Prompt:
Human: I'm William Prate, Senior Director of Global Financial Planning and Analysis and Investor Relations.
Our Chief Operating Officer, Dave Huml, is tending to a family matter today and is not able to join the call.
Chris will brief you on our operations and the progress we're making toward our enterprise strategy, then Andy will cover the financials.
After their remarks, we will open the call to questions.
These risks and uncertainties are described in today's news release and the documents we file with the Securities and Exchange Commission.
We encourage you to review those documents, particularly our safe harbor statement for a description of the risks and uncertainties that may affect our results.
Additionally, on this conference call, we will discuss non-GAAP measures that include or exclude certain items.
We hope that you and your loved ones are managing to stay safe through this pandemic.
As you may have seen, in September, we celebrated Tennant's 150th anniversary.
While our current operating environment could not be more different than what our founder George Tennant encountered in 1870, the Company has always maintained a tradition of innovation and resilience, demonstrated by our ability to adapt and stay relevant to our customers.
When the pandemic started, we were quick to respond and established three guiding principles; to keep our employees and customer's safe, to manage our costs and cash flow, and to stay in a position to ramp up quickly when markets recover.
At the same time we honored our commitment to provide our customers with the innovative solutions they needed to keep their facilities clean and safe.
We continued with that approach in the third quarter and saw encouraging signs of recovery across all of our regions.
Our global teams have worked hard in overcoming the unprecedented sales and operational challenges resulting from the pandemic, and we work closely with our customers, supply chain partners, and carriers to avoid operational disruptions.
Furthermore, the execution of our Enterprise Strategy yielded improvements in our operating performance with third quarter EBITDA growth, despite a year-over-year COVID-19 related decline in organic sales.
While the pandemic continues to pose considerable macro level uncertainty, especially as some markets see spikes in COVID 19 cases, we have a high level of confidence in our near-term business outlook.
As Andy will speak to in a few moments, we are reinitiating our full year guidance for 2020 which not only reflects our revenue and profitability expectations, but also our commitment to investing in our business to support our long-term enterprise strategy.
That strategy includes, winning where we have competitive advantage, reducing complexity and building scalable processes, and innovating for profitable growth.
While the global pandemic impact or the economic impact of the pandemic is nothing anyone could have predicted a year ago, it has not diminished our ability to execute on our enterprise strategy because the key elements are all within our control.
For example, while innovating for profitable growth might sound like a lofty ideal; for Tennant it represents how we take customer insights and leverage our tremendous engineering capabilities to solve real world problems.
A recent illustration of this commitment is our October 1st introduction of our new T380AMR, which complements our current robotic offering by providing a smaller-sized machine that enhances maneuverability and navigation to help customers with smaller footprints.
This new product and our continued partnership with Brain Corporation enabled us to finalize agreements in the third quarter to provide two national retailers and a separate regional retailer with our full suite of autonomous floor scrubbers.
Additionally, we are starting to achieve wins in additional verticals like logistics, education and aviation.
Following our initial roll-out with Walmart earlier this year, wins like these demonstrate how we're continuing to lead with innovation and deliver value to a more diverse customer base.
In support of our enterprise strategy, we recently hired Dan Glusick as our Senior Vice President of Operations, reporting directly to our COO, Dave Huml.
Dan has broad enterprise leadership and deep functional expertise across all aspects of manufacturing operations, supply chain management, and enterprise transformation and he brings more than 25 years of Global Operations leadership experience to Tennant.
Dan is an important hire and will play a critical role in the implementation of our Enterprise Strategy as we advance our supply chain and optimize our operations to support our product standardization and local for local initiatives.
In short, this is an important area of focus as we position Tennant for success in a post pandemic world.
Lastly, given the improving demand trends that we've seen since May and our confidence in the improved trajectory of our business, we recognize the need for strategic investments to support the continued execution of our strategy, to backfill key leadership roles, and to recognize and retain our best talent.
This is core to the guiding principles we outlined at the start of the pandemic.
We began making such investments in Q3 and we'll continue to do so in Q4.
They are essential to how we can support our customers, emerge strong as markets recover, and continue to drive shareholder value.
Please note that in my comments today, any references to earnings per share, both GAAP and non-GAAP, are on a fully diluted basis.
As Chris noted, while Tennant's third quarter results reflected the continuing impact of the pandemic, we did see some encouraging trends across all of our regions.
Overall, for the third quarter of 2020, Tennant reported net sales of $261.9 million, down 6.7% year-over-year.
Organic sales, which exclude the impact of currency effects declined 7.1%.
This represents the significant improvement in our sales trajectory when compared to the 27% decline we experienced in the second quarter.
For the third quarter, we reported net earnings of $11.7 million or $0.63 per share, down from $14.6 million or $0.79 per share in the year ago period.
Adjusted EPS, which excludes certain non-operational items and amortization, totaled $0.90 compared with $0.85 in the prior year.
We'll now take a closer look at our third quarter sales results by geography, which we divide into three regions; The Americas, which includes all of North America and Latin America; EMEA, which covers Europe, the Middle East and Africa; and Asia Pacific, which includes China, Japan, Australia and other Asia markets.
Sales in the Americas declined 9.9% year-over-year and were down 8.8% organically.
Declines in direct Industrial business sales and distributor sales were partially offset by the continued success of Tennant's AMR platform and strong growth in Brazil.
Sales in EMEA declined 0.3% or down 4.5% organically in the quarter as a result of market weakness across the region.
The declines were mainly in the United Kingdom and the Iberian Peninsula, which offset growth we experienced in France and Italy.
Sales in the APAC region declined 0.8%, down 2.3% organically.
Declines in Southeast Asia and Korea were partially offset by growth in direct sales in Australia.
Overall, the Company's service and parts and consumables business trends continued to be a bright spot.
While equipment sales were down approximately 12% year-over-year for the quarter, aftermarket revenue was up 6% over the same period last year, reflecting our efforts in helping customers meet their rapidly evolving cleaning needs during the pandemic.
Adjusted gross margins during the third quarters of 2020 and 2019 were 40.2% and 40.8% respectively.
The year-over-year decrease reflects a number of strategic investments and deleverage on lower volume which were partially offset by cost out actions driven by strategic initiatives.
Turning to expenses, during the third quarter, our adjusted S&A expenses were 29.8% of net sales compared with 31.2% in the year ago period, mainly as a result of cost containment efforts and adjustments to management incentives.
This included a number of strategic investments that we made during the quarter.
Given the macroeconomic uncertainties created by the pandemic, careful S&A management continues to be an important part of our response.
Combining these results, our EBITDA in the third quarter of 2020 was $32.6 million or 12.4% of sales compared with $31.4 million or 11.2% of sales in the third quarter of 2019.
The increase as a percent of sales was attributed to adjustments to management incentives and reductions in discretionary spending that were implemented in the quarter.
As for our tax rate, in the third quarter, the Company had an adjusted effective tax rate of 11.3% compared to 16.1% in the year ago period.
The lower tax rate primarily resulted from an increase in discrete tax items in the quarter and a favorable mix of earnings.
Turning now to cash flow, capital allocation and balance sheet items.
In the third quarter of 2020, Tennant generated $48.9 million in cash flow from operations, primarily driven by business performance and improvements in working capital.
Also in the third quarter, we repaid an additional $17 million of debt.
As of September 30th, we had $124.7 million in cash and cash equivalents, and approximately $172 million of undrawn funds on our revolver.
Lastly, turning to guidance.
As you may recall, in April, we withdrew the full-year guidance we had provided in February due to the uncertain nature of the pandemic.
While there is still uncertainty in the market, we do have a higher level of confidence in our near-term projections and we are reinitiating full-year guidance for 2020.
