All our financial centers are now equipped with Wi-Fi. Turning to digital trends on slide 19, just a couple of things to highlight. Mobile users continue to grow, crossing over 26 million.

Okay. Just separately, if I could squeeze in, did you guys comment on the tax rate for 2019? Sorry, if I missed that.

Yeah, I don't think we did, actually. We were expecting an effective tax rate for 2019 of approximately 19% absent unusual items.


We also launched our next-generation D6 dozer, offering customers the world's first high-drive electric drive dozer, with 35% better fuel efficiency and increased agility compared to the previous electric drive models.

Okay. Got it. And then can you help us all on either more on the mining OE side of the business and what you're expecting from a mining truck perspective and assuming in your 2019 outlook, obviously, that number still way, way below what, I think, you guys would consider normalized demand. But are we at a pause here? Or does that number continue to grow nicely this year?

So certainly machine utilization by our mining customers continue to increase. We anticipate that our CapEx budgets will increase in 2019. The quotation activity remains robust, and we expect our mining business to be higher in 2019 than 2018. So that is a positive for us.


Feeling a transport posted exceptional top line performance for the quarter, as demand remained robust and we were able to clear the backlog that had been built as a result of our facility consolidations in DFS and OPW.

Okay. So it's fair to say, you'd feel, obviously, I think, very good about the base, at least in the context of possible risks to the economy without putting words in your mouth?

Well, no. I think I'll feel really good if we execute our plans in 2019. I mean, 2018 was a tough year, I think, for the management of the business and for us. I think that we've got a good plan. I want to see us executing and I'm going to feel a lot better about it.


And in the server market, we expect to deliver a significant step function performance increase with the launch of our next generation Roam processors in the middle of the year.

It seems like they GPU data center business is doing pretty well. Can you give us some color, if you look at mid-teens exposure overall between the 2 data center businesses, CPU and GPU, can you give us some qualitative sense for how much of that is GPU at this point and what are the main applications? Is it mostly virtualization? What other applications are you seeing there?

Sure, Joe. So for the mid-teens percentage of revenue in Q4 between CPU and GPU, it's actually roughly similar. And then in terms of the workloads on the GPU data center side, we do very well in cloud gaming. We do very well with our virtualization solutions, and we have some early traction in HPC.


We generated $16 million of current period revenues on those bookings for a yield of 15%. And the weighted average term for our bookings was 31 months this quarter.

Okay. And if I heard you correctly, did you say you put in new pricing in January of, like, this year?

That's correct. Similar to last year, when we put our pricing sheets forward, they effectively take effect as of January 1, though they obviously feather in over the course of the year as our resellers reset their price sheets as well.


For the quarter, revenue was in line with expectations approaching $1.1 billion, growing up at 7% on a reported basis and almost 10% on a constant currency basis.

I had a follow-up question on that investment-grade question that was just asked. From a policy perspective, do you want to be investment grade? Or are you wanting working towards becoming an investment grade rated company?

What I'd tell you is that, unfortunately, I don't control the ratings. The rating agencies do. I mean, we want to operate the business heading, you know, in a direction that we think is, you know, prudent for us to be able to continue to grow and fund the business. But I wouldn't say that that's something that, you know, we're aspired to. We want to keep, you know, those types of metrics, but it'll be up to the rating agency to figure out what they do.


All supported by Regency's blue chip balance sheet. This year also marked an important milestone with the release of our inaugural corporate responsibility report, which showcases our environmental, social, and governance initiatives.

So when you're talking to your leasing team, do they feel that generally beyond these sort of outliers that they're feeling they want to open more stores, they're feeling a little bit more aggressive?

Yeah, Craig, I would say that we continue to see growth in really all the sectors. The better retailers continue to grow their platforms, we see that growth migrating towards better real estate. And again, I think that's the sector that plays to our strength. But we're seeing across the board good activity and good growth among the retailers.


For example, our green blend and extend strategy allows us to negotiate new long-term PPAs with existing long-term thermal customers.

Okay. And last question, I just wanted to be clear on the sources and uses that you've laid out as you fundi this CapEx through 2022. Just to be very clear, you're not assuming or you don't see a need for external equity to support this program? The internal cash flow and asset sales should fund all your needs to support the backlog and the growth through 2022. Am I correct in that?

You're correct. So this is an unambiguous yes. The program is such that between our internally generated cash flow, including some asset sales, we fully fund our program and pay the dividends and also some modest debt pay down as well. So this does not assume any additional equity.


And while we are discussing our cash balance, I wanted to also note that we just closed a five -year, 500 million revolving line of credit.

Maybe for you, Maria, on the large $59 million lease deal in the quarter. Can you remind us how the cash collections on that multi -year deal will work?

Yeah, so Saket, as you saw in the materials, it's a four -year deal with annual payments, and that first payment will come into 2019.


Adjusted operating income declined 7 .5%. Or 6 .6 % on a constant currency basis, reflecting the negative impact of reimbursement pressure on U .S.

Could you see that normalized level in 2020?

Yeah, I think we will definitely plan to be at a normalized level in 2020. We have enough initiatives lined up against the cash flow targets. We have strong capital efficiency programs ongoing, so we're quite comfortable on that kind of getting back to that level quite quickly.


Demand was broad based across many of their space and naval programs. Army ground systems activity was particularly strong. So in my view, we were off to a good start to the year.

Okay, great. And then just as a follow -up, I noted the comments you made in the prepared remarks around the costs and the quality there. And obviously, there's some uncertainty and risk when you took that work on. You know, is there, in your view, the opportunity to maybe favor would you continue to make progress? And, you know, is this an indication maybe you're headed in that direction?

So cost is increasingly under control. The schedules, the DRISTS, a lot of the schedules, we're getting a lot of input from the manufacturing workforce, which will help us optimize our production. And again, we're very, very good at manufacturing. So a lot of at risk is definitely behind us, and it's going to get better.


And in China, auto retail sales were down double digits in the quarter. Automotive operating margin declined 350 basis points this quarter.

So Michael, lots of discussion around sort of first half, second half but I noticed you guys didn't provide sort of a specific guide on the second quarter. And the streets got you sort of flattish, I guess, for the next 3 quarters. And I guess I just wanted to make sure there wasn't a little more detail you wanted to provide around that.

Yeah, I think Q2 will look, in terms of organic growth, pretty similar to what we just reported for Q1. I think we do have, you know, the shipping day issue goes away in Q2, but the first half is going to be, as we expected, pretty challenging. And so I guess that's the color that I will provide on Q2 in the first half.


Coming back to Container Board exports on Flight 7, we wanted to give you a sense of what we're seeing from our customers. Demand in Latin America is good as customer inventories have largely normalized during the first quarter.

Okay. And as far as the full year forecast on export, it sounded like you were mentioning that just you expected recovery in the second half but you don't expect recovery back to 2018 levels, did I hear that, right?

Right. It's going to be down versus last year, but it will start ramping back from the first half numbers as we get in the third and fourth quarter..


