions.
For the full year, we anticipate interest expense of about [Phonetic] $34 million.
The effective tax rate was 18.9% for the second quarter and the adjusted effective tax rate was 20%.
For the first six months of fiscal 2020, the effective tax rate was 18.8% and the adjusted effective tax rate was 20.4%.
For the full year, we anticipate an adjusted effective tax rate of about [Phonetic] 20.5%.
Turning to the balance sheet and cash flow.
Accounts receivable totaled $400 million.
This was down 6.6% from a year ago as a result of lower professional segment sales at the end of the second quarter, driven by reduced demand due to COVID-19.
This was partially offset by incremental residential segment sales to the expanded mass retail channel and additional receivable as a result of the Venture Products acquisition.
Inventory was up 16.8% to $714 million from a year ago, primarily due to higher finished goods in our Professional segment due to COVID-19 related sales reduction, increased raw materials and work in process as a result of production downtime due to facility closures and production inefficiencies and incremental inventories from Venture Products.
Accounts payable decreased 16.4% to $327 million from a year ago.
This was mainly due to decreased material purchases as we align production levels with reduced sales volume.
Incremental payables from Venture Products partially offset the decline in purchases.
We expect depreciation and amortization for fiscal 2020 of about $100 million which includes approximately $3 million of fair value step-up related to the acquired inventory from Venture Products.
We are now estimating lower capital expenditures of $80 million versus our prior expectation of $100 million.
Free cash flow for the quarter was below prior year amounts, primarily due to decreased net earnings, lower accounts payable, and higher inventory.
Our disciplined capital allocation strategy includes investing in organic and M&A growth opportunities, maintaining an effective capital structure and returning cash to shareholders.
Our keen focus on near-term liquidity has reaffirmed our capital allocation priorities for the year.
Consistent with our objectives following the Venture Products acquisition, we will continue to prioritize debt repayments in order to manage our leverage target, curtail share repurchases for the year and consider strategically compelling acquisitions.
In May, we declared our regular quarterly dividend.
Based on our current outlook and strong financial position, we expect to maintain our dividend.
As a result of the many and evolving COVID-19 related factors we discussed today and more that could emerge, should the current economic climate extend for a prolonged period, we do not have the ability to predict its impact on our businesses and financial results.
That said, we do want to share with you some of our thinking about the remainder of the year.
At this point, based on current information regarding the global economic outlook, the company expects the most pronounced year-over-year sales and earnings per share percentage declines in the third quarter of fiscal 2020.
We also expect negative year-over-year fourth quarter sales and earnings per share growth.
This assumes continued customer behavior changes that include lower capital outlays and cash preservation, mostly in the Professional segment.
On the positive side, our products have a natural replacement life.
So we anticipate net sales will rebound in future periods.
COVID-19 related factors that could impact these expectations include: first, the company's ability to continue operations and or adjust our production schedules due to governmental actions that have been and continue to be taken in response to the COVID19 pandemic; second, supplier risk and the company's ability to obtain commodities, components, parts and accessories in a timely manner and at anticipated costs; and finally, prolonged periods of economic stress that may affect customer liquidity and could impede customer buying patterns.
While we do not know how long this COVID-19 uncertainty will continue, we anticipate an easing of these pressures as we head into fiscal 2021.
In summary, with our flexible business model and strong culture as our foundation, we have taken the necessary steps to be in a position to grow as we enter fiscal 2021.
We have preserved jobs, lowered costs, strengthened our financial position, served our partners well and continued to invest in technology and innovation and we are prepared to take further actions to serve our customers in multiple potential economic scenarios.
As we've seen so for so far in 2020, we have been agile in our response to the pandemic and remain committed to our core values of innovation and caring relationships built on trust and integrity.
While our near-term visibility is limited, we've taken measures to ensure a solid financial position as we move forward.
We are confident in our ability to continue serving our global customers throughout and far beyond the pandemic.
As we look ahead, we are optimistic about our many exciting opportunities, our investments in alternative power, smart connected products, and robotic and autonomous technologies will drive an entirely new cycle of innovative products across our markets.
We continue to expand our full future portfolio of battery-powered products as customers see convenience and an opportunity to reduce emissions.
We expect the customers who deferred new equipment purchases will return to historic buying patterns as the economy improves.
In past recessionary times when we saw new equipment purchase deferrals, we experienced strong growth in the recovery.
In construction, the buildout of 5G and rural broadband should benefit sales of our underground equipment like the new JT24 horizontal directional drill.
In golf and grounds, we will continue to innovate to increase productivity and solve customer challenges.
For example, our IntelliDash course management platform professionals helps turf professionals integrate data and use information to simplify operations and use water and other resources more efficiently.
We continue to support contractors with an expanded line of high productivity equipment solutions.
For the snow and ice season, this includes the BOSS Snow Raider and Ventrac SSV and for the growing season, the Exmark Staris and Toro GrandStand Multi-Force.
These are just a few examples of how we're creating long-term growth through new product development and strategic acquisitions.
We also expect continued homeowner interest in home and garden improvement.
We have an exciting array of new products, including an expanded portfolio of 60-volt solutions, refreshed brand content and marketing and a new channel partner that is broadening our reach.
In closing, our strategic priorities are enduring.
Now and long after we emerge from this challenging time, we remain focused on accelerating profitable growth, driving productivity and operational excellence and empowering people.
 Assistant:

Chosen response:
compname reports q2 earnings per share of $0.91.
q2 adjusted earnings per share $0.92.
q2 earnings per share $0.91.
all of company's facilities are currently open with some operating at reduced capacity.
will not be providing detailed financial quarterly or full-year guidance until visibility into market conditions has improved.
expects most pronounced year-over-year sales and earnings per share percentage declines in q3 of fiscal 2020.
also expects negative year-over-year q4 sales and earnings per share growth.


Prompt:
Human: We will begin with our safe harbor statement.
You should listen to today's call in the context of that information.
We will also discuss some of our results for the quarter on a non-GAAP basis.
Any reference to sales in the discussion today is referring to local currency sales, which compares results between periods as if current period foreign exchange rates had been the exchange rates in the prior period.
Just 13 months ago, along with a new leadership team, we began the process of turning around this iconic company.
We've committed to right size the cost structure, to fix the core business, increase the use of digital tools and strengthen the balance sheet.
But more about a quarter on our performance in just a minute.
Let me first reiterate key elements of our strategic growth plan that are well under way.
We want to pivot from a distributor push to consumer pull and distributor push model.
Update a brand architecture to allow us to segment branding, products, channels and pricing to appeal to a broader consumer base; expand into new product categories and push consumer permission of our iconic brand; align product development efforts to address needs of all consumer social subsegment; expand distribution and access points to meet consumers where they shop.
And most importantly, fix the core direct selling business with proven methods.
Today, in our 75th year, the brand is very strong, widely known and accepted.
And we intend to leverage this important asset.
We also believe we're on trend with a worldwide focus on ESG by producing and selling environmentally friendly reusable products.
You've seen our increased efforts in this area with the sponsorship of National Park and our use of new, more environmentally friendly materials.
Due to the strength and awareness of our brand, we made the strategic decisions to be a branded house, not a house of brands, as we develop our new brand architecture.
As such, we expect to divest all the non-Tupperware businesses this year and use the proceeds to continue to pay down our debt and continue to invest in the business.
We believe the execution of this new brand architecture will enable us to penetrate new channels of distribution, new product categories and new pricing structures, all of which have the potential to accelerate our growth, while minimizing any potential conflict with our current direct selling channel.
In the first quarter, we reorganized our leadership team around channels, with Patricio Cuesta leading our direct selling business.