As included in today's earning announcement, our full year 2020 guidance is as follows; Net sales of $995 million to $1,005 million with organic sales declining 12.5% to 11.5%; GAAP earnings of $2.00 to $2.20 per share; adjusted earnings per share of $2.80 to $3.00 per share, which excludes certain non-operational items and amortization expense; adjusted EBITDA in the range of $116 million to $121 million; capital expenditures of approximately $35 million; and an effective tax rate of approximately 17%.
It's worth mentioning that our guidance does include approximately $5 million to $8 million of government benefits, which is primarily driven by the wage subsidies we received and mentioned in our second quarter results.
Also, and as Chris noted, this guidance incorporates continued investing in our business to support our enterprise strategy.
At the same time, while we believe the underlying business performance is improving and we expect our revenue will continue to increase sequentially quarter-over-quarter, it's important to note that organic sales would reflect a difficult year-over-year comparison as Q4 2019 was Tennant's second highest revenue quarter ever.
As a result, we are anticipating that our implied fourth quarter organic decline will be greater than the third quarter; and due to the continued strategic investments that I just mentioned, our anticipated EBITDA dollar and percent of revenue will be lower than previous quarters.
With that, we will now open the call to questions.
 Assistant:

Chosen response:
q3 adjusted earnings per share $0.90.
q3 earnings per share $0.63.
sees fy 2020 adjusted earnings per share $2.80 to $3.00.
sees fy 2020 gaap earnings per share $2.00 to $2.20.
sees fy 2020 sales $995 million to $1.005 billion.
q3 sales $261.9 million versus refinitiv ibes estimate of $237.7 million.
reinstates 2020 guidance for net sales, adjusted ebitda and eps.
sees 2020 capital expenditures of approximately $35 million.


Prompt:
Human: Before Kevin begins I'd like to direct all participants to our website at www.
I'll now turn over the call to Kevin to begin.
With me here in Vancouver I have Stewart Andrade Teekay Tankers Chief Financial Officer.
Teekay Tankers generated total adjusted EBITDA of $132 million during the fourth quarter more than double the $62 million reported in the fourth quarter of 2018.
For the full year 2019 we generated total adjusted EBITDA of $259 million up approximately 100% from the $129 million in fiscal year 2018.
We reported adjusted net income of $83 million or $2.47 per share in the fourth quarter up from an adjusted net income of $14 million or $0.42 per share in the fourth quarter of 2018.
For the full year in 2019 we reported adjusted net income of $64 million or $1.91 per share up from an adjusted net loss of $55 million or $1.63 per share in fiscal year 2018.
Our spot tanker rates in the fourth quarter of 2019 peaked at the highest level since 2008 and Teekay Tankers marked one of the most profitable quarters since the end of the tanker market super cycle in 2009.
Including all of these items our pro forma net debt at the end of the year was reduced by $153 million or 15% since the third quarter of 2019.
And our pro forma liquidity at year-end increased to approximately $260 million from $95 million at the end of last quarter.
The strength in the tanker market continued into the early part of the first quarter of 2020 and I'm pleased to report that we have secured significantly higher spot tanker rates to date than those achieved in the fourth quarter.
While crude tanker spot rates have come under pressure in recent weeks primarily due to the coronavirus and the removal of sanctions against COSCO we continue to believe the underlying tanker supply and demand fundamentals point toward an improved rate environment in the medium term.
I will touch on this in the next few slides.
Turning to slide four.
We look at recent developments in the spot tanker market.
Crude tanker spot rates saw extreme volatility during the fourth quarter of 2019 as shown by the chart on the right of the slide.
The market initially started tightening in September as a result of firmer refining demand ahead of IMO 2020 and a slowdown in tanker fleet growth due to shrinking newbuild deliveries and vessels being taken out of service for scrubber retrofitting.
The market received a significant boost in October from the removal of 26 COSCO-owned VLCCs from the trading fleet due to sanctions imposed by the United States.
This tightened available fleet supply further exacerbating positive underlying fundamentals and caused crude tanker spot rates to spike to the highest level since 2008.
This spike in spot rates also drove an increase in time charter rates and Teekay Tankers took advantage of this window of opportunity by chartering out four Suezmaxes at very attractive rates averaging $37000 per day for average durations of 12 months.
The window for chartering out at those levels was relatively brief with rates correcting to more normalized seasonal levels at the start of November as the market absorbed the news of the COSCO sanctions.
Nevertheless rates remained relatively firm.
And in the fourth quarter as a whole rates averaged the highest since the last market peak in the fourth quarter of 2015 as shown by the chart on the left of the slide.
Spot tanker rates started 2020 on a positive note as the supply demand fundamentals remain fully intact in the new year and various market events continue to support rates.
However rates in most segments have come under pressure during February due to a combination of weaker refining margins the onset of seasonal refinery maintenance the return of the COSCO vessels to the trading fleet and the impact of the coronavirus outbreak.
I will discuss these factors in more detail on a later slide.
Turning to slide five.
We give a summary of our earnings in the first quarter of 2020 to date.
Based on approximately 77% and 62% of spot revenue days booked Teekay Tankers' first quarter-to-date Suezmax and Aframax bookings have averaged approximately $51700 and $38100 per day respectively.
For our LR2 segment with approximately 65% of spot revenue days booked first quarter-to-date bookings have averaged approximately $40100 per day.
In each segment rates achieved to date are significantly above those achieved during the fourth quarter.
It's also important to note that we are currently trading the majority of our LR2s in the crude market hence the LR2 earnings being comparable to those achieved by Aframax fleet and at a substantial premium to earnings which could be achieved in the clean market.
As discussed in the previous slide the freight market for most segments except our U.S. Gulf Aframaxes have come off from the highs seen at the start of the year and we expect spot rates during the balance of Q1 to be at levels substantially lower than those booked in the quarter-to-date for these segments.
Turning to slide six.
We discuss some of the factors which will impact the tanker market over both the near and medium terms.
In the near term the tanker market faces a number of headwinds most prominent of which is the recent coronavirus outbreak.
Although the full impact of the outbreak remains uncertain it appears likely that the tanker market will be negatively impacted in the coming weeks or months due to reduction in Chinese oil demand and associated refinery run cuts.
In an effort to support oil prices the OPEC+ group have also indicated the potential for additional supply cuts in the anticipation of reduced demand caused by the virus outbreak.
Although the near-term outbreak of the coronavirus on the tanker market is clearly negative there are offsetting factors which could mitigate a portion of the overall impact.
Some refiners may look to take advantage of lower oil prices and a contango pricing structure by stockpiling cheaper oil.
In addition lower oil prices will also lead to lower bunker costs which will help support spot tanker earnings.
We're also seeing delays to vessels discharging at Chinese ports as well as delays at Chinese newbuild yards and Chinese repair yards.
This could help to tie up tonnage and will also likely extend scrubber retrofits further into 2020 than was previously expected.
In addition to the coronavirus the tanker market also faces headwinds in the near-term from the return of the COSCO vessels to the trading fleet weak refining margins in Asia and the onset of seasonal refinery maintenance.
Although the near-term outlook for the tanker market is uncertain we believe the underlying supply and demand fundamentals remain positive.
Non-OPEC oil supply is expected to grow by over two million barrels per day in 2020 led by the U.S. Brazil Guyana and Norway.
This will lead to an increase in long-haul Atlantic to Pacific crude oil movements and a stretching of the fleet as more vessels will have to ballast back to the Atlantic to load cargo.
We also believe that global oil demand could experience a strong rebound once the impact of coronavirus passes particularly if the Chinese government acts to further stimulate their economy.