And finally, seven fewer wells are expected to be turned in line during 2019 as a result of non-operated activity by joint venture partners and a bit of timing. This is all good news from a capital efficiency point of view.

Okay. And then with that shift in activity, did that have an impact on your liquids expectation for the year? I think the liquids expectation came down a little bit for the full year?

That's not related to scheduling. That's more around Mariner East as well as a D-high unit that isn't going to be in service as soon. I think it got delayed two quarters, I believe. So that's the reason that we've seen ethane volumes come down.


Moving to revenue on slide six, net interest income increased $205 million, or 10% from a year ago, driven by higher loan balances and increased market rates.

Look, we did see a delay in tax refunds. But I think by the end of tax season, it seems to have really caught off on a year-over-year basis. I'm curious if you saw any state level distortions that we should think about as we consider normal seasonality as we through the rest of the year?

No, Rick, we really didn't see much out of the ordinary in terms of any pockets of particular strength or pockets of particular weakness.


Now to offset these challenges, the team once again drove price increases above raw material inflation, kept total manufacturing costs below prior year, and substantially reduced SGA.

Okay. And then a raw materials, you talked about oil-based raw materials. Can you talk more about cellulosic, are you getting any relief on cellulosic raw materials? And what is your outlook for that over the next couple of quarters?

Yes. So right now, we see it as being stable. We don't see a big change. Wood pulp will be down just a little bit in terms of the cost, but we don't use nearly as much as cotton linters. So that, as we see it right now, has been pretty stable both in Q2 and as we look into Q3.


Partly offsetting the positive earnings drivers were higher depreciation and amortization expenses due to plan additions and lower pension and other post-retirement non-service credits due to lower market returns.

Got it. And then maybe switching to guidance a little bit. In your 2019 guidance, do you incorporate the Four Corners SCR investment recovery and return to go into effect sometime in this year potentially mid 2019?

Yeah, so our guidance is considered an earlier 2019 implementation date. We'll continue to look at guidance throughout the year, but I don't believe that guidance will change as we continue the referral that, you know, offsets most of the cost of the SCR. So we should be good within our original guidance.


First, our competitive position in our core mammography market remains very strong, based on clinically differentiated products and excellent customer relationships.

Maybe -- well, maybe on the NovaSure point. Just be curious as you look at the back half and into 2020, do you think that this can get back to growth? Or are you thinking that kind of stabilization is the right way to be thinking about this business?

I think stabilization is probably about the best. We can be just given how penetrated we are in a category that's probably not really growing and may have some competitors emerge. So if we continue to keep that flat, it's probably a pretty good performance.


We're expanding on our ESG heritage in S &P Dow Jones indices. Twenty years ago, we launched the Dow Jones Sustainability Indices, arguably the best -known ESG indices in the market.

Okay. Appreciate the color. In any about, in terms of my follow -up, I know you haven't disclosed the potential details regarding the sale of the SPS business, but can you give us an order of magnitude roughly how large that business is so we can take that out of our model?

Yeah, we have not disclosed those details, but overall you should see that that is a relatively small business for us. So not a material large impact on the results and the difference in your models. I would say relatively small.


In the U.S., leasing was up 28%, with strong demand from multiple sectors, including consumer products, energy, and technology. We benefited from several large deals, outsized growth from account-based clients, and ongoing recruiting gains.

Okay. And then just lastly on the writedown within investment management, what was the triggering mechanism for that? The trend toward passive investment strategy, it's taking place over multiple years, and you also completed your annual review several months ago. So wondering what drove that impairment, the timing of it?

Yeah, we review all of our accounts every quarter, and we had some feedback on a couple of accounts specifically that they were going to be moving to more passive strategies.


I emphasize that this is a preliminary and very conservative number. The situations with China and Mexico are highly uncertain at the moment, and we will continue to monitor them carefully.

To be fair, it was around AT&T that there's been some change leadership around AT&T [indiscernible].

Yes, it's part of a larger restructuring of our go-to-market group in which we have just changed how the organization works. The fellow who ran the AT&T account is still active in the account. He's taken another position in a revised organization. There's nothing to see here, not to worry. We're having a great time with AT&T.


And for the full year, we expect total non-interest income to increase 15% to 16% from the adjusted 2018 non-interest income. Moving on to slide 8.

Tayfun, I just want to make sure understand the guidance -- I appreciate all the granularity. As I look specifically at the figures for the full year, just given that we have happier in the bag and then we've got the third quarter guide, it looks like the fourth quarter ramp would be just very, very strong. I want to make sure I understand what all the puts and takes are as you see. And I guess both for the third quarter sounds like corporate banking is going to be very strong. But into the fourth quarter, what will drive that really big ramp?

Yeah, so, Scott, the underlying third quarter to fourth quarter growth is truly in corporate banking and a combination of overall capital markets as well as treasury management. As we look at our corporate treasury management pipelines and the expected onboarding of some of those client revenues, as well as, in general, our expectations with respect to just corporate banking, the activity, you know, that builds the basis for our outlook.


We expect customer inventories to normalize as the third quarter progresses which should lead to improved demand for boxes. Nondurables, excluding food and beverage, represents about 30 % of US box demand.

I really appreciate you highlighting the exports side first because actually, just mathematically, the decline in exports has had a bigger impact on container board demand than what we've seen domestically. So just focusing back in on that, are you suggesting that perhaps as we get things rebounding, we could get the export business back to where it had been, or do you think it ends up being somewhere between the quite low levels in the first half of this year and the very strong levels we saw last year?

Yeah, I think for our business and the customer base that we're serving, we think we can get back.


Volumes increased 11 % driven by improved balance shipments to the western Class 1 railroads for emergency flood repairs, notably in Colorado and the Midwest.

Okay. And just to make sure picking up the pieces that you're laying out, it sounds like you expect to have some pretty positive pricing discussions when you roll out initial 2020 pricing to your customers based on the framework that you just laid out considering how good volumes have been this year. Is that reasonable?

I don't want to get too far ahead of my customers, but I think it's fair to say when customers feel like they've got good backlogs and they've got a good outlook is an easier pricing conversation of customers, Jerry.


I'll just remind you that total interest expense on all tranches of our debt is approximately $45 million per quarter. We continue to execute on our capital return program during the June quarter.

Great. And my follow-up question for Doug in terms of the installed base business, that's probably providing you a lot of support this year given the pressures on the systems business. Can you give a little color if you're seeing a lot of upgrade business for I guess the trailing edge, the fabs that are trying to upgrade, improve their productivity, is that a key driver to the installed base business? And the strength that you're likely seeing this year?

It's certainly a piece of it. In fact, last quarter, record level for our Reliant business, which is refurbished equipment. So the answer, Patrick, is yes.


This reduces our leverage and enhances our financial flexibility, though the cost of the tender will largely offset the savings on interest expense this year.

Okay. And just to follow up on that, a quarter go, you said you expected to exit the year with the year-over-year margin growth. Is that still the case?