Hector Lezama now leads our nondirect selling business, which include key markets, like China and Korea, along with all the important markets, and most importantly, our efforts to penetrate new channels of distribution.
Improving our abilities and expanding our capabilities in product innovation will be a key objective for our executive team over the next two years.
We believe they are highly innovative manufacturers around the world that we can strategically partner with to accelerate our efforts to broaden our current product offerings, extend our brand into new categories and appeal to consumer in different social subsegments.
Also, we believe there is an exciting R&D journey ahead to use no raw materials to accelerate our efforts to continually improve the planet.
Our Eco+ line is an example of this.
This product line is a revolutionary product portfolio made with sustainable materials.
We are adding two new products, Launch-It Container and sandwich keepers with a new material partner Tritan Renew from Eastman.
Tritan Renew uniquely offers Tupperware's ability to design clear or transparent products with 50% certified recycled content, without compromising on quality or clarity.
These products with this new material will be launched in Europe in the second half of this year.
Our efforts to fix the core business are evident in our recent financial results.
In each of the past three quarters, we have reported 20-plus percent year-over-year growth.
While we are up against easy comps, this growth reflects increases activity, higher engagement and rapid adoption of detailed tools and techniques by our sales force.
As we mentioned on our last earnings call, a key strategic shift for us in 2020 was that our sales force realized that geography was no longer a hindering factor to growing their business.
By utilizing social media platforms and digital tools, they have been able to reach beyond their physical neighborhood and leverage the expansive reach of their online social network.
While it is still early in their transition to embrace in detailed selling tools and methods, we're confident we can build upon the success gain in 2020 and accelerate widespread adoption in 2021.
We believe a more digitally equipped sales force will enable ongoing engagement and increase productivity as we move forward with all our other growth initiatives.
Our overall digital strategy is making great progress, with the expansion of sales force enablement tools, social commerce and web sources.
Our top-tier markets now have these important tools in order to create a more seamless interaction between consumers and our sales force and increase the options for consumers to access our products.
Speaking of more ways to access consumers, let me take a few minutes to discuss some new business opportunities.
Historically, we have done 30 to 35 million per year in business-to-business partnerships.
In these partnerships, we sold products to well-known retailers, who then use the product in their loyalty programs.
Tupperware products are then exchange for points based on consumer buying activity with a major retailer.
We believe there are opportunities to expand these partnerships.
Currently, we're working with major brands in Mexico, Brazil and Europe and are evaluating more opportunities for the remainder of the year to accelerate our growth in this channel.
Additionally, here in the U.S., we will be testing new channels of distribution.
This past weekend, Tupperware ran a future segment using limited products with a major home shopping channel, who has access to more than 92 million homes across the U.S. through various media channels.
This new product and brand exposure allow us to deepen engagement around our brand and provides potential leads for our sales force.
Additionally, this is an opportunity to reach an expanded audience through the power of storytelling and discovery driven shopping experience.
Just a few months ago, Tupperware became the first reusable plastic container brand to partner with TerraCycle's circular reuse platform, Loop.
Loop works with leading brands to create zero waste, durable and returnable packaging.
As part of this agreement, Tupperware has recently partnered with one of Loop's prominent brand partners, and we're currently designing a one of a kind reusable package option for this brand, and it will be available later this year.
Another example of our efforts to reduce the use of single-use plastic is our partnership with a National Park Foundation.
This summer, Tupperware will be releasing a limited edition, especially designed national theme park line of sandwich keepers and on the go carts, which will be sold through a national park service retail partner, available at select parts around the country, as well as through Tupperware direct selling and e-commerce channels.
Also, our donation will help expand access to clean drinking water through new refilling stations.
Turning to first-quarter results, let me highlight a few of our large markets before Sandra discusses our overall financials.
In the U.S. and Canada market, sales increased 83%, and sales force activity was up 92%.
It is important to note that this level of growth is not sustainable going forward.
As the first quarter of 2021 had the ECS year-over-year comparisons.
Additionally, we're shifting to more profitable sales in this market, and we will reduce some of the highly promotional programs and improved distribution costs.
As we become more consumer-centric in the U.S. and Canada, our customer profile is changing.
Virtual selling leads to more people purchasing smaller units, reflecting our consumer pull strategy.
This changing order profile has increased our distribution cost.
And while we accept the higher cost in the near term, we're evaluating ways to embrace the shift into more efficient ways.
This is an important market to Tupperware, and we will be working intensely internally with our sales force to continue to increase the profitability in this market.
Tupperware Mexico had an 18% sales growth in the first quarter on a 6% growth in average active sales force.
This market also had an easy comparison in the first quarter of 2021 that need to be considered going forward.
While we're experiencing sales growth in Mexico, we're not meeting what we believe to be our potential in this market.
As a result, we recently made a leadership change to make sure that we leverage the opportunity of our products, brand and sales force going forward.
The new leader of this market worked with me over the last 10 years, and I'm confident he will be able to work with the local sales force to increase sales and profitability.
In Brazil, sales increased 46% on an easy first-quarter comparison and was achieved through an increase in sales force activity of 40%.
As you know, the second wave of COVID has hit Brazil very hard.
While this second wave has not yet significantly impacted sales, our recruiting efforts have been affected.
So we will remain cautious in this market until the trend stabilizes and COVID rate subside.
And lastly, a key market in our loan-term growth plan in China, which declined 14% as active studios were down 7% versus last year.
Our new leader in China is focused on improving product innovation, exploring bigger opportunities in e-commerce and fixing the core entrepreneur led retail business.
The turnaround in this market will take time, but we're confident that our brand is accepted and recognized by Chinese consumers.
Looking forward, our key priorities in 2021 to strengthen our direct selling business are the following: detail and product investment, segmentation of our sales force, introducing preferred customer loyalty programs around the world, use of data to identify best practices, use of data to upsell and cross-sell to our preferred customers and ensure competitive service and costs.
And our key priorities in the business expansion are: to explore new channels of distribution, avoiding a potential conflict with our current direct omnichannel.
In tradition, Tupperware sub-brands and penetrating into different product categories where we know the consumers give us permission to enter.
We believe the execution of these priorities is creating competitively strong foundation that will create meaningful value for our shareholders for years to come.
The strong revenue momentum from the second half of 2020 carried over to the first quarter of 2021, reaffirming the firm financial foundation we are establishing as part of our turnaround plan.
Our first-quarter sales were 460 million, which was an increase of 20% compared with last year in local currency and up 22% on a reported basis.
and Canada, Mexico and Brazil contributed 74% of the dollar increase.
Additionally, reflecting the breadth of our efforts to fix our core business, the majority of our markets posted improved sales in the quarter as well.
On a regional basis, North America increased 43%, South America increased 53%, Europe increased 12% and Asia was up 6%, excluding the negative impact from China's decline that you heard Miguel say.
These higher sales, coupled with our turnaround land cost savings led to a gross margin of 70.3%, 480 basis points higher than a year ago.
Of the improvement, 330 basis points was attributable to lower manufacturing costs.
The balance of the improvement reflects favorable changes in country and product mix.
Like other companies you may follow, we are experiencing higher resin cost.
But so far, we've been able to offset this negative impact through additional cost savings throughout our operations.
Moving on to SG&A.
We also experienced tremendous year-over-year improvement.
Adjusted SG&A as a percentage of sales was 53.9% and reflected an 820 basis point improvement from last year.
Rightsizing efforts contributed 560 basis points and 310 basis points improvements are from lower promotional costs.
These improvements were partially offset by 50 basis points of higher distribution costs.
Looking forward over the next few quarters.