The outlook for tanker fleet supply remains highly encouraging with the tanker order book currently at a 23-year low when measured as a percentage of the existing fleet.
We also believe that scrapping could rebound this year as 13 million deadweight ton of tankers reaches 20 years of age.
As highlighted earlier fleet supply should also remain constrained through 2020 by ongoing vessel removals for scrubber retrofits.
And finally new tanker ordering remains at relatively low levels compared to previous market cycles due to a lack of available financing and uncertainty created by anticipated long-term changes to maritime regulations and new technology development.
In sum while the coronavirus creates a period of uncertainty we believe the underlying supply and demand fundamentals are constructive for a return to a healthier rate environment in the medium term.
I will now turn over the call to Stewart to cover the next couple of slides.
Turning to slide seven.
TNK continues to maintain significant operating leverage to the tanker market as highlighted by the two graphs on this slide.
On an annualized basis the rates we achieved in the fourth quarter of 2019 would result in over $320 million of free cash flow or over $9.5 per share.
This is compelling relative to our closing share price yesterday of $12.66 per share and equates to a free cash flow yield of approximately 75%.
From an earnings per share perspective using a similar methodology it would translate into $8 per share which can be seen in the graph on the right.
This equates to a compelling 1.6 times price to earnings ratio.
Turning to slide eight we highlight significant balance sheet improvements that we have made since the beginning of the third quarter.
Starting with the graph on the top of the page we provide our debt repayment profile before and after the recently secured five year $533 million revolving credit facility refinancing which was approximately two times oversubscribed.
This attractively priced refinancing at LIBOR plus 240 basis points reduces our 2021 balloon maturities from approximately $390 million to approximately $70 million with our next balloon maturity coming at the end of 2024.
Including this refinancing and our previously mentioned asset sales our pro forma December 31 liquidity is $260 million compared to $95 million at the end of the third quarter.
Our balance sheet leverage has also improved with net debt to capitalization decreasing by 5% from 51% at the end of the third quarter to 46% on a pro forma basis at December 31.
Our net debt which includes our debt and capital lease obligations less cash on hand has reduced significantly since the beginning of 2019 as shown by the graph on the bottom of the page.
Taking into account cash flows earned from the improved tanker market and proceeds from agreed asset sales our pro forma net debt at the end of the year stands at $844 million a decrease of over $200 million or approximately 20% since the end of 2018 and a decrease of $150 million or approximately 15% from the third quarter of 2019.
In 2020 we will continue to allocate capital toward debt reduction as we think this will create the most shareholder value by increasing our net asset value better positioning us to exercise purchase options on higher cost sale leaseback debt thereby reducing our cost of capital and strengthening our balance sheet which will further which will build further our financial flexibility.
Turning to slide nine we have summarized our execution on many of the strategic priorities that we laid out at our recent Teekay Group Investor Day in November with a goal of creating shareholder value and strengthening our balance sheet.
Operationally we have maintained our high spot market exposure while locking in attractive time charters when the market spiked in October.
Financially we have increased balance sheet strength by aggressively reducing debt and pushing out maturities.
On the asset side we have opportunistically agreed to sell more than $100 million of assets further accelerating our debt reduction and exiting a noncore business.
And lastly on IMO 2020 I am pleased that we have had a very smooth transition to burning lower sulfur more environmentally friendly fuels which we attribute to our extensive preparations over the past three years and to having secured supply contracts with quality fuel suppliers covering approximately 75% of our requirements.
Given our leverage to the tanker market and tanker supply and demand fundamentals pointing toward a healthier rate environment in the medium term we expect to continue creating significant shareholder value and increasing our financial strength.
With that operator we are now available to take questions.
 Assistant:

Chosen response:
teekay tankers q4 adj earnings per share $2.47 excluding items.
q4 adjusted earnings per share $2.47 excluding items.


Prompt:
Human: This includes projections for our business in the current or future quarters or fiscal years.
In addition, as we continue to anniversary the onset of the COVID-19 pandemic last year, we will be providing financial information compared to FY '19 or pre-pandemic and FY '20 where applicable.
For a full reconciliation of corresponding GAAP financial information, please visit our website, www.
Now let me outline the speakers and topics for this conference call.
Joanne will begin with highlights from the fiscal year for Tapestry and each of our brands.
She will also provide an overview of the progress we've made on our Acceleration Program, along with goals for FY '22.
Scott will continue with our financial results and priorities going forward.
Following that, we will hold a question and answer session where we will be joined by Todd Kahn, CEO and Brand President of Coach.
After Q&A, Joanne will conclude with brief closing remarks.
We delivered standout results in fiscal 2021, a transformational year for Tapestry.
We are a fundamentally different company today than we were just one year ago.
Through our Acceleration Program, we reached new customers in new ways and effectively adapted to a rapidly changing environment.
Our success is a testament to our powerful brands and talented team.
We achieved many strategic milestones this year, which have strengthened our organization.
We've sharpened our focus on the consumer and clarified the unique positioning of each of our brands.
This drove improvements in key customer metrics, including recruitment, retention and reactivation.
We enhanced our digital capabilities, highlighted by our global e-commerce channel, a margin accretive business for Tapestry, reaching approximately $1.6 billion in revenue, nearly doubling versus prior year and over $1 billion ahead of pre-pandemic levels.
This was fueled by the acquisition of nearly 4 million new customers in North America alone, including a growing number of millennial and Gen Z consumers.
And we sustained double-digit e-commerce sales growth in the fourth quarter, even as we lapped more difficult comparisons online.
At the same time, we drove continued sequential sales improvement for our global store fleet with operating margins that were once again above pre-pandemic levels.
We further strengthened our positioning in China, which still has tremendous runway, supported by the growth of the rising middle class.
In fact, Tapestry's business in Greater China reached $1.1 billion in sales this fiscal year, led by over 60% growth on the Mainland.
At the same time, we grew our business with Chinese consumers globally, increasing at a high-single-digit rate as compared to pre-pandemic levels.
We successfully leveraged data and analytics, embedding capabilities across the company to enhance our understanding of the customer, increased responsiveness and drive faster, more effective decision making.
This has underpinned our ability to optimize the assortment planning process, lower SKU counts by 40% to 45% and reduced promotional activity, supporting higher AUR and gross margin as well as improved inventory turns.
We also embraced new ways of working with a leaner operating model and more empowered teams.
This resulted in $200 million of gross expense savings in fiscal year '21, which funded investments in areas such as digital and marketing to fuel our continued growth as well as our purpose-led initiatives to accelerate and amplify our work within our social fabric to effect positive change for our industry and stakeholders.
Importantly, the traction of our strategy is clearly evidenced by our financial performance, including the achievement of record operating margin at Tapestry Inc. as well as operating income and earnings per share growth versus both FY '20 and FY '19 in each quarter of the year.
We also exceeded pre-pandemic sales in the fourth quarter, representing an important financial milestone.
In addition, we generated $1.2 billion of free cash flow and ended the year in a strong cash position, while reducing our leverage through organic profit growth and the pay down of the company's revolver.
Given our strong financial position and underlying business trends, our board of directors approved the reinstatement of our capital return programs with a plan to return over $750 million to shareholders through both dividend and share repurchases in fiscal year '22.
These actions underscore our conviction and Tapestry's ability to drive long-term growth along with our commitment to enhancing value for our stakeholders.
Scott will discuss our capital allocation priorities in more detail shortly.
Now let me touch on our results and strategies for Coach, Kate Spade and Stuart Weitzman.
Coach, our largest brand, led Tapestry, outperforming in each quarter of the year.
The brand fueled momentum through innovation across consumer touch points, driving engagement with new and existing customers.