Yeah, I think that would still be our expectation. I think we remain on track with our major initiatives.


On slide number six, we outlined local currency sales growth by product area. In the quarter, laboratory sales grew 8%. Industrial increased 3%, with core industrial up 5%, and product inspection was down 1%.

Shawn, I believe if I heard you correctly, you said that you're assuming FX and tariffs to be a negative 4% headwind now. And I had to down we say negative 4.5% before. And so just trying to figure out the moving pieces between your old guidance and your new guidance and how that all settles out. And I have a one quick follow-up.

Yeah, hey, Steve. It might be more of a rounding topic. You know, I'm not seeing any particular changes in terms of, like, you know, the tariffs versus what we talked about before. And if anything, the FX is modestly a little bit worse than the last time we spoke.


As we look at the third quarter, we expect production to be 192,000 to 196,000 equivalents per day, of which approximately 118,000 barrels will be oil.

A couple of months ago, you mentioned that there were plans for additional exploration on Block 5 in Mexico in 2020. Are there any further details you can provide now that we're in the second half of 2019?

We're doing our work to drill two wells there, and the difference between one, two, or three wells will be determined when we go through our budget process, but we're eager to drill there. We have oil that was found there. Amplitude is oil. We have nearby amplitudes we can drill, and we have other prospects we can drill. We're excited about going down there when we get through our capital allocation process.


This comes on top of strong prior year growth of 4%, which included the benefit of premium-priced Cuba sailings compared to the current year, which now includes lower-priced Bahamas cruises that will have to be filled in a very condensed sales cycle.

Okay. And then just on a housekeeping basis, it looks like the capacity next year is expected to be 8.8%. That was up from last quarter, it was 8.2%, but I think there was some changes with Pearl on the second quarter. Is that the only delta? Or is there anything else that has changed for capacity growth next year?

Yeah, it's really just a function of, you know, some of the Pearl that happened this year, and then you have some shifting and optimization of dry docks in next year. So it's just fine-tuning of our deployment.


However, the more meaningful impact was to our balance sheet, as you saw from this morning's press release. This quarter, we also updated our segment reporting.

Okay. And then, I guess, is there something different to the menu that may be triggered a change in frequency to the heavy, heavy user from the past? Or is it ownership? But they notice...

No, it's just the fact that we actually now have the transactional data to be able to analyze and have that insight. That's why it's so important when we do an acquisition for us to put our systems in so that we can get the data and then do our analysis.


Now turning to the Corporate Investment Bank on page 5. CID reported net income of $2.8 billion and an ROE of 13% on revenue of $9.3 billion.

Jen, you had mentioned earlier just the point about that next year's asset growth will be led largely through deposits. But with all this mixing into your last point there about where the deposit margin pressure comes in, do you expect the constitution of deposit growth could change at all, whether it comes from the Consumer business, Wholesale or the Wealth Management complex?

So, look, I think it's difficult to know. I think in the declining rate environment, as I said, I think the higher yielding alternatives are obviously less attractive for consumers. We do still see good organic growth in wholesale as well in both treasury services and security services. I think it's difficult to know. The macro environment will be a big determinant.


To sum up, we're controlling what we can control and delivering on the key priorities we laid out last November at our investor day. We have strong balance sheet momentum with good loan and deposit growth in key markets and specialty areas.

Understood. So the net $65 million of savings, one way or the other, are reflected in these numbers. Just making sure we got the right -- understood.

It's come in across the year. That's an all-in number relative to what our run rate was at the beginning of the year.


Combat systems margins returned to the 15 plus neighborhood. On a year to date basis, revenue was up 538 million or 12 % against the same period of 2018.

Got it. And then I guess, you know, some industry sources suggest that you'd been showing this plane for some time under NDA's. Were there any firm orders included in your bookings in the third quarter for the G700?

We've had some bookings on this airplane. That's about all I'm going to say on that score. This airplane is going to be very popular with that particular market segment.


Mortality and morbidity were within our expectations in individual life and specialty benefits for third quarter. RAS spread mortality losses were $12 million, worse than expected.

Just on asset adequacy testing reserves or cash flow testing reserves given current interest rate levels?

Yeah, so both there. I don't expect anything from a cash flow perspective and specific to the AR. It could have a slight negative impact but very manageable within our capital deployment plan.


We exceeded our expectation for revenue growth. Earnings were better than our guidance, driven by better top-line performance and our cost-saving measures.

So Fred, it's very fair to characterize that as small acquisitions that would be focused on the EV powertrain is really where you're headed. Nothing that would be a big bang or nothing that would be in  old school combustion technology. Is that a fair statement?

again, will be opportunistic but also very disciplined in how we see that. The drive will be technology. That's the punchline.


Our comparable POI metric came in at 2.1% of the quarter, ahead of our expectations, bringing this metric through the first nine months this year to 3%.

Got it. Okay. And then, Dan, you mentioned some lease term income in the quarter. Can you just quantify what that was?

Yeah, we had a strong quarter in 2018, and so last year of $2.6 million and $2.8 million this quarter. So a modest boost to the comparable, but it wasn't a big driver of our outperformance on a comparable basis.


This morning, we announced financial results for the first quarter of fiscal year 2020, which reflect continued momentum in transforming our business and improved year -over -year performance. Our overall results were largely in line with our expectations.

Just a quick question on the calendar for second quarter. You know, the, you know, the period between Thanksgiving and Christmas is shortened. I think last time we went through something like this, you know, Starbucks was impacted. I mean, I don't think it's really pent up demand, you know, for restaurants. Did it impact you at all? Should we expect any weakness associated with that?

Well, I don't think, you know, from where we're sitting today, we don't necessarily believe so. It's a fair question and something, you know, we certainly have to go do a little more work on, but we don't at this point see any historical impact or feel like that's going to be a problem.


This implies 14 % growth at the midpoint of our guidance range for 2019. Turning to slide 9, I'll turn the call back to Bob for his brief closing remarks.

Okay. And then in terms of the guidance, your fourth quarter leasing comp looks like it's actually a tougher one than the third quarter. How should we think about, you know, how that works out for the rest of this year?

So we've provided guidance out to EPS, which implies, you know, double -digit low -teens growth in the fourth quarter. We're not going to speak specifically to expectations around leasing, but we do expect, you know, obviously there was a much tougher comp in Q3 and that that trend will not go away in Q4.


That's on or about 12-31-19. We also have a significant additional borrowing capacity under our credit line and our credit agreement.

When you think about potentially deploying some of that capital, are there areas in the portfolio that you think you need more coverage of? I mean is there any color you can give us? And if you were to do some more M&A, what area would you be covering?

Yeah, I would say what we're looking for is the same thing we're always looking for, proprietary aerospace businesses with significant aftermarket content. We're not biased towards one part of an airplane or another part of the airplane or one product or another. If it meets that criteria and we see a clear path to our private equity-like return, we're a very interested buyer, and we really don't hem it down any more than that.


