Thank you for participating in our second quarter earnings conference call. I would like to review our disclosure cautioning investors and participants that in addition to statements of historical facts, we will be discussing forward-looking statements reflecting our expectations and plans about our future financial performance and future business opportunities.
All forward-looking statements involve risks and uncertainties, which maybe out of our control and may cause actual results to differ materially. Such risks include changes in economic conditions, changes in the competitive markets and landscape, including impacts of global trade discussions and policies, the impacts of governmental laws, regulations and orders, including those resulting from pandemics, disruptions to our business caused by geopolitical events, military actions, work stoppages, natural disasters or international health emergencies such as the COVID pandemic, management of growth, timing and magnitude of future contracts, fluctuations of margins, availability of raw materials, components and shipping services, the introduction of new products and technology, and other important factors as noted and detailed in our K and Q SEC filings.
With that, let me highlight some of our financials. During the first half of fiscal , customer activity began increasing in varying degrees across our markets as effective vaccinations became available and utilized, allowing people to move more freely and safely.
COVID restrictions have reduced which improved economic outlooks and provided our customers with more confidence. These levels equated to increases of Each business units order volume grew through the first half of fiscal Commercial business unit orders increased due to the strong demand from customers using systems for on-premise promotion and out-of-home advertising.
High School Park and Recreation business unit growth was driven by the continued adoption of video displays used for sporting and educational use. Transportation order levels increased as project planning and approval activities resumed to a more pre-pandemic level and our customers moved forward in purchasing displays using intelligent transportation systems and for mass transit venues. The International business unit for the quarter were less than last year same quarter, but improved through the first half of the year.
While some countries have eased travel restrictions, we have seen some business in those locations increase, but other countries continue to have taken a more cautious approach to reducing various measures enacted during the pandemic, creating slower recovery of orders across the globe. Live Events business units were similar to last year's second quarter and increased on a year-to-date basis.
Net sales increased The increase is a result of strong demand, as noted in the order commentary and an increase in the conversion in Q2 yet it's been tempered by constraints in supply of components, freight and labor availability for the first half of the year. These material supply and labor shortages are creating an increase in lead times and extending the timing of converting some orders to sales in the near-term.
This has created a larger than typical backlog for us. Gross profit for the quarter as a percentage of net sales was The decrease in gross profit is primarily related to an increase of cost and inputs and higher personnel costs compared to last year during the pandemic.
We've experienced inflation in our input costs including raw materials, labor and shipping through the year with varying ability to adjust our pricing. In addition, during the second quarter of fiscal , we had more large project sales, which generally have a lower gross profit because of the competitive nature of large projects. Last year was also different as we were utilizing furloughs, government programs and reductions to adjust capacity and manage expenses during that phase of the pandemic.
Our operating expenses have increased as we adjust our capacity to support the increased demand levels. These increases are mostly in personnel costs with some increases in travel and convention activities. Our balance sheet remained strong during the quarter. Our Board suspended dividends and share repurchase programs at the start of the pandemic and can reinstate them at their discretion.
Therefore, no cash was used during the first half of the year for these programs. As we look into the second half of fiscal , we expect some cash usage for inventory, accounts receivable and contract assets as our business activities continue to grow.
So far, the items they've produced include hats and pocket tees, and according to the line's official Instagram , their merchandise sells out pretty quickly after it drops. They have no idea how it started, where it's going next, or how to stop it. They are sorry," reads the mission statement on their website. Back in November , the actor said in an interview with YouTuber Graham Bensinger that it would focus on the psychiatrist's "connection with his son. So far, no official casting information has been released, but it sounds like Einhorn would be down to reprise that role if asked.
Last February, he retweeted a plea for him to join the reboot. In the meantime, Einhorn seems to be busy with his clothing brand, his career in show business, and his relationship with wife Alyx Andrushuk , a dancer. How to stay warm in the winter without breaking the bank.
Ethiopia lashes out at WHO chief for Tigray war remarks. Ad Microsoft. Full screen. Trevor Einhorn Played Frasier's Son. See Him Now at Microsoft and partners may be compensated if you purchase something through recommended links in this article. Einhorn has continued his acting career as an adult. He recently starred in an Off-Broadway play.
Financial engineering to enhance shareholder value is always an interesting exercise. I caution, however, that there is many a slip twixt the cup and the lip. Given the large portion of the capital structure to be taken up by the preferred, the relatively weak 3X dividend coverage and no prohibition against creation of more senior claims, the MSFT preferred might trade like junk.
And once the preferred is issued, the now more junior common will absolutely trade at an even high earnings yield that before. In any event the preferred stock idea should be measured against a more traditional use of debt leverage to buy back equity. What we found at that time at least was that the cost of capital was minimized and shareholder value maximized by targeting capital structure and interest coverage parameters in the weak single A to mid triple B credit range generally indicating 5 to 6 times pretax coverage of interest.
Clearly APPL, MSFT and many others have long ignored development of any financial policy and strategy, and any movement to light a fire under the managements is probably a good thing.
The companies have truly massive untapped credit capacity for which their shareholders are paying a price. Financial engineering would add somesignificant value,. A proper accounting will cause the specious arbitrage to evaporate.
Specifically, these attempts to minimize WACC almost universally rely on an assumption that debt beta is zero, which leads to an incorrect calculation of the cost of debt and the levered cost of equity. At Salomon I was the credit market guy who explained to corporations what I thought they could get away with, but I had Paul Pilorz, Eric Lindenberg and Marty Leibowitz , all finance Phds, running interference on the theoretical considerations; Marty, of course, is probably the most published finance academic in the world.
Markets are made by often irrational people, not mathematical formulas and, as result there are at times significant inefficiencies to be found.
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