During the fourth quarter, Coach revenue rose 117% versus prior year, outpacing pre-pandemic levels of sales by 2%, a meaningful achievement given the volatile backdrop.
In addition, we delivered significant profitability enhancements during the fiscal year, resulting in operating income increases of 67% on a one year basis and 14% on a two year basis.
This outstanding performance was the result of both gross margin expansion and SG&A leverage, reflecting strategic actions and structural changes we've made to sustain long-term growth.
Throughout the fiscal year, we made significant progress at Coach against the pillars of our multi-year growth agenda.
First, we've deepened our engagement with consumers by leaning into our brand values of inclusivity and authenticity to drive increased recruitment and reactivation.
In addition, through the launch of our loyalty program in North America and more targeted marketing, we drove significant gains in the number of repeat transactions.
Second, we created innovative, unique and compelling product to meet the needs of our target consumer segment.
We are building enduring icons that create a foundation for our product pipeline and future seasons.
This was evidenced by the recent success of newness within the Tabby family, including our Pillow and Mini versions.
In addition, we saw continued strength in our signature platforms across an expanded assortment of refresh styles, highlighting desirability for the brand.
Third, we drove triple-digit sales growth in our digital channels on both the one and two year basis led by new customer recruitment.
During the fiscal year, we acquired nearly 2.5 million new Coach customers through our digital channels in North America alone, a meaningful increase versus prior year.
Importantly, we sustained strong momentum in the fourth quarter even as we comped our digital initiatives and the initial uplift in e-com sales that occurred during the pandemic in the prior year, highlighting continued opportunity in the channel.
Fourth, we accelerated growth in China by leveraging our foundation in the country, which resulted in over 60% revenue growth on the Mainland in fiscal year '21 with strength across channels.
This performance reflected our integrated and comprehensive brand building strategy, including investments in marketing, innovative product and a continued focus on digital channels.
Most recently, we hosted our live stream fashion show in Shanghai, which was extremely well received and highlights our commitment to the Chinese consumer.
Finally, we enhanced profitability to realize an operating margin of over 31%.
This performance was driven by higher gross margin, which reached nearly 74% through a focus on streamlining our offering, sharpening our merchandising efforts and reducing SKU counts by approximately 45%.
These initiatives resulted in global handbag AUR growth in each quarter of the fiscal year.
In fact, in the fourth quarter, our handbag AUR rose high-single-digits globally led by particular strength in North America.
In addition, we made structural changes to SG&A, including our fleet optimization efforts.
Looking ahead to fiscal year '22, our goals are to increase market share in our core handbag and small leather goods categories through a combination of AUR and unit growth by continuing to develop the brand's iconic families, approachable and inclusive messaging and consistent global positioning, invest and grow in digital while delivering differentiated and compelling omnichannel experiences, continue to drive growth in China with key initiatives to capitalize on market trends of the emerging middle class and increased digitalization and grow men's by expanding lifestyle, building brand awareness and increasing our presence in Asia in keeping with our ambition to deliver over $1 billion in revenue in this category over our planning horizon.
In summary, Coach has both a remarkable 80-year history and a bright future.
We are confident that the deliberate actions we've taken to improve the foundation of the brand, including the realization of higher AUR and stronger margins are sustainable over the long-term as revenue continues to inflect.
We're continuing to improve on the momentum we've built to drive market share gains at sustainably high margins in fiscal '22 and beyond.
Now moving to Kate Spade.
Throughout the year, the brand delivered consistent improvement on the top-line, resulting in fiscal year '21 sales growth of 3% compared to prior year or 13% decline compared to pre-pandemic revenue levels.
In the most recent quarter, sales increased 95% versus prior year and were 4% below fiscal year '19.
Direct sales in the fourth quarter, excluding wholesale, increased on a two year basis.
In addition, for both the quarter and fiscal year, operating income rose meaningfully with margin expansion compared to prior year on both a stronger gross margin and SG&A leverage.
We are pleased with Kate Spade's progress across its growth strategies, which highlight the traction we're making to build stronger connections with consumers.
In fiscal '21, we crystallized the brand's purpose, returning to its roots of unique and best-in-class storytelling and fulfilling its promise as a lifestyle brand, representing joy, optimism and color.
During the most recent quarter, we continued to rereengage lapsed customers and an increasing rate as we reactivated 550,000 customers through our North America digital channels, an increase of nearly 35% compared to prior year, demonstrating our focus on building lasting relationships with our customers.
Second, we embedded a laser focus on the customer by harnessing the power of the broad and loyal Kate Spade community to engage consumers in new and exciting ways.
This was evidenced by our viral Happy Dance Campaign on TikTok, which has over 11 billion views and counting.
Third, we reenergized our core handbag offering by introducing innovative and universal brand elements.
We're seeing traction in leather with the introduction of the Knot, which has already grown to approximately 20% of our retail assortment, proving its position as a key family in the assortment going forward.
In addition, our new signature branding, the Spade Flower continues to perform, while the reimagine Sam and Nylon has outpaced expectations.
These platforms represent strong foundations for future growth.
Fourth, we leaned into our digital strength, delivering approximately 35% growth compared to prior year across our e-commerce channels, reaching 35% of sales for the fiscal year.
This growth was driven by both the acquisition of nearly 1.4 million new customers through our North America digital channels as well as the engagement of existing customers.
Fifth, we improved profitability by focusing on acquiring, reengaging and retaining customers to drive top and bottom line growth.
Through the use of data, we adjusted our assortment and pricing strategies, which resulted in approximately 40% lower SKU count and disciplined promotional activity.
This ultimately drove overall handbag AUR growth, which increased mid-single-digits in both the fourth quarter and for the fiscal year.
Finally, we've continued to focus on talent and culture.
This year, we reorganized our creative structure with the formation of the cross-functional ideation studio spanning across our brand creative, design, merchandising and marketing teams.
This has increased collaboration and cohesion to drive more impactful and consistent storytelling.
As we head into fiscal '22, we are building on the strong foundation we've established with the goal to deliver profitable and sustainable global growth.
To achieve this, we will maintain a consumer-centric approach across all aspects of the business, amplify recent product introductions, while continuing to build out our core handbag platforms, continue to engage newly acquired reactivated and existing customers to drive higher lifetime value, drive brand heat through marketing focused on our Kate Spade community, particularly in social channels, maximize lifestyle positioning by strengthening the foundation of ready-to-wear, jewelry and footwear and improve the global omnichannel experience and drive continued growth in digital.
Overall, we are pleased with Kate Spade's execution and the traction we gained with consumers in fiscal '21, including AUR improvement and strong customer engagement.
This progress is reflected in Kate Spade's outperformance versus internal expectations, reinforcing our confidence in the brand's potential.
Kate Spade is a unique yet universal brand, and our teams are galvanized around driving our clear strategy.
We continue to believe in the significant runway ahead and our ability to achieve $2 billion in revenue and enhanced profitability in the future.
Turning now to Stuart Weitzman.
Throughout the fiscal year, the brand progressed on its growth strategies.
Specifically, we continued to renew the brand's reputation for fit, comfort and quality by listening and responding to customer needs.
During the fourth quarter, we were pleased to see a significant increase in demand for dress styles as much of the world began to reopen and events and in person socialization returned.
Second, we grew our key categories by building strength in boots, booties and sandals through fashion innovation, highlighted by the continued success of our iconic 5050 Land and Nudist families, which brought a new and younger customers.
We also expanded the casual assortment, including a broader sneaker offering in the recently introduced on-trend Jelly styles.
At the same time, we dramatically simplified the product assortment with SKU counts declining approximately 45%.
