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I'm joined by our chief executive officer, Patrick Beharelle. We use non-GAAP measures when presenting our financial results. Any comparisons made today are based on a comparison to the same period in the prior year, unless otherwise stated. Before I discuss our fourth quarter results, I want to take a moment to reflect on the past year. 2021 was an extraordinary year across many levels. As the world continued to learn how to live in a pandemic, I am very proud of the TrueBlue community for growing together to deliver solid results. The demand for our services has never been higher as businesses turn to flexible solutions to solve their workforce challenges. Despite the ongoing challenges associated with COVID, including lower worker supply and supply chain disruptions, our ongoing commitment toour digital investments and numerous operating adjustments positioned us to emerge stronger from this downturn. Revenue grew 18% for the year and is on pace to recover to pre-pandemic levels two years faster than the previous recession. New client wins at PeopleManagement and PeopleScout throughout the year and existing client recovery at PeopleReady and PeopleScout in the second half drove this growth. Compared to where we were prior to the pandemic, we now find ourselves with a stronger, more agile and more efficient business model. 2022 will be my fourth year as CEO of TrueBlue, and I've never been more optimistic about the momentum we have in the business. Now let's turn to our fourth quarter results. I am pleased to announce our fourth quarter results surpassed pre-pandemic levels. Revenue was $622 million, an increase of 20%, compared to Q4 2020 and up 5% versus Q4 2019. PeopleReady's revenue growth accelerated throughout the quarter, driven by improved worker supply and strong performance within the retail sector, while same customer demand and new customer wins continued to produce impressive PeopleScout results. These factors produced adjusted EBITDA of $36 million, an increase of $14 million compared to Q4 2020 and an increase of $15 million compared to Q4 2019. Let's take a closer look at the performance of each of our three segments, starting with PeopleReady. PeopleReady is our largest segment, representing 59% of total trailing 12-month revenue and 63% of total segment profit. PeopleReady is the leading provider of on-demand labor and skilled trades in the North American industrial staffing market. We service our clients via a national footprint of physical branch locations, as well as our JobStack mobile app. Year-over-year PeopleReady revenue was up 22% during the quarter. Compared to the fourth quarter of 2019, we recovered 99% of our revenue, which is an improvement of 15 points from the recovery rate in the third quarter of this year. Performance was boosted by improving worker supply trends and solid results within the retail vertical. For worker supply, we saw an increase in the number of applicants, resulting in a 13-point improvement from September to December in associates put to work compared to 2019. Retail results were strong during the quarter, increasing 100% year-over-year led by a seasonal surge, combined with ongoing project work. PeopleManagement is our second largest segment, representing 29% of total trailing 12-month revenue and 10% of total segment profit. PeopleManagement provides industrial staffing and commercial driving services in the North American industrial staffing market. The essence of a typical PeopleManagement engagement is supplying an outsourced workforce that involves multiyear, multimillion dollar onsite and driver relationships. Even though PeopleManagement revenue exceeded the comparable 2019 period by 4%, revenue declined 1% in the fourth quarter. This decrease is primarily due to lower same-site sales, which are being negatively impacted by recent supply chain disruptions impacting several of our clients. Turning to our third segment, PeopleScout represents 12% of total trailing 12-month revenue and 27% of total segment profit. PeopleScout is a global leader in filling permanent positions through our recruitment process outsourcing services, as well as offering managed service provider solutions. Revenue momentum at PeopleScout continued during the fourth quarter, growing 96% year over year and surpassing the comparable 2019 period by 49%. PeopleScout's strong results were driven by growth in existing client volumes of 71% year over year due to surging client demand and new customer wins. Now I'd like to shift gears and update you on our key strategies by segment, starting with PeopleReady. At PeopleReady, our most important strategy is to further digitalize our business model to gain market share and improve the efficiency of our service delivery cost structure. temporary day labor market is highly fragmented, and there are very few large players in the industrial staffing segment where PeopleReady competes, with the bulk of the market made up of smaller companies. These smaller, regional companies are typically not able to spend the type of investment required to deploy something like our JobStack mobile app. So this, along with our nationwide footprint, is what makes us a leading provider within industrial staffing. Our goal is to use JobStack to deliver value through differentiated associate and client experiences, leading to increased market share and operational efficiencies. Since rolling out the application to associates in 2017 and to our clients in 2018, associate adoption has grown to over 90%, and our JobStack client user count ended the quarter at 29,700, up 13% versus Q4 2020. We continue to focus on converting clients to heavy users. As a reminder, a heavy user has 50 or more touches on JobStack per month, whether it's entering an order, rating a worker, or approving time. Overall, heavy client users account for 56% of PeopleReady US on-demand revenue compared to 35% in Q4 2020. We've also seen continued growth in our digital fill rates, which have increased 3x since rollout to nearly 60%, with 964,000 shifts filled via the app during the quarter. With our digital strategy providing a differentiated experience, our centralized service centers to better serve existing clients and reach new ones more effectively is a major focus. As a reminder, the service centers increase our accessibility as they operate 85 hours per week versus 60 hours for a typical branch. This enhanced go-to-market approach includes repurposed job roles with the creation of dedicated, territory-based account managers who are responsible for new client acquisition and management of existing client relationships. We expect the new structure will deliver a greater sales focus and provide elevated customer service, while nonclient facing positions will be reduced, resulting in a net cost reduction. Based on progress made over the past nine months, I am excited to announce we have expanded our two service center pilots by consolidating additional branches into each. In addition, we are testing a virtual service center model and opening a service center to support our skilled trade customers and tradespeople. We view these actions as the next step in the journey. We will expand existing locations and add new ones over time as long as we are able to meet the needs of our clients and achieve a variety of operational performance metrics. We have developed a standard rollout framework to ensure service continuity for our clients and associates. This includes aligning account managers to specific territories and client portfolios in advance of go-live, adjusting service center staffing levels to ensure adequate coverage, and a robust training and quality assurance process to ensure operational and service delivery excellence. Once the service center rollout is complete, we expect annual run-rate cost savings of $10 million to $15 million. Turning to PeopleManagement, our strategy is to focus on execution and grow our client base. Last year, we sharpened our vertical focus to target essential manufacturers as well as warehouse and distribution centers and made investments in our sales teams to enhance business development activities. With these initiatives implemented, we have broadened the strategy to expand our geographic footprint by targeting more local and underserved markets. PeopleManagement secured annualized new business wins of $95 million this year, up more than 40% versus the three prior year comparable average, helping to offset recent supply chain challenges. Additionally, we are investing in customer and associate care programs in an effort to better serve our clients' needs and improve retention. Turning to PeopleScout, our strategy leverages our strong brand reputation to capture opportunities in an industry poised for growth. Many companies reduced or eliminated their in-house recruiting teams during the pandemic, and now we are seeing companies return to hybrid and fully outsourced models. Our ability to hire large volumes of workers quickly has us well-positioned. And to capitalize further, we made investments in our sales teams to expand wallet share at existing clients and obtain new clients. Our efforts are delivering results with annualized new wins of $39 million this year versus the three-year prior comparable average of $11 million. Finally, I want to quickly address vaccine mandates. On January 13, the Supreme Court blocked the Biden administration's vaccine mandate for large employers. Leading up to the ruling, we were taking the appropriate steps to comply with the mandate. As such, in the event vaccine mandates are enacted at the federal, state, or local levels, we will be prepared to service our clients. Looking forward, connecting people and work remains at the center of the TrueBlue strategy. As the economy improves and people return to work, we are excited about the prospects of the industry and our business. I'll now pass the call over to Derrek who will share greater detail around our financial results. Total revenue for Q4 2021 was $622 million, representing growth of 20% compared to Q4 2020 and growth of 5% compared to Q4 2019. This growth was driven by strong results at PeopleReady and PeopleScout. Strong overall demand, particularly in the retail sector, along with improvements in worker supply drove the PeopleReady results. While PeopleScout benefited from strong client demand, as well as turnover in the employee base of its clients. We posted net income of $20 million or $0.57 per share, an increase of $12 million compared to Q4 2020 and an increase of $11 million compared to Q4 2019. Revenue growth and gross margin expansion contributed to the net income growth in 2021. We delivered adjusted EBITDA of $36 million, an increase of $14 million compared to Q4 2020 and an increase of $15 million compared to Q4 2019. Adjusted EBITDA margin was up 160 basis points compared to Q4 2020 and up 230 basis points compared to Q4 2019, with growth in 2021, again, driven by revenue growth and gross margin expansion. Gross margin for Q4 2021 of 26.8% was up 350 basis points. Our staffing segments contributed 310 basis points of margin expansion, comprised of 110 basis points from lower workers' compensation costs mainly due to favorable development of prior-period reserves; 70 basis points from favorable bill/pay spreads; 70 basis points from increasing PeopleReady sales mix, which carries a higher margin than PeopleManagement; and 60 basis points from PeopleReady customer mix. Higher PeopleScout sales mix contributed the remaining 40 basis points of expansion. SG&A expense increased 33%, which was higher than our revenue growth of 20% due to the magnitude of the cost actions taken in Q4 last year. As a reminder, in Q4 2020, our cost management actions produced a decline in SG&A of 22%, which outpaced the revenue decline of 12% for the quarter. As we anniversary these cost reductions, we expect SG&A growth to moderate. SG&A as percentage of revenue in Q4 2021 improved by 30 basis points in comparison with Q4 2019. Our effective income tax rate was 21% in Q4, which was slightly higher than expected due to lower tax credits. Turning to our segments, PeopleReady revenue increased 22%, while segment profit increased 69%, and segment margin was up 210 basis points. PeopleReady revenue growth accelerated throughout the quarter, driven by improved worker supply and high demand in the retail sector. Revenue in the retail sector increased 100% year over year, largely due to a seasonal surge from one client, which contributed about half of the retail sector growth, or 4 percentage points of growth for the PeopleReady business, which we do not expect will carry into the first quarter. The rest of the retail growth came from a combination of retail and distribution-related support, as well as store remodels. Revenue growth trends were also favorable across most industry sectors and geographies. Segment profit margin benefited from lower workers' compensation costs and positive bill/pay spreads. PeopleManagement revenue decreased 1%, while segment profit decreased 20%, with 60 basis points of margin contraction. Same-site sales are being negatively impacted by supply chain disruptions, which created a drag of approximately 4 percentage points during the quarter. This headwind is being offset by solid performance from commercial driving services and new business wins. The decline in segment profit margin is a function of the decrease in same-site sales, which carries a higher margin than new business wins due to the associated implementation costs, as well as higher employee-related costs reinstated during 2021 that were temporarily cut during 2020. PeopleScout revenue increased 96%, with segment profit up $7 million and over 300 basis points of margin expansion. During the quarter, same customer demand surged 71% year over year. Of the increase, approximately 15 percentage points was related to clients catching up to pre-pandemic hiring levels. Operating leverage from higher sales volume contributed to the improvement in year-over-year segment profit margin. Now let's turn to the balance sheet and cash flows. Our balance sheet is in great shape. We finished the quarter with $50 million in cash and no outstanding debt. While we experienced an improvement in net income this year, cash flow from operations is down, primarily due to the repayment of 2020 employer payroll taxes that were allowed to be deferred as part of the CARES Act and higher accounts receivable associated with our revenue growth. Days sales outstanding increased three days compared to last year, which was a multiyear low but was one day lower than Q4 of 2019. During the quarter, we repurchased $17 million of common stock and $13 million was purchased during the first quarter of this year. The board of directors also authorized an additional $100 million in share repurchases, which we intend to complete over the next three years. We are in the early stages of redesigning our PeopleReady technology platform to better support our digital strategy and new service center model. This investment will replace a 20-year old internally built system and improve our ability to interact with clients and associates, which will also help us run our business with fewer branches. In the first quarter, we expect approximately $3 million in operating costs as we prepare to implement this system at the end of this year and roughly $10 million for the full year. Once the system implementation is complete, we do not expect these costs to continue. And as such, we are excluding them from our adjusted EBITDA and adjusted net income results. In connection with this transition, we are accelerating the depreciation of the existing systems that will be replaced by the new technology platform. We expect $2 million in accelerated depreciation for full year 2022. The accelerated depreciation will be excluded from our adjusted net income results. As we head into 2022, we are optimistic about the business. Our services are in high demand, and with the supply of workers improving, we are better able to meet customer demand. And our technology strategies are creating competitive differentiation and additional operating efficiencies to further enable sustainable growth.

q4 earnings per share $0.57. q4 revenue rose 20 percent to $622 million.

These statements are subject to numerous risks and uncertainties as described in Pebblebrooks' SEC filings, and future results could differ materially from those implied by our comments. We'll discuss non-GAAP financial measures during today's call, and we provide reconciliations of these non-GAAP financial measures on our website at pebblebrookhotels.com. On to the highlights of the second quarter. Well, we're deep into the summer travel season, and it's clear that the leisure traveler is back and with a vengeance, and that business travel is gaining momentum as well. Overall demand in the second quarter was robust and much stronger than we expected just 90 days ago. Same-property revenues of $162.5 million were down 57.8% versus the same period in 2019. This was a significant improvement from the first quarter when same-property revenues were down 74.7% versus 2019. Sequentially, same-property revenues grew 95.4% from Q1 to Q2. More encouraging is the accelerating demand that we experienced throughout the quarter. June same-property revenues were more than 50% higher than April, and July is expected to be almost 20% higher than June, an encouraging turnaround in such a short time. These increases are not just at our resorts but also at our urban hotels. We have seen a resurgence in business travelers as they are clearly getting back on the road, and we expect this trend of improved business demand, both transient and group, to continue during the third quarter. We anticipate leisure demand to slow down post Labor Day as is typical with the end of summer when kids return to school. Obviously, the Delta variant and its impact on travel demand for the fall is hard to forecast today, but we have not seen or experienced any notable declines in booking trends or cancellations so far. Jon will provide insight on our current post-summer booking trends later in the call. This accelerating strength in hotel demand during the second quarter allowed us to generate $17.1 million of adjusted EBITDA. This is a dramatic improvement compared with a negative $25 million of adjusted EBITDA for the first quarter of 2021 and demonstrates the rapid turnaround for our portfolio, and the results improved substantially every month throughout the quarter. This is critical as we live in a sequential recovery world right now. Adjusted FFO per share was a negative $0.12 per share, better than the negative $0.42 per share from the first quarter. Most encouraging, we generated positive corporate cash flow in June, and we expect to generate positive adjusted FFO and cash flow in the third quarter. Drilling down to our hotel operating results for same-property RevPAR versus the comparable period in 2019, April was down 66.3%, May was down 60.1% and June was down 51.6%. We're forecasting July to be down 38% to 42%, continuing the very positive recovery trend. For the third quarter, we currently expect RevPAR to also be down between 30% and 42% compared with the comparable period in 2019, which also continues the improving quarterly trend. Total hotel level expenses of $134.2 million were reduced by 45.1% versus Q2 2019. Expenses before fixed costs, like property taxes and insurance, were cut by 50.9%. Our total property-level expense reduction was 78% of the revenue decline and 88% before fixed expenses, pretty incredible, frankly. Our eight resorts generated a positive $28.4 million of hotel EBITDA in the quarter. This resulted from an occupancy of 66% at an average daily rate of $386, which is more than $107 and a 38% increase over the comparable 2019 second quarter. As a result, total revenue per occupied room was 17% higher than Q2 2019. This allowed our resorts to produce $28.4 million of EBITDA in the second quarter, a 17.5% increase over the comparable period in 2019 and a $13.9 million improvement almost doubling from Q1. EBITDA margins were up an impressive 622 basis points from Q2 2019. Urban hotels also made great strides during the second quarter as well. Occupancy was 33.3%, ADR reached $198 and total revenues were $91.6 million. Urban hotels were just under the breakeven level in second quarter with a negative EBITDA of just $0.8 million. Yet in our sequential world, our urban hotels achieved $5.3 million of EBITDA in June with a 43.5% occupancy and a $210 ADR. Impressive results considering the still low occupancy levels in our urban markets and operationally, not something we would have thought possible before the pandemic started. We had general managers parking cars and cleaning floors, directors of sales moonlighting as front desk agents and many other managers cleaning rooms, serving guests and performing many other jobs that our hourly employees previously did. This is not anything they signed up to do. But with a shortage of hourly workers, our dedicated and committed hotel management teams stepped in. Our company's management team, Board and our shareholders greatly appreciate their leadership and their self-sacrifice. Shifting to our capital improvement program. In the second quarter, we completed an $11.7 million redevelopment of L'Auberge in Del Mar in South California. In early July, we completed -- we commenced the $25 million transformation of Hotel Vitale to 1 Hotel San Francisco and a $15 million comprehensive guest room renovation at the Southernmost Resort in Key West. We expect the 1 Hotel to be completed by the end of this year and Southernmost early in the fourth quarter. For 2021, we anticipate reinvesting a total of $70 million to $90 million in the portfolio, which is in line with our prior estimate. Shifting to our investments program. You may have noticed that we had a busy quarter taking care of business. On April 1, we completed the Sir Francis Drake Hotel sale in San Francisco. And then on June 10, we closed on the sale of our leasehold interest in the Rouge, New York. And last week, we executed a contract to sell Villa Florence San Francisco on Union Square. Combined with previous sales we completed since June of last year, this represents approximately $330 million of sales proceeds to reallocate into other assets. And as we previously announced, we've already had two reinvestment opportunities that we believe would generate substantially better risk-adjusted returns for our shareholders. In late June, we executed a contract to acquire Margaritaville Hollywood Beach Resort in Hollywood, Florida for $270 million. This acquisition is anticipated to be funded from existing cash on hand and through the assumption of $161.5 million of favorably priced existing nonrecourse property debt. We are targeting to complete this acquisition by the end of Q3. And last week, we completed the acquisition of the iconic Jekyll Island Club Resort for $94 million. Jon will provide more detail on why we're excited about this investment and the upside opportunities of this unique resort. As a result of these property sales and acquisitions and assuming Villa Florence is sold and Margaritville is acquired, our 10 resorts will comprise roughly 23% to 24% of our 2019 same-property EBITDA. Our San Francisco share in 2019 dollars were declined to 19% with 10 properties, and our Southeast focus will increase to 15% with five resorts and one hotel. Of course, the world moving forward will be different, and we expect these 10 resorts will likely represent a more significant percentage of our EBITDA on a go-forward basis than they did in 2019. Turning to our balance sheet and liquidity. We are also taking care of business in this area. On May 13, we raised $230 million of capital through our 6.375% Series G preferred equity raise. On July 27, we successfully raised $250 million through our 5.7% Series H preferred equity raise, the largest preferred offering ever in the lodging space and equal to the lowest rate ever. This raise refinances an equivalent amount of higher price redeemable preferable securities, our 6.5% Series C preferred shares and 6.375% Series D preferred shares. This effect of $250 million swap will reduce our preferred dividend payments by approximately $1.8 million annually or $0.014 per share. After completing our Jekyll Island Resort acquisition, we have approximately $875 million of liquidity, which includes roughly $230 million of cash on hand and $644 million available on our unsecured credit facility. We also have approximately $235 million of reinvestment proceeds available under our current bank arrangements. We're proud of the tremendous progress we've made strengthening our balance sheet, reducing near-term debt maturities and lowering our cost of capital through our various preferred refinancings and convertible notes offerings while also increasing our liquidity. This positions us to take advantage of additional new investment opportunities as they become available. So, I thought I'd focus on what we're currently seeing in our business and how we think the rest of the year is likely to play out. Though the path continues to be a path with uncertainty given the rise of the Delta variant. We're certainly very encouraged by the consistent increases in demand we've experienced each month, the robust level of leisure demand that is well outpacing 2019 levels, the continuing acceleration in business travel and forward bookings, our ability to push our average rate closer and closer to 2019 levels and our ability to operate our hotels with new operating models and greater efficiencies. In Q2, occupancies rose significantly every month on a sequential basis, even as we opened our remaining hotels in softer markets in our portfolio. Those gains drove RevPAR higher as rates also gradually increased. April RevPAR was 22.4% higher than March, may was 20.3% higher than April and then June rose even more, up 32.1% to May. We think July will be up 25% to June. We estimate that business travel doubled from the first quarter and probably recovered to about 30% to 40% of 2019 levels by the end of the second quarter. The airlines who certainly have more visibility than our industry have indicated they believe that business travel will improve to 50% to 60% of 2019 levels by the end of the third quarter, with further improvement through the end of the year and into next year. Their forecast seems reasonable given the bookings we've been seeing and the significant advances each month in urban weekday occupancies, which improved from 24.5% in March to 39% by June, and they look like they'll be up to around 47% or 48% in July. Overall, urban occupancy rose from 29.5% in March to 43.8% in June, just below our overall portfolio occupancy for June of 46.4% July looks to be over 52%. Most companies have already changed their travel policies, allowing either vaccinated employees or all employees to travel again. Our property teams report seeing travel from most of our corporate accounts throughout our portfolio. Businesses are definitely getting back to travel, both transient and group. For our portfolio, we saw continuing improvement in all of our markets and at all of our properties. But outside of our resorts, we saw the most advances in Boston, San Diego, Los Angeles, Seattle and Portland. Chicago, San Francisco and D.C. are recovering more slowly, primarily a result of their later reopenings. We believe the recovery is about three to four months behind the faster-recovering urban markets. In July, looks like occupancies at our properties in San Francisco will average around 30%; L.A., 64%; San Diego, 74%; Portland, 58%; Seattle, 58%; D.C., 34%; and Boston at 66%. Boston has recovered very strongly in the last two months. We're also encouraged that we're seeing forward transient bookings pick up as well as the leisure customer feels increasingly confident about booking vacations and leisure trips further out. The lengthening of the booking window gives us more visibility to schedule our staff and operate our hotels better, and it improves our ability to revenue-manage more confidently and push rate more. When it comes to room rates, we've seen consistently strong growth in ADRs throughout our portfolio. All eight of our resorts are achieving significant increases over 2019 levels. Ray already discussed their combined rates in Q2, so I won't repeat that, but I thought I'd provide some impressive specifics because not only is the rate growth at our resorts a result of leisure compression and a general lack of consumer rate resistance, but it's a result of the repositioned nature of our resorts following large investments we made improving these very unique properties. For example, ADR year-to-date at LaPlaya in Naples is up $159 or 34% from the first half of 2019. And ADR for business on the books in both Q3 and Q4 is ahead by a whopping $250 versus same time 2019 or roughly 100% increase in Q3 and 70% in Q4. Over the year, LaPlaya has consistently climbed higher in the TripAdvisor traveler rankings, reflecting the increasing desires of leisure guessing groups to choose our redeveloped and more luxurious resort. And consider this, total room revenue currently on the books at LaPlaya is $5.8 million ahead of total room revenue achieved for all of 2019, and we're only in July with five more months to book into this year. On the other side of the country, at L'Auberge Del Mar in Southern California, where we just completed a highly impactful $11.7 million luxury redevelopment in Bay. We're booking at dramatically higher rates as we reposition this property to an even higher tier. In June, we achieved an average rate $258 or 66% higher than for June 2019. July is running even higher. Rate currently on the books for July is at $878. That's $372 or 73% higher than July 2019. This past weekend, the resort ran 97% at a rate handily over $1,000. At Paradise Point just down the road in Mission Bay, San Diego, Q3 ADR on the books is currently at $450 versus $269 for Q3 2019. Transient revenue on the books for 2021 is already $2.8 million ahead of total transit revenue achieved for all of 2019. Just across the water from Paradise Point at San Diego Mission Bay Resort, which was a Hilton when we acquired LaSalle and where a year ago we completed a $32 million multiphase transportation -- transformation of the property into a luxury independent resort, ADR is climbing as well compared to 2019. In Q2, we achieved a 23% higher rate than Q2 2019 as we established this new independent resort and gained significant ADR share versus our market competitors. For Q3, as we gain momentum, ADR is the books is currently ahead by $115 or 46% compared to Q3 2019. At The Marker in Key West, we've also gained ADR and RevPAR share on our competitors following the $5 million of upgrades we made in 2019 at this small 96-room resort. In Q2, ADR was up 45% or $143 to $459 compared to $316 in Q2 '19. The third quarter is running $157 or 65% higher versus Q3 2019. And I could go on and on about our other resorts as well. But we've been pushing rates higher at our urban properties as well as leisure and business travel returns to cities. While in most cases we haven't yet achieved rates higher than 2019, we have grown our city ADR significantly since the pandemic recovery earlier this year, even as we reopened our hotels in the slower-to-recover markets, like Chicago, San Francisco and D.C. Average rate for our urban hotels has grown every month from a low of $155 in January to $158 in February to $160 in March to $175 in April, $196 in May and finally reaching $206 in June. In July, we look to be up again as ADR achieved at our urban properties has increased another 10% from June at $227 through July 25, and rate on the books for the fall is running even higher. Some of our better-quality and recently redeveloped urban properties, which also have strong leisure appeal, are closing in on 2019 rates. At The Nines in Portland, where our luxury collection hotel is the market rate leader and the only luxury property in the city, ADR in the second quarter was down just 7% in Q2 at $250 and our rate on the books is currently running 9% higher than third quarter 2019, the Nines benefits from its number one position in the city and its high-quality suites and event spaces that appeal to high-end leisure and business travelers. We're also seeing both leisure and business travelers buy up to suites in higher-priced rooms, and that is helping us as our unique lifestyle urban properties recover rate more quickly than more typical commodity hotels in our markets. At the Mondrian in West Hollywood, where we completed a major comprehensive renovation just two years ago, ADR in Q2 recovered to within 4% of Q2 2019. Third quarter ADR in the books at Mondrian is currently within 1% of same time 2019 and Q4 rate is up over 10% compared to same time 2019. Le Parc in L.A., which received an $80,000 per key upgrading and repositioning just a year ago, is also closing in on 2019 rates on its way to even higher rates. In Q2, ADR was down just 5.5% from Q2 '19. Q3 is looking to close the gap further and Q4 rates on the books are running ahead of Q4 same time 2019. In Boston, at The Liberty, which is one of the most unique and popular higher-end properties in Boston, we've achieved a $332 ADR month-to-date through July 25, and it's doing this at an impressive 86% occupancy level. While we're not yet back to the $375 rate and 97% occupancy we achieved in July 2019, The Liberty, like our other properties in Boston, has certainly come back a long way from January's 30% at $186 and April's 61% at $210. I could provide more examples of the individual property results that are behind the urban portfolio ADR recovery we're achieving, but we must move on. As you know, this downturn is unlike any prior cyclical downturn and it would seem that this recovery will be unlike any prior recovery. With robust macroeconomic fundamentals, the consumer with record amounts of savings, net worth and a pent-up desire to travel and vacation and with business profits at record levels and businesses with a significant pent-up desire and need to travel, we believe it's likely that this recovery will be swift with demand returning much more quickly than we previously thought and rates recovering much more rapidly as well as evidenced by the progress we've already made on rates. In fact, we're currently forecasting that July's same-property ADR will reach $270 to $275, which will exceed July 2019's ADR by $5 to $10. We expect to continue to benefit from the quality and uniqueness of our properties, their strong appeal to both leisure and business travelers and the vast repositioning investments we made in the last few years, those we're currently making and those upcoming repositionings we expect to undertake and complete in the near future. Of course, the benefit of gaining rate back quickly and gaining material rate share at all of our recently repositioned hotels and resorts is gaining an ability to drive profitability and margins much higher than 2019 and do it much more quickly than in a typical cyclical recovery. Not only have we rebuilt our individual property business models to operate more efficiently, but gains in our rates will naturally flow much more substantially to the bottom line. We've also achieved efficiencies from creating operating clusters in various markets, which is something we started pre-pandemic. Because of the turnover that took place following the shutdown of our properties last year and the rebuilding this year, we've been able to cluster even more of the senior positions where we have multiple properties with the same operator in the same market. These clustered positions often include general management, sales and marketing, revenue management, food and beverage, HR, accounting and even engineering. Our properties in Santa Monica, San Diego, Portland, San Francisco, Seattle and D.C. have almost all been clustered, yielding significant operating synergies while optimizing performance through the increased quality of the overall clustered personnel. These savings are permanent and run in the hundreds of thousands of dollars per clustered property. Ray already talked about the operating cost savings achieved in Q2 versus our revenue shortfalls compared to 2019, so I won't repeat those numbers. But when we look forward, we expect to continue to close the gap on EBITDA margins to 2019 as revenues and room rates continue to recover. For example, in June, with total revenues down 50% from 2019, our hotel EBITDA margin was 23.7%. But for July, with 20% sequential growth in revenues, our hotel EBITDA margin should recover to around 27% to 28%. While this is still lower than the 35.5% achieved in July 2019, it's a heck of a lot closer in a much shorter time than we were expecting just three months ago. In addition to transient, group is returning as well, and we've begun to see in the month for the month business group bookings in addition to an increasing volume of business group leads, RFPs, site visits, request for contracts and bookings. While we're not yet booking at pre-pandemic levels, activity has been progressing toward those prior levels, and bookings each month for this year and next year are increasing monthly. Yet not surprisingly, group revenue on the books for Q3 and Q4 is down about 64% and 54%, respectively, versus same time in 2019 for the same quarters. Group on the books for 2022 has been growing. And as of July, we had about 32% fewer group nights on the books, but it's at a 5% higher ADR as compared to the same time in 2018 for 2019. The group deficit is not surprising given corporations are just beginning to get back to their offices and refocus on booking group meetings. This gap should begin to shrink later this year as businesses gain confidence in getting back to normal. We expect group bookings to be more short term until behavior stabilizes at the new normal. Citywides are booking rooms throughout our markets in 2022, including in cities like San Francisco, where 2022 kicks off with the JPMorgan Healthcare Conference in early January where groups have been actively booking rooms at our hotels for the conference. With June achieving positive cash flow and therefore, positive FFO, the recovery has progressed faster than we expected. And if the Delta or some other variant doesn't drive our economy and mitigation measures backwards, we certainly expect room revenues, total revenues and EBITDA to continue to recover. In Q3, EBITDA should continue to climb from June as previously discussed. August is likely to flatten out or decline slightly, including in terms of its percentage recovery to '19 as the prime vacation season winds down in the second half of the month and kids presumably begin to go back to school. While at the same time, we don't expect business travel gains to accelerate until the post Labor Day period. September should then pick up the recovery pace, particularly after the Jewish holidays by mid-month, which should continue through the rest of the year as business travel continues its recovery and leisure travel and social groups remain at elevated levels. When we think about 2022, we're focused strategically on the year being a very strong recovery year overall. Group should be very healthy as we believe there's a great deal of pent-up demand. We also think that leisure will continue to be robust with continuing pent-up demand for vacations and getaways, while outbound international travel probably remains more limited. This means we don't expect rate discounting in 2022. Again, this is the -- with the obvious caveat that we get to relatively normal behavior by the end of this year and it remains relatively normal next year. As it relates to the few remaining redevelopment projects we deferred due to the pandemic, we're continuing to complete plans and permitting and will likely pull the trigger on these few remaining projects as soon as the approvals are complete and it's the right time of year to commence them. All of our redevelopments and transformations, including a large number in the last few years, and all of the current and upcoming projects will provide very significant upside for our portfolio over the next few years as the recovery rolls forward. Importantly, the vast majority of the dollars for these projects has already been invested. As we look at the silver lining of potential upside from the crisis, we continue to expect there will be significant opportunities over the next few years to acquire highly desirable properties at the lowest risk time in the cycle at attractive returns with significant upside opportunities for us to use our expertise to improve performance. In this regard, as previously announced, we've been successful tying up two very unique resort properties that we believe have very significant upside from operational and physical improvements, including numerous opportunities to remerchandise them, add and enhance amenities and better utilize both indoor and outdoor areas to drive higher rates, more revenues and increased EBITDA and NOI. We believe the Jekyll Island Club Resort we just acquired last Thursday is the quintessential Pebblebrook investment. That being an extremely unique lifestyle independent property with an almost unlimited list of opportunities that we'll be able to execute on for many years to come. In this case, very similar to what we've been accomplishing at Skamania Lodge over the last 10 years and with much more to come there as well. Some of these opportunities include upscaling the rooms throughout the resort, transforming the Ocean Club property into a more exclusive resort as well as dramatically improving each of the three mansion buildings to create a more elevated and more personalized service experience that takes advantage of each building's unique historic architecture and interior finishes. This would be similar to what we did with the two historic bread and breakfast buildings at Southernmost Resort in Key West where we consistently achieve $100 to $200 or more in rate premiums than the rest of the resort because of the higher personal service and special exclusive club atmosphere that was created and that higher-end guests find very appealing. Jekyll Island itself has been growing as a desirable drive-to regional vacation and meeting market as the improvements on the island and those currently planned by the Jekyll Island Authority drive the increased desirability of this unique island destination. We're extremely excited about this acquisition, bringing on Noble House as our operating partner and the vast number of improvements that we'll be planning and executing together. As a reminder, Noble House operates a long list of independent, unique, high-end resorts and hotels, including LaPlaya Beach Resort & Club, San Diego Mission Bay Resort and L'Auberge Del Mar with us. As it relates to the upcoming acquisition of Margaritaville Hollywood, we'll be in a position to discuss the opportunities there in more detail once the acquisition is completed. We continue to be active in our pursuit of additional new investment opportunities, and we'll be sure to update you as and if we are successful. We believe we have significant competitive advantages pursuing new investments opportunities as they arise. These include our ability to operate our properties more efficiently than the vast majority of buyers, the additional cost savings from the economies of scale generated by curator, our unique strength in redevelopments, transformations and independent or small brand lifestyle hotels, our vast number of operator relationships and our high-profile and very positive reputation in the industry. And with that, we'd now like to move to the Q&A portion of our call. So Donna, you may now proceed.

reported core funds from operations (core ffo) per share of $0.51 for quarter. introducing 2022 financial guidance of $1.97 to $2.07 per diluted share of core ffo.