Our AutoZoneers' intense focus on the customer is the reason that I believe we have momentum and while we were able to deliver solid results this quarter.

And over that last 25 years, there's been a market share shift from smaller independent and regional players to the larger players. Over time, should we see more share being shifted between and amongst the larger players just because there's less consolidation and fragmentation within the market?

I think you're going to continue to see it come from those smaller folks. It's what's happened overall. When I got in this business, there were about 35,000 Auto Parts outlets. Today, there's about 35,000 Auto Parts outlets. Now a lot more of them are in the hands of us and our close end competitors, but there's still a whole lot out there that aren't by us.


Demand for our IR intelligence offering drove both in the corporate solutions subsegment, which saw a 6 % increase in the fourth quarter. I'm proud of the growing momentum in that business.

So once you get to that six, nine, 12, you know, finalized implementation level, that's, you know, your full run rate for revenue and margins at that point?

Yeah. The margins do improve as we go on into production after we've been able to complete the development phase.


For the Americas region, we expect Q1 to increase sequentially with growth from North America, orthodontists, and GP dentists. For international, we expect Q volumes to be down sequentially.

Got it. One quick one for John, just on gross margin. It's come down over the last kind of 3 years to the low 70s in 2019, and a lot of moving parts here, but how do we think about that metric going forward? Are we kind of getting close to the bottom on that metric? Or should we expect more kind of annual erosion of that metric?

Well, I think, Nate, you saw that our gross margin improved 60 basis points in Q4 from Q3. And, you know, we would look into the future to expect that, you know, with the cases that we do, you know, sometimes more difficult versus even the non-comprehensive cases, we know how to drive that gross margin and we'd expect to see improvement in 2020 and beyond.


Slide 17. Our projects are moving along as planned in the Gulf. We currently have a platform rig drilling a three-well program at Front Runner, as well as a drill ship conducting two back-to-back subsea workovers in the first half of 2020.

So why the first quarter, we're not going to see any well coming on stream?

We are, Paul. We're starting Saturday morning. It's been a while. What I'm trying to say is it's hard in a shale play, and you'll find it rare to not put a well on in 100 days. But we're back clicking and adding wells throughout the quarter, and we have a significant cadence of wells building, as Eric described earlier in the call.


and we're moving forward on these opportunities responsibly and with increased resources. With ICOS, we're encouraged by early interest from adult smokers and excitement from the trade.

That's a helpful clarification. And on the FTC review, obviously you've said you thought it would be resolved in the first quarter and now it's pushed out to the first half. Can you just give some color there? Is that delay any cause for concern?

I don't think it is a cause for concern. You know, there's a significant amount of activity going on, and there were some scheduling delays that pushed it likely out of the first quarter. But I don't think it's driven by anything more than that.


As a result, we expect total O&M expense will increase approximately 1% to 2% in 2020. Next, let me provide a quick regulatory update.

My first question is on the 2020 outlook for the -- weather-adjusted load growth. Thank you for the color that you gave on what impacted, especially on the electric side, the weather-adjusted load. As you look out towards this year and just having gone through just a month of this year, does that still give you confidence that you could achieve the 1% increase in load, including the leap year impact?

And Sue, it's Bob. Thanks for the question and appreciate you on the call. I think our sales forecast is reasonably conservative. We did have some discrete declines in our large C&I customers in 2019 that we don't expect to continue in 20. And underlying those discrete items, we do have strong customer growth, which is slightly moderated by use per customer. But I think our forecast is as expected, and we don't expect to adjust that from.


The net impact was positive on revenue in the quarter. Turning to the regional results, North America revenue grew 1 % on a reported and concincurrency basis while transactions declined 4%.

Okay and then and then just kind of following up on again on the white labels you know would you say that performance has been kind of in line with expectations I mean we've got like a little hint of it back at the analyst day and it looked like since we're going quite nicely is there any any change to that or does it seem like things are kind of moving along according to plan.

Yeah I would say things are moving along very much according to plan they're doing quite well and you know we're very excited about them and we want to continue to add more and more partners to the mix.


For 2020, we expect global housing net operating income, excluding cats, to increase for the first time after several years of decline, driven by expansion across all of our lines of business.

Did you actually pull -- I think I heard during your original remarks, maybe, Richard, that you had pulled forward some of the expenses in this severance charge. Could you clarify on that?

Well, essentially what we're saying is at the end of 2019, we had severance charges. So severance charges would be the reduction in staff going into this year. That reduction in staff would decrease the expenses. We're not expecting that to fall to the bottom line. What we're expecting to do is redeploy that in the IT infrastructure, the cloud capabilities that we mentioned, et cetera.


The Florida Capital Plan is underscored by solar investments and grid improvements, including targeted undergrounding. Storm Protection Plan legislation supports the deployment and recovery of these grid investments, charging our increased capital.

One last question. Just to confirm, how much financing have you already committed to the project at this point? I think it's around $2 billion, including AGDC at this point.

Yeah, the gross project costs are about $2 billion on our books now. We've got about $800 or $900 million of construction financing against that.


Thank you, Andrea, and good morning, everyone. We have a lot of grounds to cover today, and we fully understand that there is one topic on top of everyone's mind.

Understood. And then just looking at the new terminal in Miami, is there anything that we can start to think about as far as potential tailwinds from that, anything from the dynamic with how you price cruising out of there? Anything that's not in guidance from that?

Well, look, anything we can do to make our cruises out of Miami, which is our #1 port of embarkation, more attractive, I think, will certainly help attract a higher level of customers, which we're always after, because we know that those who pay the most to get on in the most once they're on. Daniel, we have time for 1 more question.


In Onshore Offshore, inbound orders grew almost 80 % versus 2018, driven by more than $8 billion in LNG awards.

So, Doug, I just wanted to maybe follow up real quick to make sure I understand correctly how you were going through that very detailed explanation of the transition year of 2020 and the impact on the sub -C margins related to that transition of much significant backlog flowing through the system. So, would it be safe to say that maybe, you know, at a baseline of the margin that you have in backlog, that would be maybe 100 bases point higher than that minimum point of guidance that you provided? And therefore, the difference is all that incremental cost that you're occurring through the supply chain to make sure you can execute on these projects. Is that a fair way to maybe look at that?

Certainly a creative way to put me in the corner, Kurt. I'm not going to fundamentally disagree with your statement.


Credit adjustments and other was a loss of $951 million, which was one of the significant items that I mentioned up front. Credit costs were $1 .4 billion driven by the net reserve bills I referred to earlier.

And then can you help us think about how you do the accounting for the consumer deferrals? You keep accruing, but do you add some kind of haircut for NII and suppression in terms of what might not be collectible, even though technically you're allowed to accrue while you defer?

Yeah, you got it, John. So we do continue to accrue, but it is a lower yield over the life of the loan.


The rewire is underway and we've taken actions across each of these key elements of the playbook and more are in development. I've mentioned some of the significant actions that we've already taken to allow the organization to move forward.