Third, we focused our distribution on markets and channels of greatest opportunity to create a foundation to return to profitability as revenues inflect.
This included the exit of unprofitable markets across the globe and rightsizing of the fleet in North America.
At the same time, momentum continued for our China business in fiscal '21 with revenue on the Mainland increasing over 35% compared to prior year or nearly 50% on a two year basis.
We kept the Chinese consumer at the forefront of our strategy, highlighted by our tailored product offering featuring capsule collections, relevant marketing with key opinion leaders and continued outperformance across digital channels.
China remains an important area of long-term opportunity for Stuart Weitzman at structurally higher margins.
Fourth, we strengthened our relationship with wholesale partners by providing relevant products and faster more consistent execution.
As previously shared, we reentered 90 Nordstrom doors in the year, fueling North America wholesale revenue ahead of pre-pandemic levels in the fourth quarter.
Finally, we made progress in establishing a robust digital presence and drove approximately 30% e-commerce growth during the fiscal year, including continued strength in the fourth quarter, even as store trends improve.
In fiscal '22, our overarching goal is to return to profitability.
We will recruit and engage customers through products that sparks desire with a focus on must-have launches featuring icons, key items and capsule collection as well as [Technical Issue] drive brand heat with a digital-first drumbeat of relevant romantic storytelling; fuel continued growth in China, including an expanded footprint and further investment in digital; elevate the omnichannel customer journey, including delivering a best-in-class digital experience and accelerate wholesale partnerships with an expanded footprint in key accounts globally.
Overall, I'm pleased with the progress we've made at Stuart Weitzman and we remain focused on restoring the brand's profitability.
In closing, we are focused on driving our next phase of growth supported by our clear strategy, compelling brands and differentiated platform.
Although the environment remains volatile, we see a strong consumer who is ready to shop and continuing to engage with our brands.
We entered fiscal year '22 with a solid foundation, improved capabilities and increasing momentum.
From this position of strength, we are confident in our ability to win with consumers and capture market share, accelerating growth and profitability across our portfolio long-term, enhancing value for all stakeholders.
I'm thrilled to be with you today after joining Tapestry just a few months ago.
While I'm still relatively new, I can already see that this is a truly unique company with strong and engaged talent, great brands that are well positioned in attractive market spaces and a distribution model that allows us to directly own our consumer relationships coupled with advanced digital and analytics capabilities.
As we move forward, my focus is to work alongside our management team to align business and financial strategies to drive sustainable long-term growth, which profits shareholders and all stakeholders alike.
Looking back at fiscal year '21, it was a transformational year for the organization, as Joanne mentioned.
We effectively executed our Acceleration Program against a difficult backdrop, created a foundation for sustainable growth.
Specifically, we increased the penetration of our margin accretive digital and China businesses, which led overall growth in the fiscal year.
We expanded gross margins, primarily through higher AURs, driven by lower levels of promotional activity.
We grew operating margin by 300 basis points versus FY '19, reaching peak levels of Tapestry.
This despite significant investments in talent, digital capabilities and marketing, which were more than funded by gross profit gains and $200 million in gross SG&A savings delivered through the Acceleration Program.
And we further strengthened our financial position through tight inventory management and a reduction in debt levels, while achieving $1.2 billion in free cash flow, resulting in an ending cash position of approximately $2 billion.
Turning to the details of the fourth quarter.
Total sales rose 126% versus prior year on a 14-week basis or 113% on a 13-week basis, outpacing pre-pandemic levels, an important milestone.
These results were led by strength at Coach, while Kate Spade and Stuart Weitzman delivered material sequential improvements in trends.
By region, North America led the overall growth, rising approximately 150% versus FY '20 and a high-single-digit percentage versus FY '19, fueled by digital and a continued improvement in our brick and mortar businesses.
In Mainland China, our strong momentum continued as revenue increased approximately 60% on a one year basis and over 40% compared to pre-pandemic levels.
Across the balance of Asia, sales rose materially compared to the prior year, but remained below pre-pandemic levels with notable pressure in Japan given the continued state of emergency and lack of tourists sales.
In Europe, while a small portion of our total sales experienced a sequential improvement in trends on both a one and two year basis as lockdown measures were lifted and while revenue remained well below the fiscal '19.
Given the lack of tourist travel, our local demand did rise in the quarter.
By channel, we maintained strength in digital, which grew more than 35% compared to prior year, reaching 30% penetration, that's three times 2019 level.
While our stores remain pressured, slightly better traffic drove a sequential improvement for the channel.
And in wholesale, while revenue remained below FY '19, trends improved with particular strength in duty-free growth in China.
Moving down the P&L, we realized another quarter of overall gross margin expansion compared to prior year and FY '19 with all brands exceeding expectations.
We continued to successfully execute our strategy to maintain price discipline, reduced SKU counts and leverage data analytics to more effectively tailor our product assortment and marketing messaging to the consumer.
As anticipated, SG&A rose significantly given the prior year's atypical comparison due to the impact of COVID-19.
On a two year basis, the increase in SG&A was attributable to higher marketing spend of almost $100 million compared to Q4 '19, and an increase in our annual incentive plan given our outperformance this year.
In addition, our expenses for the quarter included the $25 million contribution toward the endowment of the newly established Tapestry Foundation.
Taken together, we achieved our fourth consecutive quarter of operating income growth and margin expansion compared to pre-pandemic levels.
Earnings per diluted share for the quarter was $0.74 on a 14-week basis or $0.65 on a 13-week basis, a significant increase compared to a loss in the prior year and 7% ahead of pre-pandemic earnings per share levels.
Now moving to distribution.
We continued to optimize our global fleet to prioritize profitability.
For Tapestry, we closed a net of 59 locations globally in FY '21, including 10 net closures in the fourth quarter.
As compared to fiscal '19 year end, we have closed a net of 90 locations across our brands.
Turning to a discussion of our balance sheet and cash flows.
We ended the quarter in a strong position with $2 billion in cash and equivalents and total borrowings of $1.6 billion.
Total inventory at quarter end was approximately in line with last year and 6% below FY '19, reflecting in part deliberate actions to reduce SKU counts and prioritize inventory turn.
And we generated $1.2 billion in free cash flow in FY '21 versus $202 million in the prior year and $118 million in fiscal '19.
This included capex of $116 million, a decline of 44% versus prior year as we prioritize investments in high return projects, notably in digital, while tightly controlling overall spend and reducing our outlay for new stores.
Now touching on our capital allocation priorities.
First, we continue to prioritize investments in the business to support strong returns and long-term profitable growth.
Second, we're committed to returning capital to shareholders through both dividend and share repurchases.
In keeping with the strategy, we're pleased to announce today our plan to return over $750 million to shareholders.
Specifically, the board declared a quarterly cash dividend of $0.25 with an anticipated annual dividend rate of $1 per share.
Over time, our intent is to increase the dividend at a faster rate than earnings growth.
We also expect to repurchase approximately $500 million worth of stock in fiscal '22 under our current authorization.
Importantly, once we have more visibility into a normalization in the external environment, we expect over time, to more aggressively returning cash to shareholders.
And finally, in keeping with our objective to reduce leverage, we expect to repay our July 2022 bonds totaling $400 million at the end of this fiscal year.
So when considered together, the dividend, share repurchase and debt repayment are intended to approximately equal our projected free cash flow in the fiscal year.
And as Joanne mentioned, these actions demonstrate our confidence in the underlying strength of our business as well as our commitment to driving total shareholder returns.
Now moving to our fiscal '22 outlook.
Before touching on the specific details, it's important to note the paradigm shift compared to just a year ago.