Both of these documents are available in the Investor Relations section of applied.com. In addition, the conference call will use non-GAAP financial measures, which are subject to the qualifications referenced in those documents. We appreciate you joining us and hope you're doing well. I'll start today with some perspective on our first quarter results, current industry conditions, and company-specific opportunities. Dave will follow with more specific detail on the quarter's performance and provide some additional color on our outlook and guidance. And then, I'll close with some final thoughts. In the early fiscal 2022, we are executing well and making progress on our strategic initiatives. We reported record first quarter sales, EBITDA and earnings per share, as well as another strong quarter of cash generation despite greater working capital investment year-to-date. As widely evident across the industrial sector, inflationary pressures and supply chain constraints are presenting challenges as industrial production and broader economic activity continues to recover. Nonetheless, we are in a strong position to handle these conditions and believe the current backdrop is reinforcing our value proposition and long-term growth opportunity. As it relates to the quarter and our views going forward, I want to emphasize a few key points that continue to drive our performance. First, underlying demand remains positive. Second, our industry position, operational capabilities, and internal growth initiatives are supporting results. And third, we continue to benefit from efficiency gains and effective channel execution. In terms of underlying demand, trends remain favorable across both our segments during the quarter. Industrial supply chain constraints are having some impact on the timing of demand flowing through to sales, though solid execution and our favorable industry position, still drove an over 16% organic increase in sales versus prior year levels. And stronger growth on a two-year stack basis relative to recent quarters. This positive momentum has continued into our fiscal second quarter with organic sales month-to-date in October up by a mid-teens percent over the prior year. As it relates to customer in markets, trends during the quarter were strongest across technology, chemicals, lumber and wood, pulp and paper and aggregate verticals. In addition, we continue to see stronger order and sales momentum across heavy industries, including industrial machinery, metals and mining, providing incremental support to our sales growth in the early fiscal 2022. Forward demand indicators also remain largely positive. [Technical Issue] activity across our service center network is holding up well, despite sector wide supply chain pressures. We believe this partially reflects the diversity of our customer mix, as well as sustained MRO demand as customers catch up on required maintenance activity, provide greater facility access, and continue to gradually release capital spending. Our ability to provide strong technical and local support, inventory availability and supply chain solutions, places our service center network in a solid position to address our customers' evolving needs near term, while helping them prepare and execute growing production requirements over the intermediate to long-term. In our Fluid Power and Flow Control segment, we continue to see strong demand from the technology sector. This includes areas tied to 5G infrastructure and cloud computing, as well as direct solutions we are providing to semiconductor manufacturing. Customer indications and related outlooks across the technology end market remained robust, reflecting various secular tailwinds and production expectations continue with an ongoing recovery and longer and later cycle markets such as industrial OE and process flow. We believe the underlying demand backdrop across our fluid power and flow control operations remains favorable. In addition, we're seeing strong growth indications across our expanding automation platform. The current tight labor market, combined with evolving production considerations post the pandemic, is driving greater customer interactions and related order momentum for our automation solutions. We remain focused on expanding our automation reach and capabilities, both organically and through additional M&A. During the quarter, we announced the tuck-in acquisition of RR Floody Company, a regional provider of advanced automation solutions in the U.S. Midwest. The transaction further optimizes our footprint and strategy across next generation technologies, including machine vision and robotics. Overall, the demand environment remains positive and we're seeing ongoing contribution from our internal growth initiatives. That said, we expect supply chain constraints to persist across the industrial sector near term. Lead times remain extended across certain product categories, driving component delays and an increase in fulfillment timing. We saw greater evidence of this across both our segments during the quarter. Our teams are effectively managing through these issues to date, as reflected by our first quarter results, as well as our ability to increase operational inventory levels in the U.S. by 6% during the quarter. Our products are primarily sourced across North America, limiting our direct exposure to international freight and supply chain dynamics. Our technical scale, local presence and supplier relationships are key competitive advantages in the current backdrop, providing a strong platform to gain share as the cycle continues to unfold. The broader supply chain backdrop is also increasing inflationary pressures across our business, both through the products we sell and the expense we incur to support our competitive position and growth initiatives. We saw ongoing supplier price increases develop during the quarter, with indications of additional increases in coming quarters. Our price actions, strong channel execution and benefits from productivity gains are helping offset current inflationary headwinds, as reflected by solid EBITDA growth and EBITDA margin expansion during our first quarter. We continue to take appropriate actions to offset these headwinds. Overall, we are encouraged by our ongoing execution. First quarter results highlight the strength of our position and company-specific earnings potential despite broader challenges industrywide, and reinforce our ability to progress toward both near term and long-term objectives in any operational environment. Combined with a strong balance sheet, increasing order momentum exiting the quarter, and greater signs of secular growth tailwinds across our business, we remain positive on our potential going forward. This will serve as an additional reference for you as we discuss our most recent quarter performance and outlook. Turning now to our results for the quarter. Consolidated sales increased 19.2% over the prior year quarter. Acquisitions contributed 2.1 percentage points of growth, and foreign currency drove a favorable 80 basis point increase. The number of selling days in the quarter was consistent year-over-year. In many of these factors, sales increased 16.3% on an organic basis. On a two-year stack basis, [Technical Issue] positive in the quarter and strengthened from fiscal '21 fourth quarter trends. As it relates to pricing, we estimate the contribution of product pricing on a year-over-year sales growth was around 140 basis points to 180 basis points in the quarter. As a reminder, this assumption only reflects measurable topline contribution from price increases on SKUs sold in both periods, year-over-year. On a two-year stack basis, segment organic sales were up nearly 2%, an improvement from fiscal '21 fourth quarter trends. And markets such as lumber and forestry, open paper, chemicals, aggregates, and food and beverage had the strongest growth on a two-year stack basis during the quarter, while our primary metals, machinery, and mining are showing greater improvement, both year-over-year and sequentially. In addition to solid sales performance in our U.S. service center operations, we saw favorable growth across our international operations, which contributed to the segment's topline performance in the quarter. Within our Fluid Power and Flow Control segment, sales increased 24% over the prior year quarter with acquisitions contributing 6.6 points of growth. On an organic basis, segment sales increased 17.4% year-over-year and 6% on a two-year stack basis. Segment sales continue to benefit from strong demand within technology end markets, as well as across life sciences, chemical and agricultural end markets. Sales trends within primary metals and refinery end markets, also improved nicely during the quarter, partially offset by moderating trends across certain transportation vertical. By business unit segment, growth was strongest across fluid power and automation. In addition, demand across our later and longer cycle flow control operations continues to improve, with customer quote activity and order momentum building through the quarter. Extended supplier lead times and inbound component delays had some effect on segment sales growth during the quarter, though the overall impact remains limited and manageable to date. Moving to gross margin performance, as highlighted on page eight of the deck. Gross margin up 28.6% declined 22 basis points year-over-year. During the quarter, we recognized LIFO expense of $3.6 million compared to $1.1 million of expense in the prior year quarter and a $3.7 million LIFO benefit in our fiscal '21 fourth quarter. The net vital headwind had an unfavorable 25 basis point year-over-year impact on gross margins during the quarter. LIFO expense was higher than expected during the quarter, reflecting supplier product inflation and a greater level of strategic inventory expansion year-to-date. Excluding the impact of LIFO, gross margins were relatively unchanged year-over-year, and up sequentially, reflecting strong channel execution, pricing actions, and ongoing progress with internal margin initiatives. Turning to our operating cost. Selling, distribution and administrative expenses increased 10.6% year over year, or approximately 7% on an organic constant currency basis. SG&A expense was 20.3% of sales during the quarter, down from 21.9% in the prior year quarter. We had another solid quarter of SD&A expense control, reflecting our leaner cost structure following business rational vision [Phonetic] taken in recent years, as well as benefits from our operational excellence initiatives, shared services model, and technology investments. These dynamics are helping mitigate the impact from inflationary pressures, higher employee-related expenses, lapping a prior year temporary cost actions, and normalizing medical expense. Combined with improving sales and effective price cost management, EBITDA grew 31% year-over-year, while EBITDA margin of 9.9% was up 89 basis points over the prior year. Including reduced interest expense and a slightly lower tax rate, reported earnings per share of $1.36 was up 52% from the prior year. Moving to our cash flow performance and liquidity. Cash generated from operating activities during the first quarter was $48.6 million, while free cash flow totaled $45 million or 85% of net income. We had a strong quarter of cash generation considering creating greater working capital investment year-to-date, including a strategic inventory build during the quarter to support growth and address supply chain constraints. We continue to benefit from our working capital initiatives and solid execution across our business. Our cash performance and outlook continues to support capital deployment opportunities. During the quarter, we deployed a total of $36 million on share buybacks, debt reduction, dividends, and acquisitions. With regards to share buybacks, we repurchased nearly 77,000 shares for approximately $6.5 million. We ended September with just over $247 million of cash on hand and net leverage at 1.7 times adjusted EBITDA, which is below the prior year level of 2.1 times and the fiscal '21 fourth quarter level of 1.8 times. Our revolver remains undrawn with approximately $250 million of capacity and an additional $250 million accordion option. Combined with incremental capacity on our AR securitization facility, an uncommitted private shelf facility, our liquidity remains strong. Turning now to our outlook. This includes earnings per share in the range of $5 to $5.40 per share based on sales growth of 8% to 10%, including a 7% to 9% organic growth assumption, as well as EBITDA margins of 9.7% to 9.9%. We are encouraged by our year-to-date operational performance and remain focused on our growth, margin, and working capital initiatives. Combined with our favorable industry position, ongoing order momentum, and forward demand indications, our fundamental outlook and underlying earnings potential remain firmly intact. That said, as previously highlighted, LIFO expense year-to-date is running higher than our initial expectations, assuming fiscal Q1 LIFO expense levels of $3.6 million sustained for the balance of the year. This would result, in LIFO expense representing an approximate 40 basis point year-over-year headwind on EBITDA margins, compared to our initial expectation up 20 basis points to 30 basis points. Combined with ongoing uncertainty from industrial supply chains and inflationary pressures, we currently view the midpoint of earnings per share guidance as most reasonable from a directional standpoint pending additional insight into how the year progresses. In addition, based on month-to-date sales trends in October, and considering slightly more difficult comparisons in coming months, we currently project fiscal second quarter organic sales to grow by a low double-digit to low teen percentage over the prior year quarter. We expect gross margins will be down slightly on a sequential basis during the second quarter, assuming a similar level of LIFO expense as the first quarter. This would be directionally aligned with normal seasonal trends. Further, we expect SD&A expense will be flat, to up slightly on a sequential basis, compared to first quarter levels of approximately $181 million. Lastly, from a cash flow perspective, we continue to expect free cash flow to be lower year-over-year in fiscal 2022 compared to fiscal 2021 as AR levels continue to cyclically build and we replenish inventory. That said, we are encouraged by our first quarter cash flow performance and continue to drive working capital initiatives as a partial offset across our business. Overall, we are encouraged by how we started the year and what we see entering our fiscal second-quarter. Order momentum remains firm across our businesses, our fluid power backlog is at record levels, and we are effectively building inventory to support our growth opportunities. Our increased exposure to technology end markets is driving greater participation in secular growth tailwinds, while our later cycle Flow Control business is seeing increased activity across key market verticals. We're also making great progress in building our automation platform, including organically as customer and supplier relationships continue to develop and broaden across new industry verticals, and within our legacy end markets. Customer outlooks on underlying demand and capital spending, remain largely favorable over the intermediate term and we're on track to achieve our initial guidance provided in mid-August. As is common across the industry right now, we're dealing with inflationary pressures, supply chain constraints, and lingering COVID related impacts. As our historical track record and first quarter results show, we know how to execute in any environment. In addition, I believe our strategy on our ongoing initiatives will prove out further in this environment as the industrial economy continues to evolve both cyclically and structurally. The breadth and availability of our products, combined with our leading technical solutions and localized support, is a significant competitive advantage right now. We look to leverage these capabilities across our expanded addressable market during these dynamic times and in years to come. At the same time, our balance sheet and liquidity provide strong support to pursue strategic M&A opportunities. We maintain a disciplined approach to M&A and are actively evaluating opportunities primarily across key priority areas of fluid power, flow control and automation. There remains significant potential to further scale our leading technical industry position across these areas. We're eager to demonstrate what we're fully capable out in the years ahead as we continue to leverage our position as the leading technical distributor and solutions provider across critical industrial infrastructure.

applied industrial technologies q1 earnings per share $1.36. q1 earnings per share $1.36. q1 sales rose 19.2 percent to $891.7 million. applied industrial technologies - fiscal 2022 guidance maintained including earnings per share of $5.00 to $5.40.

I hope you are all healthy and staying safe and we certainly appreciate you joining our call today. Let me start by expressing my sincere appreciation to our global team for their extraordinary commitment during this unprecedented time. We made every effort to keep our employees and other stakeholders safe as we've navigated the COVID-19 pandemic and I'm very proud of the collective role our team members played in supporting our customers in the critical water industry. We continue to follow all health and safety measures according to health organization recommendations and local government regulations. At our sites, key actions have been taken to include steps to ensure employees are practicing social distancing, on-site temperature monitoring, use of face coverings, enhanced cleaning and sanitation efforts and staggered production schedules. All of our manufacturing and distribution locations are operational. The majority of our non-production employees continue to work from home. The potential for order delays and operations and supply chain disruptions that I mentioned during last quarter's earnings call gradually diminished throughout the quarter. We remain encouraged by the backlog and funnel of project opportunities and our balance sheet is in excellent shape to weather whatever lies ahead, recognizing conditions and potential business impacts are continuously evolving. Bob will walk you through the details of the quarter and after that I'll come back and talk further about the market outlook and what we're hearing from customers in the current environment. I want to begin by stating it is incredibly difficult to quantify the specific impact of COVID-19 on our financial results in the quarter. Clearly it was far-reaching in terms of customer order patterns, supply chain logistics and capacity interruptions and ultimately costs, including the various implemented cost savings actions. So, similar to the release, my comments will not include that break down or level of granularity. Given our sales concentration in the U.S. market, it is not surprising that the month of April marked the low point for us in terms of both orders and sales as the vast majority of states were under government lockdown restrictions. Customers were definitely taking a pause in determining the impacts to their operations, how to operate remotely, how to continue with projects and how long the restrictions would last. Municipal water demand began to improve to become less worse, if you will, as the lockdowns began to be lifted in mid-May and into June. In municipal water, overall sales decreased 9% with April representing the largest year-over-year decline with sequential improvement off of that bottom to a more stabilized level as the quarter progressed. I would not characterize it as back to normal, but definitely off of the April bottom with relative consistent. In addition, backlog grew as orders exceeded sales in the quarter due to a number of factors. These included manufacturing disruptions from stay-at-home orders in the U.S. and Mexico, higher rates of intermittent employee absenteeism and early supply chain challenges, all of which combined to limit output at certain of our manufacturing facilities. Additionally, the sequential demand ramp impacted order timing and our ability to convert orders into sales late in the quarter. On a positive note, revenue mix trends toward adoption of smart metering solutions including BEACON service revenue along with ultrasonic meter penetration continued. In contrast, flow instrumentation sales declined 22% year-over-year with April again representing the most difficult demand level. As expected, demand trends improved from April -- from the April low, but at a very modest pace, reflective of the significantly challenged industrial markets served and our continuing view of this product line being lower for longer, compared to the more resilient municipal water trend. Operating profit as a percent of sales was 13.9%, a 60 basis point decline from the prior year 14.5%. As we discussed on our last call in mid-April, we enacted a number of temporary cost containment measures to mitigate the impact of the rapid sales decline to both profitability and cash flows. These included reductions in discretionary spending, a hiring freeze, reduced work hour furloughs and executive salary reductions among others. While the reduced work hour and salary reductions were initiated -- initially targeted for five weeks, we did extend those reductions for an additional four weeks through mid-June. The combined actions helped to contain the decremental operating margin impact from the rapid sales decline to approximately 20% in the quarter. Gross margin for the quarter was 39.3%, up 40 basis points year-over-year despite the sales decline and once again in the upper half of what we would call our normalized range of 36% to 40%. The implemented cost actions helped to offset lower production volumes. Additionally, positive sales mix, notably, the overall trends of ultrasonic meter adoption and higher BEACON service revenues, along with lower commodity costs, benefited gross margins in the quarter. SEA expenses for the second quarter were $23.2 million, down $2 million year-over-year resulting from the net benefit of the implemented cost actions, partially offset by higher investments in certain business optimization initiatives. The income tax provision in the second quarter of 2020 was 24.3%, slightly higher than the prior year's 23.8% rate. In summary, earnings per share was $0.33 in the second quarter of 2020, a decline of 15% from the prior year's earnings per share of $0.39. Working capital as a percent of sales was 22.9%, in line with the prior sequential quarter. Free cash flow of $20.1 million was just $700,000 below the prior year comparable quarter despite lower earnings and was due primarily to the working capital differential between quarters and deferral of our quarterly federal income tax payment under the CARES Act. We continue to monitor customer cash receipts and supplier payment terms and we have not experienced any significant collectability or other issues. We ended the quarter with approximately $85 million of cash on the balance sheet and a net cash position of approximately $81 million. In addition, we have an untapped credit facility of $125 million. We believe we have ample liquidity to fund operations, our dividend and other capital allocation priorities under a wide range of potential economic scenarios. We participated in a number of virtual investor conferences during the quarter, so I thought I'd start by addressing the common questions and themes from those discussions. So let's start with the current environment. As we discussed in the release and in our earlier remarks, we do believe we are entering the new normal after the shock in April and early May when most of the U.S. was shut down. While some of the municipal water activity never stopped, there was definitely a break as our customers, like all of us, had to figure out how to navigate the COVID-19 pandemic and the rapid pace of changing government rules and requirements globally. Once that settled a bit and gradual reopenings occurred, we started to see activity improve off the April bottom. I can't say we're completely back to normal, but activity has steadied on a relative basis. Customers are requesting in-person meetings and site visits, bid tenders and awards are proceeding, some projects have accelerated despite others being temporarily deferred. We have not experienced any outright cancellations. As it relates to supply chain and logistics, we commented last quarter that it could potentially create operating challenges. While there was and still is a significant amount of active management, it was not a major factor. As Bob noted, we did however experience manufacturing disruptions from the stay-at-home orders in the U.S., various government mandates in Mexico related to vulnerable populations and intermittent employee absenteeism, as well as early logistics and supply chain glitches, all of which contributed to slightly lower than expected output at our manufacturing facilities. These impacts continue to lessen in severity and we expect them to be behind us shortly, barring any new currently unforeseen developments. We previously outlined a series of temporary cost reductions that were instituted in mid-April. And as Bob mentioned, we did extend the reduced work hour and salary reduction measures into mid-June. Not surprisingly, we continue to manage hiring and discretionary spending action given continuing market uncertainty. While painful in the short term, we believe these steps were both necessary and adequate to responsibly manage the cost structure of the company during the worst of the impact. We obviously continue to stay close to the rapidly changing implications of the pandemic and are prepared to take additional actions if they become warranted. Turning to the outlook. While the economic environment appears more stable, there is certain market data and sentiment that points to the potential for a protracted recovery from COVID-19 and this continued uncertainty could weigh on customer demand and municipal budgets moving forward. We cannot confidently predict the degree or duration of the impact. So therefore we continue to focus on the items we can control. We are actively investing in and launching new products, an example of which is our recently released E-Series Ultrasonic Plus Meter with integrated control valve, which allows water utilities to remotely restrict water flow. With multiple valve positions, this safe, humane and efficient solution to controlling water service and residential applications improves utility efficiency, expenses and safety. It addresses one of the two longer-term trends we believe could accelerate as a result of COVID-19, the other being accelerated AMI adoption. Our operations teams are adapting manufacturing processes to increase output while optimizing safety. We do expect to recover the majority of the backlog built in the second quarter during the third quarter. We are managing cash flow and working capital with $85 million of cash on the balance sheet and a $125 million of revolving credit available to fund capital allocation priorities including the dividend. Finally, we continue to pursue strategic tuck-in M&A that will expand our offerings in attractive adjacencies serving our critical and essential markets. In summary, I'm pleased with the resilience of our business model and our financial performance in relation to the economic severity of this unprecedented crisis. Our organization is prepared and well-positioned to successfully manage the uncertain days ahead, remaining nimble and reactive to our market trends.

q1 earnings per share $0.47. q1 sales rose 9 percent to $117.8 million.

If you have any questions after reviewing these tables, please feel free to contact our Investor Relations team after the call. The refining business saw a strong recovery in the first quarter as various pandemic-imposed restrictions were eased or withdrawn and as more and more people receive vaccinations. However, Winter Storm Uri disrupted many U.S. Gulf Coast and Mid-Continent facilities in February due to the freeze and utilities curtailments. Although our refineries and plants in those regions were also impacted, they did not suffer any significant mechanical damage and were restarted within a short period after the storm. While we did incur extremely high energy costs, I'm very proud of the Valero team for safely managing the crisis by idling or shutting down the affected facilities and resuming operations without incident. With many of the country's Gulf Coast and Mid-Continent refineries offline due to the storm, there was a significant 60 million barrel drawdown of surplus product inventories in the U.S., bringing product inventories to normal levels. Lower product inventories, coupled with increasing product demand, improved refining margins significantly from the prior quarter. Crude oil discounts were also wider for Canadian heavy and WTI in the first quarter relative to the fourth quarter of last year, providing additional support to refining margins. In addition, our renewable diesel segment continues to provide solid earnings and set records for operating income and renewable diesel product margin in the first quarter of 2021. Our wholesale operations also continue to see positive trends in U.S. demand, and we expanded our supply into Mexico with current sales of over 60,000 barrels per day, which should continue to increase with the ramp-up of supply through the Vera Cruz terminal. On the strategic front, we continue to evaluate and pursue economic projects that lower the carbon intensity of all of our products. In March, we announced that we were partnering with BlackRock and Navigator to develop a carbon capture system in the Midwest, allowing for connectivity of eight of our ethanol plants to the system. In addition to the tax credit benefit for CO2 capture and storage, Valero will also capture higher value for the lower-carbon intensity ethanol product in low carbon fuel standard markets such as California. The system is expected to be capable of storing 5 million metric tons of CO2 per year. In our Diamond Green Diesel 2 project at St. Charles remains on budget and is now expected to be operational in the middle of the fourth quarter of this year. The expansion is expected to increase renewable diesel production capacity by 400 million gallons per year, bringing the total capacity at St. Charles to 690 million gallons per year. The expansion will also allow us to market 30 million gallons per year of renewable naphtha from DGD 1 and DGD 2 into low-carbon fuel markets. The renewable diesel project at Port Arthur or DGD 3 continues to move forward as well and is expected to be operational in the second half of 2023. With the completion of this 470 million gallons per year capacity plant, DGD's combined annual capacity is expected to be 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha. With respect to our refinery optimization projects, we remain on track to complete the Pembroke Cogen project in the third quarter of this year, and the Port Arthur Coker project is expected to be completed in 2023. As we head into summer, we believe that there's a pent-up desire among much of the population to travel and take vacations, which should drive incremental demand for transportation fuels. We're already seeing a strong recovery in gasoline and diesel demand at 93% and 100% of pre-pandemic levels, respectively. Since March, air travel has also increased, as reflected in TSA data, which shows that passenger count is now nearly double of what it was in January. We're also seeing positive signs in the crude market with wider discounts for sour crude oils and residual feedstocks relative to Brent as incremental crude oil from the Middle East comes to market. All these positive data points, coupled with less refining capacity as a result of refinery rationalizations, should lead to continued improvement in refining margins in the coming months. We've already seen the impacts of these improving market indicators, with Valero having positive operating income and operating cash flow in March. In closing, we're encouraged by the outlook on refining as product demand steadily improves toward pre-pandemic levels, which should continue to have a positive impact on refining margins. We believe these improvements, coupled with our growth strategy and low-carbon renewable fuels, will further strengthen our long-term competitive advantage. So with that, Homer, I'll hand the call back to you. For the first quarter of 2021, we incurred a net loss attributable to Valero stockholders of $704 million or $1.73 per share, compared to a net loss of $1.9 billion or $4.54 per share for the first quarter of 2020. The first quarter 2021 operating loss includes estimated excess energy costs of $579 million or $1.15 per share. For the first quarter of 2020, adjusted net income attributable to Valero stockholders was $140 million or $0.34 per share. The adjusted results exclude an after-tax lower of cost or market, or LCM, inventory valuation adjustment of approximately $2 billion. The refining segment reported an operating loss of $592 million in the first quarter of 2021, compared to an operating loss of $2.1 billion in the first quarter of 2020. The first-quarter 2021 adjusted operating loss for the refining segment was $554 million, compared to adjusted operating income of $329 million for the first quarter of 2020, which excludes the LCM inventory valuation adjustment. The refining segment operating loss for the first quarter of 2021 includes estimated excess energy cost of $525 million related to impacts from Winter Storm Uri. Refining throughput volumes in the first quarter of 2021 averaged 2.4 million barrels per day, which was 414,000 barrels per day lower than the first quarter of 2020 due to scheduled maintenance and disruptions resulting from Winter Storm Uri. Throughput capacity utilization was 77% in the first quarter of 2021. Refining cash operating expenses of $6.78 per barrel were higher than guidance of $4.75 per barrel, primarily due to estimated excess energy costs related to impacts from Winter Storm Uri of $2.21 per barrel. Operating income for the renewable diesel segment was a record $203 million in the first quarter of 2021, compared to $198 million for the first quarter of 2020. Renewable diesel sales volumes averaged 867,000 gallons per day in the first quarter of 2021. The ethanol segment reported an operating loss of $56 million for the first quarter of 2021, compared to an operating loss of $197 million for the first quarter of 2020. The operating loss for the first quarter of 2021 includes estimated excess energy costs of $54 million related to impacts from Winter Storm Uri. First quarter of 2020 adjusted operating loss, which excludes the LCM inventory valuation adjustment, was $69 million. Ethanol production volumes averaged 3.6 million gallons per day in the first quarter of 2021, which was 541,000 gallons per day lower than the first quarter of 2020. For the first quarter of 2021, G&A expenses were $208 million and net interest expense was $149 million. Depreciation and amortization expense was $578 million, and the income tax benefit was $148 million for the first quarter of 2021. The effective tax rate was 19%. Net cash used in operating activities was $52 million in the first quarter of 2021. Excluding the favorable impact from the change in working capital of $184 million and our joint venture partner's 50% share of Diamond Green Diesel's net cash provided by operating activities, excluding changes in DGD's working capital, adjusted net cash used in operating activities was $344 million. With regard to investing activities, we made $582 million of total capital investments in the first quarter of 2021, of which $333 million was for sustaining the business, including costs for turnarounds, catalysts and regulatory compliance, and $249 million was for growing the business. Excluding capital investments attributable to our partner's 50% share of Diamond Green Diesel and those related to other variable interest entities, capital investments attributable to Valero were $479 million in the first quarter of 2021. On April 19, we've sold a partial membership interest in the Pasadena marine terminal joint venture for $270 million. Moving to financing activities, we returned $400 million to our stockholders in the first quarter of 2021 through our dividend. And as you saw earlier this week, our board of directors approved a regular quarterly dividend of $0.98 per share. With respect to our balance sheet at quarter end, total debt and finance lease obligations were $14.7 billion and cash and cash equivalents were $2.3 billion. The debt-to-capitalization ratio net of cash and cash equivalents was 40%. At the end of March, we had $5.9 billion of available liquidity, excluding cash. We expect capital investments attributable to Valero for 2021 to be approximately $2 billion, which includes expenditures for turnarounds, catalysts and joint venture investments. About 60% of our capital investments is allocated to sustaining the business and 40% to growth. Over half of our growth CAPEX in 2021 is allocated to expanding our renewable diesel business. For modeling our second-quarter operations, we expect refining throughput volumes to fall within the following ranges: Gulf Coast at 1.65 million to 1.7 million barrels per day; Mid-Continent at 430,000 to 450,000 barrels per day; West Coast at 250,000 to 270,000 barrels per day; and North Atlantic at 340,000 to 360,000 barrels per day. We expect refining cash operating expenses in the second quarter to be approximately $4.20 per barrel. With respect to the renewable diesel segment, with the start-up of DGD 2 in the fourth quarter, we now expect sales volumes to average 1 million gallons per day in 2021. Operating expenses in 2021 should be $0.50 per gallon, which includes $0.15 per gallon for noncash costs such as depreciation and amortization. Our ethanol segment is expected to produce 4.1 million gallons per day in the second quarter. Operating expenses should average $0.38 per gallon, which includes $0.05 per gallon for noncash costs such as depreciation and amortization. For the second quarter, net interest expense should be about $150 million, and total depreciation and amortization expense should be approximately $590 million. For 2021, we still expect G&A expenses, excluding corporate depreciation, to be approximately $850 million, and the annual effective tax rate should approximate the U.S. statutory rate. Lastly, as we reported last quarter, we expect to receive a cash tax refund of approximately $1 billion later this year. Before we open the call to questions, we again respectfully request that callers adhere to our protocol of limiting each turn in the Q&A to two questions.

q4 adjusted earnings per share $0.21. q4 revenue $554.6 million.