To support our strategy to grow in new channels, we are accelerating investments in IT infrastructure to increase our capabilities and enhance our cybersecurity, data privacy and strengthen our controls.
We plan to also make incremental investments in the supply chain to improve the service levels required by consumers in these new channels.
We estimate this incremental investment to be in the range of 30 to 35 million for the balance of 2021.
Additionally, through approximately 10 million of additional investments in our tax strategy, we believe we have the ability and opportunity to more quickly achieve a tax rate in the low 30 for the full year of 2021.
We expect these 2021 additional investments will result in SG&A in the mid-50% range in the near term.
Longer term, we will continue to pursue SG&A at sub-50% of sales through ongoing centralization efforts, creating centers of excellence to leverage our size, simplifying our compensation plans, and through sales growth in our omnichannel initiatives.
For the first quarter, the improvements in gross margin and SG&A that I just discussed, combined with our contribution margin on the 20% sales growth resulted in an adjusted operating income of 75.3 million or 16.4% of sales, which reflects a significant improvement of 1,290 basis points versus prior year.
We made a huge commitment toward cost savings in 2020, and it's gratifying to see it now reflected in our P&L.
Now let me turn to a non-GAAP metric, EBITDA.
In addition to the higher operating income I just mentioned, Q1 EBITDA was favorably impacted by a one-time gain on sale of assets of $9 million, a $3 million benefit related to a grant from the China government normally received in the fourth quarter and a bad debt reversal in Germany of 2 million.
Adjusted for these items, and the incremental investments that I just discussed, future quarter EBITDA will be slightly lower than the first quarter, but still above 2020.
The improvements in the operations, higher sales and higher margins led to a GAAP diluted earnings per share in the first quarter of $0.85.
This is a dramatic turnaround from the loss of $0.16 in the first quarter of 2020.
And adjusted earnings per share of $0.82 also improved significantly compared to just $0.09 last year.
The $0.73 of improvement in adjusted earnings per share includes $0.69 of turnaround plan savings profits associated with the growth in sales and less COVID-19 impact.
$0.07 related to the China grant and the reversal of the bad debt reserves.
Offset by $0.03 of acceleration of interest related to the debt repayment, which I'll discuss in a minute.
In the first quarter, our total balance of debt was 695 million, reflecting a reduction of nearly 300 million from the 991 million in the first quarter of last year.
In addition to the proactive actions we took in 2020 to reduce and restructure our debt, in the first quarter, we used the proceeds of approximately 34 million from the sale of noncore assets to pay down our term loan debt.
The debt reduction, together with strong improvement in EBITDA, resulted in a debt to adjusted EBITDA ratio for debt covenant purposes of 2.36 versus 5.36 last year and well below our required covenant of four.
The debt reduction also triggers a favorable 50 basis point reduction in our new term loan interest rate effective during the second quarter.
We expect the rate to decline from 9.75% to 9.25% on 240 million of term loan debt.
Achieving double-digit growth for the third consecutive quarter, delivering profits that continue to reflect our rightsizing efforts and lowering our debt through the proceeds of noncore asset sales, resulting in a leverage ratio of 2.36 are continued evidence that our turnaround plan is working.
As we discuss today, and as we look forward to the rest of the year, we are shifting our focus to support efforts contained in our growth strategy.
And therefore, we plan to make incremental investments that we believe will drive penetration and growth into new channels.
We are also committed to finalizing the divestiture of noncore asset sales to focus our resources on growing our branded health.
As a result, we believe these actions and our strategic plans will create a stronger, more competitive company for the future.
 Assistant:

Chosen response:
q1 gaap earnings per share $0.85.
qtrly net sales of $460.3 million increased 22% versus.
2020, up 20% in local currency.
qtrly adjusted diluted earnings per share were $0.82.


Prompt:
Human: Before we begin, I'd like to mention we will be discussing future estimates and expectations during our call today.
On the call today, we have Scott Donnelly, Textron's chairman and CEO; and Frank Connor, our chief financial officer.
Textron's revenues in the quarter were $3.7 billion, down $368 million from last year.
During this year's fourth quarter, we recorded $23 million in pre-tax special charges, largely related to restructuring activities on industrial and Textron Aviation or $0.07 per share after tax.
We also recognized a one-time favorable tax benefit related to the sale of TRU Canada of $0.04 per share.
Excluding special charges and the one-time favorable benefit, adjusted net income was $1.06 per share compared to $1.11 in last year's fourth quarter.
Manufacturing cash flow before pension contributions was $467 million, down $183 million from last year's fourth quarter.
For the full year, revenues were $11.7 billion, down from $13.6 billion a year ago.
Adjusted net income was $2.07 per share compared to $3.74 last year.
Manufacturing cash flow before pension contributions was $596 million, as compared to $642 million last year.
Our business has closed out the year with a strong operating performance in the fourth quarter, as we saw margin improvement in Systems, Industrial, and Bell that drove an increase in Textron's manufacturing margin to 8.8% on lower revenues.
At Bell, margins of 12.6% were up 30 basis points, as compared to the prior year despite lower military revenues and commercial volume.
We delivered 57 commercial helicopters, down from 76 in last year's fourth quarter.
On the military side, the Japanese officially began V-22 flight operations in November.
This continues the growth of the worldwide fleet of operating aircraft, which has amassed over 560,000 flight hours.
Looking to Future Vertical Lift, Bell marked the third anniversary of the V-280's first flight in December, with the aircraft having now flown more than 200 hours.
Army leadership and Congress have been very supportive of Future Vertical Lift and we expect this will continue under the new administration.
In December, the U.S. Army provided the draft RFP for the FLRAA program for review and comment.
The Army continues to anticipate a down-select and FLRAA program award in mid-2022.
At Systems, revenues were down primarily on lower volume at the TRU Simulation + Training business.
In November, Systems announced sale of its commercial air transport simulator business to CAE.
This transaction closed in January.
In the quarter, ATAC won the recompete of the U.S. Navy and Marine Corps flight, fighter jet training services program.
This contract expands the scope of the services we currently provide into the program and it's worth up to $440 million over the next five years.
Also in the quarter, unmanned systems was awarded a $66 million contract for the U.S. Army for 36 Shadow aircraft.
The Shadow platform now has over 1.2 million flight hours globally.
Revenues were down primarily due to reduced demand in the ground support equipment business within Specialized Vehicles.
Kautex, the automotive production outlook, has steadily improved since the low point in May and demand from our customers continues to ramp in the fourth quarter as revenues approach their prior-year levels.
Moving to Textron Aviation.
Revenues were down in the quarter, primarily on lower jet deliveries and aftermarket volume.
We delivered 61 jets, down from 71 last year and 61 commercial turboprops, up from 59 in last year's fourth quarter.
On the new product front, Aviation began deliveries of the new King Air 360 with eight units in the quarter and announced the new King Air 260.
Cessna SkyCourier program continues to progress with three aircraft flying in the certification program.
The flight test -- test program has completed over 400 flight hours and the aircraft is on track for entry into service in the second half of 2021.
In summary, 2020 was a difficult year with many challenges for our operations and I'm proud of the way our teams responded.
Through our focus on working capital management and cost control, the business has generated a strong manufacturing cash flow performance for the year.
At our defense businesses, we were able to maintain our operations, meeting our customer commitments and delivering strong results.
On the commercial side, we overcame temporary manufacturing shutdowns and disruptions in our end markets to deliver strong fourth-quarter results and look forward to carrying that momentum into 2021.
With this backdrop, we're projecting revenues of about $12.5 billion for Textron's 2021 financial guidance.
At Aviation, we are projecting growth from increased aircraft deliveries on both jets and turboprops, including the entry into service of our new Cessna SkyCourier and higher aftermarket revenues driven by increased fleet utilization.