Entering COVID, there was a macro demand concern, and we took bold actions to adjust supply in order to preserve liquidity.
As you can see in our just reported results, we were very successful in achieving our goals, while continuing to accelerate investments to drive increasing momentum in our brands.
Today, we find ourselves in a dynamic where the consumer demand backdrop is strong, while supply chain remains challenging.
So I want to emphasize the underlying strength and trend of our business and separate that from the uncertainty in the macro environment, primarily due to COVID-related impacts, which are largely out of our control.
Therefore, the outlook we're giving you is a reflection of what we know as of today.
It's a point in time.
While we have visibility into the risks that we see on the horizon, we're not trying to predict that which is unknowable.
We have taken the position that we will be aggressive on protecting the momentum of the business by securing significant expedited deliveries at an additional cost in order to mitigate the impact of supply chain disruptions, at least through the holiday period.
Further, we will continue to increase AURs as price is a lever to counter some of the additional cost pressures.
Of course, we'll continue to monitor the impact of the new developments on our outlook over time.
Now turning to the details of our FY '22 outlet.
Please note that all growth rates as compared to prior year are on a comparable 52-week basis.
We expect revenue to increase at a mid-teens rate versus FY '21, resulting in approximately $6.4 billion in sales, which would mark a record for the company.
This includes the expectation for a continuation of strong growth in digital and Greater China as well as improving global trends in stores.
While we expect stores to show improvement, revenue is currently planned to remain below pre-pandemic levels.
Turning to gross margin.
We expect to sustain the company's strong margins through continued AUR improvements and lower promotional activity.
Our outlook also incorporates the expectation for GSP's renewal for the retroactive benefit in the second fiscal quarter, which is currently planned to partially mitigate the negative impact associated with higher freight costs currently embedded in our plan.
Touching on SG&A, we expect expenses to grow relatively in line with sales for the year.
We continue to estimate that we will realize approximately $300 million in structural gross run rate expense savings, including $100 million of incremental savings from the prior year.
We are utilizing these savings to fund investments in the business, including $50 million of planned higher marketing spend, which is expected to represent approximately 7% of sales in fiscal '22, up roughly 75% or 3, 4 percentage points compared to FY '19.
We're also investing in our teams, adding talent to growing areas of the business such as digital.
And we're focused on continuing to retain and develop these strong teams as evidenced by our recently announced commitment that all U.S. Tapestry employees will earn at least $15 per hour.
Operating income is expected to increase in a mid-teens rate, resulting in operating margin modestly ahead of prior year and an increase of over 300 basis points versus 2019.
Net interest expense for the year is expected to be $65 million, and the tax rate is estimated at 18.5%, assuming a continuation of current tax laws.
Weighted average diluted share count is forecasted to be in the area of 283 million shares, approximately even with last year with share repurchase activity expected to offset dilution.
We anticipate earnings per share to be in the range of $3.30 to $3.35, reflecting leverage to the bottom line.
Capex for the year is projected to be about $220 million.
We anticipate approximately 40% of the spend to be related to store development, primarily in China, with the balance dedicated to our digital and IT initiatives, including the initial investments related to build out our new distribution center.
Specifically, as our digital business continues to grow, we've recognized the opportunity to sharpen our focus on the consumer by expanding our distribution capabilities.
We recently signed a lease for a new distribution facility based in Las Vegas, which we believe will allow us to better serve our customers in the western part of the United States.
Finally, we expect inventory levels to be up meaningfully throughout the year as we pulled forward receipts to match strong demand and faced elongated lead times from supply chain pressures due to COVID disruptions.
Given the dynamic environment and last year's atypical comparisons, we again expect significant variability by quarter.
Revenue growth versus prior year is expected to be front-half weighted given relatively easier compares due to lapping COVID impacts with the first quarter forecasted to increase more than 20%.
Earnings growth in the first half is expected to be somewhat pressured due to incremental SG&A investments along with last year's unusual compare, including lower expenses due to compensation reductions, lease abatements and the timing of government assistance.
That said, we still expect earnings per share growth in the first half versus prior year, particularly in Q1.
So in closing, we drove strong results in FY '21.
Our significant progress is a testament to the successful execution by our passionate teams, the power of our brands and our competitive advantages, including our differentiated platform.
The bold and deliberate actions we've made under Tapestry's Acceleration Program has transformed our organization.
These changes are foundational and will continue to be a meaningful point of difference for our brands.
As we look ahead, with regard to those things we can control, we're continuing to build momentum and we are confident in our ability to leverage the solid foundation to drive sustainable top and bottom line growth across our portfolio of brands.
And with respect to those things we can't control, we've taken aggressive actions to protect our strong momentum and mitigate those macro challenges we see today.
Our conviction is underscored by our capital allocation actions, highlighting our optimism for the future and commitment to enhancing value for all stakeholders.
I'd now like to open it up for Q&A.
 Assistant:

Chosen response: q4 revenue rose 126 percent to $1.62 billion.


Prompt:
Human: Additionally, David Bray, group president, poultry; Noelle O'Mara, group president, prepared foods; Shane Miller, group president, fresh meat; and Chris Langholz, group president, international, will join the live Q&A session.
Earlier today, we announced our first quarter fiscal 2022 results.
Tyson Foods once again delivered strong financial results.
At our Investor Day, I shared our plan to grow our top and bottom lines aggressively over the next three years.
This meant earnings per share growth of high single digits relative to a 2019 baseline and volume growth ahead of the market.
Our results this quarter put us firmly on that path.
We achieved double-digit sales and earnings growth, both of which were driven by ongoing demand strength, productivity savings, and improving execution across our segments.
Our diverse protein portfolio, omnichannel capabilities, leading brands, and value-added products contributed to our results.
Strong performance in our beef segment, earlier-than-expected recovery in prepared foods, and improvement in chicken and pork all supported strong earning results.
Our retail core business lines, which include our iconic brands, Tyson, Jimmy Dean, Hillshire Farm, and Ball Park maintain their volume share position even as we work through price increases to address inflationary pressure.
And our foodservice Focus 6 product lines grew share year over year in broad-line distribution.
This growth was driven in large part by value-added chicken, which outperformed industry recovery and breakfast sausage where we were seeing improved fill rates.
Importantly, and despite the continued impact of COVID-19, our volumes improved slightly across the company relative to the same quarter last year.
Chicken was a bright spot, where we saw our volumes improved 3.6%.
While this is a good start, we are not where we want to be on volume.
So we're taking actions segment by segment to improve our volume performance.
These actions include investing in our team members, in additional capacity, and in brands and product innovation.
As discussed at Investor Day, we are also in the process of building 12 new plants.
Each of these is progressing and each will enable Tyson to address capacity constraints and meet the growing global demand for protein.
Bottom line, we're committed to improving our total company volumes during the year.
We're also making sure that our pricing incorporates inflationary cost pressures on our business.
In the quarter, our cost of goods sold was up 18% relative to the same period last year.
We are seeing higher costs across our supply chain, including higher input costs, such as feed and ingredients.
We're also managing the higher cost of labor, transportation due to strong demand and limited availability.
With these higher costs, we work closely with our customers to achieve a fair value for our products.
As a result, our average sales price for the quarter increased 19.6% relative to the same period last year.
This helped us capture some of the unrecovered costs due to the timing lag between inflation and price.
Finally, our balance sheet and overall liquidity position are strong, providing optionality to pursue strategic growth priorities and invest in growth across our portfolio.
We have a disciplined approach to deploying capital to support capacity expansion while achieving improved returns on invested capital.
Our first-quarter results clearly demonstrate that we are making progress on our growth objectives, that we remain focused on outpacing the overall market, improving operating margins, and driving strong returns for our shareholders.