Then Tom Dineen, our chief financial officer, will give an overview of the fourth quarter and 2021 financial results, and then I will discuss our operations and the state of the market. Copies of these documents may be obtained by contacting the company or the SEC or on the company website at ruger.com/corporate or, of course, at the SEC website at sec.gov. We do reference non-GAAP EBITDA. Now Tom will discuss the company's 2021 results. For 2021, net sales were $730.7 million and diluted earnings were $8.78 per share. For 2020, net sales were $568.9 million and diluted earnings were $5.09 per share. The substantial increase in profitability in 2021 compared to 2020 is attributable to the increase in sales and production, the resulting favorable leveraging of fixed costs, including depreciation, engineering, and other indirect labor expenses, reduced sales promotional activities, and increased labor, and other manufacturing efficiencies. For the fourth quarter of 2021, net sales are $168.0 million and diluted earnings were $2.14 per share. For the corresponding period in 2020, net sales were $169.3 million and diluted earnings per $1.78 per share. Diluted earnings per share in the fourth quarter of 2021 were increased by $0.18 due to a reduction in the effective tax rate for the year, which was recognized in the quarter. T-bills, total $221 million. Our current ratio was 4.3 to one, and we had no debt. Our cash laden, debt-free balance sheet will allow us to pursue acquisitions and other capital opportunities that may emerge. At December 31, 2021, stockholders equity was $363.7 million, which equates to a book value of $20.67 per share, of which $12.56 per share was cash and short-term investments. In 2021, we generated $172 million dollars of cash from operations. We reinvested $29 million of that back into the company in the form of capital expenditures, primarily related to new products. We estimate that 2022 capital expenditures will be approximately $20 million, predominantly related to new product development. Our ability to shift manufacturing equipment between cells and between facilities improves overall utilization and allows for reduced capital investment. In 2021, we returned $59 million to our shareholders through the payment of dividends. Our board of directors declared an $0.86 per share quarterly dividend for shareholders of record as of March 11, 2022, payable on March 25, 2022. As a reminder, our quarterly dividend is approximately 40% of net income and therefore, varies quarter to quarter. That's the financial update for 2021. 2021 was a great year for Ruger. We ended the year with virtually no finished goods inventory, so all the firearms sold in 2021 had to be manufactured in 2021. Our 28% increase in sales would not have been possible without the 30% increase in production at our factories. And this 30% increase was achieved with a manpower increase of less than 10%. The manufacturing efficiency gains drove a 109% return on net operating assets for the year, which is a remarkable feat. Our dedicated workforce accomplish this despite the highly publicized challenges of tight labor markets, transportation, and supply chain issues, and COVID-19 obstacles that we experienced throughout the year. Following a 44% increase in 2020, the sell-through of our products from distributors to retailers increased again in 2021, this time by 4% despite the 12% reduction in the National Instant Criminal Background Check System background checks as suggested by the National Shooting Sports Foundation. The increase in the sell-through of our products compared favorably to the decrease in adjusted NICS background checks in 2021 and may be attributable to strong consumer demand for our products, increased availability of our products at the distributors and at retail as a result of our increased production, and the introduction of popular new products. Led by the award-winning Ruger-5.7 pistol, the MAX-9, and the LCP MAX pistol, our new product sales in 2021 represented $155 million, or 22% of firearm sales, an increase of $45 million from $111 million, or 22% of firearm sales in 2020. As a reminder, derivatives in product line extensions of mature product families are not included in our new products sales calculations. We ended 2021 on a high note as we shipped the first Ruger-made Marlin lever action rifles. The model 1895 SBL, chambered in 45-70 government in December. During the past year, our team completed a thorough design and production review of the 1895 focused on ensuring the highest quality, accuracy, and performance standards. Being a longtime Marlin fan, I knew that we needed to take our time and make sure that our reintroduction was nothing short of perfect. From the quality of the firearm to clear ways for consumers to differentiate Ruger-made Marlins, we focused on getting every detail right. I look forward to reintroducing many more Marlins in 2022 and in the years to come. Long live the lever gun. Our finished goods inventory remains significantly below pre-COVID-19 pandemic levels. Distributor inventories of our products increased 125,000 units in 2021, but remained below the level needed to support rapid fulfillment of retailer demand for most products. We have an expansive product line, which ranges from our versatile pistols to bolt-action hunting rifles, to our classic revolvers to Marlin lever action rifles. This provides some stability in the volatile firearms market as we can reallocate our labor and machinery to prioritize the manufacture of products that are in strong demand while we replenish our inventories of models that appear to be in adequate supply in the distribution channel. Our ability to reallocate resources and our willingness to maintain appropriate levels of inventory strengthen us as demand ebbs and flows within the various diverse sectors of the industry. I'm excited as we enter 2022. We will remain disciplined and committed to our strategy of pursuing manufacturing excellence and vigorously developing innovative and exciting new products. We look forward to watching some of these new products under both the Ruger and Marlin brands in 2022. Those are the highlights of 2021. Operator, may we have the first question?

compname reports q4 earnings per share $1.78. compname reports 2020 diluted earnings of $5.09 per share and declares dividend of 71¢ per share. q4 earnings per share $1.78. q4 sales $169.3 million.

CNA performed extremely well in the third quarter with core income up 23% year-over-year despite the elevated catastrophe activity. In the third quarter, core income was $237 million or $0.87 per share, driven by improved underlying underwriting performance and favorable Life & Group results. Net income for the quarter was $256 million or $0.94 per share. Gross written premium, excluding our captive business grew by 10% this quarter, fueled by excellent new business growth and continued strong price increases. And importantly, momentum continued to build throughout the quarter. As we expected, the transactional capability limitation that we mentioned last quarter, following the cyber security incident are now behind us. Earned rate was 11% in the quarter, and written rate was 8%, which remains well above loss cost trends and which we believe portends continued progress toward building margin as the written premium earns in over a third renewal cycle in 2022. Additionally, the tighter terms and conditions we have been able to secure during the hard market persists with no early signs of pressure to relax them. I'll have more to say about production performance in a moment. The all-in combined ratio was 100% this quarter, about a point lower than the third quarter of 2020, which included elevated catastrophes in both periods. In the third quarter of 2021, pre-tax catastrophe losses were $178 million or 9.2 points of the combined ratio, which included $114 million for Hurricane Ida. The P&C underlying combined ratio was 91.1%, a 1.5 point improvement over last year's third quarter results. This is a record low for the third consecutive quarter. After adjusting for the impacts of COVID in last year's third quarter, the improvement in our underlying combined ratio is actually 2.1 points. The underlying loss ratio in the third quarter of 2021 was 60.2%, which is down 0.3 points compared to the third quarter of 2020. Excluding the impacts of COVID in the prior year quarter, the underlying loss ratio improved by 0.9 points, and the decrease reflects our prudent acknowledgment of margin improvement. As I've mentioned before, we increased our loss cost trends about 2 points over the last couple of years and classes impacted by social inflation. This quarter, we increased our loss cost trends in property lines about 2 points because of the supply chain shortages, which have increased the cost of material and labor and don't look like they will revert back lower anytime soon. This change pushed up our overall P&C loss cost trends marginally, and are now above 5%. During the third quarter, earned rates are running close to 11%. So, earned rate is exceeding loss cost trend by about 6 points. Applying that to a 60% loss ratio should portend about 3 points of improvement in the quarter. We have reflected about 1 point of improvement in the underlying loss ratio in the third quarter. We are going to continue to be prudent in terms of acknowledging margins since the courts are just starting to open up and the dockets are only starting to clear. The underlying combined ratio for Specialty was 89.6%, a 0.9 point improvement compared to last year, entirely from an improvement in the underlying loss ratio, while the expense ratio was comparable to the third quarter of 2020. The all-in combined ratio was 88.2%, a 1.3 point improvement compared to the third quarter of 2020. The all-in combined ratio for Commercial was 111.6% including 18.6 points of Cat compared to 111.3% in last year's third quarter including 17 points of Cat. The underlying combined ratio for Commercial was 92.5%, which is the lowest on record and it's 1.2 points lower compared to last year and 2.3 points lower, excluding the COVID frequency impacts that reduced the loss ratio in 2020. The underlying loss ratio improved by 0.4 points, excluding the COVID frequency impacts last year, while the expense ratio improved by 2 points. Incidentally, compared to the second quarter of 2021, the underlying loss ratio is higher simply because of the resulting mix change between property and casualty net earned premium due to the new property quota share treaty we purchased in June. In ceding [Phonetic] an annual estimate of property earned premium to the reinsurers in June, it altered the underlying loss ratio with a higher casualty mix going forward. The underlying combined ratio for international improved by four full points to a record low of 91%. This reflects at 2.8 point improvement in the expense ratio and a 1.2 point improvement in the underlying loss ratio, which was 58.9% in the quarter. Importantly, as our reunderwriting has largely been completed in international, we've continued to see that benefit in the underlying loss ratio as well as a more modest catastrophe ratio from the meaningful reduction in our P&L exposures. The all-in combined ratio of 95.5% compared to 98.1% in the third quarter of 2020, reflects the success of our reunderwriting strategy. Now, turning back to production statistics. As indicated earlier, our P&C operations had 10% growth in gross written premiums ex-captive which was 2 points above what we achieved in the first half of 2021 and 1 point above full year 2020. Our growth in the quarter was fueled by strong new business growth of 24% and written rate of 8%, while retention was stable at 81%. Net written premium growth for P&C was plus 5% for the quarter, up 4 points over the first half of the year. Our specialty gross written premium growth ex-captive was plus 10%, driven by excellent new business growth of 40%, concentrated in affinity programs and management liability in continued strong rate of 9%. This is our fifth consecutive quarter of double-digit growth in specialty notwithstanding that our retention in the third quarter was down about 5 points to 80%. In the quarter, we continued our reunderwriting of the healthcare portfolio and we non-renewed a portion of our hospital medical malpractice business, because we could not achieve our required returns even after the rate increases we secured to-date. Non-renewing this segment also lowered the rate increase for specialty this quarter, because it was the segment achieving some of our highest rate increases in recent quarters. But improving our profitability is always our first priority and walking away from this business was the right action to take. In Commercial, our gross written premiums ex-captives grew 10% in the quarter, representing an 8 point improvement over the second quarter's growth. As we mentioned last quarter, commercial was disproportionately impacted by the cyber incident, as the majority of the underwriters in the branches are in the commercial business unit. And so we expected to see the biggest rebound in commercial, now that it's behind us. And we did indeed see that this quarter. Commercial new business growth grew by 21% in the quarter with all segments contributing and retention increased 3 points to 83% compared to last quarter and rates increased 6%. Although rates moderated in certain segments like national accounts, where rate increases were lower by 3 points, we still achieved a very strong 13% increase in the quarter, which is well above loss cost trends. Our middle market rates were lower by 1 point this quarter, but we had a 7 point increase in retention to 84%. We also achieved 2 points of exposure increase in Commercial in the quarter from higher payroll and sales compared to the third quarter of 2020. Our international gross written premium growth was 16% for the quarter or 11% excluding currency fluctuation. As we mentioned, with the reunderwriting actions behind us, we are focusing on growing the portfolio. We continue to achieve strong rate in International at 13%, consistent with the second quarter. Retentions have improved each quarter this year and stand at 79% in the quarter, up from 77% last quarter and 74% in the first quarter. For P&C overall, prior period development was favorable by 0.3 points on the combined ratio. Turning to Life & Group, we conducted our Annual Gross Premium valuation or GPV analysis on our active life reserves as well as a claim reserve review on our disabled life reserves. There was no result in unlocking of the assumptions, which we believe is due to our continued prudent management of this run-off book and we now have $72 million of GAAP margin on the active life reserves. The claim reserve review resulted in favorable development of $40 million on a pre-tax basis and Larry will have more detail on the Life & Group reserve analysis and our P&C prior period development. Larry, of course, is no stranger to CNA. He retired as CNA's Chief Actuary in August of last year after serving over a decade at CNA's Chief Actuary, during which time he worked hand-in-hand with the finance function. Larry's willingness to come out of retirement has afforded us the time to accomplish a thorough search for this vital role which is going well and we expect to complete it soon. Larry will also help facilitate a smooth transition with the incoming CFO. I must say, it has been both a professional and personal pleasure working with the CNA executive team once again these past two months. As Dino highlighted, the 23% increase in core income for the third quarter produced a core ROE of 7.7%. Before providing more information on the financials, I will first discuss Life & Group. As you know, each quarter -- each year in the third quarter, we complete our annual reserve reviews for Life & Group. These reviews include our long-term care active life reserves, which we refer to as gross premium valuation or GPV as well as our long-term care and structured settlements claim reserves. Slide 12 contains key demographic information about both our individual and group long-term care blocks. As a reminder, both blocks are closed with no new policies issued for individual since 2004, and no new group certificates since 2016. As a result, the average attained age for the individual block is 80 years old and the group block is 67. While, the group block is less mature in age, you can see from the table on the top right of Slide 12 that the benefit features on average for the group block are less rich. As we have discussed on past calls, we have proactively reduced risk in both blocks, while obtaining meaningful rate increases and using a prudent approach to setting assumptions in our reserve analysis, both for active life and claim reserves. One clear result of our efforts is the 35% reduction in policy count since 2015, which is shown on the bottom left graph on Slide 12. As we continue to push for needed rate, we also offer benefit reduction options to our policyholders as a means to avoid or mitigate rate increases. This reduces the cost of future claims, while providing a viable option for our policyholders. Also worth noting on Slide 12, our claim counts are down significantly over the past two years as can be seen in the graph on the bottom right. Starting with the GPV analysis, the results of which are shown on Slide 13. Our efforts involved a thorough review of all of our reserving assumptions, including critical factors related to morbidity, persistency, rate increases and discount rate. The key result is that we did not have an unlocking event, and we now have margin in our GAAP carried reserves of $72 million. Starting with the discount rate. Recall, that last year we moved meaningfully on our assumption by lowering the normative risk free rate of 2.75% and increasing the gradient period for the risk free rate to rise to that level to ten years. For the first three years of that 10-year period, as you might recall from last year's analysis, we used the forward curve. We followed the same approach this year and the current forward curve has interest rates that are higher than the assumptions we locked in last year creating margin. Given the higher rate interest rate environment, we also reviewed our estimates around the cost of care assumptions, and determined a small increase was warranted, which decreased margin. Taken together, the changes resulted in creating the $65 million of margin disclosed in the table. Turning next to Morbidity. We refined our claim severity assumptions, specifically those related to utilization rates in our group block, expected recovery rates and claim side as mixed, which together drove margin improvement of $205 million. Importantly, we did not include our favorable experience in 2020 due to COVID-19 as part of the datasets that are analyzed to update the long-term assumptions. Not including the 2020 experience is further evidence of the prudent approach we take with our reserving assumptions. With respect to persistency, the key assumption change was a decrease in healthy life mortality. While, this result may seem counterintuitive as the pandemic caused elevated mortality, we excluded the impacts from the pandemic when setting our long-term GPV assumptions as we do not believe this recent elevated mortality will persist over the duration of our liabilities. Rather, the assumption change is from a periodic review of past policy terminations to better determine our attribution between mortality and lapse. For this year's review, we used external data sources to obtain data at a more granular level to examine the terminations over multiple past years. The result of that effort was a slightly lower level of mortality than we had used in the 2020 assumptions. Of course, even a slight change in mortality rate applied against the entire tail of the portfolio will have a leveraged effect and these assumption changes resulted in margin deterioration of $233 million. We will continue to monitor active life mortality, relative to our revised assumptions to see how our approach plays out. Regarding future premium rate increases, our actual rate achievement over the past year exceeded our assumption in last year's analysis, contributing $27 million to the favorable margin increase. As you may recall, our prudent approach is to include rate increases that have been approved; filed, but not yet approved, or that we plan to file as part of a current rate increase program. As a result, the weighted average duration of future rate increase approvals assumed in reserves is less than two years. As you can see on Slide 13, the cumulative impact of these changes, including a slight margin improvement of $8 million from lowered operating expenses, resulted in a reserve margin of $72 million in our carried reserves, while continuing to use a prudent set of reserve assumptions. As a result, there is no need to have an unlocking event and we feel good about the reserves. In addition to the GPV, we concluded our annual long-term care claims reserve review, which is a review of the sufficiency of our reserves for current claims. The impact from this review was favorable, driven by lower than expected claims severity. Specifically, we observed higher claim closure rates, most notably driven by mortalities. The favorability, which flows through to our bottom line was a pre-tax benefit of $41 million -- $40 million or $31 million on an after-tax basis. Turning to Slide 14. Our overall Life & Group segment produced core income of $41 million in the third quarter, which compares to a third quarter 2020 loss of $35 million. In addition to the $31 million favorable impact from the annual long-term -- long-term care claims review that I just discussed, activity in the quarter contributed another $10 million to core income, as we had strong net investment income performance predominantly from our alternative investments portfolio. Returning now to financial results, our third quarter 2021 pre-tax underlying underwriting profits increased 28% on a year-over-year basis, driven by the 6% growth in net written premium and a record low underlying combined ratio. A key component of the combined ratio improvement is the expense ratio. The third quarter 2021 expense ratio of 30.7% was 1.1 points lower than last year's third quarter. Our Commercial and International segments drove the overall improvement, as commercial improved 1.9 points to 30.4% and International improved 2.8 points to 32.1%. Our focus on expense discipline as we grow the Company has driven meaningful expense improvement. And this quarter's result reinforces the success of our strategy. Of course, as we have mentioned before, the improvement will not be a straight line down because, we continue to make investments in talent, technology and analytics, which in any one period can materially vary. As this quarter's expense ratio reflected somewhat less investment, we believe a more appropriate expectation on run rate is 31%. For the third quarter, overall P&C net prior period development impact on the combined ratio was 0.3 points favorable, compared to 0.4 points favorable in the prior year quarter. Favorable development was driven by surety in the specialty segment, somewhat offset by amortization of workers' comp tabular reserves in the commercial segment. In terms of our COVID reserves, we made no changes to our COVID catastrophe loss estimate following an in-depth review during the quarter, and our loss estimate is still virtually all in IBNR. Total pre-tax net investment income was $513 million in the third quarter compared with $517 million in the prior year quarter. The results included income of $77 million from our limited partnership in common stock portfolios as compared to $71 million on these investments from the prior year quarter. The strong LP returns for the quarter across both the P&C and Life and Group segments were significantly driven by private equity investments and reflected the lag reporting results from the second quarter. As a reminder, our private equity funds primarily report results on a three-month lag basis, whereas our hedge funds primarily report results on a real-time basis. Our fixed income portfolio continues to provide consistent net investment income, stable relative to the last few quarters and modestly down relative to the prior year quarter. The year-over-year decrease reflects lower reinvestment yields due to the ongoing low interest rate environment with pre-tax effective yields on our fixed income holdings of 4.3% during the third quarter of 2021, compared to 4.5% during the third quarter of 2020. However, our strong operating cash flows have fueled the higher investment base with the book value of the fixed income portfolio growing by $1.5 billion over the past year. From a balance sheet perspective, the unrealized gain position of our fixed income portfolio was $4.8 billion at quarter-end, down from $5.1 billion at the end of the second quarter, reflecting a slightly higher interest rate environment. Fixed income invested assets that support our P&C liabilities and Life & Group liabilities had effective duration of 5.1 years and 9.3 years respectively at quarter-end. Our balance sheet continues to be very solid. At quarter-end, shareholders' equity was $12.7 billion or $46.67 per share. Shareholders' equity excluding accumulated other comprehensive income was $12.3 billion or $45.39 per share, an increase of 8% from year-end 2020 adjusting for dividends. We have a conservative capital structure with a leverage ratio of 18% and continue to maintain capital above target levels in support of our ratings. In the third quarter, operating cash flow was strong once again at $669 million. In our P&C segments, the paid to incurred ratio was 0.75%, consistent with the last two quarters. Contributors to this include our growth, which increases the incurred losses while paid losses lagged, especially for casualty lines, as well as the ongoing impact of slowed court dockets. Certainly, the occurrence of catastrophe events in a given quarter and the payout over subsequent quarters impact this ratio as well. In addition to strong operating cash flow, we continue to maintain liquidity in the form of cash and short-term investments and together they provide ample liquidity to meet obligations and withstand significant business variability. Finally, we are pleased to announce our regular quarterly dividend of $0.38 per share. Before opening the call for the Q&A session, I'd like to offer a few comments about how we see the marketplace that we compete in evolving. Most importantly, we see the market remaining very favorable throughout 2022. We continue to build momentum in new business growth and retention, and rate increases should remain above long-run loss cost trends for most of 2022 in light of the headwinds of social inflation, elevated Cat activity, low interest rates and the additional headwind of economic inflation emanating from the protracted supply chain dynamics. Although rates have moderated from the high watermark of the fourth quarter of last year, it is premature to assume it will continue down on a straight line due to the uncertainty of the strength of the headwinds. In the third quarter, we saw pricing inflections as a response to pressure on those headwinds. As an example, momentum on cat exposed property pricing picked up immediately after Hurricane Ida. And the supply chain issues creating higher cost of labor and materials are partially offsetting the benefit of the price increases, leading to a greater awareness that additional rate is required in property for a longer period of time. Similarly, notices of seemingly outsized jury awards in the industry reminds us that social inflation was merely obfuscated during the pandemic, and by no means extinguished, which should allow continued strong pricing in most casualty lines. Indeed, we are seeing similar strength in our price increases early in the fourth quarter. Bottom line, we believe written rate increases will persist above loss cost trends in 2022 leading to earned rates above loss cost trends for a third year in a row, which portends well for margin build all else equal. And we remain very bullish about our ability to increasingly take advantage of the opportunities this continuing favorable marketplace affords us.

raised guidance for 2021 adjusted earnings to $2.83 - $2.87 per share.

These documents as well as our supplemental financial information package are available on our website, www. vno.com, under the investor relations section. In these documents and during today's call, we will discuss certain non-GAAP financial measures. The call may include time-sensitive information that may be accurate only as of today's date. On the call today from management for our opening comments are Steven Roth, chairman and chief executive officer; and Michael Franco, president and chief financial officer. I hope everyone is healthy, continues to be vigilant and gets vaccinated. Let me say it again. Everybody, please get vaccinated. I'll start by sharing a few things that are happening on the ground, which I hope you all find interesting. The U.S. economy is resilient, it's growing. I might even say is booming, and so is New York. Financial, tech and almost all industries are achieving record results. In New York, apartment occupancy, which had dropped to as low as 70% during COVID, is now rapidly climbing back with record numbers of new leases being signed each week at higher and higher rents. Condo sales, which had stalled during COVID, are now active, albeit at discounted pricing, except I'm proud to say that our 220 Central Park South where resales are at a premium. This apartment and condo demand is coming from folks who live and work in New York, and that's a very good sign. At 220 Central Park South, where we are basically sold out, resale pricing is up, and that's an understatement. A recent spectacular example, which is now public, is a two-floor 12,000 square foot resale that traded at a record-breaking $13,000 per square foot, think about that. Our New York office division is now experiencing record incoming RFPs and requests for tours, including from many large and important occupiers who had been on the sidelines during COVID. Glen and his team are very busy. By the way, big tech is now very active looking for more space in New York to take advantage of New York's large, highly educated and diverse workforce. Here's an interesting fact, a Fortune 100 occupier household name who dropped out of the market during COVID has come back to market. They were originally looking for 300,000 square feet to house 2,800 employees. Post-COVID, after extensive study and space planning, they now need and are seeking 400,000 square feet, a 30% increase to house the same 2,800 employees. In both instances, their projected in-office occupancy is the same 60%. The fact that this occupier needs 30% more space post-COVID is contrary to all analyst expectations, but that is the fact. And we are hearing the same from many, although not all, but many of our tenants that they will need more space, not less post-COVID. One of our analysts and a friend recently wrote that our company suffers from PENN fatigue. It took us over a decade to assemble our vast PENN District hoardings, but as the same goes, this is our time. Here's where we stand. At Farley, we have delivered to Facebook all of their 730,000 square feet. Their tenant work is going full bore. The West Side of Seventh Avenue, along the three blocks stretching from 31st Street to 34th Street, is now a massive construction site, where we are transforming the 4.4 million square foot PENN one and PENN 2 into the nucleus of our cutting-edge connected campus. The 34th Street PENN 1 lobby just opened, and our unrivaled three-level amenity offering will be completed at year-end. Our full building PENN 2 transformation, including the bustle and reskinning, is 98% bought out on budget and off to a fair start. We couldn't be more excited. Our 14,000 square foot sales center the Seventh Floor of PENN 1 is now open to rate reviews from brokers and occupiers. After working with Glen and Josh in the sales center, the market is understanding our ambitious plans to make the PENN District, the crown jewel of the west side of the new New York. By the way, every quarter and every year, the West side is punching way above its weight, measured by high and growing leasing share -- market share of leases signed. Aside from our confidence and the market's enthusiasm, even at this early date, we are raising our PENN asking rents. We will shortly begin demolition of the Hotel Pennsylvania to create the best development site in town. We expect demolition and shutdown costs to be about $150 million, which you should look at as land cost. Our book basis in this property today is $203 million. And we are midstream in the process to make the unique high-growth PENN District a separate investable public security. Our best in the business team leaders in the PENN District are Glen Weiss Leasing, Barry Langer Development and Dave Bendelman Construction. Michael will cover our operating results in a moment, but I can say that, overall, leasing and occupancy statistics in New York tell a misleading story. While overall availability is 18%, assets newly built or repositioned since 2000 have a much lower direct vacancy rate of 11%. Last quarter, 88% of new leasing activity in Midtown was a Class A product. It's clear that the market is voting for new and repositioned assets As you would expect, Class A assets command higher pricing than Class B, in fact, one-third higher. Obviously, this is the place to be and you should know that substantially all of our assets are repositioned and in this competitive set. New York is coming back to life. Residential neighborhoods are bustling, less so the commercial canyons where office utilization is now approximately 23%. Remember, it's August, the vacation month. The largest employers in Manhattan have mandated a return to work by Labor Day or shortly thereafter, some with full staff in office and others with a flexible program allowing some work from home. As I have said before, I do not believe that the office will be threatened by the kitchen table. And I do not believe that even one or two work from home days per week by some number of a tenant's employees will be a negative to us. I, for one, I'm unable to predict whether it will take a month or a quarter for office buildings to be back to full up and the canyons to be teeming again. There is no magic date. All that matters is that it will happen soon enough. Last week, we announced that Wegmans, the premier grocer in the Northeast region, is opening its first store in Manhattan at our 770 Broadway replacing Kmart. And you can bet that we will do several more Manhattan deals with Wegmans. The fact that Wegmans is coming is creating excitement with it at last count, 43 print and broadcast press articles celebrating the announcement. Here is an interesting fact to it. Wegmans expects that as much as 50% of its volume will be from in-home delivery -- appropriately from to home delivery. We will be investing $13 million in TIs, leasing commissions and free rent in this long-term lease with a 65% GAAP mark-to-market increase over Kmart's rent. This quarter, we announced that we exercised a ROFO to acquire our partner's 45% interest in One Park Avenue in a transaction that values the building at $870 million. Based on the in-place floating rate loan, we project $18 million, $0.09 cents per share first-year accretion. Last summer, we brought 555 California Street to market for sale and are unable to achieve fair value, we withdrew, understandable at the height of COVID with travel restrictions and so forth. At that time, we said we will refinance and this past quarter, we did to the tune of $1.2 billion, netting us approximately $467 million at share. We can just carry on the new floating rate loan is almost exactly the same as the old much smaller fixed-rate loan. So one might say the $460 million is free money. Ironically, I believe, continuing to own this outstanding asset with this superb accretive financing is actually a better outcome. In New York replacement cost is rising quickly over the past many decades, replacement costs with a dip here and there has risen relentlessly. And if past this is pro-log, replacement costs will undoubtedly continue to rise as far as the eye can see. Replacement cost has always been a key predictor of future value a rising umbrella lifting all similar real estate values. And New York is the poster child of this phenomenon. Here is updated guidance for our retail business. For 2021, we guided cash NOI of $135 million. And now halfway through the year, we expect to do a little bit. For 2022, we guided cash NOI of $160 million, which we affirm. For 2023, we announced new cash NOI guidance of not less than $175 million. You should know that, as expected, Swatch exercised the termination option for a portion of their space at St. Regis, which is effective March 2023 with a $9 million termination fee. The Swatch owned Harry Winston store will remain under lease through its June 2031 expiry. The guidance above takes account of the Swatch termination. If I were a betting man, and I guess in some ways, I am, I would bet that we have already put in the bottom in New York that the worst of the best stuff is behind us and that New York will get better and better and so will New York real estate in space. In our case, occupancy rate, TIs and pricing have bottomed. I will start with our second-quarter financial results and end with a few comments on the leasing and capital markets. Second-quarter comparable FFO as adjusted was $0.69 per share compared to $0.56 for last year's second quarter, an increase of $0.13. The increase was driven by the following items. $0.09 from tenant-related activities, including commencement of certain lease expansions and nonrecurrent or straight-line rent write-offs impacting the prior period, primarily JCPenney and New York & Company. $0.02 from lower G&A resulting from our overhead reduction program and $0.02 from interest expense savings and the start of improvement in our variable businesses, primarily from BMS cleaning. Our second-quarter comparable results are consistent with the fourth-quarter run rate we discussed at the beginning of the year as is our overall expectation for the full year. Speaking of our variable businesses, we are beginning to see signs of recovery with a return to normalcy. BMS is nearing pre-pandemic levels. Signage is starting to pick up with healthy bookings in the second half of the year. Our garages are picking up as well and should be fully back in 2022. And finally, we have a number of trade shows scheduled for the fourth quarter. Other than Hotel Penn's income, we expect to recover most of the income from our variable businesses by year-end 2022 with the balance in 2023. Companywide same-store cash NOI for the second quarter increased by 0.5% over the prior-year second quarter. Our core New York office business was up 3.2%. Blending in Chicago and San Francisco, our office business overall was up 2%. Consistent with prior quarters, our core office business, representing over 85% of the company, continues to hold its own, protected by long-term leases with credit tenants. Our retail same-store cash NOI was down 6%, primarily due to JCPenney's lease rejection in July 2020. But excluding the impact of JCPenney's lease rejection, the same-store cash NOI for the remaining retail business was up 9.8%. Our office occupancy ended the quarter at 91.1%, down 2 percentage points from the first quarter. This was expected and driven by long expected move-out at 350 Park Avenue and 85 Tenth Avenue as well as 825 Seventh Avenue coming back into service. With the activity we have in our pipeline, this quarter should represent the bottom of our office occupancy, and it should improve quarter by quarter from here. Retail occupancy was up slightly to 77.3%. Now, turning to the leasing markets. Since our last call, the pace of office leasing activity in New York City has picked up each successive month. With the vaccination rates high, companies are now fully focused on their return to the office with many returning during the summer and a majority expected back soon after Labor Day. Predictably, the overall sentiment in New York continues to improve as company's return and the office market continues to heal. During the second quarter, leasing volume in Manhattan was its highest since the onset of the pandemic. And office tour activity has now exceeded pre-pandemic levels with more than 11 million square feet of active tenant requirements. Importantly, office-using employment in the city continues to strengthen. With more than 100,000 jobs now recovered, we're at 92% of the pre-pandemic peak. While leasing volume during the first half of 2021 was dominated by small to medium-sized transactions, driven by well-capitalized financial services and technology tenants, we are now seeing pent-up demand from larger occupiers across all industry types as many have formally entered the market. There are additional signals that the market continues to fought. Tenants are now entering into leases for longer terms and asking rents in concessions have stabilized. And in fact, as Steve alluded to, we have recently increased our asking rents in our top-tier assets, reflecting the strong demand for best-in-class assets. During the second quarter, we signed 33 leases, totaling 322,000 square feet with two-thirds coming from new companies joining our high-quality portfolio across the city. The average starting rent of these transactions was a strong $85 per square foot. The leasing highlight for the quarter was 100,000 square feet at PENN 1, further validating the market's resounding reception to our redevelopment of this property. The largest transaction was a new lease with Empire Healthchoice for 72,000 square feet. Our main competition here was newly constructed buildings in both Downtown and Midtown, our new dramatic lobbies in Plaza's best-in-class campus amenity program and premier access to transportation from the data. Looking toward the second half of 2021, our leasing pipeline has grown significantly since last quarter with more than 1 million square feet of leases in active negotiation, including 180,000 square feet of new leasing at 85 Tenth Avenue, as well as an additional 1.6 million square feet in various stages of discussion. This includes discussions with several large users newly interested in PENN 2 after seeing our vision at the Experience Center. Our activity is a balanced combination of new and renewal deals with the majority of our activity with companies in the financial, technology and advertising sectors. Our office expirations are very modest for the remainder of 2021 and 2022, with only 976,000 square feet expiring in total, representing 7% of the portfolio, and 150,000 of this square footage is in PENN 1 and PENN 2. As we look toward our 2023 expirations of 1.9 million square feet, of which 350,000 is in PENN 1 and PENN 2, we are, of course, already in dialogue and trading paper with many of these companies and anticipate announcing important transactions by year-end. Now, turning to theMART in Chicago, where the office market is also showing signs of life, and tenant demand is returning coming out of the pandemic. While short-term renewal leasing dominated the market during 2020, activity has picked up with almost 1 million square feet of new leasing completed during the second quarter, though concessions are unusually high. At theMART, we completed a 91,000 square foot long-term office renewal with 1871. Chicago's premier technology incubator for entrepreneurs and have an additional 80,000 square feet of new deals in negotiation. Two weeks ago, we produced our first trade show at theMART since February 2020 pre-pandemic. This show in partnership with International Casual Furniture Association featured the largest manufacturers of outdoor furniture in the country. Attendance was 10% higher than the same show produced pre-pandemic 2019, and feedback from exhibitors and attendees was very positive. We have eight upcoming trade shows calendared during the remainder of 2021, including NeoCon in October, the largest show in North America focused on commercial design, though we don't expect the tenants to reach 2019 levels this year. In San Francisco at 555, we are finalizing a couple of small, strong leases in our fall other than the cube. Turning to the capital markets now. The financing markets are wide open and aggressive for high-quality office companies and buildings, and we are taking advantage of the low all-in coupons. It bears repeating that in May, we upsized our 555 California Street loan from $533 million to $1.2 billion with no additional interest costs. We also reentered the unsecured debt market for the two tranche $750 million green bond offering at a blended yield of 2.77%. There was robust demand for our paper, underscoring investor support for our franchise and belief in New York City. We paid off the loan on theMART with the proceeds and added the remainder to our treasury. Finally, our current liquidity is a strong $4.492 billion, including $2.317 billion of cash and restricted cash and $2.175 billion undrawn under our $2.75 billion revolving credit facilities.

q4 non-gaap earnings per share $2.21. qtrly combination of subscription and saas and license revenue was $1.7 billion, an increase of 8%.