Yes, I want to try a third time. Do you want to be CEO of Harley if the Board wants to remove acting? Are you an option? If you don't want to answer then it's a problem because given the scope, this is probably the -- that release and that strategy was so refreshing and must be a huge relief for your dealers, your employees, stakeholders, your investors. I know you've been on the Board since 2007, so I'm preaching to the choir, but that is a huge, huge open-ended area. And I just -- I'm not asking for you to break new ground here, but are you even an option?

I take it as a compliment, thank you very much. But as I said, nothing to add to this point in time. But I have hit the ground running and there's a lot to be done and we are very focused on implementing our plan and developing a new plan for the next five years. So you should be confident about that.


Let me focus on that word, results. Many investors have asked us why U .S. testing volumes are still limited, even as the diagnostics industry is producing more tests.

And then on the ASP, around 25, is that how we should be thinking about it?

Yeah, I'd probably go just a little below that, probably when you think about a global weighted ASP.


And we instituted an unpaid leave program for any employee who doesn't feel safe coming to work. We are also supporting our communities and most impacted by coronavirus across North America and Europe.

So I think core self -ser was originally set to launch in July. So I guess the question is, if COVID pressure somehow ease or begin to ease, would there be a willingness to pull what is a delayed launch forward again and do it again in July? Or is it now definitely in the fall?

Yeah, hi, Bill. Thanks. So look, based on what we're seeing in the marketplace, I think you can safely assume that it will be in the fall. In other words, I would say based on what we know right now, we will not be bringing forward the launch. We'll keep it as to where we've moved it to now.


And to them, I want to express my gratitude for helping keep us safe. As importantly, I want to thank the men and women of Eastman. It's been said that characters revealed through adversity, and the Eastman team has demonstrated its character and arisen to every challenge we've faced.

Is there a market price premium? Are you catching that price premium on recycled content? Are you finding that people are willing to pay up for it?

We're not continuing to discuss that right now. That's a customer by customer basis. But, you know, there is a value to this that in a cost, you know, to this. And we're confident that our spreads will be equal to or better than our current spreads.


Thank you for what you are doing to help all of us. We are eternally grateful. I also want to thank our 4800 Atmos Energy Everyday Heroes as they continue to provide our customers safe and reliable natural gas service.

Okay. And then I heard you talk about 2020 CapEx. Are you also reaffirming, though, the the $10 billion to $11 billion of CapEx between 2020 and 2024?

As we said, we've been able to continue our capital work through this program designated as an essential service provider. We anticipate continuing to be able to do that and at this point don't see anything out there that would defer our capital strategy that we have in place right now.


Now, shifting to our debt maturities, we have been able to obtain a 12-month debt amortization holiday for most of our VESL's payments, bringing our debt maturities down to $400 million for the remainder of 2020.

But to add on to that, the equity convert would be your last option that you would want to do?

I would say that we are very sensitive to dilution, but overall, I think that we purposely made sure we had maximum flexibility on the depth side.


For employees choosing to work in the office, we will ensure social distancing and all local safety regulations are followed. The health and safety of our employees is our top priority. Let's focus on industry trends.

God, excellent. And then the trends that you've seen so far in May.

We have no reason to believe so far as what we've seen in May that our guidance is not achievable. Otherwise, we would not have guided. I think that's the best answer I can give you.


However, our market share sequentially improved in June, supported by the strength of our brands. While we see signs of improvement in the market, the situation remained challenging.

Okay, great. Thanks. Could you also just clarify in Indonesia, you gave color that in your guidance thinking you don't expect enforcement of minimum prices at least until September. As far as 4Q goes, what's your base case thinking? Is your thinking reflected in guidance that there's no enforcement all year or is there built in some assumption that that does improve?

No, what is taken in the guidance is essentially that we should have a large part of the benefit in Q4. So we're not expecting anything in Q3, but we think a large part of the benefit of having minimum retail selling price should be seen in Q4.


The link quarter increase reflects broad -based commercial growth, as well as growth from consumer stimulus payments and lower consumer spending. This growth was offset by a decline in time deposits primarily related to lower interest rates.

Don, I was wondering if you could talk about the near-term outlook for cards and payments income? Will that -- the prepaid card activity remained high over the next couple of quarters?

It will remain high for the next couple of quarters. Many of those are for support programs that the various states have put in place, and we would expect that to continue throughout this year and probably into the first part of next year as well.


We've evolved our protocols and have implemented mandatory phase coverings in all of our facilities to protect our employees and limit the spread of COVID-19. As I mentioned earlier, our operations and supply team team have done an excellent job ensuring business continuity.

Yes, sir. A couple of questions here on the application. And then broadly, our you seeing investments yet on this whole wave of the reshoring of the U.S. pharmaceutical production capacity, so two questions. One, for this application on Page 8, are you both in vaccine discovery and also vaccine production and then all the pharma reshoring, are you seeing any of that?

Yeah, so the answer to your first question is yes and yes, or question A and question B, it's yes and yes.


We believe our ability to successfully navigate the regulatory process and communicate potential reduced harm benefits of our non-combustible tobacco products is critical to achieving our vision.

Sure. My second question is on the oral tobacco category. So thanks for sharing that slide where you mentioned that 37% of on! users are smokers. Of the other 63%. Is it possible to disaggregate into users coming from [indiscernible] e-cigarettes? And what are the new consumers coming into the product?

It is possible. We wanted to share what we saw from exclusive smokers just because of the opportunity that presents. We'll consider whether we go into the other detail of the other categories in the future, but we haven't thus far.


Finally, EPS in the quarter was lower by 17 cents because of dilution from the increase in shares outstanding. On page three, you will find SCE's capital expenditure and rate -based forecast.

Okay, thank you. And if I could just follow up on one similar topic, I see you booked a charge related to 2017 -18, a small one in the quarter that's below the core line. And just the nine million dollars. What was that and what caused that to book this?

Sure. So Jonathan, you can imagine as we move through this process, we're accumulating legal and expert costs. Because those are legal and expert costs that are associated with a non -core charge, we're booking those at non -core as well. Prior to this quarter, the number was really not significant.


Increased working and schooling from home due to COVID -19 resulted in a strong PC market in the quarter, although we believe our growth was largely driven by our 11th -straight quarter of market share gains.

Got it. And just one small one follow -up. Just on the data center comment, 20 % of revenues is still the data center graphics piece, still a small part of the business, or was that better this quarter? They're trying to get a qualitative understanding what happened there.

Yeah. So we did say that overall data center revenue was over 20 % of revenue this quarter, and it was predominantly CPUs. So the GPU portion of that is still relatively small.


North America origination also showed improvement compared to a challenging year-ago period. Higher results in trading and distribution were driven by improved margins and favorable positioning.

I might be just doing my model incorrectly here. But if I start at that, I think you said $2.80 base and add the $100 million to that, I'm getting, according to your math, something around $3.40 for the year. But my model is spitting out a much higher number. Maybe we're using the wrong base or maybe I'm misunderstanding the communication on sugar here. So can I start there? Are you expecting sugar to operate at a loss in the back half of the year?