While we're growing our business, we are mindful of our corporate responsibilities around environment, social, and governance goals.
For example, we committed to investing in and supporting our communities in rural America and around the world.
Last year, Tyson Foods donated more than 16 million pounds of protein, the equivalent of 64 million meals to fight hunger.
We're incredibly proud of this work and the people that make it possible.
Tyson is a great company with a great team doing great things, and I'm pleased that this was recognized just last week by Fortune Magazine, who announced that for the sixth year in a row, Tyson Foods was No.
1 in our sector in their rankings of the world's most admired companies.
Now let's look at a few financial highlights from the first quarter.
Our results included double-digit top and bottom-line growth.
We delivered solid operating income performance, up 40% for the quarter.
This performance was broad-based across segments where continued strong consumer demand and effective pricing to mitigate the impact of inflation drove higher earnings.
On volume, we are up slightly.
And while we're working to achieve optimal throughput across our segments, labor challenges are still impacting our volumes and the ability to achieve optimal mix across our network.
Compared to pre-pandemic levels, our volume performance is outpacing our peer set.
In retail, despite substantial market pressures, core business lines held share in the first quarter, led by strong performance in lunch meat, hotdogs, snacking, and bacon.
We also realized strong e-commerce results with Tyson Foods outpacing total food and beverage growth in our core lines gaining share in the quarter.
Still, customer demand continues to outpace our ability to supply products.
So we have targeted actions in each segment to improve volumes.
This is key to delivering on our commitments.
To realize our volume goals, we must be able to fully staff our plants across the company.
We continue to take meaningful action toward becoming the most sought-after place to work.
For example, we provided our hourly team members with more than $50 million in bonuses during the first quarter.
We are piloting subsidized and on-site child care and we are adjusting schedules to flex with workforce needs.
These actions are bearing fruit as we see some improvement on the labor front.
And while we have seen some labor challenges during the omicron surge, we are generally seeing lower turnover in absenteeism.
We saw chicken volumes grow 3.6% in the quarter, driven by strong fundamental demand and improved live production.
What is important to note is that we grew ahead of the market and gained market share.
In prepared foods, volumes were down 2.6% in the first quarter.
About half of the decline was related to pet treats divestiture.
We expect to sequentially improve these results over the remainder of fiscal year '22 as we take actions to expand and improve capacity utilization.
In beef, volumes were down 6.2%, driven by labor shortages previously mentioned.
In addition, port congestion has also dipped in export volumes in the segment.
We expect these headwinds on volume to normalize over the course of fiscal 2022.
In pork, we have sequentially improved our capacity utilization.
We are still working to optimize the mix.
In international/other, while we are starting from a relatively small base, our investment in capacity, innovation, and brands are supporting our market share growth objective.
Overall, we expect to grow our total company volumes by 2% to 3% in FY '22, outpacing protein consumption growth.
Chicken remains a top priority and we continue to execute against our road map to achieve an operating income margin of 5% to 7% on a run-rate basis by mid-fiscal '22.
I remain confident we will meet this goal.
In the first quarter, we've started to see profitability improvement resulting from our actions.
For example, we're investing aggressively in automation and technology to help us address some of the most hard-to-fill roles.
This is not a series of projects but is a well-planned program with automation designed to use common designs and equipment across our plants to optimize cost, maintenance, and asset utilization.
The second imperative is to improve operational performance and critical to improving performance is maximizing our fixed cost leverage, which means having enough furs to run our plants full.
Since September, we've seen an improvement in our hatch rate ahead of our expectations.
We continue to expect full recovery in this year.
We were pleased with our volume growth in the quarter and expect further improvements as we grow our harvest capacity utilization from an average of 37 million head per week in FY '21 to 40 million head per week by year end.
We've noted previously that strength in spot prices for commodity chicken products put our buy versus grow program at a relative disadvantage.
We have reduced our reliance on outside meat accordingly.
We will staff our plants, service our customers, grow our volumes and be the best in the business.
The plan we have continues to be the right plan and our commitment to winning with our team members, winning with our customers and consumers, and winning with operational excellence is delivering results.
Last year, we announced the launch of a new productivity program designed to drive a better, faster, more agile organization that is supported by a culture of continuous improvement and faster decision-making.
The program aims to deliver $1 billion in recurring productivity savings by the end of fiscal '24 relative to a fiscal 2021 cost baseline and has three critical focus areas, which are operational and functional excellence, digital solutions, and automation.
We're making some good progress on this front.
I spoke just a minute ago about our investments in automation, but we've also attacked other issues.
In Prepared Foods, we're making use of supply chain, digitization, and advanced analytics.
Our digital manufacturing platform allows us to analyze real-time data to take actions to optimize process conditions that drive better yields, lower costs, consistent quality, and increased output.
In transportation and logistics, we have established ongoing optimization of the mix and allocation of our private fleet, dedicated fleet, and third-party fleet, mitigating inflationary pressures and supporting better on-time deliveries to our customers.
In addition, we continued the expansion of our direct shipment program, reducing miles driven, and product touches in our supply chain.
As a result of projects like these, we're on track to deliver $300 million to $400 million of savings in fiscal 2022.
We shared at our Investor Day that we are taking actions to accelerate our growth and drive disciplined return on invested capital.
The five imperatives on this slide show how we will achieve our commitments and drive value creation.
This starts first with our commitment to our team members with a focus on ensuring their health, safety, and well-being as well as ensuring an inclusive and equitable work environment.
We are proud of our COVID-19 vaccine policy implemented last year in the U.S. and of the broader investments that we have made to keep our team members, their families, and our communities safe.
Because of our policy, our team members are better protected and the cases we do see have been mild or asymptomatic, resulting in an extremely low number of hospitalizations.
We are strongly encouraging boosters and are hosting clinics to make it easier for our team members and their families to get boosted.
Second, we are working to enhance our portfolio and capacity to better address demand.
This includes increasing the contribution of branded and value-added sales.
As a result, we expect our volume to outpace this growing market.
Third, we are aggressively restoring competitiveness in our chicken segment.
This starts by returning our operating margin to the 5% to 7% level by the middle of fiscal 2022.
Fourth, we're driving operational and functional excellence and investing in digital and automation initiatives.
This is at the heart of our new productivity program.
We're working diligently to drive out waste, minimize bureaucracy and enhance decision-making speed across the organization.
Fifth, to address projected demand growth over the next decade, we are using our financial strength to invest in our business.
On capital alone, we're expected to invest $2 billion in fiscal year '22 with a disproportionate share focused on new capacity and automation objectives.
And we continue to return cash to shareholders.
During the quarter, we returned over $500 million in dividends and share repurchases.
To wrap it up, we are committed to winning with our team members, customers, and consumers as well as winning with operational excellence.
I'm more excited about the future of Tyson Foods with each passing day.
Let me turn first to a summary of our total company financial results.
We're pleased to report a strong overall start to the year.
Our sales were up approximately 24% in the first quarter, largely a function of our pricing initiatives to offset inflationary pressures.
Volumes were also up slightly, although impacted by continued labor challenges.
Looking at our sales results by channel, retail drove almost $350 million of top-line improvements versus last year.
Improvements in sales through the foodservice channel drove an increase of $1 billion and our export sales were nearly $333 million stronger than the prior-year period as we leveraged our global scale to grow our business.
First-quarter operating income of $1.4 billion was up 40% relative to the same quarter last year due to increased earnings in beef, pork, and chicken.
Driven by the strength in operating income, first-quarter earnings per share grew 48% to $2.87.
Higher operating income led to higher adjusted earnings per share compared to the same period last year.