Mark Keener, our vice president of investor relations, is also in the room today. As Ellen mentioned, I'll make a few opening comments, and then Bill will address a few details about this quarter's results. And then we'll begin the Q&A session. Obviously, financial and operating results were outstanding, but the context for describing them as notable meant something different. For the past year, we've been integrating Concho, improving underlying metrics across the business and creating the most competitive E&P for the energy transition. The significance of this quarter's performance is that it represents the post Concho go-forward baseline for the company. On a run rate basis, the integration is essentially complete. We've captured the announced $1 billion of synergies and savings from actions the company took in connection with the transaction, all ahead of schedule. We're unhedged, but even more importantly, our torque to upside is helped by having high conversion of revenue to income and cash flow. The core executables of our global operating plan are delivering as expected. We'll close out 2021 as a stronger company compared to any time in the past decade. Every aspect of our triple mandate is moving in the right direction. Our underlying portfolio cost to supply is improving. Our overall GHG intensity is lower. Our emissions intensity reduction targets are more stringent. Underlying margins are expanding, and our trailing 12-month return on capital employed is headed toward an estimated 14% by year-end, reflecting the benefit of more than just stronger commodity prices. Between now and year-end, our top priority is closing the Shell transaction, which we expect to occur in the fourth quarter. Once we close, we will be working diligently to integrate these properties and capture efficiencies in a similar fashion to what we've achieved through the Concho integration. In addition to layering in these properties on top of our existing high-performing platform, we're continuing to high-grade our portfolio and optimize the business drivers everywhere. The setup for next year is, well, notable. We're now in the process of setting our 2022 capital plans, which we expect to announce in early December. Directionally, we don't anticipate a significant departure on capex from what we included in our June update excluding Shell. In June, we provided an outlook based on a roughly $50 per barrel price that included a modest ramp in the Lower 48 to reactivate our optimized plateau plans, some incremental base Alaska investment and some longer-cycle low cost of supply investments in Canada, the Montney and in Norway. Since June, we see some inflation pressures, especially in the Lower 48. However, at this point, we'd expect to adjust scope modestly in order -- in response to maintain our base capital at a level that is roughly consistent with our June update. And then, of course, we'll add capex for the Shell properties once we've brought them into the portfolio. As we finalize our 2022 plans, we're watching the macro closely, keeping an eye on inflation and potential OBO pressures and undertaking our typical capital high-grading processes. It goes without saying the market certainly appears to be more constructive, but we must always remember that this is an incredibly volatile business. But there's more to come on that in December. We believe we're entering a very constructive time for the sector, but even so, we know that there will be relative winners. The relative winners will be companies with the lowest cost of supply investment options, peer-leading delivery of returns on and of capital and visible progress on lowering emissions intensity. That's what we offer. Our third quarter represents a glimpse and a strong jumping-off point to what you can expect from ConocoPhillips going forward. To begin, adjusted earnings were $1.77 per share for the quarter. Relative to consensus, this performance reflects production volumes that were slightly above the midpoint of guidance, better-than-expected price realizations and lower-than-expected DD&A. As for the better realizations, we captured a higher percentage of Brent pricing in our overall realized prices. And as Ryan mentioned, we're unhedged so we're getting full exposure to the current higher prices. As for DD&A, we're trending lower compared to the previous guidance as a result of positive reserve revisions due to higher prices. You saw in today's release that we lowered full year 2021 DD&A guidance from $7.4 billion to $7.1 billion. Excluding Libya, production for the quarter was 1,507,000 barrels of oil equivalent per day, which represents about 2% underlying growth. Lower 48 production averaged 790,000 barrels a day, including about 445,000 from the Permian, 217,000 from the Eagle Ford, and 95,000 from the Bakken. At the end of the quarter, we had 15 operated drilling rigs and seven frac crews working in the Lower 48. Across the rest of our operations, the business ran extremely well. In particular, our planned seasonal turnaround activity across several regions went safely and smoothly. This reflects the impact of a decision we're making to convert Concho two stream contracted volumes to a three-stream reporting basis as part of our ongoing efforts to create marketing optionality across the Lower 48. We expect to convert the majority of our contracts in the fourth quarter. Reported production is expected to increase by approximately 40,000 barrels a day, and both revenue and operating costs will increase by roughly $70 million. In other words, this conversion is earnings neutral. Besides DD&A and production, there were no other changes to 2021 guidance items. Now, once we've closed the Shell acquisition and can see where the ongoing US tax legislation conversation lands, we'll provide an updated earnings and cash flow sensitivities that consider such factors as projected 2022 price ranges and how those ranges might impact our cash taxpaying position in various jurisdictions around the globe. Coming back to third quarter results. Cash from operations was $4.1 billion, which was reduced by about $200 million for nonrecurring items, so a bit higher than the average of external estimates on an underlying basis. Free cash flow was almost $3 billion this quarter, and on a year-to-date basis, this is about $6.5 billion. Through the first nine months of the year, we've returned $4 billion to shareholders, and we're on track to meet our target of returning nearly $6 billion by the end of 2021. This is through a combination of our ordinary dividend and buybacks. So to summarize, as Ryan said, it was a notable quarter. The company is running exceptionally well, and we've achieved a significant reset of the base business post Concho. That creates a powerful platform for entering next year. We're focused on closing the Shell Permian acquisition so that we can begin the work of getting those properties fully integrated into the business, setting our capital plans for 2022, maintaining a leading position of returns on and of capital and lowering our emissions intensity. That's the triple mandate. That's what ConocoPhillips is all about. And we look forward to providing additional information in December.

q3 adjusted earnings per share $1.77 excluding items.

We will also discuss certain non-GAAP financial measures. Participants in today's call include our President and Chief Executive Officer, Steve Strah; Senior Vice President and Chief Financial Officer, Jon Taylor; and our Vice Chairperson and Executive Director, John Somerhalder. We will also have several other executives available to join us for the Q&A session. Yesterday, we reported first quarter 2021 GAAP earnings of $0.62 per share and operating earnings of $0.69 per share, which is in the upper end of our guidance range. As Jon will discuss, our results reflect the continued successful implementation of our investment strategies, higher weather-adjusted load in our residential class and strong financial discipline in managing our operating expenses. Last month, I was honored to be named FirstEnergy's CEO and appointed to the Board of Directors. I greatly appreciate the trust and confidence the Board has placed in me, since I was named President last May and Acting CEO in October. I have great pride in FirstEnergy and the work our employees do to serve our customers and communities. It's my privilege to continue leading the company as we navigate our current challenges and position our business for long-term stability and success. As we work to move FirstEnergy forward, my priorities are the continued safety of our employees and customers. Ensuring that ethics, accountability and integrity are deeply ingrained in our culture and supported by a strong corporate compliance program. Executing FE forward, our transformational effort to capitalize on our potential, deliver long-term results and maximize near-term financial flexibility and continuing our investments in infrastructure growth opportunities from electrification, grid modernization and renewable integration to benefit our customers. During today's call, I'll provide an update on the Department of Justice investigation, regulatory matters and our FE Forward initiative and other business developments. John Somerhalder will join us for an update on the Board and management's work toward instilling a culture of compliance built upon the highest standards of ethics and integrity. As we discussed on our fourth quarter call, we are committed to taking decisive actions to rebuild our reputation and focus on the future and continuing to cooperate with the ongoing government investigations. We have begun discussions with the DOJ regarding the resolution of this matter, including the possibility FirstEnergy entering into a deferred prosecution agreement. We can't currently predict the timing, outcome or the impact of the possible resolution with the DOJ. Our goal is to take a holistic and transparent approach with a range of stakeholders across the spectrum of matters under review. This approach is consistent with the changes we're making in our political and legislative engagement and advocacy. For example, we are stopping all contributions to 501(c)(4)s. We've paused all other political disbursements, including from our political action committee. And we have limited our participation in the political process. We have also suspended and/or terminated various political consulting relationships. In addition, we'll be expanding our disclosures around political spending in order to provide increased transparency. For example, we have committed to post updates on our website, on our corporate political activity, relationship with trade associations and our corporate political activity policy, which is under revision. A comprehensive and open approach is also the cornerstone in our regulatory activity. In Ohio, we continue taking proactive steps to reduce the regulatory uncertainty, affecting our utilities in the state. This includes our decision in late March to credit our Ohio utility customers approximately $27 million. This comprises the revenues that were collected through the decoupling mechanism authorized under Ohio law plus interest, the partial settlement with the Ohio Attorney General to stop collections of decoupling revenues and our decision not to seek recovery of lost distribution revenues from our Ohio customers. Together, these actions fully address the requirements approved in Ohio House Bill 128 as well as the related rate impact of House Bill 6 on our customers. These are important steps to put this matter behind us. In other Ohio regulatory matters, we proactively updated our testimony in the ESP quadrennial review case to provide perspective SEET values on an individual company basis. We are engaged in settlement discussions with interested parties on this matter as well as the 2017, 2018 and 2019 SEET cases that were consolidated into this proceeding. During our last call, we mentioned that we were proactively engaging with our regulators to refund customers for certain vendor payments. Those conversations are under way in each effective jurisdiction. In Ohio at the PUCO's request, the scope of our annual audit of Rider DCR has been expanded to include a review of these payments. Outside of Ohio, our state regulatory activity is concentrated on customer-focused initiatives that will support the transition to a cleaner climate. For example, on March 1, JCP&L, filed a petition with the New Jersey Board of Public Utilities seeking approval for its proposed EV driven program. If approved, the four-year $50 million program would offer incentives and rate structures to support the development of EV charging infrastructure throughout our New Jersey service territory, in an effort to accelerate the adoption of electric vehicles and provide benefits to our residential, commercial and industrial customers. And in late March the Pennsylvania PUC approved our five-year $390 million energy efficiency and conservation plan, which supports the PUC's consumption reduction targets. In March, we closed the transaction to sell JCP&L's 50% interest in the Yards Creek pump-storage hydro plant and received proceeds of $155 million. And we also announced plans to sell Penelec's Waverly New York distribution assets, which serves about 3,800 customers to a local co-op. The deal, which is subject to regulatory approval will simplify Penelec's business by solely focusing on Pennsylvania customers. During our fourth quarter call, we introduced you to FE Forward, our companywide effort to transform FirstEnergy into a more resilient, effective industry leader delivering superior customer value and shareholder returns. We expect the FE Forward initiatives to provide a more modern experience for our customers with efficiencies in operating and capital expenditures that can be strategically reinvested into our business, supporting our growth and investments in a smarter and cleaner electric grid, while also maintaining affordable electric bills. During the first phase of the project, we evaluated our processes, business practices and cultural norms to understand where we can improve. While our safety and reliability performance is strong, we found opportunities in many areas to enhance and automate processes, take a more strategic focus on operating expenditures and modernize experiences for our customers and employees. We've identified more than 300 opportunities and now we are diving deeper into these ideas, developing detailed executable plans as we prepare for implementation beginning later this quarter. Examples of this work include, improving the planning and scheduling through integration of systems to allow our employees to deliver their best to our customers, leveraging advanced technologies such as drones and satellite imagery to improve our vegetation management programs, using predictive analytics and web-based tools to provide our customers with more self service options and improve their experience and leverage purchasing power to optimize payment terms. As part of these efforts, we intend to evaluate the appropriate cadence to initiate rate cases on a state-by-state basis to best support our customer focused strategic priorities. We will also remain focused on emerging technologies, smart grid, electric vehicle infrastructure and our customers' evolving energy needs as we think through how to reduce our carbon footprint. We're off to a great start this year, and yesterday we reaffirmed our 2021 operating earnings guidance of $2.40 to $2.60 per share. Our leadership team is committed to upholding our core values and behaviors and executing on our proven strategies as we put our customers at the center of everything we do. We will take the appropriate steps to deliver on our promise to make FirstEnergy a better company, one that is respected by our customers, the investment community, regulators and our employees. It's a privilege and a pleasure to join you today. I'd like to start by sharing my impressions of FirstEnergy after almost two months in this role. This is a company with a firm foundation, including a commitment to improve in the area of governance and compliance, our commitment to customers by embracing innovation and technology to help ensure the strength, resilience and reliability of its transmission and distribution businesses, a deep seeded and strong safety culture and a strong potential to deliver significant value to investors through customer focused growth. Since joining the team, I've been supporting senior leadership in advancing the company's priorities, strengthening our governance and compliance functions and enhancing our relationships with external stakeholders, including regulators and the financial community. Steve spoke about our business priorities. So, I will focus my remarks today on our compliance work including remedial actions. First, I'd like to update you on our internal investigation which has rebuild no new material issues since our last earnings call. The focus of the internal investigation has transitioned from a proactive investigation to continued cooperation with the ongoing government investigations. Management and the Board with the assistance of the compliance subcommittee of the Audit Committee, have been working together to build a best-in-class compliance program. Through these efforts, we have identified improvement opportunities in five broad categories, including governance, risk management, training and communications, concerns management and third-party management. As part of these efforts FirstEnergy is embracing a commitment to enhancing its compliance culture to be best-in-class. Some of the actions completed to date include hiring, our Senior Vice President and Chief Legal Officer, Hyun Park in January; Antonio Fernandez, who joined as Vice President and Chief Ethics and Compliance Officer last week; and myself. On the Board side, Jesse Lynn and Andrew Teno, joined us from Icahn Capital in March. And the Board has nominated a new Independent Member, Melvin Williams for election at the Annual Shareholders Meeting when Sandy Pianalto's term ends next month. I believe the insights and experience of these new leaders are helping to round out a very committed and confident Board and management team. In March, the Board affirmed our confidence in Steve by naming him CEO. Steve has consistently demonstrated the integrity, leadership skills, strategic acumen and deep knowledge of our businesses needed to position FirstEnergy for long-term success and stability. These changes along with the Board's reinforcement of the executive team's commitment to setting the appropriate tone at the top or support a culture of compliance going forward. For instance, we recently held an event where the Chairman and the Chair of the Compliance subcommittee addressed the company's top 140 leaders, regarding the expectations to act with integrity, in everything we do. Our legal department recently completed training on up the ladder reporting and we have enhanced our on-boarding process for new employees and for third-parties on expectations around our code of business conduct. Over the course of the next few months, there will be many more steps the company will take to enhance our compliance program such as, continuing to build the new more centralized compliance organization under Antonio's leadership; addressing our processes, policies and controls, which include additional oversight for political contributions; continuing to emphasize our values and expectations in ongoing communications with our employees, incorporating compliance into our goals and performance metrics and holding all employees regardless of title to the same standards; enhancing the channels for incident reporting and developing thorough and objective processes to investigate and address allegations of misconduct; and insuring increased communications with and training of employees with respect to our commitment to ethical standards and integrity of our business procedures; compliance requirements; our code of business conduct; and other company policies; and understanding and utilizing the process for reporting suspected violations of law or code of business conduct. We have also enhanced our internal controls around disbursements to require additional approvals, targeted reviews of any suspicious payments and a reassessment of approval levels across the entire company. Additionally, in the area of disbursements, we will update and clarify policies and procedures, conduct training and institute a regular audit program that reviews payments and services performed. A detailed list of the corrective actions we are taking can be found on Pages 8 and 9 of our first quarter FactBook. Over the next several months, we expect to make significant progress in the areas of compliance led by Antonio's organization, where it will continue to be overseen by the Board and the newly established management steering committee for Ethics and Compliance. Through these efforts, we expect the material weakness associated with the tone at the top to be remediated by the time we file our fourth quarter earnings. Our leaders are continuing to elevate the importance of compliance and working to regain the trust of employees and our stakeholders by modeling appropriate behavior and consistently communicating that compliance and ethics are core values, just like safety. We are committed to ensuring that employees understand what is expected of them and are comfortable reporting ethical violations without fear precautions. By continually emphasizing the importance of compliance to our strategies and future as well as demonstrating that we are setting the right tone at the top, we strive to bolster confidence among our employees that the management team and the Board are taking the proper decisive actions to move the company forward. I believe we have learned a lot from recent challenges and are taking the right actions to emerge as a better, stronger company with a bright future. Now I'll turn the floor over to Jon Taylor for a review of first quarter results and the financial update. We have provided new disclosures in three main areas within our Investor FactBook. Our steps to support a cleaner, smarter grid and the movement to more green and renewable resources, additional disclosures on our balance sheet, including our funds from operations target and the steps we're taking to achieve our goals and third, enhanced ESG disclosures. Also note that we continue to provide more robust disclosures on ROEs including more granular sensitivities. Yesterday we announced GAAP earnings of $0.62 per share for the first quarter of 2021 and operating earnings of $0.69 per share, which was at the upper end of our guidance range. GAAP results for 2021 include two special items, regulatory charges related to customer refunds associated with previously collected Ohio decoupling revenues and expenses associated with the investigation. In our distribution business our results for the first quarter of this year as compared to 2020 reflect higher residential usage on both in actual and weather-adjusted basis as well as growth from incremental riders and rate increases, including DCR and grid modernization in Ohio, the distribution system improvement charge in Pennsylvania and the implementation of our base rate case settlement in New Jersey. These drivers were partially offset by $0.10 per share related to the absence of Ohio decoupling revenues and our decision to forgo the collection of lost distribution revenues from our residential and commercial customers. Our total distribution deliveries for the first quarter of 2021 decreased 2% on a weather-adjusted basis as compared to the last year, reflecting an increase in residential sales of 2% as customers continue to spend more time at home in the first quarter of 2021, a decline of 7% in commercial sales and in our industrial class first quarter low decreased 3%. It's worth noting that total distribution deliveries through the first quarter are consistent with our internal load forecast, with residential demand 2% higher versus our forecast, while industrial load is down 2%. In our regulated transmission business earnings decreased as a result of higher net financing costs, which included an adjustment to previously capitalized interest, partially offset by the impact of rate base growth at our ATSI and MAIT subsidiaries. Finally, in our corporate segment, results reflect lower operating expenses, offset by the absence of a first quarter 2020 pension OPEB credit, related to energy harbors emergence from bankruptcy as well as higher interest expense. We are off to a solid start for the year and are reaffirming our operating earnings guidance of $2.40 to $2.60 per share for 2021. We've also introduced second quarter guidance of $0.48 to $0.58 per share. In addition, our strong focus on cash helped drive a $125 million increase in adjusted cash from operations and a $185 million increase in free cash flow versus our internal plan for the first quarter. As to a couple of other financial updates, our 2021 debt financing plan remains on track. In March FirstEnergy transmission issued $500 million in senior notes and a strong well supported bond offering that showcase the strength of our transmission business. The deal was oversubscribed and on par with an investment grade offering. We used the proceeds to repay $500 million in short-term borrowings under the FET revolving credit facility. In addition, we repaid $250 million at the FirstEnergy Holding Company. We also successfully issued $200 million in first mortgage bonds at MonPower in April, that was also very well supported. This supports our earlier commitment to reduce short-term borrowings as well as our goal to improve our credit metrics at FirstEnergy, return to investment grade as quickly as possible and maintain the strong credit ratings at our utilities. We continue to provide the rating agencies with regular updates on our business and we are working with them to develop a clear outline of what is needed to return FirstEnergy to investment grade credit ratings. Key milestones include governance and compliance changes at our company, resolution of the DOJ investigation and solid credit metrics. As to more longer term financing needs through the execution of FE Forward, we have reduced our debt financing plan by approximately $1 billion through 2023, mainly at the FirstEnergy and FirstEnergy Transmission holding companies. Additionally, as we have previously mentioned, equity is an important part of our overall financing plan, with plans to raise up to $1.2 billion of equity over 2022 and 2023. As we said previously, we'll flex these plans as needed and we are also exploring various alternatives to raise equity capital in a manner that could be more value enhancing to all stakeholders. These actions combined with new rates at JCP&L and our 60% plus formula rate capital investment program will generate $150 million to $200 million of incremental cash flow each year, while maintaining relatively flat adjusted debt levels through 2023, all of which will support our targeted 12% to 13% FFO to debt range. Turning to our pension. Our funding status was 81% at March 31, up from 78% at the end of last year, resulting in a $500 million reduction in our unfunded pension obligation, which improves our adjusted debt position with the rating agencies. The extended funding timeframe permitted under the American Rescue plan, together with the modification of interest rate stabilization rules means that we do not expect any funding requirements for the foreseeable future, assuming our plan achieves a 7.5% expected return on assets. Although, we plan to make contributions into the pension next year, this legislation provides us with additional discretion and flexibility to make voluntary contributions as we assess our capital allocation plans. As Steve mentioned discussions have begun with the Department of Justice. While no contingency has been reflected in our consolidated financial statements, we believe that it is probable we will incur a loss in connection with the resolution of this investigation. However, we cannot yet reasonably estimate the amount. Finally last month President Biden introduced the American Jobs Plan, which includes a corporate tax increase and proposed minimum tax as well as potential opportunities related to proposed infusion into the electric vehicle infrastructure and the energy grid. Clearly, it's very early in the process, but the corporate tax provision could be slightly cash positive for us if implemented in its current form. Our solid first quarter results and expectations for the year reflect our strong operating fundamentals and the continued success of our strategies to modernize and enhance our distribution and transmission systems. As we move our company forward, we are laser focused on unlocking opportunities and increasing value for our shareholders, customers and employees. Now, let's open the call to your Q&A.

compname reports q2 loss per share $0.05. q2 loss per share $0.05. q2 revenue $113 million. q2 adjusted loss per share $0.29 excluding items. customer spending has been 'exceptionally' weak, impacting demand for many of forum's products.