Notwithstanding any fluctuation in currency, I think our expectation is that there should be a small contribution from sugar in the second half to flat to zero. We don't expect underlying operational losses to continue in the second half based on what we can see. So it's all going to be dependent upon the exchange rate and how that impacts the reported numbers from the debt.


We see continued strength from memory, and Foundry for that matter, driven by demand and more strategic technology-oriented investments. The customer support business group is also expected to provide continued momentum for the company.

I know you guys said you had -- you were working your way through the supply challenges. But I wonder if you could help us kind of with what the quarterly revenue progression might have looked like? If you hadn't had those, you had said in March, you get about $300 million of revenue deferred by the supply challenges. Should we view June as kind of having caught up to that and then the surge in September is more shipping direct to demand? Or just what would that have looked like if you hadn't had the supply challenges that you had?

Yeah, I didn't quantify it. I did say we got nicely caught up. I also said we're not completely caught up at the end of the June quarter, and that's as much as I think we're going to give you right now. You know, we're driving efficiencies. We're getting much better. You know, I think Tim and I are pretty happy with how the supply chain is performing.


The 5 .5 % yield is lower than we would typically expect from small sell anchor builds due to some higher cost that we incurred during construction, which were beyond what we had initially estimated.

And just to clarify, I just seem like at least right now in the midst of all this, you still have been able to generally meet the deployment goals you set out earlier this year. Is that fair?

No, that is fair. That's what we've set the targets ahead of time. And we've learned to navigate in the new environment that we're in and believe we can continue to do so.


it's worth reviewing additional key indicators of customer health in the quarter. We've told you that most customers entered this downturn fairly healthy and current on their loans.

So that last comment, just to be clear, it should be roughly around the 30 that we saw in 2Q, just ballpark?

It shouldn't be. If you do the math and you assume margin, you know, that there's no improvement in operating margins from the 7.8% we've just posted against the 15.8%. That will be slightly higher as a percentage.


In our electric segment, operating earnings were up nearly $4 million, driven primarily by lower employee and administrative expenses, lower generation maintenance expenses, and higher COVID-related residential demand.

Got it. And then just from a balance sheet perspective, you're still targeting the 14% to 15% [audio gap] debt longer term. When we think about 2021, do you still -- do you expect to be at least at the 14% range just by using your annual ATM program?

Yeah, long term, we're targeting that 14% to 15%. Just recently met with the rating agencies and continue to have conversations with them about our investment plan over the next four years, and we're confident in that plan. Again, we'll provide more detail on what that looks like in our analyst day.


Finally, the sale of New York American Water continues to progress, and we anticipate the closing of the acquisition by Liberty Utilities in early 2021. Moving on to slide 11.

Awesome. And lastly, I mean, we keep waiting to see the interveners, filings in New York, New Jersey, rate case, I understand that they haven't been posted yet. So can you give us at least a sense, you know, what are the key contentious points and how the rate case is going?

Well, the rate case is proceeding according to our anticipated schedule. We, you know, the postings have not been public, so we really can't comment on those. But just to say, there's really nothing out of the ordinary in these.


Returning cash to shareholders remains a high priority for 3M, including both dividends along with a disciplined approach to share repurchases, which we plan to restart in 2021.

Okay. That's helpful. And then within the organic growth assumption, what are you assuming for price?

So as I said before on the earlier question that was there, we expect prices to be positive based on all the inflation that we are seeing. And historically, when you think about what 3M has been able to do, they have been able to get price just because of the value that they add to customers. And I don't expect that to change.


Good morning, Kelly. Thanks, everyone, for calling in today. Before we get started reviewing our 2020 and looking forward to a segment of day-to-day, I would like to address the recent actions taken by the Biden-Harris administration.

Okay. And then finally, that you already have a pretty sizable hedging program for 2021. Should we assume you're pretty offset or that you will look for opportunity to increase that further?

In 21, no at this time. In 22, we have done some hedges, which is disclosed in our release, and working on options to review that, but not settled in on that now because I feel like we're well positioned with our cash, I feel like we're well positioned on our liquidity, and really taking a look at the additional hedging for 22 at this time. I haven't made a decision yet on that.


Accordingly, we will continue building momentum behind our business unit strategies, company positioning, strong brand, and industry-leading portfolio. I'll now turn the call over to the operator to begin Q&A.

Yes. Absolutely. And just a follow-up. So many of the suppliers of your HDD and SSD controller chips are seeing tightness in wafer supply, assembly and test capacity. Are your shipments here in the March quarter potentially being somewhat held back because of lack of controller availability from some of your merchant or ASIC controller chip suppliers?

Yeah, there's no doubt things are tight and we're not immune from that. I mean, clearly we have our financial plan covered with components, but when you do go looking for things from the semiconductor supply chain, it is tight right now. So we'll see how it plays out during the quarter.


as we reap the benefits of the cost reductions we put in place last year. As we discussed last quarter, some of those savings will be reinvested as we identify opportunities and hire additional individuals in key strategic areas.

Right. I guess Equifax reported that mortgage inquiries should actually accelerate a little bit this quarter. And I thought you had a comment that something related to mortgage, almost like it was a lesser benefit than I just didn't know if that was just seasonal mix or what you were saying? And maybe I just misheard you.

No, I don't – maybe I need to go consult my notes. I think that, you know, we don't really opine on kind of the future mortgage. You're better off looking to the bureaus and their forecasts than to us because we're kind of a lagging indicator on that. But what we see, at least what we're seeing right now, is strong mortgage.


Overall, the sales growth of 2 % to 4 % represents a solid turnaround after difficult 2020 with growth across all regions and all lines of business. Switching to operating profit on slide 12.

Nice results. So your maintenance units were up 2% in the fourth quarter. My recollection is they were up 1% in the third. Can you comment how much of that is organic versus acquisition and maybe trends outside of China?

The 2% was a full year number, Cai, so that's a full year number. So I think that's where we ended up -- ended the year. And in the growth that we saw in the quarter was all organic. There was -- I don't think there's any acquisition worth speaking about, so it was all organic.


RIS liability exposures excluding UK longevity reinsurance grew 14 .3 % year over year, due to strong volume growth across the product portfolio, as well as separate account investment performance.

Thanks. And then I just have a follow up on non -medical health. Given your comments on favorable dental utilization in the first quarter so far, would you anticipate setting up an under premium reserve again in 2021 or is that more of a kind of one -off practice due to the volatility we saw in 2020?

Yeah, we just remind you, Ryan, the reason that we were able to do that is because services were not available, you know, dentist offices were closed. We don't forecast that that will be the case in 2021, so we would not expect, you know, the need or the requirement to set up an under premium reserve for that.


And then as a result, we didn't have to just pull out our own recession playbook and and hunker down. If for ITW, this was a unique opportunity to react smartly and to stay focused on the long term.