And first-quarter earnings per share also benefited from lower net interest expense and taxes.
Slide 10 bridges year-to-date operating income, which was $407 million higher than fiscal 2021.
Volumes were up slightly during the year, primarily a result of improvement in chicken, pork, and international/other, offset by declines in beef and prepared foods.
Declines in beef and prepared foods were largely due to continued labor challenges in those segments.
Our pricing actions led to approximately $2.1 billion in sales and price/mix benefits during the quarter.
which offset the higher cost of goods sold of $1.6 billion.
We saw continued inflation across the business, in some instances, up 20% to 30%.
Notable examples were labor, grain costs, live cattle and hog costs, and freight costs.
And finally, SG&A was $88 million unfavorable to the same period last year, which was largely a result of cycling a $55 million benefit recorded last year for the recovery of cattle.
Moving to the beef segment.
Segment sales were more than $5 billion for the quarter, up 25% versus the same period last year.
Sales growth was driven by continued strong demand for beef products, which has supported higher average sales price.
Partially offsetting higher sales prices were higher capital costs during the first quarter versus the comparable prior-year period.
We had sufficient livestock available in the quarter driven by strong front-end supplies.
We have good visibility into cattle availability through fiscal year 2022 and continue to expect it will also be sufficient to support our customer needs.
We delivered segment operating income of $956 million, up 81% versus the prior comparable period.
This improvement was driven by strong global demand for beef products and a higher cutout, which were partially offset by higher operating costs.
Our operating margin of 19.1% was notably higher than the same quarter last year but was down on a sequential basis versus the last two quarters as cost increases led to a narrowing of the spread.
Now let's move on to the pork segment on Slide 12.
Segment sales were over $1.6 billion for the quarter, up 13% versus the same period last year.
Key sales drivers for the segment included higher average sales price due to strong demand and increased hog costs, partially offset by a challenging labor environment.
Average sales price increased 12.8% and volumes were slightly higher relative to the same period last year.
Segment operating income was $164 million for the quarter, up 41% versus the comparable period.
Overall, operating margins for the segment improved to 10.1% for the quarter.
The operating income improvement was driven by higher spreads in the business.
Moving now to prepared foods.
Sales were $2.3 billion for the quarter, up 10% relative to the same period last year.
Total volume was down in the quarter with strength in the retail channel and continued recovery in foodservice more than offset by labor and supply chain challenges.
Sales growth outpaced volume growth driven by inflation-justified pricing.
During the quarter, retail core business mines maintained share, driven by consumer demand for our brands and continued strong execution by our team.
Operating margins for the segment were 8% or $186 million for the first quarter.
The decline in segment operating margins versus the same quarter last year was driven by significant increases in raw material and other input costs that we were not able to fully recover through price during the quarter.
Raw material costs, logistics, ingredients, packaging, and labor have increased our cost of production.
Our pricing lagged inflation, but we expect to recover cost increases during fiscal 2022.
In addition to pricing, we've executed productivity, revenue management, and commercial spend optimization initiatives while ensuring the continued development of brand equity through marketing and trade support.
Moving into the chicken segment's results.
Sales were $3.9 billion for the quarter, up 37%.
Volumes improved 3.6% in the quarter due to strong consumer demand and increased life production.
Our teams have been focused on streamlining our plants to deliver higher volumes and we expect to deliver substantial volume improvements in fiscal 2022 as hatch recovers, and we continue to look for ways to operate our plant more efficiently.
Average sales price improved around 20% in the first quarter compared to the same period last year.
This increase is due to favorable product mix and price recovery to offset cost inflation.
On pricing, we made tremendous progress toward driving our pricing mechanisms toward more variable structures and are now seeing those benefits.
We restructured our pricing strategies given our experience in fiscal 2021 to ensure that we have the flexibility to better respond to market and inflationary conditions.
Chicken delivered adjusted operating income of $117 million in the first quarter of fiscal 2022, representing an operating margin of 3%.
Operating income in the quarter was negatively impacted by $185 million of higher feed ingredient costs.
Now turning to Slide 15.
As part of our capital allocation approach, we focused on building financial strength, investing in our business, and returning cash to shareholders.
In pursuit of our priority to build financial strength and flexibility, we used improved earnings to retire debt in fiscal year 2021 and expect to do the same this year.
Continued strength in our earnings this quarter have further improved our leverage ratio to 1.1 times net debt to adjusted EBITDA.
Investing in our business for both organic and inorganic growth will continue to be an important priority and will help Tyson increase production capacity and market capabilities.
This will support strong return generation for our shareholders.
Finally, as our track record has demonstrated, we are committed to returning cash to shareholders through both dividends and share buybacks.
We finished the quarter with a powerful balance sheet and continued capital allocation optionality.
Let's now discuss the fiscal '22 financial outlook.
We are maintaining our total company sales guidance of $49 billion to $51 billion, although we expect to perform at the upper end of the range.
In support of our sales growth, we still expect a 2% to 3% volume growth on a year-over-year basis as we work to optimize our existing footprint and run our plants full.
Looking at AOI margin target ranges for our segments, in chicken, our operational turnaround is working and we still expect to achieve a run rate profitability of 5% to 7% by the middle of the year.
We expect full-year margins that also fall between 5% to 7%.
Prepared foods is expected to deliver margins during fiscal '22 of between 7% and 9%.
Based on our first-quarter performance, we now expect the full-year margin performance in prepared foods to be at the upper end of the range.
In beef, we are maintaining our AOI margin at 9% to 11%, but we expect to perform at the upper end of the range.
Also, we expect the front half of the year to be meaningfully stronger than the back half as industry and labor conditions are expected to normalize partway through the year.
In Pork, we expect similar performance during fiscal '22 to what we accomplished during fiscal '21, equating to a margin of between 5% and 7%.
As is normal seasonality for pork, we expect the first quarter to be the strongest.
In international/other, we expect margins of 2% to 3% as capacity expansions and strong global demand support volume growth and improved profitability.
Consistent with our expectation for a meaningful increase in capex spending to pursue a healthy pipeline of projects with strong return profiles, we anticipate capex spending of approximately $2 billion during fiscal 2022.
We now expect lower net interest expense due to lower anticipated average debt balances during the fiscal year.
Our expectations for productivity savings and tax rate changes remain unchanged.
Our net leverage is expected to remain well below two times net debt-to-adjusted EBITDA, providing optionality for inorganic investment and additional return of cash to shareholders over the course of the year.
In summary, we've had a strong start to the fiscal year.
We have a great team, growing demand for our products, strong portfolio diversity, and the differentiated asset footprint needed to win in the marketplace.
We set out ambitious calls at our Investor Day, and we expect to achieve them.
Operator, please provide the Q&A instruction.
 Assistant:

Chosen response:
compname reports q1 adjusted earnings per share $2.87.
q1 adjusted earnings per share $2.87.
currently on track to achieve our planned productivity savings for fiscal 2022.
expect sales to be at upper end of $49 billion to $51 billion in fiscal 2022.
expect capital expenditures of approximately $2 billion for fiscal 2022.
tyson foods - targeting $1 billion in productivity savings by end of fiscal 2024, $300 million to $400 million in fiscal 2022.
tyson foods - qtrly beef sales volume decreased due to impacts associated with a challenging labor environment and increased supply chain constraints.
qtrly pork sales volume was up slightly as strong global demand was offset by impacts associated with challenging labor environment.
qtrly chicken sales volume increased primarily due to increased live production and a strong demand environment.
tyson foods - qtrly prepared foods sales volume decreased due to divestiture of our pet treats business in q4 as well as lower production throughput.
anticipate improved results from our foreign operations in fiscal 2022.