It was a year ago this week that we reported our 31st consecutive year of sales growth. In 2019, we achieved record levels of sales, earnings per share and cash flow. As you may recall 2020 got off to a good start for us with mid-single-digit growth in sales through February 2020 was forecasted to be another good year of sales and earnings growth. By mid-March a global pandemic and national emergency had been declared and the lives of people throughout the world were disrupted. In the months that followed we worked to keep our employees and our store customers safe from the virus. We reduced spending, negotiated lower product costs and improved liquidity. We significantly reduced our exposure to excess inventories caused by temporary store closures. And by curtailing inventory commitments, we were able to improved price realization and margins last year. When the pandemic hit, we accelerated the execution of new capabilities to support the same-day pickup of eCommerce orders in our stores, curbside pickup and the direct shipment of eCommerce orders from our stores. We engaged remotely with our wholesale customers, leveraged our investments in digital product imagery and secured higher bookings for our product offerings this year. We also engaged more deeply and effectively with consumers through social media, building a virtual community of families with young children. During the pandemic, we added over 2 million new eCommerce customers and with the support of our wholesale customers, the online sales of our brands exceeded $1 billion last year. The pandemic was a challenging experience for all of us, but it also enabled us to find new ways to improve our business. We believe the foundation of our company is now stronger because of the pandemic and we are better positioned to weather future storms that may occur. It was the strongest quarter of the year in terms of sales and earnings contribution and the performance was in line with what we had planned. We reporting a record gross profit margin in the fourth quarter enabled by a stronger product offering, leaner inventories and more effective marketing. As planned, spending grew in the quarter, driven by investments in eCommerce, better staffing and retention in our distribution centers and the partial restoration of compensation for all of our employees. Compensation was curtailed for several months earlier in the year. With respect to sales trends, the fourth quarter got off to a strong start with October sales at 95% of prior year sales, consistent with the very strong demand we saw in September. On a comparable basis, normalizing a holiday calendar shift and excluding the 53rd week. November and December sales were 84% of prior year sales. Our best analysis of the deceleration in demand relative to September and October reflects lower store traffic due to the resurgence of the virus heading into the final months of the year. And we're lean on inventories heading into the holidays and less promotional than last year. Sales trends improved meaningfully at the end of December and continued into January. We saw growth in January sales and are expecting first quarter sales to be comparable to last year. March is expected to be the largest month of sales and earnings contribution in the first half this year. March sales have historically been driven by Easter holiday shopping and the arrival of spring like weather in more parts of the country. We're expecting very good growth in the first half of this year as we comp up against temporary store closures last year. And for the year, we're also expecting good growth in sales and profitability despite the lingering effects of the pandemic. Our Retail segment was the largest contributor to our fourth quarter sales and profitability. All of our U.S. stores remained open for the quarter though we did curtail hours 13% based on lower traffic. COVID continues to have a material impact on store traffic. Our border and tourist stores have been most affected by the pandemic. Our border and tourist stores represent 10% of our U.S. stores that contributed over 20% of the decline in comparable sales. This past year, we saw a fewer international guests in our stores and fewer shopping with us online. In part, we attribute the decline in online demand from international customers to a significant reduction in our promotions this past year. Those who came into our stores in the fourth quarter came to buy. Our store conversion rate grew 5% in the quarter. The average transaction value grew 9%, driven by higher units per transaction and better price realization. We ran much leaner in store inventories in the fourth quarter, recall that we curtailed fall and winter inventory commitments when the risks of the pandemic became clear to us in March. With leaner inventories, we focused our marketing less on promotions and more on the beauty of our product offerings. In the fourth quarter 94% of our comparable stores were cash flow positive. Our mall stores saw the largest decrease in comparable sales. 90% of our stores are in open-air shopping centers and these stores outperformed the chain. As we shared with you last year, we plan to close about 25% of our 2019 store portfolio upon lease expiration. About 60% of those closures are planned this year, 80% of the closures are planned by the end of next year. These stores collectively contributed over $140 million in sales in 2020 with an EBITDA margin of less than 3%. By comparison, the balance of our stores had an EBITDA margin of nearly 18%. Our focus is on fewer better higher margin stores located in more densely populated areas to provide a higher level of convenience to in-store and online customers. Our store closure plan is expected to be accretive to earnings in 2021 and provide a $10 million cumulative earnings benefit by 2025. ECommerce continues to be our fastest growing and highest margin business. ECommerce penetration grew to 45% of our retail sales, up from 38% in the third quarter. Increasingly, we are seeing customers enjoy the convenience of picking up their online purchases at our stores located closer to their homes. Omni-channel sales grew to 24% of our eCommerce orders in the fourth quarter, up from 12% last year. Last year, we leveraged our stores from Maine to Hawaii to ship online purchases from over 600 stores. As a result, we improve the speed of delivering online purchases and improve the profitability of our eCommerce business. We expect the mix of omni-channel sales to grow to nearly 40% of online orders by 2025. Our Wholesale segment was the second largest contributor to our fourth quarter sales and profitability. Collectively, we continue to see double-digit growth with our exclusive brands which were margin accretive in the quarter. ECommerce sales of our brands through our wholesale customers grew over 30% in the fourth quarter and up over 50% for the year. Sales of our flagship Carter's brand were lower in the fourth quarter, reflecting our decision to curtail fall and winter inventory commitments. Off-price sales were also lower in the quarter. The excess inventories created by temporary store closures and related cancellations due to the pandemic were largely sold through our own stores at higher margins. Going forward, we will continue to use our own stores to move through a higher percentage of excess inventories rather than selling to the off-price channel. Spring selling is off to a good start with our wholesale customers. They too are leaner on inventory, have a lower mix of prior season goods and are seeing better price realization and margins. We're projecting very good growth in wholesale this year, especially in the first half, assuming all stores remain open. Our International segment contributed over 11% of our fourth quarter sales. Canada and Mexico contributed nearly 90% of our international sales. Our eCommerce sales in those markets grew over 60% in the fourth quarter and grew to 30% of our international retail sales from 18% last year. Both businesses performed remarkably well despite COVID-related store closures in the fourth quarter. In Canada and Mexico, many of our stores were closed in the weeks leading up to Christmas. Some of those closures continued through February. The strength in our international wholesale sales was our Simple Joys brand sold exclusively through Amazon. That business nearly doubled in the fourth quarter with Amazon's expansion of our brand into Europe and Japan. Most challenging component of our International segment is with smaller retailers, representing our brands in over 90 countries. Though individually small, collectively they contributed about 15% of our international sales in 2019 and were margin accretive. Wholesale sales to these retailers were down over 50% in the fourth quarter. Based on bookings from these wholesale customers, we're projecting a good recovery in this component of our business this year. Our supply chains did an excellent job, supporting the continued acceleration in eCommerce demand in the fourth quarter. The speed of delivering online purchases was meaningfully better than last year and we saw a related improvement in our customer satisfaction ratings. In 2020, we invested to ensure the safety of our distribution center employees, raised their wages to improve staffing and retention, and invested in technology to improve the speed of delivery. Our supply chain team also negotiated lower product costs for 2021, which may enable us to further improve our gross profit margin this year. In the fourth quarter, we began to see delays in the receipt of products from Asia. Our suppliers were running on average 10 days late due to COVID-related challenges and precautions and transportation delays. Since the reopening of stores last summer, there's been a surge of imports into the United States. As a result, there is an unusual shortage of cargo containers in Asia, further delaying the shipment of our products to the United States. Given the imbalance in the supply and demand for cargo containers, the cost per container has risen significantly in recent months. This is a macro issue. Our best information suggests we'll see delays and higher transportation rates for most of the first half. The surge in imports has also caused congestion at the West Coast ports in California, adding additional time to the receipt of goods. Our wholesale customers are challenged by the same delays. The late arrivals of our warm weather products and there is plenty of warm weather ahead of us. To date, we have not experienced any meaningful order cancellations, but that's a higher risk than usual given the abnormal delays in deliveries from Asia. Since our last call with you, we have revisited the longer term potential of our brands. By 2025, we expect sales to grow to nearly $3.7 billion with an expansion of our operating margin to 13%. Our growth strategies are focused on leading in eCommerce, winning in baby, aging up our brands and expanding globally. Our Carter's brands have the largest share of the eCommerce children's apparel market in the United States. In the fourth quarter, Carter's online experience was rated as one of the top user experiences among the largest U.S. and European eCommerce websites. We also have unparalleled relationships with the leading retailers of young children's apparel, including Amazon, Target, Walmart, Kohl's and Macy's. Carter's is the number one brand in baby apparel with over 4 times this year of our nearest competitor. It's been the best-selling brand in young children's apparel for generations of consumers. It's possible that we may see fewer births near-term due to the pandemic. We've seen births decline almost every year since the Great Recession began in 2007. And since 2007, our sales and earnings have more than doubled. With the promise of vaccines more broadly available this year, government stimulus helping families with young children, historically low interest rates, strong housing market and an improving economy, we view the risk of fewer births as a potential short-term challenge, but not a longer term obstacle to our growth. We have the number one market share in the baby and toddler apparel markets. The largest growth in our sales before the pandemic, both in percentage and absolute dollars, was driven by our product offerings focused on 10 -- 5 to 10-year-old children. With the continued success of our age-up initiative and the reopening of schools this year, we expect that our age-up strategy will be a good source of growth for us in the years ahead. We plan to extend the reach of our brands globally and profitably. International sales contributed about 12% of our consolidated sales in 2020 and are expected to grow to 15% of sales by 2025. Over the next five years, over 60% of our international sales growth is forecasted to be driven by our multichannel operations in Canada and Mexico. Our brands are also sold through Amazon, Walmart and Costco on a global basis. We expect good growth from these multinational retailers and other retailers who are extending the reach of our brands to families with young children throughout the world. In summary, we strengthened our business this past year and we're expecting a good multi-year recovery from the pandemic. We have built a unique multi-brand multi-channel model, which we believe is well positioned to grow and gain market share. We're committed to strengthen our business and provide good returns to our shareholders in the years ahead. I'll begin on Page 2 with our GAAP income statement for the fourth quarter. Net sales in the quarter were $990 million, down 10% from the prior year. This year's fiscal year included a 53rd week, so the fourth quarter consisted of 14 weeks versus 13 weeks last year. This extra week represented $32 million in additional net sales in 2020 and contributed roughly $1 million of operating income. Reported operating income was $134 million, a decrease of 18% and reported earnings per share for the fourth quarter was $2.26, down 20% compared to $2.82 a year ago. On Page 3 is our GAAP income statement for the full year. Obviously, sales and earnings this past year were meaningfully affected by the global pandemic. Net sales for the year were just over $3 billion, a decline of 14%. Reported operating income was $190 million, down nearly 50% and reported earnings per share for the year was $2.50, down 57% from $5.85 in 2019. Our fourth quarter and full year results for both 2020 and 2019 contained unusual items which are summarized on Page 4. We've treated these items as non-GAAP adjustments to our reported results to enable greater comparability and to provide what we believe is a clear view into the underlying performance of the business. My remarks today will speak to our results on an adjusted basis which excludes these unusual items. On Page 5, we've summarized some highlights of the fourth quarter. It was a strong finish to what's obviously been an eventful and challenging year. We met our expectations overall for our financial performance in the quarter. We saw good continued momentum in several important parts of our business. ECommerce comparable sales were strong, up 16% in the U.S. and up 47% in Canada. Our store sales in the U.S. were stronger than we had forecasted in part due to a slight improvement in the store traffic trend in December. A real headline and driver of our fourth quarter performance was gross margin, which expanded significantly over last year; this was an acceleration over the gross margin expansion which we achieved in the third quarter. Despite lower earnings, our cash flow was very strong in the year, reflecting our working capital initiatives implemented in response to the pandemic. And our balance sheet and liquidity both were in great shape at the end of the year. Turning to Page 6 for a summary of net sales for the fourth quarter; reported net sales declined 10% to $990 million. On a comparable 13-week basis, net sales declined 13% year-over-year. I'll cover our business segment results in some more detail in a moment. But as we had expected, sales were lower year-over-year across the business. Sales were negatively affected certainly by the ongoing disruptions of the pandemic, but also in part due to some of our decisions earlier in 2020 to curtail our fall and inventory commitments. In recent weeks, we have also been further challenged by delays in the planned receipt of inventory. This is an industrywide issue with many companies experiencing delays in the scheduled arrival of product from Asia. We've estimated that the impact of late arriving product negatively affected sales by about $30 million in the fourth quarter. Turning to Page 7 and our adjusted P&L for the fourth quarter; while sales were down versus last year, as I mentioned, the profitability of our sales increased significantly with our gross margin increasing by 460 basis points to 47.1%. This represented record quarterly gross margin performance. So despite sales decreasing over $100 million, gross profit dollars were roughly comparable with a year ago. This increased gross margin rate was driven by the strength of our product offering, improved price realization, which was a result of more effective marketing and promotion, and our focus on inventory management, including good progress in reducing excess inventory. Royalty income declined about $1 million versus last year, largely due to the timing of shipments of spring seasonal goods which shifted from the fourth quarter last year into first quarter 2021 and late arriving product. Adjusted SG&A increased 5% to $327 million. We partially restored certain compensation provisions, which had been suspended earlier in the year. So the fourth quarter reflected some element of catch up for these expenses. Our employees did great work this past year managing through very difficult circumstances. As we rationalized our promotional activity in Q4, we reinvested some of those savings into marketing, specifically digital media, which delivered good returns. We also made several investments to strengthen our eCommerce and omni-channel capabilities, including the launch of a new mobile app, enhancing our websites and continued investment in improving the speed and efficiency of our distribution center which supports eCommerce. We believe these investments will strengthen our capabilities long-term and help us as the business recovers from the pandemic. Adjusted operating income was $145 million compared to $162 million in the fourth quarter of 2019 and adjusted operating margin was 14.7%, comparable to last year. Below the line, net interest expense was $15 million, up from $9 million in the prior period due to the $500 million in new senior notes we issued in the second quarter. We had a $2 million foreign currency gain in the fourth quarter and our effective tax rate was approximately 18%, down from about 19% last year. On the bottom line, adjusted earnings per share was $2.46, down 12% compared to $2.81 in 2019. Moving to Page 8 with some balance sheet and cash flow highlights. Our balance sheet and liquidity remained very strong. Total liquidity at the end of the fourth quarter was approximately $1.8 billion with $1.1 billion of cash on hand and virtually all of the borrowing capacity under our $750 million credit facility available to us. Quarter-end net inventories were up 1% to $599 million. While largely comparable to last year in total of the composition of our inventory was very different because of our decisions to proactively curtail inventory earlier in the year, our inventory levels in our stores and for the core Carter's brand at wholesale were meaningfully lower than a year ago. Our exclusive brand inventories were generally higher at year-end. Total year-end inventories were down year-over-year when considering the inventory from summer 2020, which we pack and hold earlier in the year as the pandemic unfolded. We made good progress selling through this pack and hold inventory during the year and expect to sell the remaining balance as we move through the first half of 2021. We also made good progress reducing our overall level of excess inventory during the fourth quarter. Our Q4 accounts receivable balance declined 26% compared to the prior year, principally due to lower wholesale sales. Accounts payable increased by $290 million to $472 million, which reflects the extension of payment terms and rent deferrals. Long-term debt was nearly $1 billion, up from roughly $600 million at the end of last year. This increase reflects our successful senior notes issuance this past May and full repayment of outstanding revolver borrowings in the third quarter. Operating cash flow in 2020 increased by about $200 million to $590 million. Our strong focus on working capital and management of spending enabled us to achieve this record performance despite lower earnings in 2020. Note that while we're planning higher earnings in 2021, operating cash flow is expected to be lower this year due to the repayment of deferred rent and adjustments to some vendor payment terms. Moving to Page 9 with a summary of our adjusted full year performance; while 2020 sales and earnings were of course meaningfully affected by the pandemic, the combination of our strong product offering, marketing, inventory management and productivity initiatives enabled us to minimize the overall profit impact of lower sales. With demand so uncertain we made the choice early on in 2020 to focus more on profitability than on sales. The effectiveness of our initiatives is most evident and looking at the difference in our performance between the first and second halves of the year, which we've summarized on Page 10. First half sales were significantly affected when our retail stores were closed for much of the second quarter and shipments to many of our wholesale customers were suspended, while their own stores were closed. Gross margin performance was starkly different between the first and second half. In the first half our gross margin declined by 350 basis points in part due to taking higher provisions for excess inventory. In the second half, we achieved record gross margin as a result of improving our realized pricing and making good progress on clearing through that excess inventory. Profitability followed this gross margin performance with a much smaller decline in adjusted operating income in the second half with an expansion of our adjusted operating margin versus a decline in the first half. Turning to Page 12 with a summary of our business segment performance in the fourth quarter. In the largest part of our business, U.S. retail, we improved profitability significantly despite the decline in total sales driven by improved product margin and good growth in our high margin eCommerce business. Profitability in U.S. wholesale and International declined with sales lower it was more difficult to leverage costs in these businesses. The increase in corporate expenses was largely due to the additional provisions for compensation and to a lesser extent some spending on external consulting in the quarter. Now, turning to Page 13 with some detail on U.S. retail performance in the fourth quarter. Total segment sales declined 6% compared to last year. Total comparable sales declined 9%, reflecting strong eCommerce growth and lower store sales. Q4 traffic while down meaningfully versus a year ago came in ahead of our expectations and was better than the apparel industry benchmark which we follow. The adjusted operating margin of our U.S. Retail segment improved by 280 basis points to 19.1%, driven by higher product margins as a result of improved price realization, lower product costs and lower inventory provisions. These gains were partially offset by investments to strengthen our eCommerce business and the timing of compensation provisions. Moving to Page 14 with an update on our omni-channel initiatives; our investments in recent years to build our omni-channel capabilities are clearly paying off. The ability to pair our leading eCommerce website with our nationwide network of stores is a strong competitive advantage. As shown in the chart here, we saw strong year-over-year growth in omni-channel demand in the fourth quarter. We believe these capabilities provide a better experience for our customers in terms of convenience, flexibility and shorter click to consumer times. Our store-based fulfillment options also generally provide better economics compared to traditional fulfillment from our distribution center. Lastly, our ship-to-store and pickup in-store options have driven significant traffic to our stores accounting for 1.7 million store visits in 2020. About 25% of the time customers picking up their online orders made incremental purchases while in the store. Moving to Page 15 to some of our recent marketing; fourth quarter marked the arrival of the first babies conceived during COVID. While 2020 certainly provided its share of stress and negative news, there is no happier occasion than the arrival of a new baby. Campaign featured real families and their babies born in 2020. Campaign has generated an overwhelmingly positive response, which drove gains in brand awareness, brand favorability and future purchase intent with customers, while introducing Carter's the number one most trusted baby brand to a new audience of parents. On Page 16 we continued to innovate in our marketing in the fourth quarter and lean into emotionally driven digital experiences for families such as our virtual visits with Santa and virtual PJ parties with Leslie Odom Jr., the star of Hamilton. These millennial parents have responded well to these digital offers. As Mike said, we added 1 million new online customers in 2020. These brand's storytelling and customer engagement efforts resulted in a record 8 billion media impressions across the year, a significant increase over 2019. Overall, Carter's continues to enjoy the highest level of engagement on social media among all the other major players in the young children's apparel market. Turning to Page 17; we continue our efforts to expand the reach of our brands to more diverse consumers, which reflects our company's broader focus on diversity and inclusion. To celebrate the wonderful legacies of historically black colleges and universities and to inspire the next generation, we recently launched an HBCU apparel collection partnering with a series of HBCU alumni influencers. We also partnered with Sisters Uptown Bookstore in New York City on a Black History Month reading series, highlighting historical black figures and their notable contributions to our country and society. Moving to Page 18 and with a recap of the U.S. wholesale results for the fourth quarter; net sales were $290 million compared to $349 million a year ago. Despite late arriving product, we've largely achieved our sales forecast in wholesale for the quarter. Sales of the Carter's brand and sales in the off-price channel were each down about 40%, tracking with our reduced inventory positions in these parts of the business. We are planning for good growth of sales in the core Carter's brand in 2021. With regard to the off-price channel sales, we made much greater use of our own retail stores in the past year to clear excess inventory at higher recovery rates than we've historically achieved in the off-price channel. Online demand for our brands through our wholesale customers was strong in the fourth quarter with growth of 36% over the prior year. U.S. wholesale adjusted segment income was $54 million in the fourth quarter compared to $67 million a year ago. Adjusted segment margin declined 60 basis points, reflecting higher compensation and marketing expenses that were offset in part by lower inventory-related charges and lower bad debt expense. On Page 19, we've included a photo from Kohl's, which is one of our largest and longest tenured wholesale customers. Our Carter's baby shops at Kohl's continue to provide a competitive advantage, which elevates the presence of our brand and the customer shopping experience. Our Little Baby Basics assortment drove strong sales increases all season as customers stocked up on these must-have basics. This product is shown here in the front isle of this Carter's shop. On Pages 20 through 22, we've included a few slides that highlight our exclusive brands which are available at Target, Walmart and on Amazon. These brands had a terrific 2020 and that momentum continued into the fourth quarter where collectively sales of the exclusive brands increased 13% over 2019. On Page 21, we've depicted some of the beautiful Child of Mine product carried at Walmart. We've seen a significant -- we've seen significant growth of the Child of Mine brand online with Walmart over the past year. On the next page, Simple Joys on Amazon continues to be a good source of growth for us. In 2020, we expanded our product offering in key categories and added incremental categories such as outerwear, robes and sleep bags. Pictured here is our latest brand store featuring a range of products, including our 2-Way Zip Sleep & Play swimwear and play wear for newborns to toddlers. Moving to Page 23 and our fourth quarter results for our International segment; international net sales declined 13% to $114 million. We saw significant disruption in our Canadian and Mexico stores in the fourth quarter as many stores were closed due to the pandemic in these markets. Online demand in Canada was very strong with eCommerce comps up nearly 50%. As Mike mentioned, the disruption in our international partners business continued in the fourth quarter, but we're planning for a rebound in this part of our business in 2021. International adjusted operating margin was 13.3% compared to 16.2% a year ago. This decline reflects deleverage of store expenses due to lower store sales, eCommerce investments, and the catch-up compensation provisions, offset by lower inventory costs. On the next few pages, beginning on Page 25, we've summarized some of our thoughts on our strategic positioning in the industry and the growth we're targeting over the next few years. We believe the company has a number of strategic advantages in the marketplace. You've heard us speak about many of these over the years. Our brand portfolio contains the most established and trusted brands in which multiple generations have clothed their children. We are unique in our multi-channel business model that broadly distributes our brands, including through a growing and vibrant direct-to-consumer business. We've had a long record of strong operating performance and returns, including significant cash generation. On Page 26, we've summarized our mission and vision. Clearly, our objective is to continue to lead the marketplace with special emphasis on the strategic pillars listed here, leading in eCommerce, continuing to win in baby, aging-up and expanding globally. We've recently refreshed our multi-year financial forecast. It is difficult to predict the future right now with a lot of precision, but we believe good growth is possible over the next several years. We believe we can generate mid-single-digit growth overall in net sales comprised of low single-digit growth in U.S. retail, mid-single-digit growth in U.S. wholesale and high single-digit growth in our International segment. We believe profitability can grow faster than sales as we continue to pursue our transformation and productivity agenda. So our target for operating income is in the low double-digit growth range. We believe our anticipated significant cash generation provides us an opportunity to augment operating income growth through debt pay down and the resumption of share repurchases and thereby target earnings per share growth in the mid-teens. Our forecasts indicates we will generate substantial cash in the coming years, which provides us significant flexibility to reinvest in the business and pursue alternatives, which includes evaluating M&A opportunities where appropriate, paying down debt and returning capital to shareholders. On Page 27, there are a number of elements which we believe will contribute to our planned growth in sales and earnings over the coming years. We've summarized some of these here for you. I won't read this list, but the good news is the number of factors listed. We have multiple meaningful ways to drive growth in our business. Turning to Page 29 and our outlook for 2021; while there remains significant uncertainty regarding the ongoing impact of COVID-19, we believe we will have good growth in both sales and earnings in 2021. We're expecting all of our business segments will deliver growth in net sales with our consolidated net sales growing about 5%. We're planning for good growth in operating income and operating margin expansion in 2021. Adjusted earnings per share is expected to grow about 10%, a bit less than what we are planning for operating income growth because of the higher interest costs from the senior notes we issued last year and an assumption of a higher tax rate with more of our income expected to be generated in the United States this year versus overseas. We expect the first half of the year will be the more meaningful period of sales and earnings growth for a number of reasons, including the comparison to the first half of last year with the initial pandemic disruptions as well as various timing differences between the years and wholesale shipments and spending. We won't match 2020's record year of cash generation as we repay deferred rent and have other changes in working capital. We'd expect 2022 to be a more normal year of significant operating and free cash flow generation. We're cautious and conservative in our planning assumptions given the continued uncertainty which exists, this posture has served us well overtime. In terms of the first quarter, we expect sales will be comparable to last year. We do expect first quarter profitability will increase significantly with operating income in the neighborhood of $30 million and adjusted earnings per share of approximately $0.25 compared to losses a year ago. In terms of key risks, we continue to monitor the status of later arriving product across our various channels and the potential impact these delays may have on the sales of spring product. Also, we're seeing an ongoing escalation of transportation costs in the marketplace, which may result in additional expense above what we have planned in this year.

compname reports q3 earnings per share of $1.93. q3 earnings per share $1.93 . q3 adjusted non-gaap earnings per share $1.93. sees fy adjusted earnings per share about $7.57. compname reports q3 adjusted non-gaap earnings per share of $1.93.

A detailed discussion of the risks and uncertainties that may affect our future results is contained in AMETEK's filings with the SEC. I'll now turn the meeting over to Dave. AMETEK had another outstanding quarter, with better than expected sales growth, strong operating performance, and earnings above our expectations. We established records for sales, EBITDA, operating income, and earnings per share in the quarter. Demand remained strong across our diverse set of end markets, leading to robust order growth, and a record backlog. While the global supply chain and logistics networks remain challenging, our businesses are doing a tremendous job navigating these issues and delivering results which exceeded our expectations. Given our results in the third quarter and outlook for the fourth quarter, we are again increasing our sales and earnings guidance for the full year. This strong overall performance reflects the exceptional work of all AMETEK colleagues, as well as the strength, flexibility, and sustainability of the AMETEK growth model. AMETEK's proven business model is central to our focus on creating a sustainable future for all stakeholders. We are very proud of the important steps we're taking to further sustainability across AMETEK. And last week, we published our latest Corporate Sustainability Report to highlight our efforts in this area. This report provides information on our sustainability initiatives, the strong progress we have made, and the commitments we are making to create a better future. Now let me turn to our third-quarter results. Third-quarter sales were a record $1.44 billion, up 28% over the same period in 2020, and above our expectations. Organic sales growth was 17%, acquisitions added 11 points, and foreign currency was a modest benefit in the quarter. Overall orders in the third quarter were $1.55 billion, an increase of 37% over the prior-year period. While organic orders were up an impressive 30% in the quarter. We ended the quarter with a record backlog of $2.62 billion, which is up over $800 million from the start of the year. Third quarter operating income was a record $338 million, a 25% increase over the third quarter of 2020, and operating margins were 23.4%. Excluding the dilutive impact of acquisitions, core operating margins were 24.7%, up 70 basis points versus the third quarter of 2020. EBITDA in the third quarter was a record $415 million, up 25% over the prior year, with EBITDA margins of 28.8%. This outstanding performance led to record earnings of $1.26 per diluted share. Up 25% over the third quarter of 2020, and above our guidance range of $1.16 to $1.18. We continue to generate strong levels of cash flow, with third-quarter operating cash flow of $307 million, and free cash flow conversion of 109% of net income. Overall tremendous results in a challenging operating environment. Next, let me provide some additional details at the operating group level. First, the Electronic Instruments Group. Sales for AIG were a record $982 million, up 31% over last year's third quarter. Organic sales were up 15%, acquisitions added 16%, and foreign currency was a modest headwind. While growth remains broad-based, growth was particularly strong across our Ultra Precision Technologies, and our Power and Industrial businesses. AIG's third-quarter operating income was a record $245 million, up 20% versus the same quarter last year, and operating margins were 25%. Excluding acquisitions, AIG's core margins were excellent at 27.2% in line with prior year margins. The Electromechanical Group also delivered outstanding sales growth and excellent operating performance. Third-quarter sales increased 21% versus the prior year to $459 million. Organic sales were up 20%, and currency added one point to growth. Growth remained strong across all of the MG, with our automation businesses again delivering notably strong growth in the quarter. EMG's operating income in the quarter was a record $115 million, up a robust 36% compared to the prior-year period. EMG's operating margins expanded an exceptional 270 basis points to a record 25%. Now, switching to our acquisition strategy. AMETEK has had an excellent year with a record level of capital deployment, leading to the acquisition of 5 highly strategic businesses. AMETEK is supported, approximately $1.85 billion on acquisitions, thus far this year, reflecting the strength of AMETEK's acquisition strategy and our ability to identify and acquire highly strategic companies. Our proven operating capability allows us to drive meaningful improvements across our acquired companies, resulting in outstanding returns on capital. Generating strong returns on capital deployed is critical to long-term sustainable growth, an important element of AMETEK strategy. AMETEK's strong cash flow generation continues to support our capital deployment strategy, our acquisition pipeline remains very active, our M&A team continue to work diligently, identifying attractive acquisition opportunities, and we expect to remain busy over the coming quarters. We also remain focused on investing back into our businesses to support their organic growth initiatives, including in support of their new product development efforts. In the third quarter, we invested over $75 million in RD&E. And for all of 2021, we now expect to invest approximately $300 million or approximately 5.5% of sales. Through these investments, our businesses develop unique and highly differentiated solutions that help solve our customers' most complex challenges. One such example is a new product introduction from AMETEK Gatan. Gatan is a leading provider of direct detection technology, for Elektron microscopy [phonetic], supporting high-end research and materials and life sciences applications. Gatan recently introduced The Stela hybrid pixel camera, the only fully integrated hybrid pixel electron detector with the Gatan microscopy [phonetic] suite. This new product reinforces Gatan's leadership position, providing the highest quality TEM diffraction camera, allowing the user to perform 4D stem analysis for the rapid speed and high dynamic range. Gatan's new camera builds on a long history of disruptive and award-winning technology. In August, The Stela Cameron was awarded the 2021 [indecipherable] today Innovation Award, and called one of the ten game changing products and methods. I would like to congratulate the team at Gatan for the recent launch of The Stela camera, and further support of important research applications. Now, let me touch on the supply chain issues. The global supply chain remains challenging, we see extended lead times for a broad range of materials and components with logistics issues, and labor availability adding to the complexity. While these difficulties exist, we exceeded our sales estimates for the quarter, and are navigating the challenging environment well, given our agile operating approach. The supply chain issues are leading to higher inflation. However, given our differentiation, we're able to more than offset this inflation with higher pricing, leading to a strong price inflation spread. While we expect these challenges will continue into 2022, we remain well positioned to navigate the issues, given the strength and flexibility of the AMETEK growth model. Moving to our updated outlook for the remainder of 2021. Given our strong performance in the third quarter, and the continued strong orders momentum and record backlog, we have again raised our 2021 sales and earnings guidance. For the full year, we now expect overall sales to be up in the low 20% range, versus our previous guide up approximately 20%. Organic sales are now expected to be up low-double digits on a percentage basis over 2020, as compared to our previous guides of approximately 10%. Diluted earnings per share for 2021 are now expected to be in the range of $4.76 to $4.78, an increase of approximately 21% over 2020 is comparable basis, and above our prior guide of $4.62 to $4.86 per diluted share. For the fourth quarter, we anticipate that overall sales will be up in the low 20% range versus last year's fourth quarter. Fourth-quarter earnings per diluted share are expected to be between $1.28 to $1.30 of 19% to 20% over last year's fourth quarter. In summary, AMETEK's third-quarter results were excellent. Our teams continue to execute, and our businesses are performing well. Our performance through a challenging environment shows the resilience and strength of the AMETEK growth model. The asset-light nature of our businesses, our leading positions in attractive niche markets, and our world-class workforce will continue to drive long-term sustainable success. The proven nature of the AMETEK growth model continues to drive long-term success for all of AMETEK's stakeholders. As Dave highlighted, AMETEK delivered excellent results in the third quarter, with continued strong sales growth, and orders growth, and outstanding operating performance. Let me provide some additional financial highlights for the quarter. Third-quarter general and administrative expenses were $22.1 million dollars, up $4.8 million from the prior year, largely due to higher compensation expenses. As a percentage of total sales, G&A was 1.5% for the quarter, unchanged from the prior year. For 2021, general and administrative expenses are expected to be up approximately $18 million, driven by higher compensation costs were approximately 1.5% of sales, also unchanged from the prior year. Third-quarter other income and expense was better by approximately $4 million versus last year's third quarter, driven by a $6 million or approximately $0.02 per share gain on the sale of a small product line in the quarter. This gain on the sale was more than offset by a higher effective tax rate in the quarter of 19.5%, up from 17.5% in the same quarter last year. For 2021, we now expect our effective tax rate to be between 19.5% and 20%, actual quarterly tax rates can differ dramatically, either positively or negatively from this full-year estimated rate. Working capital in the quarter was 14.9% of sales, down 210 basis points from the 17%, reported in the third quarter of 2020, reflecting the excellent work of our businesses, and managing working capital. Capital expenditures in the third quarter were $26 million, and we continue to expect capital expenditures to be approximately $120 million for the full year. Depreciation and amortization expense in the third quarter was $75 million, for all of 2021 we expect depreciation and amortization to be approximately $295 million including after-tax, acquisition-related intangible amortization of approximately $138 million or $0.60 per diluted share. We continue to generate strong levels of cash given our asset-light business model and working capital management efforts. In the third quarter, operating cash flow was $307 million, and free cash flow was $281 million. With free cash flow conversion, 109% of net income. Total debt at quarter-end was $2.65 billion, up less than $250 million from the end of 2020, despite having deployed approximately $1.85 billion on acquisitions, thus far in 2021. Offsetting this debt with cash and cash equivalents of $359 million? In the quarter-end, our gross debt to EBITDA ratio was 1.6 times, and our net debt to EBITDA ratio was 1.4 times. We continue to have excellent financial capacity and flexibility with approximately $2.25 billion of cash and existing credit facilities to support our growth initiatives. To summarize our businesses drove outstanding results in the third quarter, and throughout the first 9 months of 2021. Our balance sheet and tremendous cash flow generation, have positioned the company for significant growth in the coming quarters, and years.

q3 adjusted earnings per share $1.01. q3 sales $1.13 billion versus refinitiv ibes estimate of $1.12 billion. sees q4 adjusted earnings per share $1.00 to $1.04. ametek - for q4, expect solid sequential improvements in sales versus. q3 with y-o-y sales down high single digits on a percent basis compared to last year's q4.