And any differentiation region link that you'd like to comment on?

No, I think it's pretty, you know, I think the comps are a little bit easier in Europe, maybe than in North America, but we really, on a global basis, we had a good year. But so that's really all that I would point to.


These changes will enable us to pursue OpEx investments to enhance growth while preserving strong profitability. We managed our balance sheet prudently heading into the downturn.

Okay. And how much is the cumulative investment in Hana thus far?

So in terms of HANA, we have invested approximately – I'll have to get you the exact number, Jade. But in terms of the current year, we had a loss of about $40 million related to HANA. And I'll get you the balance sheet number.


We also received five emergency response awards from EEI. This marks the 23rd consecutive year EEI has recognized Entergy employees for their emergency response. 2020 was another successful year for our company.

Understood. And in the Grand Gulf work, is that sort of just general operational improvements? How would you sort of highlight the work needed there?

In the equipment reliability space, for the most part, as you know, we've gone through a couple of major outages with big equipment modifications. The most recent equipment modification, the turbine control system, we've had some issues coming out of that outage with some of the equipment associated with that modification, so we're going to continue to work through those, get those knocked out, and get the plant up to the level of excellence that we desire.


I'm now on slide five. Let's discuss the performance of our four segments. Retail delivered a record organic growth of 9 .8 for the first quarter.

My first question going back to your M&A commentary. So I just want to make sure I'm thinking about this correctly. So if there is a cultural fit and makes financial sense, you are open to opportunities, even if they would be outside of the norm or of the core type of acquisitions that you've done in the past, namely if they -- if you see businesses that get this lodged in other regions of the world, or in some verticals that you may not necessarily have to strengthen today, those would be open opportunities for you. Is that fair?

Yaron, the answer is yes, as long as they're in the insurance space, I'm making the assumption. I don't like to assume anything, but their insurance businesses of some sort. But yes, we would consider and we would evaluate them. And if, in fact, they were overseas, obviously, you have to think about regulatory issues and all kinds of other things. But yes, we would be open to consider that. Yes.


The site's work plan now targets fuel load in the third quarter and late December 2021 in service state for unit three.

Okay. And so just 1 follow-up. So is it fair to say that what's left to be done? And granted that it's probably somewhat depends on what the hot functional testing covers. But is it fair to say at this point, you think what's left to be done on the construction side is something pretty straightforward. And so it shouldn't be prone to delays that we've seen in the past?

Yes, I wish. I mean, Angie, you've lived with us for a number of years here. I mean there's nothing that's easy. Every day, I've described out there as a dog fight, but it certainly is less complex than what we've been doing to get to HFT.


Now I'd like to provide you with a brief update on our COVID -19 -related programs. To meet our commitments to our customers and their patients, a number of catalytic facilities have been operating 24 seven for more than a year.

And then maybe John, another strategic question. We've seen a CRO get into the CDMO industry recently, then Thermo acquire a CRO to add to their CDMO capabilities. I'd just be curious of your view of Catalyt, maybe moving closer to CRO work and why or why not it would make sense to operate a CRO and CDMO under one group.

Well, I answered the question that's with Jacob. I think, first of all, I think it was a very interesting move with regards to Thermo acquiring PPV. And I would just make the comment that it really shows the overall importance of the pharmaceutical services industry for pharma and emerging pharma.


We should all seek to emulate his example, a consistent commitment to ethics and integrity, to excellence, and perhaps most of all to the safety of our colleagues. He cherished his friends and family most of all.

Got it. And then just two very super quick ones on South Carolina. First, you know, obviously, Santee, next there and pulled their offer, you know, the Senate passed a bill that's more focused on, you know, internal restructuring. Do you, does Dominion have any stance remaining here, including maybe an MSA opportunity or is that sort of behind us?

Yeah, our position on that is that it hasn't changed. It's the same. We've offered. We've worked cooperatively with Santee. We continue to work cooperatively with Santee. And we look forward to other opportunities to work cooperatively with Santee Cooper. So, no change there, Char. We want to do what's best for South Carolina.


Scores were up 31% in the quarter versus the prior year. On the B2B side, revenues were up 25%. There was continued strength in mortgage originations, which grew substantially year over year and also sequentially.

This is actually Greg on for Manav. I think the divestitures you've made so far make a lot of sense when you explain them. Just wondering if there's any smaller products left out there that could be candidates for a similar treatment? Or from here, it's more about being selective in the contracts going forward?

I would say that this is pretty much the end of the reprioritization of our resources. So we don't see any significant divestitures in our immediate future.


We are already capitalizing on this trend in a number of ways. Our latest award -winning PC includes features purpose -built for hybrid work.

And just sticking there, just going back to the questions about mix on the PC side, you talked about strengthening Chromebook and how that, something sort of softer mixed impact on ASCs. Would that not reverse as commercial business continue to open up? Should we not expect that to reverse and carry sort of into 2022, the mix?

So in terms of mix, yet we expect the mix of commercial to go up through during the next quarter. And this is why Marie was mentioning before that we expect the overall operating profit of personal systems to be slightly higher than our guided range through the end of the year.


We delivered around $120 million towards our 2021 -2023 target of $1 billion in growth SG &A savings before inflation and reinvestment.

And just to confirm then on your pricing are you saying that you're not getting any increases or have you actually lowered prices?

We are impacted by the increase in in duty so we are increasing price but it's still having a negative impact and that's why there is a difference between what we are reporting in terms of price impact within Indonesia and without Indonesia so overall it's still having a bit of a negative impact.


The pipeline that developed in that quarter rolled over into the second quarter as is obvious from these results. We continued to experience a high level of interest activity and a growing pipeline.

Okay, and just to follow up on the pricing issue, are you seeing any of your competitors doing anything what you might call maybe irrational on the new pricing front?

Well, that's your word, not mine. Hey, look, we tend not to, first of all, we don't compete on price, most importantly, and I never comment on other people's behavior. I find that's a wise and judicious stance to adhere to.


This is a great brand and great management team operating in sectors with favorable long-term growth profiles. Turner & Townsend will advance diversification across the four dimensions of our business that we've been discussing.

Okay. So is it fair to say the contracts are at least as long, maybe longer than what you would typically see in your GWS business?

Oh, yeah. Big, complex projects like that last for years and years. I'll give you another example. They're working on a $6 billion redevelopment at the Toronto Airport. Any of us that have gone to airports and seen these projects, no, they go on for a long time. So, yes, those contracts are very long term.


Helix deploys a broad suite of marketing tools to continue to build ON brand equity and transition smokers. At retail, helix uses disruptive point of sale and trial and awareness generating promotions.

Okay. That makes sense. And then just wanted to clarify something else on IQOS. I know you have this agreement, of course, with Philip Morris and you shared some of those details. I think it was actually a year ago. So I'm curious, can you share with us if you've reached 50 bps of dollar share in any of the markets where IQOS is sold, which was defined in the agreement with PM? And the reason I'm asking, because I think that was one of the areas that you needed to maintain or to get to, to maintain your exclusive distribution agreement for IQOS.

