Loews Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Lowe's Corporation second quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, please press star one on your touchtone phone. I will now turn the call over to Mary Scafidis. Please go ahead.

Thank you, Chriselle, and good morning, everyone. Welcome to Lowe's Corporation's second quarter earnings conference call. A copy of our earnings release, earnings supplement, and company overview may be found on our website, Lowes.com. On the call this morning, we have our Chief Executive Officer, Jim Tisch, and our Chief Financial Officer, David Edelson. Following our prepared remarks this morning, we will have a question and answer session with questions from shareholders. Before we begin, however, I will remind you that this conference call might include statements that are forward-looking in nature. Actual results achieved by the company may differ materially from those made or implied in any forward-looking statements due to a wide range of risks and uncertainties, including those set forth in our SEC filings. Forward-looking statements reflect circumstances at the time they are made. The company expressly disclaims any obligation to update or revise any forward-looking statements. This disclaimer is only a brief summary of the company's statutory forward-looking statements disclaimer, which is included in the company's filing with the SEC. During the call today, we might also discuss non-GAAP financial measures. Please refer to our security filings and earnings supplement for reconciliation to the most comparable GAAP measures. With that, I'd like to turn the call over to Jim Tisch, our CEO. Jim, over to you.

Thank you, Mary, and good morning. Lowe's had a strong quarter across the board with good performances from each of our consolidated subsidiaries. CNA led the pack with great results, and Boardwalk continues to benefit from strong natural gas flows. Lowe's Hotels, while still recovering from the effects of the pandemic, has bounced back smartly, especially in the resort markets, and we're starting to see some pickup from group business as well. I'm going to focus my remarks today on CNA and Lowe's hotels. As for CNA, the company continues to be a success story for Lowe's. CNA had net income of almost $370 million in the second quarter of this year, the second highest quarterly net income recorded by the company in the past 20 years. And more importantly, record high core income for the quarter. The company's underlying combined ratio decreased by almost two points over the prior year's quarter, driven by improvement in the expense ratio. CNA's P&C business generated gross written premium growth of 8%, driven by new business growth of 10%, and rate increases of 10% for the quarter. CNA had net investment income of $591 million pre-tax, compared to $534 million in the prior year's quarter. Limited partnerships had a great quarter, and the fixed income portfolio continues to provide consistent earnings, even with headwinds from the lower interest rate environment. In other words, CNA's results were truly strong. Lowe's Hotels also had a success story on its hands. within the context of its comeback from the global pandemic that devastated the hospitality industry. It's no secret that our hotel company was the subsidiary most affected by COVID-19. That being said, over the last few months, Lowe's Hotels has continued to see increased demand for leisure travel and is starting to see improving interest for group travel. For the second quarter, Total occupancy rates for owned and joint venture hotels were almost 58%, as opposed to about 35% during the first quarter of this year. While that is a big jump, obviously, we still have a ways to go before we hit pre-pandemic occupancy rates. Our resort hotels continue to do considerably better than our properties in urban settings. All in all, the good news is that by the end of the second quarter, each and every one of our hotels was open for business, albeit while facing challenges filling roles at the property level. As the U.S. economy and the hotel industry continue their recovery, we firmly believe that Lowe's Hotels will once again be a growth engine for Lowe's Corp. Our confidence in the hotel company is a reflection of our belief not only in its management, but also in its long-term growth strategy. As a reminder, that growth strategy is built on two pillars. The first pillar is the core business of Lowe's Hotels, hotels with 300-plus keys that have ample meeting space. This first pillar takes advantage of Rose's well-earned reputation for operating hotels that cater to groups. These properties are equally attractive to leisure customers and offer unique local experiences. The second pillar of hotels' growth strategy is its concentration on developing and operating hotels associated with immersive destinations. Its partnership with Universal Orlando which spans more than two decades, is a great example of the strength of this pillar. As of the end of the second quarter, Lowe's Hotels had 9,000 rooms in eight hotels on the Universal Orlando Resort Campus, and all of the properties were open and performing well. Lowe's Hotels has concentrated on adding more immersive destinations where demand for hotel rooms is strong because of the presence of a built-in demand generator, such as an adjacent sports stadium or some other attraction. One such hotel that proved to be quite resilient during the pandemic is the Live by Lowe's in Arlington, Texas, which is located a stone's throw away from two professional sports stadiums, as well as entertainment venues that draw customers throughout the year. Another significant differentiator for Lowe's hotels is its ability to be both the owner and the operator of its properties. And when I say owner, I generally mean owner and development partner. It's great when we can participate in the design phase in order to build a hotel to our exacting standards. Industry dynamics generally do not allow for companies in the hotel space to perform both the owner and the operator functions. And as a result, Lowe's Hotels is a leader within this niche of the market, playing to these strengths to serve Lowe's Hotels well, and we believe it will continue to do so. Currently, there is very little financing available for most hotel developers in the full-service hotel space. As a result, Being a well-capitalized owner-operator gives Lowe's Hotels a distinct advantage when competing for attractive development projects. As always, Lowe's Corporation invests alongside our subsidiaries when it's in the best interests of our shareholders. And we certainly believe that our investment in Lowe's Hotels' growth strategy will create long-term value. Finally, let me update you briefly on share repurchases. From April 1st through last Friday, we repurchased six and a half million shares of Lowe's common stock for just over $350 million. Year to date, we've bought back four and a half percent of our outstanding shares for $630 million. As I've often said, we believe that Lowe's still trades at a significant discount to our view of its intrinsic value. So we'll continue to let our share repurchase activity speak for itself. And with that, let me hand the call over to David.