If you've not yet received a copy of the release, you can access it on our website at www. It's under the Investor Relations tab. These comments are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and involve risks, uncertainties and other factors which may cause results to differ materially from those expressed or implied in these statements. Further information concerning these risks, uncertainties and other factors are set forth in the company's periodic SEC filings and may be found in the company's 10-K and 10-Q filings. Today, I'm excited to report strong volume growth resulting from robust end-market demand. Sales were up 43% year-over-year, and this is the strongest growth Myers has obtained in over a decade. This demand appears to be sustainable. Strong end markets, a reengineered commercial organization and a new go-to-market model are delivering results. Our new strategy, combined with successful execution of our self-help initiatives, set the stage for a solid 2021 and beyond. I'm entering my second year at Myers, and I continue to see significant opportunities in our functions, businesses and end markets. It continues to be the most exciting opportunity I've seen in my career. Without further delay, let's get into the details. As I mentioned, sales were up 43% year-over-year, driven by strong growth in both the Material Handling and Distribution Segments and a meaningful contribution from the Elkhart acquisition. All end markets experienced healthy growth. Specifically, sales were up significantly in our vehicle end market as a result of continued momentum in the RV and marine markets. Wholesale RV shipments were up 79% in March and are projected to reach a record high in 2021. We also saw increased demand and double-digit growth in the auto aftermarket, food and beverage, consumer and industrial end markets. On an organic basis, sales were up 21%. Despite strong volume growth in -- volume and revenue growth, gross margins were impacted by higher raw material costs in the quarter. In response to the significant increases in raw material costs, partly due to Winter Storm Uri, we announced an 8% price increase across a broad portfolio of our products effective March 1. Then in response to continued raw material pressure and a tight supply chain, we announced a second price increase of 9% to 12% effective April 1. With these increases, we aim to protect, and in some cases, enhance our margins. Due to the top line momentum we are seeing and robust demand and the additional pricing actions we announced since our last call, we continue to be optimistic in our ability to manage through this dynamic environment. As a result, we are raising our full year sales guidance and now expect to be at the higher end of our previously provided earnings guidance. Sonal will provide the details during our financial summary. And after our comments, I will provide an update on the actions we've taken to execute our strategy. Starting with the first quarter financial summary on slide four. Net sales were up $52 million, an increase of 43%. Excluding the impact of the Elkhart acquisition, organic net sales increased 21% due to volume mix. Sales increased in both material handling and distribution segments as well as all key end markets and contributed to the strong organic growth. Price and FX accounted for 1% of the net sales growth. Adjusted gross profit was up $7.9 million, while gross margin decreased from 34.8% in the prior year to 28.9% in the quarter. Margin was negatively impacted by an unfavorable price-to-cost relationship, unfavorable sales mix and higher manufacturing costs during the quarter. The addition of Elkhart benefited profit but contributed to the unfavorable sales mix impacting gross margin. As a reminder, we are targeting $4 million to $6 million in annual cost synergies over the course of the upcoming two years. Additionally, we are encouraged by the growth synergies we have started to realize as we operate as One Myers. Adjusted operating income increased slightly to $11.9 million. The increase in gross profit was mostly offset by higher SG&A expenses, driven by the addition of Elkhart and higher incentive compensation costs, legal and professional fees and selling expenses. Adjusted EBITDA was $17 million, a decline of $400,000 compared to the prior year. Adjusted EBITDA margin was 9.8%. And lastly, adjusted earnings per share was $0.22, flat compared to the prior year. Turning now to slide five for an overview of segment performance. Beginning with Material Handling, net sales increased $46 million or 55%, including the Elkhart acquisition. On an organic basis, sales were up 22%, driven by strong volume mix. Price and FX accounted for 1% of the growth. Excluding Elkhart, sales were up double digits in the vehicle, food and beverage, consumer and industrial markets, driven by increased demand. Material Handling adjusted operating income increased 12% to $16.9 million, driven by higher sales volume and the addition of Elkhart, which were mostly offset by an unfavorable price-to-cost relationship, unfavorable sales mix and higher manufacturing expenses, incentive compensation costs and legal and professional fees. In the Distribution Segment, sales increased $6 million or 17%, driven by both equipment and consumable sales. Distribution's adjusted operating income increased 5% to $2 million, primarily as a result of higher sales volume, partially offset by an unfavorable sales mix and unfavorable price-to-cost relationship and higher incentive compensation costs. Turning to slide six. Cash provided by operating activities was $6.6 million, an increase of $1.6 million over the prior year, reflecting the benefit of working capital. Free cash flow decreased $1.1 million to $1.4 million, reflecting an increase in capital expenditures year-over-year. Our balance sheet remains strong. Cash on hand at quarter end was $16.6 million. Based on our trailing 12-month adjusted EBITDA of $66 million, leverage was 1.2 times. In mid-March, we amended and extended our credit facility, upsizing our borrowing capacity from $200 million to $250 million and extending the maturity date to March 2024, ultimately providing greater flexibility in our capital structure. Turning to slide seven. Let me now provide information on our revised outlook for fiscal 2021. Reported net sales are anticipated to increase in the high 30% range, including an incremental 10.5 months of sales related to the Elkhart acquisition. As a reminder, Elkhart's net sales at the time of acquisition were approximately $100 million. The increase in net sales from our previous guidance, which was mid- to high 20% sales growth, incorporates the strength experienced in the first quarter, along with continued sales momentum expected throughout the year. Additionally, the outlook includes the anticipated impact of the second price increase effective April one taken in response to continued increases in resin and steel costs. From a quarterly cadence, recall that our prior year second quarter sales were significantly impacted by the slowdown due to COVID-19, particularly impacting our industrial and distribution businesses. Given this comp, we expect strong sales growth in Q2 on a quarter-over-quarter basis. With respect to margins, our price increases generally take a quarter or so to start flowing through our results. Given this lag in price realization, we will continue to experience higher cost versus price in the first half of the year, but expect that relationship to turn favorable in the second half of the year as raw material costs flatten and eventually decline. As demonstrated, our teams will continue to take pricing actions as necessary to mitigate the impact of cost increases. SG&A expenses are now expected to approximate 23% of net sales benefiting from larger scale and the increase in our sales outlook. Below operating income, we are projecting approximately $4 million of interest expense and an effective tax rate of 26%. Our guidance reflects a weighted average share count of 36.5 million shares. Taking all of these assumptions into account, we are reaffirming our 2021 outlook for adjusted earnings per share of $0.90 to $1.05 per share with growing confidence of achieving the higher end of the range. Other key assumptions impacting EBITDA and cash flow include depreciation and amortization expenses of approximately $23 million and capex of approximately $15 million. capex is expected to trend higher than past years with our renewed focus on investing in our facilities. In closing, let me reiterate that we are encouraged by the sustainability of economic rebound and the impact on our business. Every time I talk about Myers, I highlight two documents: our long-term road map for the company, and the execution plan to make it a reality. And today is no exception. On our long-term road map, we're currently in Horizon 1, which is based on three elements: self-help, organic growth and bolt-on M&A. These three elements go well together. I've used this approach many times over the past 20 years to kick-start and deliver business transformations. Self-help consists of meaningful improvements in purchasing, pricing and SG&A optimization. Self-help is important because it typically has a sizable financial impact, and I like it because it's largely within our control. Self-help generates the cash and the returns that will be used to fund the two growth components, organic and M&A. In terms of organic growth at Myers, we are driving change and delivering results. We are strengthening our commercial processes, talent and capabilities. We are investing in e-commerce. We're changing how we go to market. Under the One Myers approach, we now go to market as a single company instead of several disconnected independent businesses. This scale brings strength. We are one of the only companies that has expertise in the four major plastic molding technologies: rotational molding, injection molding, blow molding and thermoforming. We now bring all of these solutions to our customers. The approach delivers value to our customers and growth for Myers. Our third element, bolt-on M&A, is focused on growing our businesses by acquiring companies that build out our current technologies, build on our competitive strengths or shore up our gaps. We believe significant shareholder value can be unlocked when consolidating fragmented industries, like plastics molding and auto aftermarket distribution. Myers will be a consolidator in these fragmented industries. Consolidation should allow us to better serve our customers, provide better opportunities for our employees and better returns for our shareholders. Once the key elements of Horizon one are in place, we'll move to Horizon 2, where we will execute larger enterprise-level acquisitions. We continue to expect that when we are ready for Horizon 2, several ideal targets will be coming to market so the timing should work well. Our long-term vision culminates with Horizon 3, which is focused on growing the company globally. In order to maximize our potential as a company, we will need to expand globally at scale. During Horizon one or 2, we will consider global acquisitions if they have the right strategic fit and are executable, though it will likely be Horizon three before we acquire internationally at scale. Our long-term vision is ambitious but well grounded and focused on building on technologies and markets that we know well. We still have a lot of work to do, but we have an experienced team, and we are making solid progress. I won't spend time today reviewing each pillar. However, I will say that each pillar has well-defined key performance indicators and an individual owner to drive results. We have a robust internal integration, PMO or program management office, that ensures that KPIs are met. In the organic growth pillar, we see significant opportunity to grow Myers faster. We are in the process of implementing an improved commercial structure that standardizes and strengthens our capabilities in sales, marketing and asset and product management. We recently reorganized our sales structure and launched the new sales training process focused on helping our teams improve their ability to cross-sell and bring all of the Myers solutions to our customers. In addition, we continue to focus on growing our e-commerce channel. In order to turbocharge this initiative, we held a summit to refine our strategy and approach to capitalize on the trends in digital and online. We're investing in our talent pool, and we'll continue to build out our e-commerce team. As a reminder, our goal for this channel is to be approximately 10% of sales by the end of 2023, and you can expect to hear more about our progress as we proceed through the year. Moving on to M&A. We are well under way having strengthened our portfolio with the acquisition of LCAR Plastics last year. The Elkhart acquisition has exceeded our expectations so far and has been instrumental in helping us further advance our integration playbook and our deal flow. We continue to build a robust funnel of potential acquisitions and believe that we have a strong opportunity to acquire complementary businesses in the near term. Now onto our accomplishments in the third pillar, operational excellence. Operational excellence involves multiple facets of how we work together to improve our performance every day. One example is our focus on procurement on lowering costs and on securing supply. Over the past months, supply scarcity has been an issue in the plastics value chain. Our newly centralized procurement team was able to leverage our scale and their individual relationships to ensure consistent raw material supply. I have several anecdotes where our purchasing professionals were able to work together, draw upon their individual areas of expertise to ensure Myers receive raw materials even in markets where product was very tight. On the pricing side, we worked with our customers on a fair and constructive approach to pricing, announcing and implementing our March one and April one price increases. We will continue to migrate to a value-based pricing approach where we will price to the value our products create with our customers. We anticipate this approach will deliver margins that will allow us to continue innovating and to continue delivering a high level of service and supply reliability to our customer base. Moving to the last of our four pillars culture. In order to execute and achieve breakthrough performance, we need to have a high-performing culture. Over the past several weeks, we took a significant step forward by holding companywide talent reviews across the organization, so we can build a strong succession planning road map that supports our aggressive growth strategy while developing our employees. We are seeding our employee base with various experts and leaders from outside the company. This approach is a catalyst and is accelerating our company's transformation. At the same time, we're also actively developing our employees and promoting from within. We have a lot of talent in-house as well. Part of having a high-performance culture is to have a culture focused on employee safety. To that end, this spring, we launched a robust companywide safety training curriculum, which includes live and online classes to ensure that we keep safety top of mind and work toward decreasing our incident rate on a year-over-year basis. In a short period of time, we've made respectable progress against our strategic initiatives. These work tracks and KPIs will ensure that our strategy comes to life and is delivered. I will close out today by reinforcing my optimism for Myer's future. I'm encouraged by the economic recovery we're seeing across all of our end markets. The demand is there, and it looks to be lasting. Myers' transformation is under way, and I anticipate it will create significant long-term value for our customers, our employees, our communities and our shareholders.

q4 sales rose 11.4 percent to $295.6 million. q4 adjusted earnings per share $0.12. sees fy sales up 4 to 8 percent. q4 earnings per share $0.12. earned net income per diluted share of $0.12 in quarter.

Ron Bernstein, Senior Advisor to Liggett Vector Brands will join us during the Q&A. I'm also pleased that Dick Lampen, our longtime Executive Vice President, who was recently appointed Chief Operating Officer and a member of our Board of Directors is joining us on the call. Dick's broad executive experience and deep operational understanding of the Company from serving in a variety of senior leadership roles for Vector Group and its affiliates since 1995 make him a valuable addition to our Board and a natural fit to be COO. Additionally, Dick's experience as CEO of Ladenburg Thalmann Financial Services and vast knowledge of the ways that technology can benefit a brokerage business will be valuable to Douglas Elliman as it continues to enhance the technology-based experience of its agents. It will also be helpful identifying potential synergies leading to further reductions in Douglas Elliman's operating expenses. Nick will then summarize the performance of the tobacco business. As of December 31, 2020, Vector Group maintained significant liquidity with cash and cash equivalents of $353 million, including cash of $94 million at Douglas Elliman and $45 million at Liggett, and investment securities and investment partnership interests with a fair market value of $188 million. Additionally, in the first quarter of 2021, we took advantage of favorable capital markets and issued $875 million of 5.75% senior secured notes till 2029. All proceeds were used to retire older notes. Now turning to Vector Group's operational and financial results. For the three months ended December 31, 2020, Vector Group's revenues were $554.6 million compared to $439.6 million in the 2019 period. The $115 million increase in revenues was a result of an increase of $25.7 million in the Tobacco segment and $89.3 million in the Real Estate segment. Net income attributed to Vector Group was $32.3 million or $0.21 per diluted common share compared to $10.7 million or $0.06 per diluted common share in the fourth quarter of 2019. The company recorded adjusted EBITDA of $93.4 million compared to $52.5 million in the prior year. As we will discuss later, we continue to be pleased with Liggett's execution of its still growing strategy as well as Douglas Elliman's resilience and rebound in the second half of 2020. Adjusted net income was $32.6 million or $0.21 per diluted share compared to $17.8 million or $0.11 per diluted share in the 2019 period. For the year ended December 31, 2020, Vector Group's revenues were $2 billion compared to $1.9 billion in the 2019 period. Net income attributed to Vector Group was $92.9 million or $0.60 per diluted common share compared to $101 million or $0.63 per diluted common share for the year ended December 31, 2019. The company recorded adjusted EBITDA of $333.4 million compared to $259.4 million in the prior year. Adjusted net income was $139.5 million or $0.91 per diluted share compared to a $110.11 million or $0.70 per diluted share in the 2019 period. Now turning to Douglas Elliman. Before we review the results, I'd like to recognize the resilience of the Douglas Elliman team of 6,700 agents and 750 employees in addressing the challenges of 2020. We have long believed our team sets us apart from other residential real estate brokerage firms. And when Forbes recently recognized Douglas Elliman in its 2021 list of America's Best Large Employers we were humbled. This recognition is a testament to the hard work and resiliency of the Douglas Elliman family. We congratulate the Douglas Elliman team for this well earned and deserved recognition. Now to Douglas Elliman's financial results. For the three months ended December 31, 2020, Douglas Elliman reported $267.5 million in revenues, net income of $14 million and an adjusted EBITDA of $16.7 million compared to $178.1 million in revenues and net loss of $432,000, and adjusted EBITDA loss of $5.7 million in the fourth quarter of 2019. For the year ended December 31, 2020, Douglas Elliman reported $774 million in revenues, a net loss of $48.2 million and adjusted EBITDA of $22.1 million compared to $784.1 million in revenues, net income of $6.2 million and adjusted EBITDA of $5.3 million in 2019. Douglas Elliman's net loss for the year ended December 31, '21 included pre-tax charges for non-cash impairments of $58.3 million as well as restructuring charges and related asset write-offs of $4.6 million. In the fourth quarter of 2020, Douglas Elliman's revenues increased by 50% from the fourth quarter of 2019 as its closed sales continue to improve in rural markets complementary to New York City, including the Hamptons, Palm Beach, Miami, Aspen and Los Angeles. Our New York City business began to stabilize in the fourth quarter and we are well positioned in New York City. Furthermore, Douglas Elliman's expense reduction initiatives continued in the fourth quarter and its fourth quarter 2020 operating and administrative expenses, excluding restructuring and asset impairment charges, declined by approximately $7.9 million compared to the fourth quarter of 2019 and $47.7 million compared to the year ended December 31, 2019. We believe these initiatives have and will continue to provide long-term upside to Vector Group stockholders. In addition, when compared to the first quarter of 2020, first quarter 2021 cash receipts have continued to strengthen from 2020 levels in all regions except New York City. 2020 proved to be an extraordinary and challenging year for our tobacco operations, and I'm very proud of our response to that challenge. Our employees remained resilient throughout and stay focused on the task at hand. They also embraced a tremendous team spirit and I believe our excellent performance throughout this difficult year reflects that effort. During the fourth quarter Liggett continued its strong year-to-date performance with revenue increases and margin growth contributing to a 33% increase in tobacco adjusted operating income. As noted on previous calls, we are well into the income growth phase of our Eagle 20's business strategy and remain very pleased with the results. Our market-specific retail programs have proven successful, and we remain optimistic about Eagle 20's increasing profit contributions and long-term potential. Our results also reflect the resilience and strong distribution of Pyramid, which continues to deliver substantial profit and market presence to the company. I will now turn to the combined tobacco financials for Liggett Group and Vector Tobacco. The three months and year ended December 31, 2020 revenues were $286.1 million and $1.2 billion, respectively compared to $260.3 million and $1.11 billion for the corresponding 2019 periods. Tobacco adjusted operating income for the three months and year ended December 31, 2020 were $80 million and $320.2 million, respectively compared to $60.1 million and $262.6 million for the corresponding periods a year ago. Liggett's increase in fourth quarter earnings was the result of higher gross profit margins associated with increased volumes, high net pricing and lower per unit Master Settlement Agreement expense. The lower per unit MSA expense reflects stronger U.S. industry cigarette volumes in 2020, which has increased the value of our market share exemption under the MSA. Similar to some other consumer product categories, cigarette industry volumes outperformed recent historical trends and benefited from increased consumer demand related to changes in underlying cigarette purchasing and consumption patterns associated with the pandemic. Wholesale inventory levels remained elevated throughout the fourth quarter as a result of the prospect of increased restrictions and lockdowns associated with COVID-19 and the timing of industry price increases. However, we anticipate a normalization of wholesale inventory levels over the course of the first quarter. According to Management Science Associates, overall industry wholesale shipments for the fourth quarter increased by 3.4% while Liggett's wholesale shipments increased by 2.1% compared to the fourth quarter in 2019. For the fourth quarter, Liggett's retail shipments declined 0.3% from 2019, while industry retail shipments increased 0.6% during the same period. Liggett's retail share in the fourth quarter declined slightly to 4.21% from 4.25% in the same period last year. The modest decline in Liggett's fourth quarter year-over-year retail share was anticipated as Eagle 20s' volume growth slowed due to increased net pricing. This is consistent with our income growth strategy for the brand, which began in the second half of 2018. Eagle 20s is now priced in the upper tier of the U.S. deep discount segment. Eagle 20s' retail volume for the fourth quarter of 2020 was essentially flat compared to the prior year period. It remains the third largest discount brand in the U.S. and is currently sold in approximately 84,000 stores nationwide. The continued strength of Eagle 20s despite increased pricing also reinforces the effectiveness of our long-term strategy to continue to build volume and margin for our business using well-positioned discount brands that provides value to adult smokers. With that in mind and after identifying volume growth opportunities in the U.S. deep discount segment, in August we expanded the distribution of our Montego brand to an additional 10 states, primarily in the southeast. Prior to August, Montego was sold in targeted markets in four states. Montego is competitively priced in the growing deep discount segment and we plan to take a measured approach with further expansion. Montego represented 8.6% of Liggett's volume for the fourth quarter 2020, and 6.3% of Liggett's volume for the year ended December 31, 2020. To date, we remain very pleased with the initial response to Montego now sold in approximately 25,000 stores representing a 50% increase from the end of the third quarter. In summary, we are very pleased with our 2020 performance, particularly considering the current macroeconomic environment. Our results continue to validate our market strategy and reflect our competitive advantages within the deep discount segment, including our broad base of distribution, consumer-focused programs, and the execution capabilities of our sales force. As we look ahead, we remain focused on generating incremental operating income from the strong sales and distribution base of both Pyramid and Eagle 20s. Finally, while we are always subject to industry and general market risks, we remain confident we have effective programs to keep our business operating efficiently while supporting market share and profit growth. Vector Group has strong cash reserves, has consistently increased its tobacco market share and profits, and has taken the necessary steps to position its real estate business for future success. We are pleased with our long-standing history of paying a quarterly cash dividend. It remains an important component of our capital allocation strategy. While we will continue to evaluate our dividend policy each quarter, it is our expectation that our policy will continue well into the future.

q3 adjusted earnings per share $0.25. q3 revenue $547.8 million.

In addition, today's call includes discussions of certain non-GAAP financial measures. Tables reconciling these non-GAAP financial measures are available in the supplemental information package in the Investors section of the company's website at crowncastle.com. As you saw from our results yesterday, we remained on track to generate an anticipated 12% growth in AFFO per share this year. We expect to be at the high end of our long-term growth target in 2022, with 8% AFFO per share growth. Being driven in large part by our expectation at tower core leasing activity will be approximately 50% higher in 2022 than our trailing 5-year average. And we increased our annualized common stock dividend by approximately 11% to $5.88 per share, marking the second consecutive year of dividend growth that meaningfully exceeds our long-term target. Given that our dividend payout ratio has remained largely unchanged since 2014, our dividend remains the best indicator of how we are performing both financially and operationally. Our significant out-performance in 2021 combined with our forecast for 2022 enabled us to raise our dividend 11%, well above our stated goal for the second year in a row. In essence, we've achieved three years of targeted dividend growth in just two years. Since we established our common stock dividend in 2014, we have grown dividends per share at a compounded annual growth rate of 9% with growth ranging from 7% to 11% in each year. We aim to provide profitable solutions to connect communities and people. And our carbon-neutral goal builds on our commitments to deploy our strategy sustainably. Our business model is inherently sustainable, shared solutions limit infrastructure in the communities in which we operate and minimize the use of natural resources. Further to the point, our core value proposition, since we began operating more than 25 years ago has centered around our ability to provide our customers with access to mission-critical infrastructure at a lower cost, because we can share that infrastructure across multiple operators. In addition, our solutions help address societal challenges like the digital divide in under-served communities by advancing access to education and technology. To-date, we have invested nearly $10 billion in towers, small cells and fiber assets located in low-income areas. As a way of quantifying how our business model minimizes the use of natural resources, our business in it's just one ton of CO2 per $1 billion of enterprise value, which is 90 times more efficient than the average company in the S&P 500 based on industry estimates. Although we are proud of our limited environmental impact, we are focused on making even more strides by reducing our energy consumption and sourcing renewable energy to help us achieve our goal of carbon neutrality by 2025. We are excited about this announcement and look forward to continuing to find ways to help our communities and planet while driving significant returns to our shareholders. Turning back to our 2022 outlook. We are benefiting from record levels of activity in our tower business with our customers upgrading thousands of existing cell sites as a part of their first phase of 5G build-out. Adding to the opportunity, we are seeing the highest level of tower co-location activity in our history with DISH building a nationwide 5G network from scratch. I believe our strategy and unmatched portfolio of more than 40,000 towers and approximately 80,000 route miles of fiber concentrated in the top U.S. market, have positioned Crown Castle to capitalize both on the current environment and to grow our cash flows and dividends per share in the near term and for years to come. We are focused on generating this growth while delivering the highest risk adjusted returns for our shareholders. By investing in shared infrastructure assets that lower the implementation and operating costs for our customers while generating solid returns for our shareholders. To execute on this strategy, we are providing our customers with access to our 40,000 towers and 80,000 route miles of fiber help them build out their 5G wireless networks. We are investing in new small cell and fiber assets that meet our disciplined and rigorous underwriting standards to expand our long-term addressable market. And we are identifying where wireless networks are going and investing early to position the company to capitalize on future opportunities, as we have done with small cells, edge computing and CBRS. One of the core principles underpinning our strategy is to focus on the U.S. market, because we believe that represents the best market in the world for wireless infrastructure ownership, since it has the most attractive growth profile and the lowest risk. And we believe this dynamic of higher growth and lower risk will continue into the future, which is why we expect our U.S. based strategy will drive significant returns for shareholders. With that in mind, we have invested nearly $40 billion in towers, small cells and fiber assets in the top market that are all foundational for the development of future 5G network. We believe our unique strategy, portfolio of the infrastructure assets and proactive identification of future opportunities provide a platform for sustained long-term dividend growth as wireless network architecture evolves and our customers' priorities shift over time. Today, our customers are primarily focusing their investment on macro sites as towers remain the most cost-effective way to deploy spectrum at scale and established broad network coverage. With our high quality towers concentrated in the top markets, we are clearly benefiting from this focus with an expected 6% organic growth for our Tower segment in 2021 and an expected 20% increase in tower core leasing activity next year when compared to these 2021 levels. With history as a guide, we believe the deployment of additional spectrum on existing cell sites will not be enough to keep pace with the persistent 30% plus annual growth in mobile data traffic. As a result, we expect cell site densification to remain a critical tool for carriers to respond to the continued growth in mobile data demand as it enables our customers to get the most out of their spectrum assets by reusing the spectrum over shorter and shorter distances. When the current cell site upgrade phase shift to densification phase, we believe the comprehensive offering of towers, small cells and fiber will be critical for our customers and provide us with an opportunity to further extend the runway of growth in our business. While we expect the densification phase of build out will drive additional leasing on our tower assets for years to come, we believe small cells will play an even greater role as the coverage area of cell sites will continue to shrink due to the density of people and therefore the density of wireless data demand. With more than 80,000 small cells on air or committed in our backlog, high capacity fiber assets and the vast majority of the top 30 markets in the U.S. and industry-leading capabilities, we believe we are well positioned to deliver value to our customers as their priorities evolve, driving meaningful growth in our small cell business. Bigger picture, when I consider the durability of the underlying demand trends we see in the U.S., how well we are positioned to consistently deliver growth through all phases of the 5G build out with significant potential upside in our comprehensive asset base as wireless networks continue to evolve. Our proven ability to proactively identify where wireless network architecture is heading and to be an early investor in solutions to help future networks, the deliberate decisions we have made to reduce risks associated with our strategy and our history of steady execution. I believe that Crown Castle stands out as a unique investment, that will generate compelling returns over time. In the near term, as I mentioned before, we expect to deliver outsized AFFO per share growth of 12% in 2021. We expect to generate 8% growth in AFFO per share in 2022 at the high end of our long-term growth target and supported by an expected 20% increase in tower core leasing activity and we increased our common stock dividend by 11% for the second consecutive year. Longer term, we believe Crown Castle provides an exciting opportunity for shareholders to invest in the development of 5G in the U.S., which we believe is the best market for communications infrastructure ownership. Importantly, we provide access to such attractive industry dynamics, while providing a compelling total return opportunity, comprised of a high-quality dividend that currently yields 3.5% with expected growth in that dividend of 7% to 8% annually. As Jay discussed, we delivered another great quarter of results in the third quarter. We remained on track to grow AFFO per share by an anticipated 12% this year. We expect to be at the high end of our growth target in 2022 with 8% AFFO per share growth and we increased our quarterly common stock dividend by 11% for the second consecutive year, meaningfully above our long-term target growth rate while maintaining a consistent payout ratio. We are excited about the outsized growth we are experiencing in the early stages of 5G. And we continue to believe our portfolio of towers, small cells and fiber provides unmatched exposure to what we believe will be a decade-long build out by our customers. Our third quarter results were highlighted by 8% growth in site rental revenues, 11% growth in adjusted EBITDA and 13% growth in AFFO per share when compared to the same period last year. Record tower activity level supported this strong growth, generating organic tower growth of 6.3% and higher services contribution when compared to the same period in 2020. Looking at our full-year outlook for 2021 and 2022 on Slide 5. We are maintaining our 2021 outlook with site rental revenues, adjusted EBITDA and AFFO growing 7%, 11% and 14% respectively. For full year 2022, we expect continuing investments in 5G to drive another very good year for us, with 5% site rental revenue growth, 6% growth in adjusted EBITDA and 8% AFFO growth. Turning now to Slide 6. The full year 2022 outlook includes an expected organic contribution to Site Rental revenues of $245 million to $285 million or 5%, consisting of approximately 5.5% growth from towers, 5% growth from small cells and 3% growth from fiber solutions. To address feedback we received to provide more detail around our expectations for future leasing -- for the leasing activity, we have introduced a new concept of core leasing activity, which excludes the impact of changes in prepaid rent amortization. Core leasing activity is more indicative of current period activity, whereas changes in prepaid rent amortization also include activity from prior periods as prepaid rent received in those prior periods eventually amortizes the zero over the life of the associated contract. Although we have as consistently provided disclosure on prepaid rent amortization by segment in our supplemental earnings materials. With that definition in mind, we expect 2022 core leasing activity of $340 million at the midpoint or $350 million inclusive of the year-over-year change in prepaid rent amortization. The 2022 expected core leasing activity includes a $160 million in towers, representing a 20% increase when compared to our 2021 outlook and an approximately 50% increase when compared to our 5-year trailing average. $30 million in small cells compared to $45 million in $2021 and a $150 million in fiber solutions compared to a $165 million expected this year. Turning to Slide 7. You can see, we expect approximately 90% of the Organic Site Rental Revenue growth to flow through the AFFO growth, highlighting the strong operating leverage in our business. As we discussed in July, we expect to deploy an additional 5,000 small cells in 2022, which is the same number we expect to build in 2021. We expect a discretionary capex to be approximately $1.1 billion to $1.2 billion in 2022, including approximately $300 million for towers and $800 million to $900 million for fiber, similar to what we expect in 2021. This translates to $700 million to $800 million of net capex when factoring in $400 million of prepaid rent contribution we expect to receive in 2022. The full year 2022 outlook for capex represents an expected 30% reduction in discretionary capex for our fiber segment relative to full year 2022 when we deployed approximately 10,000 small cells. Based on the expected growth in cash flows, for full year 2022 and consistent with our investment grade credit profile, we expect to fund our discretionary capex with free cash flow and incremental debt capacity without the need for new equity for the fourth consecutive year. In addition, we believe our business and balance sheet are well positioned to support consistent AFFO growth through various economic cycles, including during periods of higher inflation and interest rates. Our cost structure is largely fixed in nature as you can see, with nearly 90% of the full year 2022 expected Organic Site Rental Revenue growth to flow through to AFFO growth as I referenced earlier. And we have taken steps to further strengthen our investment grade balance sheet, that now has more than 90% fixed rate debt, a weighted average maturity of more than 9 years and a weighted average interest rate of 3.1%. In conclusion, we are excited about the outsized growth we are generating as a result of the initial 5G build out by our customers, which is translating into back-to-back years of 11% growth in our quarterly common stock dividend. This dividend currently equates to an approximate 3.5% yield, which we believe is a compelling valuation given our expectation of growing the dividend 7% to 8% per year, combined with our high quality, predictable and stable cash flows. Looking further out, we believe our unique ability to offer towers, small cells and fiber solutions, which are all integral components of communications networks provides significant optionality to capitalize on the long-term positive industry trends of network improvements and densification and gives us the best opportunity to consistently deliver growth as wireless network architecture continues to evolve and our customers' priorities shift over time. With that, April, I'd like to open the call to questions.

compname reports third quarter 2021 results, provides outlook for full year 2022 and announces 11% increase to common stock dividend.