Yes, Bonnie. The answer is yes. We believe we have achieved it related to the exclusivity. We've shared that data with PMI, and that's why you saw us moving to other expansion areas.


We said we would rely on Camden's values and culture and do things our way because like Bon Jovi, we weren't born to follow. And finally, we encouraged them to get on board the REO Speed Wagon and roll with the changes.

Curious on the acquisition pipeline. How large do you expect Nashville to be in the near term?

We'd like to get Nashville up to 3% or 4% in the near term. When you start looking at economies of scale and efficiencies, we really need to have 1,500, 2,000 apartments to actually get to that efficiency level. And so we definitely are going to be aggressive in Nashville and continue to push there.


We see a significant opportunity to grow the franchise further over the next few years as we provide unique and innovative experiences throughout the game. PGA Tour 2K21 continues to exceed our expectations and expand its audience.

NBA, obviously, college basketball would be pretty sweet, I think too. Just sort of, I guess, expansion opportunities for your game portfolio or working with athletes, maybe for marketing or gain from?

I'm not sure how to answer it, and so I'm going to be judicious and probably not going to answer it. I will note that we were in business many years ago with the NCAA, and we no longer are, and we're always looking for opportunities to grow our business and our sports business.


I've met with my leadership team and many employees to hear more about their focus areas. These introductions and conversations are very important and will continue.

Really appreciate the comments on kind of what you're seeing in the second half and particularly the comment on July, I think you noted maybe at one point in time, the system touched 330 a day. Is that including some recovery or at least incentivize recovery? Are you seeing some recovery in the in the Rockies starting in the second half?

Yeah, Tristan, this is Kevin. Yes, that would include some incentivized recovery, which we talked about in our in the remarks.


In the second quarter, we delivered core organic sales growth above 35 percent, along with record gross profit, adjusted EBITDA and margin.

Let me add my congratulations. Coming back to the value-added side of the piece, obviously, really strong results. So I'm just curious, are there any particular regions or areas of the country where you are seeing more growth? Or is it more broad-based?

Yes. The exciting part about it is we've seen that expansion and growth broadly across all geographies. So there's not one that I would point to that would be outpaced strong. Obviously, the strength that we have in the South and in Texas kind of leads the way. But as we've gained adoption and accelerated penetration, it's really broad-based.


Following our prepared remarks, Terry and I will take any questions you have. I'll begin on slide three. In the third quarter, we reported earnings per share of $1.30 and generated total revenue of $5.9 billion.

Okay. So what is -- I guess how do you think about the profit margins on these relationships? I mean it seems like we provide more one-stop shopping. It should be better service for the customer, and you should be making more on that, so not just the revenues. I mean what would you expect the earnings to increase by? I assume more than the 25% to 30%.

Yes, they will. I was quoting a revenue number. I would expect the earnings to be higher than that because the marginal cost of many of these products and services is not as high because they go on the platforms we already have established.


Compensation expense totaled $496 million and was up 7 % compared to the prior year and was up 2 % sequentially. The year -over -year growth was primarily driven by higher cash -based incentive accruals, as well as higher salaries.

Okay. And Jason, you recently flagged some upward expense pressure at an industry conference, which has been a big focus for investors. So understand that, and it's probably too early to get much of a sense for magnitude on that front. But if it is possible to try to frame the magnitude, that would be helpful, number one. And number two, even with that upward pressure, is the commitment and the focus still on generating fee revenue, operating leverage or organic operating leverage ex the fee waivers?

I don't want to ramble. Would it be helpful for me to just give a little bit of an overview expenses in general? Or do you want me to just stay specifically on the -- on kind of what happened with technology, equipment and services outside services?


Guidance ranges are listed at the bottom of the slide. Importantly, using midpoints of this outlook would imply our PPNR is at or above our full-year 2021 outlook provided last quarter.

Understood. And if I could just ask a last clarifying one, Don, can you just give us what the total PPP income was this quarter versus last?

The total, which would include the interest on the individual loans, was $56 million, including the $45 million in fees. Last quarter, that was $69 million, including $50 million of fees. And so that's just the relative change from quarter to quarter.


Operating profit was impacted by lower volume, increased commodity costs, and higher marketing expense to support the new Bear Dynasty product launch, partially offset by higher net selling prices.

Just looking at Decorative on the implied 4Q guidance, it's somewhat similar revenue growth compared to 3Q. Do you expect a similar pro out performance to continue through the end of the year?

Yeah, I think, again, we would expect PRO to remain strong as we go through the balance of the year. Whether it's going to be the same 45-plus percent growth we realized in Q3 is yet to be determined. But based on what we're hearing from PRO contractors, based on the projects that we're hearing in terms of contracts or backlogs, we do think the PRO demand will continue to be quite good.


On a year over year basis, growth was uneven, the market as APAC the first region to emerge from the deaths of the COVID lockdown in 2020. Additionally, we saw COVID resurgence as a lockdown sporadically impact various APAC countries in Q3.

Okay. That's fair. I guess, Joe, maybe a follow-up. I mean you've continued to have confidence in that 20% to 30% long-term range. Maybe we'll hear more on Friday at the Analyst Day. But do you have an initial view on growth for next year? And do you feel like once this period of more pronounced seasonality is behind you, we get back to like a more normalized kind of trajectory for the business as we head into next year?

Well, I mean, Nathan, is -- yes, we're growing at a pretty good pace right now, right? So it's actually above our long-term growth model, which is 20% to 30%. And as we move into 2022, we'll retain that 20%, 20% revenue growth target, and we're happy to discuss it more in detail on Friday.


Adjusted earnings, excluding notable items, were $2 .2 billion, up to 24%, and up to 23 % on a constant currency basis, primarily driven by strong returns in our private equity portfolio.

Okay, thanks. And then just one quick one, long -term care claims, you said return to more normal levels this quarter. Was that on both claim frequency and severity? And the reason I ask is there's clearly from what we've heard from others been a shift away from facility care at the home. Oh, we're a severity. I'm just curious if you have that level of detail for how that's trending right now.

Yeah, sure. Good question, Tom, because you're right. It had shifted. I mean, quite honestly, every metric has shifted back to pre -pandemic levels. I mean, maybe we're off slightly on the relationship of in -home versus, you know, kind of external care, but it's very close. It's very close to being pre -pandemic.


Recent commentary from Airbus and Boeing reiterated anticipated rate ramps for their narrow body platforms in the near future. Hopefully, this will play out as forecasted.

Great. And then just as a quick follow-up in the defense end market. I think last year, you guys ended up toward the higher end of the initial range that you gave. Is there anything to be aware of for this year that might determine, either on the plus side or the minus side, where things end up in defense?

No. I think the guidance that we provided is reasonable. As you guys might know and remember, the defense markets in general have been very strong over the past 2 to 3 years. They can be lumpy in nature in terms of the bookings. So I think the guidance that we're providing is within a reasonable range.