At Systems, we're expecting higher revenues and margin expansion, primarily driven by growth in ATAC and Marine and Land Systems.
At Bell, we expect solid margin performance despite lower military and commercial revenues while continuing to invest in Future Vertical Lift.
At Industrial, we're expecting revenue growth and margin improvement at Kautex as auto demand continues to recover from pre -- to pre-COVID levels.
At Textron Specialized Vehicles, we're also expecting revenue growth and margin improvement as we continue to grow our powersports business with Bass Pro Shops.
We are projecting adjusted earnings per share in the range of $2.70 to $2.90 per share.
Manufacturing cash flow before pension contributions is expected to be in the range of $600 million to $700 million.
Segment profit in the quarter was $324 million, down $16 million from the fourth quarter of 2019 on a $368 million decrease in revenues.
Let's review how each of the segments contributed, starting with Textron Aviation.
Revenues at Textron Aviation of $1.6 billion were down 10%, primarily due to lower Citation jet volume and lower aftermarket volume.
Segment profit was $108 million in the fourth quarter, down from $134 million a year ago, primarily due to the impact from lower volume and mix.
Backlog in the segment ended the quarter at $1.6 billion.
Moving to Bell, revenues were $871 million, down from $961 million last year, primarily on lower military revenues and commercial volume.
Segment profit of $110 million was down $8 million, largely on the lower volume, partially offset by a favorable impact from performance, primarily reflecting higher favorable program adjustments.
Backlog in the segment ended the quarter at $5.3 billion.
At Textron Systems, revenues were $357 million, down from $399 million a year ago, primarily due to lower volume at TRU Simulation and training.
Segment profit of $49 million was up $16 million, primarily due to favorable performance.
Backlog in the segment ended the quarter at $2.6 billion.
Industrial revenues were $866 million, a decrease of $61 million from last year, primarily due to reduced demand in the ground support equipment business within Specialized Vehicles.
Segment profit was $55 million, up 25% from the fourth quarter of 2019, largely due to a favorable impact from pricing and inflation and favorable performance, partially offset by the impact of lower volume and mix.
Finance segment revenues were $13 million and profit was $2 million.
Moving below segment profit, corporate expenses were $50 million and interest expense was $36 million.
We recorded pre -- pre-tax special charges of $23 million in the quarter related to restructuring activities.
Following the strong cash performance in the quarter, we ended the year with approximately $2.3 billion of cash on the balance sheet.
The $2.3 billion represents a higher-than-normal level of cash on hand, reflecting a prefunding of $500 million of 2021 debt maturities.
During the quarter, we repaid $350 million of floating rate notes that matured in November and $362 million of outstanding borrowings on corporate-owned life insurance policies that were drawn in the first quarter for additional liquidity.
In the quarter, we also reactivated our share repurchase program and repurchased approximately 120 -- 129 million of shares.
At Textron Aviation, we're expecting higher revenues of about $4.5 billion, reflecting higher aircraft deliveries for both jets and turboprops, as well as, higher aftermarket revenues.
Segment margin is expected to be approximately 5.5%, reflecting the higher volume and increased production.
Looking to Bell, we expect slightly lower revenues of about $3.1 billion, reflecting lower military revenues from a lower H-1 production and aftermarket volume and lower commercial deliveries.
We're forecasting a margin of about 12.5%, largely reflecting the lower military and commercial revenues and increased R&D investments related to FLRAA and FARA.
At Systems, we're estimating higher 2021 rev -- revenues of about $1.4 billion.
Segment margin is expected to be about 12.5%.
At Industrial, we're expecting segment revenues of about $3.4 billion, reflecting higher revenues at Kautex and Textron Specialized Vehicles.
Segment margin is expected to be about 6%.
At finance, we're forecasting segment profit of about $10 million.
Turning to Slide 10.
We're estimating 2021 pension income of about $30 million versus a pension cost of $33 million last year.
Our 2021 pension, reflects the strong return on our pension assets for 2020 of 17.4% and a change to the amortization period for accumulated actuarial losses for one of our domestic plans, resulting in those losses being amortized over a longer period.
Offsetting these favorable changes are a 75-basis point decrease in our discount rate to 2.7% and a decrease in our estimated long-term asset return of 50 basis points to 7.25%.
Turning to Slide 11.
R&D is expected to be about $600 million, up from $545 million in 2020.
We're estimating capex will be about $400 million, up from $317 million last year.
Moving below the segment line and looking at Slide 12, we're projecting about $120 million of corporate expense, $135 million of interest expense, and a full-year effective tax rate of approximately 18%.
Our full-year 2021 adjusted earnings per share guidance is $2.70 to $2.90 per share, which excludes $20 million to $30 million of pre-tax special charges for the completion of our previously announced restructuring plan and a pre-tax gain of about $10 million from the sale of TRU Canada.
Our outlook assumes an average share count of about 227 million shares as we continue to deploy the majority of our free cash toward share repurchases in 2021.
 Assistant:

Chosen response:
q4 adjusted non-gaap earnings per share $1.06.
textron aviation backlog at end of q4 was $1.6 billion.
bell backlog at end of q4 was $5.3 billion.
forecasting 2021 revenues of about $12.5 billion, up from $11.7 billion in 2020.
expects full-year 2021 adjusted earnings per share from continuing operations in range $2.70 to $2.90.


Prompt:
Human: I'm Steven Sintros, UniFirst's President and Chief Executive Officer.
Actual future results may differ materially from those anticipated, depending on a variety of risk factors.
As I have the last several quarters, I want to start by saying that first and foremost, our thoughts are for the safety and well-being of all those dealing with the impact of the COVID-19 pandemic.
Good news is that during the quarter we have seen real improvement from a health and safety standpoint, both in our Company and in our communities related to COVID-19.
I also want to again highlight that for over a year now, our team partners have continued to put forth tremendous efforts in the face of many obstacles created by the pandemic.
Consolidated revenues for our third quarter were $464.3 million, up 4.2% from the prior year and fully diluted earnings per share were $2.21, up from $1.12 in the third quarter a year ago.
Our Core Laundry operations revenues were positively impacted by a modest level of customer reopenings as well as increases in the sale of PPE.
Our Specialty Garments segment also contributed to our overall performance with a very -- with very strong results during the quarter that exceeded our expectations.
Shane will provide you with the details of our quarterly results shortly.
Clearly, our comparisons to the prior year third quarter are being positively impacted by the significant effect that COVID-19 pandemic had on our fiscal 2020 third quarter.
As a reminder, that quarter a year ago was the quarter most impacted by customer closures during the pandemic.
Overall, we are pleased with the results of our quarter which exceeded our expectations from a top and bottom line perspective.
In addition, we have started to see early signs of improved activity in the energy dependent markets that we service.
Our new account sales and account retention experience was solid during the quarter and we continue to position our sales resources to take advantage of current opportunities as well as capitalize on future opportunities as the economy recovers.
As I'm sure many of you are aware, we are operating in an increasingly inflationary environment.
The cost of labor as well as other business inputs are clearly on the rise.
In addition, we expect, and have begun to experience a rebound of several costs that trended significantly lower during the pandemic, such as merchandise, healthcare, energy, travel and others.
For example, merchandised amortization for the full year fiscal 2021 is running at least 100 basis points lower than more historical levels.
As we look ahead beyond our fourth quarter into fiscal 2022, we expect that the increases in these costs as well as the inflationary impact on labor and other business inputs will pressure our margins.
We will provide you with further insights into our outlook for fiscal '22 during our fourth quarter earnings call.