Our SEC filings can be found in the Investors section on our website at unum.com. Net income for the fourth quarter of 2020 included the following items, a net after-tax gain from the Closed Block individual disability reinsurance transaction of $32 million, an increase to the reserves backing the Closed Block long-term care product line of $119.7 million after tax, an increase to reserves backing the group pension block, which is a part of the other product line within the Closed Block of $13.8 million after-tax, and a net after-tax realized investment gain on our investment portfolio, excluding the net realized investment gain associated with the Closed Block individual disability reinsurance transaction of $1.6 million. So net income in the fourth quarter 2019 included a net after-tax realized investment gain of $7.2 million and after tax debt extinguishment cost of $1.7 million. So excluding these items, after tax adjusted operating income in the fourth quarter of 2020 was $235.3 million or $1.15 per diluted common share compared to $290.7 million or $1.41 per diluted common share in a year ago quarter. We certainly appreciate you all joining us today. And today, we will take you through our financial and operating results for the fourth quarter which finalized many of the items we shared with you on our Investor Day back in our Investor meeting in December. This will be inclusive our Closed individual disability reinsurance transaction, which we are very happy about. So let me start by saying, we closed out a very tumultuous year in a very strong position, as we continue to navigate the challenges of the pandemic. But I'd also like to recognize the entire Unum team who have shown great resilience through the year and ensuring that our customers are well cared for and that we continue to build a dynamic employee benefits franchise. Many of these factors including COVID-related mortality, saw a resurgence in the fourth quarter that is carried over into the early weeks of 2021. These factors will help frame up our financial results during our discussion today, as well as our views for 2021. First of all, the impacts from COVID-19 and related economic challenges in 2020. Have been very transparent in our financial results. And those impacts were amplified in our fourth quarter results by this resurgence that I mentioned with related deaths and infections specifically in December. As we'll discuss in greater detail COVID-related deaths in the US for the full year totaled 345,000 with 138,000 occurring in the fourth quarter. Further, over half of these fourth quarter deaths occurred in December alone, making it the deadliest month that we saw in the pandemic in 2020. Since we met with you at our Investor meeting in mid December, death counts have increased significantly. Sadly, that trend has continued into January and we will no doubt -- and it will no doubt impact our first quarter results even more than what we've seen in previous quarters. To detail that high mortality in our life insurance business lines high-claim rates in short-term disability and high expenses from leave volumes with partial offsets from high claim terminations caused by mortality and the closed of long-term care block. As we look forward, we are very optimistic that this will turn. Recently, we have seen infection rates declining coupled with the rollout of vaccines. The CDC reports that approximately 80% of the COVID-related deaths have been over the age of 65 and this population will be vaccinated in the coming months. This same group also represented about 50% of our group life deaths by count, many of whom are retirees who maintain some level of their coverage. This in turn is expected to drive a strong rebound in our results, likely in the second half of 2021, and cause us to expect to get back to our historic levels of growth and profitability in 2022. There will be some volatility in our results as we progressed through this rollout period, but we remain highly confident in a full recovery as we get the pandemic behind us. The pandemic and related impacts on the economy have also had significant impacts on our top-line premium income. Our premiums in our core businesses for several years have seen growth in the 5% range. But this year, it only grew by 0.6%. And in the fourth quarter, it was down by 1.4%. This outcome was consistent with the revised outlook we provided when the pandemic first hit that premium income would be flat to up slightly for the full year with declining year-over-year comparisons throughout 2020. So to give perspective on the drivers of premium headwinds, there are three macro factors to highlight. First, the immediate shift to work from -- to a work from home environment in March, resulting from the onset of the pandemic has significant impacts on new sales. Full year sales for our core business segments, all declined in 2020, Unum US by 10%, Colonial Life by 27% and Unum International by 9.5%. The most impacted were the voluntary benefit lines, which have a heavier emphasis on face to face sales and enrollments which require active selection. Looking forward, this has created an acceleration of the trends we were seeing with an increased adoption of digital sales and enrollment tools, that we have invested in over the past few years, especially for our Colonial Life agents, where we saw a 240% increase in the number of agents utilizing these digital tools. Looking at the group market, we are encouraged by the momentum, which was initially impacted by the dramatic economic shock of the pandemic, but is recovering to a more normal pace of activity as people have slowly returned to work. Also helping our premium is how persistency is held up well in the face of the pandemic across most of our business lines. The benefits and services we provide are highly valued by employers and [Technical Issues] they're -- came through and the retention of benefit plans, despite the financial stress many employers were facing. I believe it also reflects the investments we have made in our customer service and the dedication of our employees to serve these customers in this time. And finally, natural growth had a significant impact and a slowdown in premium growth in 2020. The shock to employment levels in the spring, rising from 3.5% to a peak of 14.7% virtually wiped out all the benefit we usually see from growth in employee count and wages for existing customers. We expect to see the benefits of natural growth reemerge as the pandemic slows and employment levels improve throughout 2021 with a more complete recovery in 2022. The next broad factor to highlight is the interest rate environment, which continues to be a headwind for all insurance and financial services companies. Over the course of 2020, the yield on a 10-year treasury fell from its peak of 1.92% at the beginning of the year to a low of 50 basis points in March and ended the year at 92 basis points. These levels coupled with historically tight credit spreads continue to create challenges for achieving attractive new money yields for our investment portfolio. Our strategy to gradually build out our alternative investment portfolio has benefited us with a well-diversified portfolio that focuses on consistent, predictable cash flows. In addition, we have also taken the necessary steps to lower our interest rate assumptions as part of our annual reserve adequacy assumption updates. In the tragedy of the pandemic, we see the economic effects on Unum is a once in a lifetime event. Unlike what you might see in a P&C CAT event. This impact has been spread out over the course of a year. It will impact our growth and profitability for a period of time, but we will come back strong. We would also note that through this period, our capital remained in excellent shape, as we ended the year in a strong financial position with healthy capital levels above our targets and holding company cash almost 4 times our target. This speaks to the financial resiliency of our franchise. And just as importantly the pandemic will be looked at as an event which we have successfully met our purpose, which is helping people through lifes challenging moments and reinforce the social value of the benefits we provide to working people and their families. We have paid out over $150 million in COVID claims, mostly in small face amounts and provided by a company as a benefit. I continue to be very proud of the work of our employees to provide excellent service to our customers, while we have navigated through this disruptive year. In our most recent surveys, we have seen strong improvements in both overall Unum employee engagement and claim and satisfaction scores over 2019. I'm also very pleased that despite disruption is presented in 2020. Our teams were able to complete an important transaction which was the sale through reinsurance of our Closed Block of individuals disability business. Once fully executed, it will have the benefit of freeing up approximately $650 million of capital, primarily to holding company cash, part of which we see in our fourth quarter numbers. The transaction is a culmination of many years of effectively managing this book of business and helps us move our capital to more effective uses. Well, the numerous disruptions of 2020 have masked the progress we are making in growing many of our more capital efficient businesses such as Voluntary Benefits, Dental and Vision and Medical Stop Loss, we are well positioned strategically and competitively in these product lines and I'm very optimistic about their long-term growth potential. So to wrap up the year, we will look back on 2020 as the year of COVID. It changed so much of our world, it changed a lot in how we operate our business, but it only reinforced our purpose as a company. We saw high mortality rates, short-term claims volatility and the unprecedented disruption to the economy and the workplace. But these are times when we step-up and deliver on our promises. And we did, as our highly engaged and dedicated employees provided excellent service to our customers when they most needed it. In a year of unprecedented challenges from the economy, interest rates, credit markets and the health crisis, the strength of our capital metrics improved year end in 2020 compared to a year ago, with holding company cash increasing $650 million to $1.5 billion, risk-based capital holding steady at 365% and leverage declining almost 3 points to 26%, the measures of strength and stability of the company combined with the know-how of our team give us great confidence as we work through what we all hope are the last stages of the pandemic to a more stable environment ahead. [Technical Issues] cover the details of the fourth quarter results. This will allow us to show how the company's business lines are progressing through the pandemic and resulting economic challenges, and outline for you the impacts it has had on our results. Before I do so, I want to level set our reported adjusted operating income of $1.15 per share for the fourth quarter against the outlook we provided at our December 17, outlook meeting, which did call for adjusted operating earnings per share within a range of $1.14 to $1.24. Looking back on those assumptions we provided in December actual fourth quarter results for premium growth sales, persistency, year end capital metrics and investment income impacts were consistent with the expectations we discussed. In addition, the capital benefits from the Closed Block individual disability reinsurance transaction which were realized Phase one were slightly better and the reserve increased for LTC as well as the capital contributions we made to back this block were consistent. The one area that did diverge significantly from our expectations with late quarter mortality, for setting [Phonetic] expectations for benefits experience, our outlook was based on an assumption of fourth quarter mortality from COVID-19 of 92,000 deaths nationwide. Actual mortality turned out to be substantially higher at approximately 138,000 excess deaths with December accounting for over 50% of those deaths. More specifically 25% of the quarter's excess deaths occurred in the last two weeks of the year with the average daily death count approaching 2600 pushing our reported income toward the lower end of our expected range. The year-end surge that occurred negatively impacted our deferred tax operating income by approximately $22 million relative to the midpoint of our expectation, primarily in Unum US Group Life with minor impacts to short-term disability, Voluntary Benefits and Colonials Life Insurance business. This was offset in part by approximately $10 million favorable before tax operating income in long-term care from higher claim claimant mortality. This $12 million net impact late in the quarter impacted our operating income by $0.05 per share. As Tom outlined in his opening after tax adjusted operating income in the fourth quarter was $235.3 million or $1.15 per common share. By comparison in the third quarter of this year, after-tax operating income was $245.9 million or $1.21 per common share. So we saw about an $11 million decline in sequential quarterly earnings. As I'll outline in my comments in more detail, the primary drivers of that quarter-to-quarter change were higher mortality impacts in US Group Life and Colonial, higher short-term disability claims and leave volumes and group disability, and lower levels of miscellaneous investment income from bond call premiums. We did experience some favorable offsets from long-term care claims experience and positive marks on the alternative investment portfolio. Before I begin my discussion of operating results this quarter, let me summarize for you the economic and business conditions that existed in the quarter and outline the impacts that it had on our results. First, as I mentioned, COVID-19 continues to have a significant impact on the external environment, driving a high level of mortality plus a continued high level of infections. These count showed a significant resurgence in the fourth quarter as excess deaths in the US from COVID totaled an estimated 138,000 compared to 80,000 in the third quarter. The impacts to our business are higher mortality across our Life Insurance business lines and increased short-term disability claims, which increased by 3% relative to the third quarter. Second, employment conditions remain challenging. Fortunately, the unemployment rate is gradually improved to 6.7% for December compared to 7.8% for September and the peak level in April of 14.8%. However, today's rate is higher than the 3.5% level, the US economy was experiencing heading into the pandemic a year ago, high unemployment rates negatively impacted premium growth in our core business lines it a negated the benefit we usually experienced from natural growth in the in-force blocks. We are seeing signs in our results as the impact is leveling out supporting our view that premium growth in 2021 for our core segments is expected to show a slight increase with group line increases offsetting small declines in the voluntary businesses. With a resurgence of infections and mortality in the fourth quarter, the reopening in the economy, with some people returning to more normal activity in their [Technical Issues] day -- generate some inconsistencies [Technical Issues] COVID-related STD claims increased with the resurgence of infections pressuring overall STD benefits experience. Leave requests continued to run significantly above year-ago levels and on a quarter-to-quarter basis, driving continued expense pressure in the group disability line. Providing a small offset that was dental utilization in the fourth quarter, which was somewhat lower than we experienced in the third quarter. The net impact to our fourth quarter results from these trends was negative, related to what we experienced in the third quarter. Finally, financial market conditions were generally favorable in the quarter. This is most impactful to Unum in the credit markets where corporate bond spreads continue to tighten while US Treasury rates did increase. This combination continues to create a challenge for achieving attractive new money yields on investment opportunities, but it is favorable for overall credit quality and our outlook going forward for potential credit impacts. We've seen a dramatic reduction in downgrades and impairments in the first quarter 2020, as well as the significant decline in our watchlist for potential credit concerns. In addition, the marks on our alternative asset investment portfolio showed a strong improvement in the fourth quarter and we estimate the portfolios recovered roughly half of the valuation decline experienced in the second quarter. Against this high level backdrop, I'll now focus on our business lines, beginning with Unum US group disability. Adjusted operating income for the fourth quarter was $64.7 million compared to $73 million in the third quarter. There were three primary factors that impacted these results. First, we experienced pressure on STD claims from the resurgence in COVID infection rates with the volume of COVID-related stand-alone STD claims, increasing 45% by count from the third quarter to the fourth quarter. Second, pressure on expenses from leave request volumes remains high and continued to impact results, with those volumes running approximately 6% higher relative to the third quarter. And third, pressure on net investment income impacted operating income as miscellaneous investment income was $10 million lower due to lower levels of bond call premiums. Miscellaneous investment income from bond calls was unusually high in the third quarter at $12 million and slightly below average in the fourth quarter at $2 million. These trends were partly offset by continued favorable results in the long-term disability block with generally stable new claims incidents and continued strong claim recoveries. We continue to be very pleased with the consistency of the results and LTD throughout this volatile environment as demonstrated by the group disability benefit ratio of 72.5% this quarter, the lowest in recent history, compared to 74.1% in the prior quarter. Adjusted operating income for Unum US Group Life and AD&D remained depressed with a loss of $21.9 million in the fourth quarter compared to income of $13.9 million for the third quarter, with the change driven primarily by unfavorable claims experience. The pandemic clearly impacted results. Though our analysis continues to show a consistent pattern between our mortality trends and the National COVID mortality statistics. That is we continue to see approximately 1% of the excess mortality by count in our Group Life results. Specifically, in the fourth quarter, we had approximately 1,300 excess claims by count or slightly under 1% of the 138,000 reported deaths nationwide. In the third quarter, we reported slightly more than 900 excess life claims benchmark against the base of approximately 80,000 COVID related deaths nationwide, a higher claim count of approximately 350 at an average claim size of $50,000 in the fourth quarter, accounts for part of the decline in operating earnings. Looking ahead to the first quarter, the national mortality rate in January has exceeded the experience of December and will likely further pressure results in Group Life in the first quarter. We believe this 1% mortality relationship to national trend will continue in the early part of 2021 and suggest that you use that as a basis for your projections and estimates in future quarters. Over time this relationship could change and potentially exceed 1% on what we expect to be a declining overall mortality count as vaccinations rollout to different sectors of the population, initially to the elderly, teachers, medical personnel and first responders, but we will update you as these trends evolve. The Unum US supplemental and voluntary lines experienced consistent -- generally consistent results in the fourth quarter with adjusted operating income of $100.7 million compared to a $101.3 million in the third quarter. While consistent in total, there were some different trends for each of the primary product lines. The voluntary benefits results were softer in the fourth quarter driven by worse experience in the individual life and short-term disability [Technical Issues] higher by COVID related claims. The IDI line had favorable results with the benefit ratio declining to 42% in the fourth quarter from 48.6% in the third quarter, driven primarily by favorable incidence and mortality trends in the block. Finally, results in the Dental and Vision business improved in the fourth quarter with the benefit ratio declining to 65.4% from 76.8% primarily driven by lower utilization. Sales for Unum US declined 7% in the fourth quarter compared to the year ago quarter, sequentially though we see sales momentum building with improvement in the year-over-year decline from 18.5% in the third quarter to 7% in the fourth quarter. Reflecting there is still -- there is still difficult yet improving commercial environment. Total sales for group lines meaning LTD, STD and Group Life combined decreased 4.3% as the fourth quarter experience the impact of a higher than normal level of large case sales recorded in the third quarter. Although new sales were down in total, we continue to be encouraged by the success from our HR Connect platform, which provides the differentiated experience on leading HCM platforms. Sales on this platform increased 6% in the fourth quarter over the year ago quarter and increased 17% for the full year. On the persistency front all group products saw an uptick from the third quarter. As discussed throughout 2020 and on our outlook call, the supplemental lines show more pressure than the group lines, voluntary, benefits sales declined 24.2% compared to the year ago quarter, but did improve their sequential year-over-year decline, which is 35.8% in the third quarter. Dental and Vision sales declined 9.4% as we continue to see disruption in group sales stemming from discounts and other incentives carriers are providing in response to the unusually favorable claim trends, the industry experienced in the second quarter. This dynamic is evident in our persistence results as well, which improved to 85% versus 82.6% in the year ago quarter. Similar to VB, we also see momentum building in the sequential year-over-year sales decline improved in dental and vision from down 33.1% in 3Q to down 9.4% in 4Q. Finally, stop-loss sales continue to grow from a small base, up over 140% for the fourth quarter and full year providing a good long-term growth opportunity for us in a very capital efficient product line. Moving to Unum International segment. Adjusted operating income for the fourth quarter remained generally consistent at $20.7 million compared to $21.4 million in the third quarter. Income for Unum UK was GBP15.4 million this quarter compared to GBP15.2 million in the prior quarter. Overall benefits experience was slightly favorable quarter-to-quarter, so premium income was slightly lower due to persistency and an increase in reinsurance ceded. Unum Poland saw more pressure on its results in the fourth quarter relative to prior quarters due to impacts from COVID, which began to emerge late in the year. Although, we are encouraged by the improved income in the second half of 2020 in the international operations. We are cautious with our near-term outlook as both the UK and Poland and deal with COVID impacts and related economic shutdowns. Colonial Life had a more challenging fourth quarter with adjusted operating income of $71.2 million compared to $92.2 million in the third quarter. These results were primarily impacted by a higher benefit ratio of 56.6% compared to 52.2% in the third quarter, which was primarily driven by higher COVID-related life insurance and disability claims as well as weaker results in the cancer and critical illness products. In previous quarters, the negative impacts on our life block from COVID claims had been partially offset in favor -- by favorable results in our other two product lines. However, in the fourth quarter, those favorable offsets were negated by a pickup and utilization of many of our health and wellness, and accident products where performance had been favorable. Premium income for the fourth quarter was in line with the third quarter. As we indicated in our prior meetings, it will take a return to more normal sales growth before we see growth reemerge in premium income. I'd also point out the fourth quarter net investment income was lower than third quarter, reflecting the unusually large $8.1 million of miscellaneous investment income we did record in the third quarter. Sales for Colonial Life declined 26.5% in the fourth quarter relative to year ago. This represents some improvement related to year-over-year trends we saw in the second and third quarters, which were down 43% and 27.6% respectively. The sales environment remains challenging, but we are encouraged by the adoption of the digital sales tools we have developed. While our traditional agent assisted sales remained pressured, we saw a 30% increase in telephonic enrollment and a 25% increase in our digital self service platforms. In addition, agent recruiting remains strong with a 10% increase year-over-year. In the Closed Block segment, adjusted operating earnings increased to $104.2 million in the fourth quarter, which did exclude the significant items that I'll cover in just a moment. This compares with $70.8 million in the third quarter, largely driven by the impact of higher climate mortality on the LTC block and positive marks on the alternative investment portfolio following the significant decline that we saw in value as of the end of the second quarter. The positive mark on the alts was $29.4 million in the fourth quarter compared to $11.3 million in the third quarter and a loss of $31.3 million in the second quarter, which did reflect the negative market conditions at the end of the first quarter. We estimate that we have recovered about half of the valuation hit we saw in the second quarter, focused mostly on the equity based and credit segment of the portfolio, and we anticipate additional recovery in future quarters. For the long-term care block the interest adjusted loss ratio was 60.2% in the fourth quarter, excluding the impact of the reserve assumption update, which I'll cover separately in a moment. [Technical Issues] the results of both quarters remain well below our expected long-term range of 85% to 90%. The underlying results this quarter continued to be highly favorable relative [Technical Issues] driven by higher mortality on the claimant block. Claimant mortality by count was approximately 15% higher than expected in the fourth quarter. As a reminder, claimant mortality was approximately 15% higher than expected in the third quarter and 30% higher in the second quarter. For the Closed Disability Block, the interest adjusted loss ratio was 79.5% in the fourth quarter, excluding the impacts from the reinsurance transaction, compared to 86.6% in the third quarter. Fourth quarter experience was more consistent with our expectations as the reinsurance transaction closed in mid December, our results reflect the performance of this block for the majority of the fourth quarter. Then wrapping up my commentary on the quarter's financial results, the adjusted operating loss in the corporate segment was $42.7 million in the fourth quarter. This is favorable to the run rate of losses of $45 million to $50 million per quarter that we did outline for you back in our December meeting, primarily due to lower expenses in this quarter. Now I'd like to cover the significant items recorded in the quarter, beginning with the Closed Block individual disability reinsurance transaction that we announced at our December outlook meeting. While the accounting treatment for the transaction is complex, the primary economic impact is the ultimate release of approximately $650 million of capital backing this block, primarily as holding company cash. This occurs with the closing of the first phase of the transaction we're reporting today with our fourth quarter results and the completion of Phase two, which we're making very good progress on here in the first quarter and we will discuss at our first quarter earnings call. From a balance sheet perspective, the active life cohort of the block is being accounted for under deposit accounting rules and then the disabled life cohort is being accounted for as reinsurance. As a result of accounting under different accounting model we are separating the transaction components, which results in recognizing a prepaid cost of reinsurance on the DLR component and a deposit asset on the ALR cohort. The prepaid cost of reinsurance of $815.7 million, which largely reflects the negative ceding commission and difference between GAAP and statutory reserves held on the block, will be amortized over the life of the block with the amortization reported as a non-GAAP measure and excluded from our adjusted operating earnings. The deposit asset related to the ALR cover is initially $88.2 million and will be adjusted going forward to reflect the net cash flows related to the performance and accretion of interest. As I mentioned, there is a lot of complexity in the accounting of the transaction, but the economic impact driving the rationale for the transaction is the release of capital back in the block, primarily to holding company cash and the financial flexibility it provides us. As we also just discussed back in our December meeting, we completed an update of our GAAP reserve adequacy for the LTC block and did record a reserve increase of $119.7 million on an after-tax basis which was really at a midpoint of our expected range. The assumptions we implemented with this review were generally consistent with what we described previously. As we mentioned, we lower the interest rate assumption for the 10-year treasury yield to an ultimate rate of 3.25% and extended the mean reversion period to seven years. This change added approximately $500 million to reserves, but we also had favorable offsets with the success of our rate increase approval program lower expense expectations and movements in our group LTC inventories. Cash contributions for the LTC blocks ended 2020 consistent with the expectations we provided at our outlook meeting. The amounts contributed for full year 2020 were $411 million for Fairwind and $55 million for First Unum. The Fairwind contribution includes funding $181 million after-tax for the LTC premium deficiency reserve in conjunction with the Maine Bureau of Insurance Examination. These are all reflected in the capital metrics I'll outline in the capital discussion. Also in the fourth quarter, as part of our GAAP reserve adequacy review, we did record a reserve increase of $13.8 million after tax in the group pension block, which is included in the other product line within Closed Block segments. This Closed Block has reserves of approximately $700 million and runs off at a rate of approximately $40 million annually. The reserve increase was really driven by lowering the interest rate assumption for this block to be more consistent with that of the LTC block. I'd like to now turn to our investment portfolio with a few points to highlight. First, we recorded a large after-tax realized investment gain of over $1 billion in the quarter. This is largely related to the reinsurance transaction as the assets being transferred to the reinsurer were mark to market before being transfered as part of Phase one of the transaction. These assets had large and unrealized gains, which were realized and the assets were transferred to the reinsurer at market. Second, and related to the reinsurance transaction, we were able [Technical Issues] assets, which had [Technical Issues] to the Closed Disability Block, but were not transferred to the reinsurer as part of the transaction. This quarter we allocated $360 million of these securities with a 7.4% yield and BBB rating to the LTC investment portfolio. These above market yields add strength to the balance sheet and represent additional economics of the transaction. Third, the overall quality of the portfolio remains in very good shape. During the fourth quarter, we saw only $85 million of investment grade bonds downgraded to below investment grade, and $52 million of which will be upgraded back to investment grade status when the acquisition of that company is completed this year. Our watch list is of potentially troubled investments has declined, a very low levels and we have taken -- as we have taken advantage of the rebound in the credit markets to trade out of these positions. A final point I'll make is that we saw a strong recovery in the valuation mark on our alternative investment assets of $29.4 million this quarter. Given the current portfolio size, we would expect quarterly positive marks on the portfolio between $8 million and $10 million. We estimate we have recovered about half of the valuation loss from the market decline in early 2020 and continue to expect a full recovery over time. I'd also note that it was an unusually low quarter for traditional miscellaneous investment income from bond calls. Following an unusually high amount in the third quarter, you will see that impact in many of our core business lines. Now looking to our capital position, we finished the year in very good shape with a risk-based capital ratio for our traditional US insurance companies at approximately 365% and holding company cash at $1.5 billion, which are both comfortably above our targeted levels. The cash balance, includes the capital released from the Phase one of the reinsurance transaction of approximately $400 million and we'll have an additional benefit at Phase two of the transaction is completed in the first quarter. So in total, once the reinsurance transaction was fully executed in the first quarter, we anticipate releasing over $650 million of capital, primarily to the holding company. In addition, our leverage ratio has declined to 26.2%. So now I'll close my comments with an update to our expectations regarding our outlook for 2021. At our outlook meeting back in December, we indicated that we expected 2021 after tax adjusted operating income to be relatively flat with our expected income for 2020. We also outlined a pattern for expected income of the first half 2021, mirroring the second half of 2020 with then the second half of 2021 beginning to rebound to more historic levels of growth and profitability. So now based on the higher than estimated COVID-related mortality we experienced in the fourth quarter of 2020 and our revised assumption of a 30% increase in mortality accounts in the first quarter of 2021. We now expect a modest decline of 5% to 6% for full year 2021 adjusted operating income per share. We anticipate COVID having a more negative impact on our first quarter results with mortality in January being the worst month of the pandemic. However, we continue to expect second half 2021 income to be in line with our previous outlook producing a stronger recovery as the impacts of the pandemic subside. As for our outlook for capital metrics, we anticipate year end 2021 level of holding company cash and risk-based capital to be very in line with our year-end 2020 metrics of 365% RBC and $1.5 billion of holding company liquidity, which will provide a strong stable capital base as we work through the remaining impacts from the pandemic. I I'll summarize by saying that we continue to be pleased with the operational performance of the company through continues to be an extraordinary environment. And we do believe we are well positioned to benefit from improving business conditions as vaccines take hold and we move past the December and January surge in mortality and new COVID infections. In the meantime, we'll continue to focus on the crisp execution and managed through the challenges we see today. We will be -- this will be his last quarterly earnings call. So I just want to recognize Peadar. Peadar has been a great part of our executive team and we will certainly miss his leadership and expertise. I will ask the operator to begin the Q&A session.

q4 adjusted operating earnings per share $1.15 excluding items. anticipates a strong recovery in after-tax adjusted operating income per share in second half of 2021. qtrly total revenue $4,273.5 million versus $3,034.6 million.

These reconciliations, together with additional supplemental information, are available at the Investor Relations section of our website, herbalife.com. Additionally, when management makes reference to volumes during this conference call, they are referring to volume points. Over the course of the global pandemic, we have delivered unprecedented business performance and growth. Despite challenging comparisons in the third and fourth quarter, we remain on track for another record sales year. The fundamental tailwinds driving the global nutrition industry, along with demand for our science-based nutrition products, continue to benefit the company. In Q3, we reported worldwide net sales of $1.4 billion, a decline of 6% compared to the prior year period. These results were in line with the updated guidance that we issued in September. On a two year stack basis, net sales grew 15% compared to the third quarter of 2019. For the third quarter, we reported earnings per share of $1.09 per diluted share and net income of $117.4 million. Adjusted diluted earnings per share of $1.21 was above the top end of our revised Q3 guidance. Adjusted EBITDA of $222.4 million also exceeded the high end of our guidance range. Uncertainty in global markets fueled by the ongoing pandemic and the Delta variant has presented challenges in predicting behavior in our channel. As we discussed at our recent Investor Day, we observed lower-than-expected activity rates during the month of August, which led to our revised Q3 and full year 2021 guidance. The decrease in activity rates was primarily driven by fewer new distributors and preferred customers entering our channel. This lower level of contribution from new entrants remained relatively consistent in the month of September and is reflected in our guidance for the remainder of the year. For the quarter, the number of new distributors and preferred customers joining the business was down 19% compared to record numbers of new entrants in Q3 2020, but it was still up 28% compared to Q3 of 2019, excluding China. Despite the slowdown in new entrants, we remain confident the foundation of our business is strong, and our long-term strategy is solid. In Q3, the number of sales leaders actively selling in the channel was up 10% compared to the prior year period, excluding China. Turning to our regional performance. The Asia Pacific region had another quarter of double-digit net sales growth, up 11% compared to the prior year. The region was led by continued strength in India, which grew 46%. India set its fifth straight quarterly net sales record as well as a monthly net sales record in September. Over 220,000 new preferred customers joined the business in India, a record number, and a reflection of the momentum that we are seeing in that market. In Vietnam, government COVID restrictions forced our Nutrition Clubs to close for the quarter, which contributed to growth of 13%, which was lower than the growth rates we had recently experienced in that market. Additionally, a third wave of COVID-19 throughout Indonesia resulted in community restrictions in all provinces, and impacted our nutrition club utilization, resulting in a sales decline of 10%. Looking at North America. We saw a decline in net sales of 11%. This decline is up against an extraordinarily high prior year comparison period. The two year stacked growth rate in the region increased 38% compared to Q3 of 2019. We continue to see strength in our U.S. nutrition club business as many parts of the country returned to more in-person activities. While we continue to closely monitor pandemic conditions, we kicked off a series of in-person distributor events in October, and are encouraged by the initial attendance and the excitement in the channel as we begin to once again meet face to face. Similar to the North America region, EMEA experienced a challenging year-over-year comparison, resulting in a 4% decline. However, in the region, we have seen a 16% year-over-year increase in the number of active supervisors, which reflects the continued strength and solid foundation of the EMEA business. Looking at the two year stack in the region, EMEA grew 33% compared to the third quarter of 2019. Although the combined new distributor and preferred customer numbers are lower than Q3 2020, we saw growth of 24% compared to the more normalized 2019 comparison period. In China, net sales declined 30% compared to the third quarter of 2020. During the second quarter earnings call, we outlined the actions that we're taking in the market. Overall, we believe our strategic initiatives, which include a focus on our digital transformation and daily consumption at Nutrition Clubs, will improve the number of new entrants joining the business and create a more active base of service providers in the long term. Although the impact of these initiatives is yet to be seen in our top line results, we remain confident, and expect these strategies will benefit our sales performance over time. For the full year 2021, we are reiterating the outlook that we provided in September for the top and bottom line. Alex will take you through our guidance in a bit more detail shortly. We anticipate this to be our go-forward cadence, which will allow time for additional data to flow through our forecasting models. Although the unpredictable and unprecedented nature of the pandemic and its economic impacts have resulted in near-term variability in our business, we remain firmly confident in the long-term growth strategy that we outlined in detail at our Investor Day. One of the initiatives that we outlined at Investor Day to accomplish this growth was new product innovation. And over the past several years, we have strategically built out our Herbalife24 sports nutrition brand through new products and global expansion. And this has contributed to impressive growth in the energy, sports and fitness category, which has increased at an 18% three year CAGR from 2017 through 2020 and growth of 31% year-to-date. We anticipate new products will be a long-term growth driver in our business, and accelerating new product development will be critical. Currently, products introduced in the prior three years represent only 14.5% of volume points in 2020. Our strategic objective is to increase sales attributable to new product development within the last three years to 25% over the next five years by localizing product development and improving speed to market. We hope that you were able to attend our Investor Day where we outlined additional aspects of our growth strategy, and shared our vision on the future of the company. For any of you that were unable to join, a full replay of the event is currently live on our Investor Relations website. Third quarter net sales of $1.4 billion represents a decrease of 6% on a reported basis compared to the third quarter in 2020. This was in line with updated guidance we provided in September, and a 15% increase on a two year stack basis compared to Q3 2019. We had year-over-year net sales growth in three of our five largest markets, consisting of the U.S., which decreased 11%. China, which was down 30%. And Vietnam, up 13%. Currency was a tailwind to net sales in the quarter, representing a benefit of approximately 165 basis points, excluding Venezuela. Reported gross margin for the third quarter of 78.7% decreased by approximately 10 basis points compared to the prior year period. The decrease was largely driven by unfavorable country mix, primarily from China, representing a smaller portion of our overall company sales. The decreases were largely offset by the impact of routine price increases. Third quarter 2021 reported and adjusted SG&A as a percentage of net sales were 34% and 33.6%, respectively. Excluding China member payments, adjusted SG&A as a percentage of net sales was 27.6%, approximately 100 basis points unfavorable compared to the third quarter 2020. Although this level of SG&A spend is still below our historical levels, it was an increase compared to the prior year where costs were significantly disrupted by the global pandemic. For the third quarter, we reported net income of approximately $117.4 million or $1.09 per diluted share. Adjusted earnings per share of $1.21 was above the high end of our Q3 guidance, and was an increase of approximately 5% compared to the prior year period. Currency was a benefit of $0.04 in the quarter versus the prior year period. Adjusted EBITDA of $222 million also exceeded the high end of our guidance range. Over the first nine months of the year, the company has generated over $409 million of net income and $740 million of adjusted EBITDA. Our adjusted diluted earnings per share and EBITDA figures continue to exclude items we consider to be outside of normal company operations and provide measures we believe will be useful to investors when analyzing period-over-period comparisons of our results. This quarter, you will notice we have a new exclusion item for onetime expenses related to transformation initiatives. Management has begun efforts to design and build to reorganize both front and back office operations. We continue to assess scope, and will update investors in February. We are reiterating our fiscal year 2021 guidance for the top and bottom line. Across the guidance ranges, this implies annual records for net sales, adjusted earnings per share and adjusted EBITDA. Our fiscal year 2021 capex guidance has been updated to a range of $145 million to $175 million. Currency remains a tailwind, and we project an approximate 200 basis points tailwind due to currency for the full year compared to the expected 220 basis points benefit from a quarter ago. For the full year, our guidance includes a projected currency tailwind of approximately $0.11 per diluted share, which is $0.04 lower than the currency benefit included in our prior guidance. As John referenced, we are expecting to provide guidance for 2022 on next quarter's earnings call. We will also be monitoring potential inflationary impacts on our business. Like many other companies, we have started to observe higher-than-usual cost increases in our supply chain with respect to raw materials, shipping costs and labor at our manufacturing facilities. Now we will turn to our cash position, capital structure and our share repurchase activity. Through the first nine months of the year, we have generated approximately $375 million of operating cash flow. During the third quarter, our cash flow was negatively impacted by timing on several working capital accounts. Given this unfavorable timing, we no longer anticipate operating cash flow to be higher in 2021 than 2020. However, we expect these items to net out in 2022, and results in a relatively more favorable cash flow environment next year. At the end of the quarter, we had $678 million of cash on hand. During the third quarter, we completed approximately $162 million in share repurchases. Given the level of our share price, we were able to opportunistically accelerate our repurchases ahead of our initial expectation of $100 million for the quarter. Our fully diluted share count as of the end of Q3 was approximately $105.3 million. We expect to complete approximately $100 million of share repurchases during the fourth quarter, which will result in just under $1 billion of share repurchases for the full year 2021.