Our solid balance sheet positions us well to meet our ongoing challenges, while continuing [Phonetic] to invest in growth and strengthen our business.
As we've talked about over the last year or two, we continue to be focused on making good investments in our people, our infrastructure and our technologies.
All of our investment is designed to deliver solid long-term returns to UniFirst stakeholders and are integral components to our primary long-term objective to be universally recognized as the best service provider in the industry.
We continue to make good progress on these core initiatives such as our CRM systems project.
Our CRM deployment is certainly a foundational change to our infrastructure that will allow for service improvements and efficiency moving forward.
We will continue to invest in our infrastructure and future over the next several years, including key investments in supply chain, other technology infrastructure, route efficiency as well as our brand.
We will provide additional details as we progress with some of these key initiatives in the quarters ahead.
As always, we will continue to focus on providing our valuable products and services to existing customers and selling new customers on the value that UniFirst can bring to their business.
As we have discussed, the pandemic has clearly highlighted the essential nature of our products and services.
We believe the need and demand for hygienically clean garments and work environments positions our Company well to support the evolving economic landscape.
As Steve mentioned, consolidated revenues in our third quarter of 2021 were $464.3 million, an increase of 4.2% from $445.5 million a year ago, and consolidated operating income increased to $54.2 million from $27.7 million or 95.5%.
Net income for the quarter increased to $42 million or $2.21 per diluted share from $21.3 million or $1.12 per diluted share.
Our effective tax rate in the quarter was 22.9% compared to 21.8% in the prior year.
As a reminder, our tax rate can move from period to period, based on discrete events including excess tax benefits and efficiencies associated with employee share based payments.
Our Core Laundry revenues for the quarter were $409 million, an increase of 5.3% from the third quarter of 2020.
Core Laundry organic growth which adjusts for the estimated effective acquisitions, as well as, fluctuations in the Canadian dollar was 4.3%.
This increase was primarily driven by the COVID-19 pandemic, significantly impacting our customers' operations and ware levels in prior year, which was partially offset by a large $20.1 million direct sale also in prior year.
As Steve discussed, our quarterly top line performance exceeded our expectations as the impact of the pandemic on our customer base continues to subside as well as from increased sales of PPE.
Core Laundry operating margin increased to 11.2% for the quarter from $45.6 million, from 5.1% in prior year or $19.7 million.
The increase was primarily driven by a number of items affecting our prior-year period, including: The impact of the decline in rental revenues on our cost structure; higher cost of revenues related to the large $20.1 million direct sale; higher bad debt expense and; additional costs which the Company incurred responding to the COVID-19 pandemic.
The current quarter operating margin continued to benefit from certain costs that have trended favorably during the pandemic, including lower merchandise and travel related costs.
In addition, the segment's operating results benefited from lower payroll cost due to understaffing caused by the challenging employment environment.
Company also relieved some of its bad debt reserves in the quarter that it had provided for during the pandemic, as our expectations around future uncollectible accounts have moderated.
These benefits were partially offset by higher healthcare claims costs which trended unfavorably due to what we believe was pent-up demand from our Team Partners deferring elective activities during the pandemic.
Energy costs were 4.2% of revenues in the third quarter of 2021 compared to 3.4% the prior year.
Our Specialty Garments segment, which delivers specialized nuclear decontamination and cleanroom products and services had a very strong quarter and exceeded our expectations in both revenues and operating income.
Revenues increased to $38.2 million from $36.2 million in prior year or 5.7%, and were primarily driven by growth in our cleanroom and European nuclear operations.
Segment's operating margin increased to 21.7% from 17.6% primarily due to lower merchandise costs and bad debt expense as a percentage of revenues, as well as costs incurred in the prior year responding to the COVID-19 pandemic.
As we've mentioned in the past, this segment's results can vary significantly from period to period due to seasonality and the timing of nuclear reactor outages and projects that require our specialized services.
Our First Aid segment's revenues were $17.1 million compared to $20.9 million in the prior year.
However, the segment's operating profit was nominal compared to $1.6 million in the comparable period of 2020.
These decreases were primarily due to elevated PPE sales in prior year.
In addition, the current quarter operating results reflect continued investment in the Company's initiative to expand its first aid van business into new geographies.
We continue to maintain a solid balance sheet and financial position with no long-term debt and cash, cash equivalents and short-term investments totaling $535 million at the end of our third quarter of fiscal 2021.
For the first three quarters of fiscal 2021, capital expenditures totaled $96.6 million as we continue to invest in our future with new facility additions, expansions, updates and automation systems that will help us meet our long-term strategic objectives.
During the quarter, we capitalized $4.2 million related to our ongoing CRM project which consisted of license fees, third-party consulting costs and capitalized internal labor costs.
As of the end of our quarter, we had capitalized a total of $32 million related to the CRM project.
In the third fiscal quarter of 2021, we began to depreciate part of the system over a 10-year life, and our quarterly depreciation approximated $0.7 million.
As a reminder, the depreciation of the full system combined with additional hardware we will install to support our new capabilities like mobile handheld devices for our route drivers will eventually ramp to an estimated $6 million to $7 million of additional depreciation expense per year.
The Company did not repurchase any shares during the quarter under its previously announced stock repurchase program.
As of May 29th, 2021, the Company had repurchased approximately 368,000 shares of common stock for $61.8 million under the program.
Based on our results to date, as well as our outlook for the remainder of the year, we now expect that our fiscal 2021 revenues will be between $1.810 billion and $1.817 billion.
We further expect that full year diluted earnings per share will be between $7.80 and $8.00.
This outlook assumes that our Core Laundry operating margin in the fourth quarter will approximate 10.6% at the midpoint of the range.
This outlook also reflects continued benefits in areas that have trended lower during the pandemic, including merchandise and travel costs, although we have also assumed that those benefits will continue to moderate.
We further assume that our payroll costs will increase as a percentage of revenues as we work to fill open positions and begin to adjust compensation levels in certain high demand roles in response to the current employment landscape.
 Assistant:

Chosen response:
unifirst corp - q3 revenue $464.3 mln.
q3 earnings per share $2.21.
q3 revenue $464.3 million versus refinitiv ibes estimate of $454.4 million.
sees fy 2021 revenue $1.81 billion to $1.817 billion.
sees fy 2021 earnings per share $7.80 to $8.00.


Prompt:
Human: I'd like to start by recognizing our colleagues, the people of Optum and UnitedHealthcare, for delivering strong results throughout 2021 and creating the momentum that is carrying us through as we enter into this year.
For example, performance in two key elements of our growth strategy, accelerating the transition of patients to Optum-led value-based care and strong United Healthcare growth in serving Medicare Advantage consumers, are both tracking well with the expectations we shared with you at our recent investor conference.
These, and the broader performance across the enterprise, confirm our confidence in our ability to advance our stated growth strategies and to support our long-term 13% to 16% earnings per share growth rate.
When you look back at the prevailing themes for 2021, you see a story of accelerating growth, strong collaboration between Optum and UnitedHealthcare and with our many external partners helped us grow in serving both commercial and government markets, unlock new innovation, introduce integrated products and services to the marketplace and significantly increased the number of people benefiting from value-based models of care.
Last year, we leveraged our technology capabilities to help physician and hospital systems better serve their patients and communities.
And we sharpened our focus on the consumer, working to elevate and improve the end-to-end experience.
Taken together, these efforts helped us add more than $30 billion in revenue for the year, about $10 billion above our initial outlook.
And you should expect similar growth in the year ahead.
We see an even greater demand for integration to bring together the fragmented pieces of the health system, to harness the tremendous innovation occurring in the marketplace, to help better align the incentives for providers, payers, and consumers, and to organize the system around value.
A healthcare system that is more connected, more informed, more human, and more responsive to every person's unique needs.
At our investor conference, we shared five key areas for growth and for differentiated experiences across our portfolio.
These growth opportunities will guide our strategy this year and for many years to come.
First is care delivery, more specifically, value-based care.
For UnitedHealth Group, this is more than a primary care strategy.
It's a comprehensive clinical strategy encompassing our growing behavioral, home, ambulatory, and virtual care capabilities.
Our second growth area is health benefits, advancing the quality, innovation, and consumer appeal of our benefit offerings and bringing our value-based strategy to life.
We enter '22 having generated strong consumer growth in Medicare Advantage and saw further progress in Medicaid and growing momentum in our commercial business.
Our major partnerships across the country help health systems improve their performance and returns, all to better support their missions.
We're energized by the potential to bring these comprehensive tailored solutions to a greater number of system partners in 2022 and beyond.
Fourth, health financial services, vastly improved in the health payment sector, streamlining and simplifying payments for providers, payers and consumers while reducing friction and increasing speed and convenience.
And finally, pharmacy services, where people interact most often with the healthcare system.
We can better use the significant breadth, volume, and value of our foundational pharmacy services and data capabilities and integrate our medical pharmacy and behavioral capabilities, all of this to provide whole person care, support the discovery of new drugs and treatments and support value-based models of care.
In sum, we enter 2022 with heightened confidence in our ability to execute upon the objectives we set forth in late November.
I thought I would take a few minutes providing you with some additional details on our first growth priority: value-based care, how we have prepared for it, the investments we have made and how we see it working in the near future.
This has been something we have been working on and building over the course of a decade.
For example, there was significant operational groundwork and investment that went into supporting the half-million new patients for whom OptumHealth will become accountable in 2022.
Successful execution requires a lot of detailed planning, investing, and building.
It has become a distinctive competency of our enterprise, which we can now increasingly apply at scale.
So what does it take to prepare for moving to a fully accountable arrangement?
Investments can be significant.
As an example, in '21, we incurred over $100 million in preparation expense.
Within this, there are three major workstreams involved: clinical training and staff preparation, technology and data enhancement and third is network coordination.
The first workstream focuses on physician education.
It begins well more than a year prior.
It's important to provide the resources and knowledge for physicians to begin approaching their patients differently.
They engage in their patients' whole health, well ahead of taking on greater accountability.
We find it to be an essential and sometimes complex shift in what our long-held fee-for-service practices.
Beyond education, we ramp up our capacity in the form of physicians, nurses, and other clinicians to meet the requirements of our business.
The second area focuses on the technology systems and information needed to support patient care and effective clinical management.
This includes things like patient portals and utilization management systems as well as reporting systems for teams to effectively manage.
Finally is the planning and network coordination work to support clinical oversight beyond primary care and ensure true continuity of care.
This planning and coordination includes initiatives such as identifying the patients most in need and ensuring a seamless transition to high-touch clinical care services that improve health and quickly pairing patients with a personal care navigator to assist in supporting complex health needs, appointment scheduling, and timely medication support on day one.
These foundational preparations and investments have been critical in creating strong results across the variety of geographies and practices we have transitioned.
We expect this expertise will serve us well as we transition even larger groups of patients in the years to come.
Before handing it over to John, I'd like to update you on how COVID has impacted our operations.
Like other businesses, we have experienced moderately higher levels of attrition and more unplanned absences.
We had prepared for this situation through increased recruiting capacity as well as meaningfully upgraded digital capabilities to improve customer experience and reduce call volumes.
As a result, in the first two weeks of '22, traditionally our most demanding period, we were able to service the needs of our patients and customers.
At the same time, we responded swiftly to the federal mandate for cash-free COVID test for consumers, a highly complex undertaking.
With four days' notice, UnitedHealthcare created a customer digital experience for ease of reimbursement and established a partnership with Walmart and now Rite Aid that eliminates cash outlays by consumers at point of purchase.
We expect more partnerships in the days ahead.
As we look forward, we believe we have the right capacity in place to execute our business priorities and meet our customers' expectations.
I'll start by expanding a bit upon Dirk's comments on the COVID impacts we're seeing.
In the most recent weeks, inpatient hospitalization levels for our members are similar to the January 2021 levels, even with national COVID case rates about four times higher.
For those people needing inpatient care, severity is seemingly lower as we are seeing shorter lengths of stay compared to that earlier period.
At the same time, we are observing familiar correlations of care activity patterns to other periods of elevated infection rates experienced over the past two years.
For example, in these early weeks of January, we are seeing slowing in primary care, elective visit, and procedural volumes.
Activity over the past several weeks shows primary care visits having declined about 10% and an even higher rate of decline in specialist visits.
As always, our prime focus is on helping people get the care they need when they need it.
Moving now to our specific business performance.
OptumHealth's revenue per consumer grew by over 30% in '21, driven by the increasing number of our patients served under value-based arrangements.
Consistent with the expectations we shared in late November, we had a strong start to the year and continue to expect to add 500,000 new patients in accountable value-based relationships, benefiting from the groundwork laid over the past many years.
OptumInsight's earnings grew 25% in '21, with operating margins approaching 28% for the year.
We ended the year with a revenue backlog of $22.4 billion, an increase of $2.2 billion over the prior year.
Our expanding relationships serving health systems has been a key factor driving this growth, and we expect these partnerships to continue to grow in '22 and beyond.
OptumRx earnings grew 6% for the year, driven by the continued expansion of our pharmacy services businesses, supply chain initiatives and strong cost management activities and benefiting from strong customer retention.
In addition, we continue to see the impact of OptumRx's movement to a higher-value pharmacy care and specialty services orientation.
Full-year revenues of $223 billion grew 11%.
As noted, our 2022 Medicare Advantage member growth outlook is very positive and consistent with the objectives we established at our November investor conference.
Within the up to 800,000 new members we will serve in '22, about three-quarters will be in individual and group Medicare Advantage and the remainder in dual special needs plans.
And given the steady strides we've made in quality performance, we have the opportunity to enroll people in our newly rated five-star plans throughout the entirety of this year.
Our Medicaid membership outlook for '22 continues to incorporate an expectation that states resume eligibility redeterminations, resulting in modest net attrition.
In January, we began serving the citizens of Minnesota and continue to support the Missouri expansion this year as well as renewed relationships with Ohio, Tennessee, and Nevada.
Over the course of the year, we will look to continue to expand upon the nearly 8 million individuals we serve across 31 states.
We concluded '21 with commercial membership about 200,000 people ahead of the original outlook provided.
Creating this momentum is the strong response we are seeing to the new innovative products you have heard us discuss, products such as NavigateNOW, which use the Optum virtual network as a first option.
Our capital capacities remain strong.
Full year '21 cash flow from operations was $22.3 billion or 1.3 times net income, about $2 billion above the initial outlook we shared a year ago.
We continue to expect our 2022 cash flow to approach $24 billion, about 1.2 times net income.
And we ended '21 with a debt-to-total capital ratio of 38%.
These ample capital capacities allow us to continue to accelerate our investments, while remaining committed to an advancing shareholder dividend and supporting our expected repurchase of between $5 billion and $6 billion of stock in '22.
Our 2022 adjusted earnings per share outlook of $21.10 to $21.60 is consistent with the view we offered seven weeks ago.
From this distance, and in contrast to the past two years, we expect the seasonal pattern to be more consistent with our historical experience, with just under 50% of full-year earnings in the first half and the first two quarters comparably even.
Before we transition to the Q&A portion of the call, I hope you've already taken away the strong sense of confidence John, Dirk, and I share in the growth potential of this company, rooted in the growing number of people we're serving in value-based models, the depth of relationships we're building with local health systems, our pharmacy capabilities and the innovation and consumer focus that's driving growth across our government programs, individual and commercial businesses.
As demand for innovation and integrated solutions, products, and services only continues to grow, we've never been in a better position to help bring together the fragmented pieces of healthcare and create more value for the people we try to serve.
One per caller, please.
 Assistant:

Chosen response:
affirmed 2022 growth and performance objectives established at its november 30, 2021 investor conference.
unitedhealth - confirmed 2022 growth forecast elements provided at its investor conference, including for people served through medicare advantage.
unitedhealth - cash flows from operations for the full year 2021 were $22.3 billion or 1.3x times net income.


Prompt:
Human: These reports, when filed, are available on the UPS investor relations website and from the SEC.
For the third quarter of 2021, GAAP results included after-tax transformation and other charges of $54 million or $0.06 per diluted share.
Unless stated otherwise, our comments will refer to adjusted results, which exclude transformation and other charges.
In the 17 months that I've been CEO, I've learned that no matter what comes our way, UPSers deliver.
But through it all, UPSers leverage the flexibility of our integrated network and the technology that powers it to deliver what matters.
A little over one year ago, we laid out our better, not bigger framework under a customer-first, people-led, innovation-driven strategy.
Inside that strategic framework is a focus on three main areas.
First is to improve revenue quality, including growing SMB volume.
Second is to reduce our cost to serve through productivity and cost takeout initiatives.
And third is to effectively allocate capital to create a better customer experience, happier UPSers, and higher returns on the capital we deploy.
While it is early in the execution of our strategy, the progress we are making is clearly visible in our results.
Looking at the third quarter, our performance was better than we anticipated.
Consolidated revenue rose 9.2% from last year to $23.2 billion, driven by another quarter of improved revenue quality across all three of our operating segments.
Consolidated operating profit grew 23.4% to $3 billion, driven by solid revenue growth and strong expense control.
Each of our segments delivered year-over-year operating profit improvement and double-digit operating margins.
And for the first nine months of 2021, UPS has generated more operating profit than any full year in our history.
Brian will share the details of our performance shortly.
As we've discussed, we are laser-focused on adding capabilities that enable UPS to grow with SMBs.
These improvements also benefit large customers that value our end-to-end network.
Expanded weekend delivery services is one of our new capabilities.
This initiative will be completed in the U.S. as planned by the end of this week.
We will now cover about 90% of the U.S. population on Saturday for both residential and commercial pickups and deliveries.
In addition, expanded Saturday services provides more capacity for Sunday SurePost delivery.
The best part of our weekend delivery program is that we've unlocked additional network capacity that benefits all customers without deploying additional capital.
And we've done this while expanding our U.S. operating margin on a year-over-year basis.
As we look at our third-quarter results, we see that SMBs value the new capabilities we are providing.
In the U.S., SMB average daily volume, including platforms, was up 10.9% year over year.
In fact, we've seen strong growth here for the past six quarters.
volume, up 380 basis points from one year ago.
And outside the U.S., SMB average daily volume growth was 3.9%.
We see many opportunities to grow our international SMB volume as we continue to improve our digital experiences and roll out DAP, our Digital Access Program, to customers outside of the U.S. Let me also touch on SMBs and healthcare.
When COVID-19 vaccines were rolled out late last year, the world turned to UPS, and we were ready with connected capabilities, technology, and expertise.
Our brand relevance here is attracting new SMB healthcare customers and significantly driving profit growth in this sector.
And just on COVID-19 vaccines, we are on track to deliver more than 1 billion vaccine doses by the end of this year with 99.9% on-time delivery.
We are relentlessly focused on reducing our cost to serve, and we're making good progress.
While Brian will go through the details, I'll call out a few highlights.
In the U.S. we drove a measurable improvement in productivity as PPH, or pieces per hour, increased by 2.5%.
Additionally, as Nando described at our June Investor Day, through our ongoing efforts to optimize loads in our trailers, cube utilization in the third quarter was up 520 basis points versus last year.
This helped us eliminate more than 10% of daily trailer loads year over year.
And as we've discussed previously, we are creating fewer but more impactful jobs.
So to reduce turnover and improve productivity, we are converting around 1,000 part-time supervisor positions in our operations into nearly 400 full-time positions at no additional cost to our company.
Turning to what we refer to as Transformation 2.0 or plans to optimize our nonoperating expense.
We are on track to eliminate $500 million in nonoperating costs this year, with about $500 million of additional opportunity in 2022.
Finally, our third area of focus is disciplined capital allocation.
Since we began executing our strategy, we've seen marked improvement in our employee satisfaction and competitive Net Promoter Scores, due in part to how we've allocated capital to enhance the employee and customer experience.
In October, we completed the acquisition of Roadie, a technology platform that also provides delivery services for packages that don't lend themselves to our small package network.
We continue to be disciplined in our capital spending practices.
This discipline, plus record earnings, yield a significant amount of cash.
So far this year, we've generated a record $9.3 billion in free cash flow.
And we expect full-year 2021 return on invested capital to be around 29%, which is a 730-basis-point improvement from what we reported at the end of last year.
Turning to the fourth quarter.
The global supply chain market is challenging.
There are capacity, congestion, and cost concerns.
But for UPS, our outlook is positive as, once we get a package, we get it delivered.
Outside of the U.S., where we peak, we are ready, and tight capacity benefits our freight forwarding business.
In the U.S., we project a robust peak season, and through our planning efforts, we believe we are well on our way to deliver a peak that will be a win for UPS shippers, recipients, and share owners.
Let me share a few details.
To begin with, the calendar is helpful as we have one more peak operating day than last year.
Further, we've expanded weekend delivery and added additional sorting capacity.
Nonetheless, we expect consumer demand will outpace capacity in the market.
We began collaborating with our largest customer several months ago, and we'll stay in close contact with them during the holiday shipping season.
Our technology allows us to match daily capacity with customer demand.
And where we need to, we will again control the amount of volume that enters our network.
These actions will minimize chaos costs and enable high service levels.
On the labor front, we've digitized and simplified our job application process.
enabling qualified applicants to receive a job offer within 30 minutes of applying.
In parts of the country, labor costs are higher than they were last year, but we are effectively managing through that cost pressure.
When you add it up, in the fourth quarter, we expect to generate record consolidated operating profit and expand operating margin year over year.
While we are laser-focused on peak, our business doesn't end on December 31st.
Later this week, we will release our U.S. general rate increase.
The 2022 increase will be 5.9%, reflecting the value of the services we offer and cost inflation pressures.
The details will be posted to ups.com.
As we move ahead, we will continue to execute by leveraging our global Smart Logistics Network, our amazing UPSers, and a strategy that's driving strong financial results today and positions us well for the future.
In my comments today, I will cover four areas, starting with a macro overview, then our third-quarter results.
Next, I'll review cash and shareowner returns.
And lastly, I'll wrap up with some comments on our outlook for the full year.
Let's start with the macro.
In the third quarter, the global economy continued its strong growth despite the dampening effects of COVID-19 and inflation, along with shortages in inventory and labor.
Within this backdrop, demand for our services remained high and the pricing environment in the industry was firm.
We expect similar dynamics in the fourth quarter, and as we demonstrated in the third, we will continue to execute our strategy and capture profitable growth opportunities in the market.
IHS is forecasting fourth-quarter global GDP will grow 3.8% and U.S. GDP is expected to grow 4.9%, which remain above historic GDP growth rates.
Moving to our third-quarter consolidated performance.
The progress we've made to improve revenue quality enhance productivity and allocate capital is driving strong top and bottom line results.
Consolidated revenue increased 9.2% to $23.2 billion.
Consolidated operating profit totaled $3 billion, 23.4% higher than last year.
All three segments generated record third-quarter operating profit and achieved double-digit operating margins in the quarter.
Consolidated operating margin expanded to 12.8%, which was 150 basis points above last year, and diluted earnings per share was $2.71, and up 18.9% from the same period last year.
Now let's take a look at the segments.
Our results in U.S. domestic were better than we anticipated principally due to higher than planned for improvements in revenue per piece and productivity gains.
As we expected, average daily volume in the U.S. was down 540,000 pieces or 2.7% due to a decline in SurePost of 576,000 packages per day.
This decline was partially offset by growth in ground commercial volume.
Our results reflect the continued execution of our strategy to win in the most attractive parts of the market.
In fact, customer mix continued to be positive as higher-yielding SMB average daily volume, including platforms, was up 10.9%.
And in the third quarter, SMBs made up 27.4% of U.S. domestic volume, compared to 23.6% last year.
Regarding our delivery mix, our commercial business continued to recover and grew 6.8%, representing 42% of our volume in the third quarter, compared to 39% in the third quarter of last year.
Nearly all industry sectors grew B2B average daily volume, including retail and high tech.
For the quarter, U.S. domestic generated revenue of $14.2 billion, up 7.4%, driven by a 12% increase in revenue per piece with fuel driving 270 basis points of the revenue per piece growth rate.
Total expense grew 5.8% and with fuel driving 180 basis points of the year-over-year expense growth rate.
Through our focus on productivity, overall improvements, led by our inside sort operations and on-road activities, helped offset the market rate adjustments we implemented in certain geographies, as well as the cost of expanding Saturday delivery.
And as Carol mentioned, a key measure of UPS productivity is pieces per hour.
And in the third quarter, we made improvements in nearly every area of our operations, led by preload, which improved by 6.5%.
Combined, these improvements contributed to a decrease in direct labor hours per day of 5.1%.
In summary, revenue growth was above expense growth, which generated positive operating leverage.
The U.S. Domestic segment delivered $1.4 billion in operating profit, an increase of $281 million or 24.8% compared to last year, and operating margin expanded 140 basis points.
The segment continues to generate strong profit growth, driven by the execution of our strategy.
Due to tough year-over-year comparisons and some supply chain disruptions, growth in average daily volume moderated in the third quarter and was up 1.9%.
B2B average daily volume grew 3.8% on a year-over-year basis and offset a decline in B2C volume, which was down 2.3%.
On a two-year stack, total average daily volume was up 14%.
Total export average daily volume was up 1.3% on a year-over-year basis.
Export growth in Europe and the Americas offset a 4.8% decrease in export average daily volume out of Asia.
The decline in Asia was due to difficult comps from a year ago and the implementation of network contingency plans in response to COVID-19 protocols at select airports.
Relative to our plan, we had 137 fewer flights out of Asia than we anticipated.
For the quarter, international revenue was up 15.5% to $4.7 billion with strong growth across all regions.
Revenue per piece was up 14%, including a 500 basis point benefit from fuel.
Revenue quality improved on a year-over-year basis as we continue to utilize surcharges to match demand with available capacity.
In the third quarter, international delivered its fourth consecutive quarter of profits over $1 billion.
Operating profit was $1.1 billion, an increase of 14%, and operating margin was 23.5%.
Now looking at supply chain solutions.
The segment delivered record third quarter top and bottom line results as the team executed exceptionally well in a dynamic environment.
Revenue increased 8.4% to $4.3 billion with all major business categories contributing to profit growth.
Market demand remained elevated with a couple of key profit drivers.
In forwarding, capacity constraints, and consumer demand in the market drove volume growth in air freight forwarding and strong yields in our ocean freight product, which drove top and bottom line results.
And in logistics, revenue and operating profit grew by double digits led by our healthcare portfolio.
In the third quarter, supply chain solutions generated record operating profit of $448 million, and the operating margin was an impressive 10.5%.
As a reminder, this is our first full quarter without UPS freight results, given that we closed the sale on that business on April 30th of this year.
Walking through the rest of the income statement, we had $177 million of interest expense.
Other pension income was $285 million.
And lastly, our effective tax rate came in at 22.3%, which was lower than last year due to favorable changes in jurisdictional tax rates and discrete items.
Now let's turn to cash on the balance sheet.
We are generating strong cash flow from our disciplined focus on capital allocation and growth in net income.
So far, in 2021, we have generated a record $11.8 billion in cash from operations and $9.3 billion in free cash flow.
And in the first nine months of this year, UPS has distributed $2.6 billion in dividends.
In August, we announced a $5 billion share repurchase plan.
with the intent to repurchase $500 million of shares in 2021, which we completed in the third quarter.
We expect to execute the remainder of the program over the next few years.
Now I'll make a few comments regarding the full-year outlook.
We are continuing to pay close attention to and manage through several external factors, including COVID-19, inflationary pressures, and inventory and labor shortages.
Despite these challenges, consumer demand is expected to be strong during peak season and in the fourth quarter.
Due to our third-quarter outperformance, combined with the progress we are making with our strategic initiatives, and our increased fourth-quarter plan, we are raising our full-year guidance.
On a consolidated basis, we expect full-year 2021 revenue growth of around 13.8% year over year, which takes into account the divestiture of UPS freight.
Additionally, consolidated operating margin should be around 13%.
In U.S. domestic, we anticipate full-year 2021 revenue growth of about 12.7% with revenue growing faster than volume.
We anticipate the full-year 2021 U.S. operating margin will be around 10.5%.
As you update your models for the U.S. domestic segment, there are a couple of things to keep in mind as we get into the fourth quarter.
First, as usual, enterprise and B2C volume will represent a larger percentage of our total volume due to peak when compared to the rest of the year.
And second, we are lapping more than $550 million in peak season surcharges in addition to the early customer pricing actions we implemented last year as a part of our revenue quality initiatives.
As a result, we expect the sequential revenue per piece growth rate to moderate in the fourth quarter.
Moving to the international segment.
We expect full-year revenue growth of around 20.7%, with an operating margin of about 23.9%.
And in the supply chain solutions segment, we anticipate full-year revenue growth of around 10.3% and operating margin of about 10%.
Additionally, for the full year in 2021, we expect free cash flow to be around $10.5 billion, and return on invested capital will be around 29%.
Capital expenditures are now expected to be approximately $4.2 billion.
And lastly, our effective tax rate for the full year is expected to be about 22.5%.
As I wrap up, the economic outlook and the effects of our revenue quality and productivity initiatives are putting us well on our way to achieving the high end of our 2023 targets that I shared with you in June.
We are executing our strategy under the better, not bigger framework, and delivering on our commitments despite a very dynamic environment.
We are laser-focused on improving revenue quality, reducing our cost to serve, and remaining disciplined on capital allocation to improve the experience for our customers and our people and the financial performance of our company.
And operator, please open the lines.
 Assistant:

Chosen response:
compname reports q3 adjusted earnings per share of $2.71.
q3 adjusted earnings per share $2.71 .
ups releases 3q 2021 earnings.
ups - raises full-year 2021 financial guidance.
q3 revenue rose 9.2 percent to $23.2 billion.
ups qtrly consolidated revenues of $23.2b, up 9.2% from last year.
ups qtrly gaap results include after-tax transformation and other charges of $54 million, equivalent to $0.06 per share.
ups - fy capital expenditures are now planned to be approximately $4.2 billion.
ups - expects fy adjusted return on invested capital to be around 29%.