q3 sales fell 6 percent to $1.4 billion. q3 earnings per share $1.09. reiterating fy 2021 outlook for top and bottom line. q3 adjusted earnings per share $1.21.

abercrombie.com under the Investors section. A detailed discussion of these factors and uncertainties is contained in the Company's filings with the Securities and Exchange Commission. In addition, we will be referring to certain non-GAAP financial measures. We will also be providing financial comparisons to the corresponding periods of fiscal 2020 and 2019 where applicable and due to temporary COVID driven store closures last year, we will not be disclosing comparable sales. I am excited to share our third quarter results, which benefited from a strong back to school and discuss the fourth quarter which is off to a good start. Together, we actively navigated factory closures and transportation delays, reduced our promotions and markdowns, manage expenses and made strategic investments across marketing, technology and fulfillment to drive our business forward. Due to that hard work and our ongoing commitment to delivering against our key strategic pillars, including fleet optimization, digital and omnichannel enhancements, stature [Phonetic] concept to customer life cycle and improved customer engagement. We delivered our best third quarter operating profit and margin in close to a decade. Total sales rose 10% to last year and were up 5% to Q3 2019 and we achieved our highest Q3 sales since 2014 despite industry wide supply chain constraints and removal of 1.1 million gross square feet from our store base last year. Our largest and most established market, the U.S. outperformed with sales up 17% on a one-year and 12% on a two-year basis. It was wonderful to have more kids return to school and as social activities resume for our kid, teen and millennial customer. We executed well against the back to school and fall calendar, providing seasonally appropriate newness and outfitting options. With compelling interpretations of the latest fashion trends including water leg silhouettes, vegan leather and seamless bodysuits, all while maintaining the quality, fit and value that we have become known for. Our customers were highly engaged as illustrated by our average basket size and lapsed customer rate of return, both of which improved in the double-digit percent range. In addition, we also acquired roughly 2 million new customers globally, all very positive signs regarding the health of our brands. By channel, store sales rose 11% from last year and declined 20% from 2019. Digital, which for us, carries a significantly higher four-wall margin than stores grew 8% on a one-year and 55% on a two-year basis, representing 46% of total sales. Results speak to higher AUR across brands and channels on reduced markdowns and promotions and improved full price sell-throughs. Q3 marked the sixth consecutive quarter of AUR improvement as our customers continue to adopt a buy it when you see it attitude. This represents a major shift in mindset that has been years in the making as we have evolved each brands conditioning, purpose, perception and execution. Looking ahead, we will build on our solid foundation and believe there's ongoing AUR opportunity at all of our brands. Third quarter AUR improvements were offset by higher supply chain related costs. In spite those pressures, we grew our operating margin rate by 80 basis points on a one-year basis and 640 basis points on a two-year basis. And while we don't talk about it often publicly, we could not have achieved these results without our corporate purpose of being there for you on the journey to being a becoming who you are, which serves as our North Star. It ensures our associates and partners feel comfortable sharing their thoughts and evolving with us and that we listen and speak to our customers authentically, providing inclusive options for all of their lifestyle needs. Part of that evolution was the recent hiring of a leader to drive our comprehensive ESG efforts forward. Simply put, purpose is woven into all that we do, including our critical pillars of product, voice and experience. Starting with product, during this third quarter we had strong new wins that is hard to name just a few. Denim, which is one of our most important categories continue to be on fire, posting record breaking Q3 sales. We received a tremendous amount of positive media headlines and publications that have billions of impressions and thousands organic social media tags across the platform, all devoted to the fit, quality and comfort of our assortment. Momentum built-in non-skinny and water leg styles including the mom, dad, straight and flare for women, while slim, straight and tapered gained popularity for guys as we continue to refresh his wardrobe. Importantly, promotions were once again down across brands with higher full price selling. In addition to denim, other top-performing categories included dresses, shorts, pants and knit tops and bottoms. We are thrilled with the progress we've made with our products, which goes hand in hand with amplifying our voice and experience. Our marketing teams are leaders in a rapidly evolving digital space and are embracing new and emerging technology trends and engagement opportunities using voices and platforms that are authentic to each of our brands. Across the company, we continue to lean into the power of social selling and refining strategies are tailor made for each of our brands and their target customer. This includes live shopping events on TikTok and Instagram, exclusive social product launches, in-app storefronts across platforms, augmented reality campaign for Snapchat and robust affiliate influencer program and our customer is responding. Our unrelenting focus on digital is intertwined with providing the best omnichannel experience for our global customers by meeting them whenever, wherever and however they choose to interact with us. This focus is what inspired us to open our New West Coast DC and introduced same-day delivery. It is all what drove one of our major internal initiatives to know them better and squall them everywhere, which is about transforming our ways of working to ensure that everything we do is data driven and aligns the moments that are most important to our customer and a world of endless ideas and rapid innovation. Now, moving onto the brands. Hollister sales, which includes Gilly Hicks and Social Tourist rose 10% to last year and 1% to 2019. In the U.S., sales rose 17% on a one-year and 7% on a two-year basis. I am proud that Hollister global Q3 sales were the strongest since 2013 and that U.S. sales were the strongest since 2012, especially given that Hollister and Gilly saw an outsized impact on inventory receipts due to higher exposure to Vietnam production, importantly sales were healthy with nice AUR growth. During the quarter, we continue to authentically speak to our Gen Z customer about the topics they care about the most, including our diverse backgrounds and identities, mental wellness and one of their most passionate -- biggest passions gaming. In September, Hollister formally announced the launch of the Hollister good deeper perspective, a long-term program dedicated to supporting rising Latinx creators from the fashion, music and comedy verticals of TikTok and Instagram and authentically amplifying their voices. This first of its kind collective is meaningful given Hollister's large Latinx customer base and is a testament to the fundamental shift in how we engage our customers. The launch, which generated over 20 million PR impressions included the bilingual made for TikTok album produced by the collective music creators. The following month Hollister named Fortnite World Cup Champion, Bugha, its first chief gaming scout. The announcement made waves across the gaming new cycles garnering over 125 million PR impressions. The partnership included a collection with Hollister's highly successful all day gameplay assortment featuring a match including and sweat pants that he co-created with the fans via social. The collaboration boosted sentiment across our social channels and saw strong sell-throughs. Looking ahead, Bugha worked with Hollister to scout rising gamers for team Hollister, our new up incoming gamer program. We are looking forward to a charity livestreaming during GivingTuesday with proceeds going back to the Hollister confidence project, an initiative dedicated to promoting confidence and mental wellness in teams worldwide. At Gilly Hicks, our updated brand purpose of bringing our customer to their happy place is resonating. Our recently introduced men's products have been well received, which is exciting giving us a completely new and untapped customer for us. At the same time, our existing customers continue to come to us for her must haves including Go Active, which grew to over 20% of sales. Response to our stand-alone in '23 updated side-by-side locations have been encouraging. We see runway to open additional stand-alone and side-by-sides globally and to refresh the Gilly Hicks experience that lived within Hollister as we embark on our next phase of growth. In addition to Gilly Hicks, we've also please with results at our newest brand Social Tourist, which we view as another one of our growth vehicles. As a reminder, Social Tourist was launched in May. It's a multi-year exclusive apparel partnership with social media super stars Charli and Dixie D'Amelio. In the third quarter, the D'Amelio series aired on Hulu. In this show Charli, Dixie and their family wore Social Tourists into their daily lives. The highly viewed series, which Hollister sponsored, drove meaningful social impressions and engagement, spikes in search demand and major PR buzz. Hollister also partnered with Hulu on an ad by which drove roughly 90 million ad impressions. We've also continued to apply learnings in Social Tourists, particularly as it relates to TikTok and social selling to other areas of the company making us even smarter, faster and more creative. Turning to Abercrombie, which includes kids, Q3 sales rose 12% compared to last year and 10% to 2019, representing our highest sales volume since 2015 and best gross margin since 2013. In the U.S., sales rose percent on a one-year and 18% on a two-year basis. It has been absolutely amazing to experience a turnaround of this brand, which is in a remarkably different place than it was just a few short years ago. At kids, we had a great back-to-school season. We combined insight driven marketing and paid media, entered the stress and guesswork out of shopping for parents by providing product that shine from both the fashion and a quality perspective. We also found power and leveraging affiliate parents voices with its first ever many collection, spanning both the adult and kids brands that contain stylish, cool and A&F essentials for fall and was an immediate hit. At adults, we launched our highly successful denim your way campaign in early August. This was a combination of work that's first again in January when we put out a call on social media to catch our customers in the campaign. After receiving thousands of submissions, which was 10 customers and brand fans to help drive fit and design decision and to be predominantly featured in our denim your way marketing. The campaign and the company assortment receiving glowing reviews as a perfect example of how we are listening to our customer to create product for their lifestyle needs. Throughout the quarter, we also continue to leverage our relationship with TikTok, a highlight was our women's fall outfitting campaign, flashes of fall, which generated over 140 million impressions. In addition our Abercrombie influencer team double down their efforts to maintain their leadership in the world at social selling. Now looking to the fourth quarter. Our customer is responding well to our assortments, especially our cold weather offerings including cozy and outerwear, as well as occasion dressing and denim. We have seen some early holiday shopping and also a fair amount of self purchasing, as the weather has become more seasonal and our customer gears up for a turn to holiday activities and events. With the delays in the supply chain, we expect to deliver newness leading up to the holiday peak, which will be a great learning around future flows and strategies. On the delays, I'm proud of our season supply chain team for helping us navigate these challenges. On top of our great products, I'm also excited about the social strategies we have in place. Our stores and DCs are well staffed and ready to go and I'm confident that our store network and expanded suite of omni capabilities, including same day shipping, will enable our customers to do their shopping whenever, wherever and however they choose. We are ready to compete and win for holiday and I'm confident in our ability to deliver an operating margin between 9% and 10% this fiscal year, which will be our best annual operating margin since 2008. Looking beyond holiday, we continue to see significant growth opportunities across our portfolio brands and we look forward to sharing more on our strategic vision of how we will scale our business at our next Investor Day, which we are planning for the first half of fiscal 2022. Stay tuned as we finalize the details. In the third quarter, we delivered strong results across brands and across the P&L. Our profitability continued to benefit from the transformative moves we made in our operating model and expense structure last year as the shift to digital accelerated. For Q3, total net sales were $905 million, up 10% to last year and up 5% to pre-pandemic levels. While transportation delays increased during the quarter, our teams were able to maximize the inventory on hand to deliver sales above our expectations. Store sales rose 11% on a one-year basis and were down 20% on a two-year basis. At the same time, total digital sales increased 8% compared to last year and grew 55% from 2019, representing 46% of total sales this quarter, compared to 31% in 2019. By brand, net sales increased 10% for Hollister, which includes Gilly Hicks and Social Tourist and 12% for Abercrombie, which includes Kids. As compared to Q3 2019, net sales increased 1% for Hollister and 10% for Abercrombie. By region, we continue to see strong results in the U.S. with net sales up 17% and 12% on a one and two-year basis respectively. Despite having roughly 140 fewer stores and over 20% less square footage in our U.S. store base as compared to Q3 2019. In the U.S., Hollister was up 17% to 2020 and up 7% to 2019, while Abercrombie was up 19% and 18% respectively. Outside of the U.S., we continue to see a slower recovery with EMEA down 6% to last year and 7% to Q3 2019. Our business was strongest in our largest European market, the U.K., where we experienced sequential sales improvements. The UK customer has responded well to product and has embraced our latest A&F location on Regent Street, which opened in September and is a fraction of the size and cost of our recently closed flagship. This was offset by continued COVID driven restrictions and impacts across key Western European countries, including two of our largest markets, Germany and France. In APAC, sales were down 12% to last year and down 32% to 2019 as we face traffic headwinds due to ongoing COVID cases inside China and Hong Kong and slow vaccination progress in Japan. Additionally, we believe the China was impacted further by overall geopolitical climate. We continue to view international as a long-term growth opportunity and are encouraged by the customer response to regional marketing and product distortions in both the EMEA and APAC markets. Moving on to gross profit. Our rate of 63.7% was down 30 basis points to last year and up 360 basis points to 2019. The result exceeded our expectations and included approximately 300 basis points of impacts from higher freight costs and air utilization, which was at the low end of our 300 to 400 basis point expectation. We continue to see AUR growth across brands compared to 2020 and 2019 on reduced promotions and markdowns, while maintaining initial tickets. We ended the quarter with inventory approximately flat to last year. Inventory on hand was lower than plans coming out of Q3 and was offset by higher in-transit due to the extended Vietnam closures and increasing transit times. Related to Vietnam, all factories are open and operating. We are using air to catch up on these receipts and are encouraged by recent improvements moving product through the U.S. ports. I'll cover the rest of our Q3 results on an adjusted non-GAAP basis. Excluded from our non-GAAP results are approximately $6.7 million and $6.3 million of pre-tax asset impairment charges for this year and last year respectively. Operating expense excluding other operating income was up 8% compared to last year and up 1% to 2019, coming in at the low end of our expectation of up low-single digits. As we saw better-than-expected store and distribution expense and shifted a portion of our marketing spend to Q4 to better align with inventory flows. In Q3, we saw an increase in store and distribution expense of 2% compared to 2020 and a reduction of 7% compared to 2019. Compared to 2019, store occupancy was down approximately $43 million related to square footage reductions and renegotiated leases. These savings were partially offset by increased shipping and fulfillment expenses on higher digital sales. Marketing, general and administrative expenses rose 21% from last year and 28% to Q3 2019, primarily driven by increased marketing investments. As Fran mentioned, we continue to drive strong customer engagements across our brands and we expect to continue reinvesting a portion of our occupancy savings into digital media in Q4. We delivered operating income of $79 million compared to operating income of $65 million last year and $27 million in 2019. This is our best third quarter operating income and operating margin since 2012. The effective tax rate was approximately 25%. Net income per diluted share on an adjusted non-GAAP basis was $0.86 compared to $0.76 last year. As we continue to benefit from the evolved operating model and the resulting higher profitability level, we are in a strong position to both invest in the business and return excess cash to shareholders. We ended the quarter with cash and cash equivalents of $866 million and funded debt of $308 million. During the quarter, we repurchased approximately 2.7 million shares for $100 million, bringing year-to-date total share repurchases to about 6.1 million shares and $235 million. Recently, our Board of Directors approved a new share repurchase authorization of $500 million, replacing the February 2021 share repurchase program. In the fourth quarter, we expect to repurchase at least $100 million worth of shares pending market conditions and share price. We continue to expect fiscal 2021 capex to be approximately $100 million, with about half of that related to digital and technology and the other half related to real estate and maintenance items. During the quarter, we opened five new stores, bringing the total to 23 for the year-to-date period and closed three stores for a total of 23 year-to-date. For the full year, we expect the store count to remain roughly flat to last year, pending ongoing negotiations with landlords. I'll finish up with our thoughts on Q4, which we are planning as follows using 2019 as our comparison period: net sales to be up 3% to 5% from 2019 level of approximately $1.185 billion. We expect the U.S. to continue to outperform EMEA and APAC. On inventory, we are optimizing AURs on current inventory and our distribution center teams are quickly replenishing as inventory flows in. While the inventory receipt pattern will be different than the past, we have and we will continue to work diligently to minimize the impact on sales for the quarter. Gross profit rate to be around flat to the 2019 level of 58.2%, including an expected negative impact of approximately $75 million of freight cost pressure due to rising ocean and air rates as well as higher air deliveries necessary to catch up on the Vietnam factory closures. Based on early customer response to holiday, we are optimistic in our ability to continue to reduce markdowns and promotions to drive AUR improvements to offset this headwind. Operating expense excluding other operating income to be up low to mid single digits to 2019 adjusted non-GAAP level of $565 million. We expect to continue to see lower store expenses, partially offset by higher fulfillment costs. Similar to Q3, we plan to increase marketing spend compared to 2019 as we look to maximize holiday sales and build momentum heading into 2022. Finally, we expect the tax rate in the low 20s. Assuming we deliver against these expectations, we expect the full-year operating margin to be in the 9% to 10% range, our highest since 2008. In closing, we are excited to have delivered another quarter of profitable growth in Q3 and are laser focused on executing our strategies for holiday and beyond. We will provide additional detail on our 2022 assumptions in our year-end earnings call.

q3 sales rose 10 percent to $905 million. qtrly adjusted earnings per share $0.86. qtrly digital net sales of $413 million increased 8%. compname announces board of director's approval of $500 million share repurchase program.

These risks include, but are not limited to, the impact of seasonality and weather, general economic conditions and the level of consumer spending, the company's ability to capitalize on opportunities or grow its market share and numerous other factors identified in our Form 10-K and other filings with the Securities and Exchange Commission. Our team continues to set records with their performance and our third quarter was no exception. They produced record sales, record margins, record profit and on top of that record Net Promoter Scores. Today, I'd like to share the highlights from our very productive third quarter and then discuss the results of our strategic growth plan, which will continue to create shareholder value in 2021 and beyond. Then Mike will discuss our financial results in more detail and provide color on our updated 2021 financial outlook. Let me start by touching on our third quarter performance. I'm extremely excited about our results in the quarter, with both sales and earnings exceeding expectations, and I am especially proud of the MarineMax team for continuing a high level of execution on our key strategic initiatives which continue to gain traction and resonate with customers. We have capitalized on a favorable consumer spending backdrop along with a continued demand and consumer seeking the boating lifestyle. The record sales and earnings growth we delivered was driven by solid 6% same-store sales growth, which is on top of a robust 37% same-store sales growth a year ago. From a nine month perspective, same-store sales growth was up 21% on top of a 22% a year ago. Our significant geographic and product diversification along with the effective utilization of our digital platform is driving sustained growth. Additionally, the marine industry continues to experience a significant acceleration in new customers. Given our scale and global position, we are benefiting from our growing share of the market. And based on available industry data, we believe we continue to gain market share. We had meaningful revenue growth across most brands and categories of products and continue to leverage our investments in technology, which is driving leads that are being converted into sales and enhanced profitability. We built on our prior quarter's profitability and increased our operating margin to over 12%. This performance is directly attributable to our ability to execute against our strategy, focusing on higher gross margin businesses, including finance and insurance, marina, storage, parts, services and brokerage. The gross margin strength we produced in the first half of the year accelerated in the June quarter to 30.7%. Additionally, our acquisitions have performed well and are aligned with our strategy of contributing to the margin expansion, and we expect our two most recent acquisitions, Cruisers Yachts and Nisswa Marine to further contribute to this growth. In the quarter, gross margin expansion and good expense control led to outstanding operating leverage of over 20% and record earnings per share of $2.59. Now let me discuss the confidence we have that our strategy will continue to create sustained growth and long-term shareholder value in 2021 and beyond. We are making significant progress on our vision of creating exceptional customer experiences through best services, products and technology. Our teams remain focused on these initiatives, resulting in strong sales and margins. We are uniquely positioned to drive this growth for years to come. We will accomplish this through our global market presence, premium brands, valuable real estate locations, exceptional customer service, technology investments, strategic acquisitions, industry-leading inventory management and finally, a continued commitment to build on our strong company culture. Supported by one of the strongest balance sheets in the industry, we will continue to make strategic, accretive acquisitions in a disciplined manner. The combination of being well capitalized and having a broad global geographic presence has allowed and will allow us to grow in many ways by adding additional dealers, marinas, storage, service-related offerings, manufacturing and asset-light businesses, such as our superyacht services business. We continue to have strong demand-driven visibility, and we are well positioned to serve our customers. The sheer size of our backlog continues to provide us with added confidence that we should outperform for the remainder of 2021 and well into fiscal 2022. Also, there is no question that our scale is a competitive advantage as we leverage our deep manufacturing relationships, our nationwide shared inventory and strong balance sheet to support the growing demand. As we will discuss later on in the call, based on our third quarter results, we are again raising our full year 2021 guidance. This reflects another great quarter and the confidence we have in the business as we build our backlog and look ahead to the new product that will start to flow in the future. We believe the combination of driving operating leverage and generating significant cash flow, coupled with strong consumer demand will result in sustained growth well into fiscal 2022 and beyond. And with that update, I'll ask Mike to provide more detailed comments on the quarter. For the quarter, revenue grew 34% to over $666 million due largely to same-store sales growth of 6%, which was on top of 37% a year ago, plus the strong results from the acquisitions we have completed, namely SkipperBud's, Northrop & Johnson and Cruisers Yachts. Overall, our growth has been demand-driven across generally all segments of products. As expected, the supply chain challenges have resulted in low industry inventory, which led to reduced overall unit sales versus our record last year. However, with greatly increased backlog visibility, coupled with our broad product portfolio and production insight from our manufacturing partners, we were positioned to drive growth in many of our key categories. This approach resulted in a double-digit expansion of our average unit selling price. We also believe this strategy will continue to work well as we move ahead. Our gross profit dollars increased over $81 million, while our gross margin rose 590 basis points to 30.7%. Our initiatives to drive margin growth over the last several years is clearly working. Margins rose with contributions from multiple segments and businesses, including new and used boats, storage, our higher-margin finance, insurance and brokerage business as well as our global superyacht services businesses, Northrop & Johnson and Fraser Yachts. We would note that the superyacht charter business is starting to see improvement with the reopening of Europe. Assuming the reopening continues, we would expect a much improved charter season compared to August and September last year. Regarding SG&A, the majority of the increase was again due to rising sales and related commissions, combined with the recent acquisitions. Generally, expense trends are on track. Our operating leverage in the quarter was over 20%, which drove very strong earnings growth, setting another quarterly record with pre-tax earnings of over $80 million. Our record June quarter saw both net income and earnings per share rise more than 60%, generating $2.59 in earnings per share versus $1.58 a year ago. For the first nine months of the year, I will make just a few comments. Our revenue exceeds $1.6 billion, driven by a 21% increase in comparable store sales. Gross margins exceed 30%. Our operating leverage is around 20%. Our earnings per share is at $5.33 and our EBITDA is over $180 million, a very impressive nine months. Moving on to our balance sheet. We continue to build cash with over $200 million at quarter end. Our inventory at quarter end was $209 million. Excluding SkipperBud's and Cruisers Yachts, our inventories neared historically low levels on a relative basis. However, it is important to reiterate that we have reasonable visibility from our manufacturing partners. That, coupled with our backlog, allows us to direct our efforts to drive growth like we did this quarter. Looking at our liabilities, short-term borrowings decreased sharply due to lower inventory and related financing as well as the increase in cash generation. Customer deposits almost tripled to over $86 million due to the demand we are seeing setting a new record. Our current ratio stands at 2.20, and our total liabilities to tangible net worth ratio is below one. Both of these are very impressive balance sheet metrics. Our tangible net worth is $386 million. Our balance sheet has always been a formidable strategic advantage and now more than ever, it provides the capital for growth and expansion as opportunities arise. Turning to guidance for 2021. The June quarter exceeded expectations and industry trends remained strong. Industry estimates for 2021 retail unit growth is in the high single digits. We expect our annual same-store sales growth to be in the high teens. This is generally consistent with our comments last quarter. Given the strength of earnings in the June quarter and the demand-driven visibility, we are raising our estimates for earnings per share guidance to the range of $6.40 to $6.55. In summary, we do expect our pre-tax earnings to rise in the fourth quarter, which gets dampened a bit by a higher tax rate of around 25% this year as well as higher outstanding shares which results in the earnings per share guidance range. Our guidance excludes the impact from any potential acquisitions that we may complete. Our updated 2021 guidance implies an EBITDA level well in excess of $200 million. Turning to current trends. July will close with positive same-store sales growth and our backlog is at record levels. As we have said, industry demand trends remain strong, and we are generally outperforming these elevated levels. While we would typically not share perspective beyond the current fiscal year, I'd like to provide some additional context as we look out to fiscal 2022. With the demand side of our business remaining very strong, and with the visibility we have with our manufacturing partners and backlog, we do anticipate same-store sales growth in 2022. We will provide more color around this on our fourth quarter call. As evidenced in today's results, we are pleased to see our business continue to build momentum. Our team's performance in the first nine months of fiscal 2021 continues to show excellent execution, even on top of a record performance last year, which included very impressive same-store sales. Much of our strategic work is still underway with the true benefit to be realized in the coming quarters and years. We remain committed to creating exceptional customer experiences through our teams, services, products and technology. Record high Net Promoter Scores show that our customer-centric approach is fully aligned to drive high levels of satisfaction and repeat business. We will continue to uncover significant opportunities for brand expansions and higher-margin businesses that will strengthen our overall business, while staying focused on our strategy to create long-term shareholder value.

marinemax raises fy earnings per share view to $6.40 to $6.55. raises fy earnings per share view to $6.40 to $6.55. raises fiscal year 2021 guidance. q3 earnings per share $2.59.

Our earnings slides provide a reconciliation of the GAAP to non-GAAP financial metrics used. Core means designated financial metrics excluding the impact of the recent s::can and ATi acquisitions. We believe this reference point is important for year-over-year comparability. I couldn't be more pleased with the dedication and execution demonstrated by our team supporting our customers and delivering record sales in the face of widespread supply chain inflation and logistics challenges. Our strong order momentum from the first quarter continued into the second, and even with that strong execution, our backlog reached another record high as we exited the second quarter. Our two water quality acquisitions s::can and ATi delivered strong top line performance above our expectations with solid earnings per share accretion. Overall, it was a great quarter, due in large part to the activity in the trenches day in and day out. As you can see on Slide 4, total sales for the second quarter were $122.9 million compared to the coronavirus impacted trough of $91.1 million in the same period last year, an increase of 35%. Overall utility water sales increased 38%. Excluding the approximately $12 million of sales from s::can and ATi acquisitions, core utility water revenues increased 22% year-over-year. Comparing back to the pre-COVID impacted second quarter of 2019, core utility water sales increased 11%. As Ken noted, we continue to experience robust orders, however supplier allocations of certain electronics and other components along with logistics challenges again limited manufacturing output in deliveries. We did experience growth in overall meter sales and BEACON software as a service revenue and we benefited from strategic value-based pricing actions. We exited the quarter with another record high backlog, which bodes well for our sales expectations moving forward. As anticipated, the flow instrumentation product line sales rate of change returned to growth with a 22% year-over-year improvement, stabilizing demand trends across the majority of global end markets and applications as well as an easier comp influenced the increase. We were pleased with the operating profit margins generated in the quarter in light of the significant and varied inflationary forces. The quarter's operating margin was 15.2%, an increase of 130 basis points year-over-year. Gross margin for the quarter was 40.8%, an increase of 150 basis points year-over-year. Margins benefited from favorable acquisition mix as well as the higher volumes and positive product sales mix, namely higher SaaS revenues, along with favorable value-based pricing realization. Combined, these drivers tempered the cost headwinds from higher brass and other component and logistics inflation. Taking a closer look at copper, prices have settled back down into the $4.30 range after escalating to about $4.80 earlier in the quarter. This is generally in line with our most recent year-over-year headwind estimate, which was approximately $7 million to $8 million on a full year basis unmitigated. As our margins demonstrate, we have executed well in implementing appropriate pricing mechanisms to offset this inflation and we will continue to actively monitor pricing in light of the inflationary pressures. Turning to SEA expenses. The second quarter spend of $31.4 million was sequentially in line with the $31.6 million from Q1 2021 and represents an increase of $8.2 million from the prior year. You may recall, the prior year included the benefit of various cost reduction actions taken at the onset of COVID-19 including temporary furloughs. The SEA run rate includes both the s::can and ATi along with the higher level of acquired intangible asset amortization, and is in line with our ongoing expectations of normalized SEA leverage in 25% to 26% range over time. The income tax provision in the second quarter of 2021 was 25%, slightly higher than the prior year's 24.3% rate. In summary, earnings per share was $0.48 in the second quarter of 2021, an increase of 45% from the prior year's earnings per share of $0.33. Working capital as a percent of sales was 24.3% on par with the prior quarter-end. Inventory increased due to the manufacturing output constraints as well as commodity inflation as described earlier. Free cash flow of $11.9 million was lower than the prior year, the result of higher cash tax payments and the increase in inventory. On a year-to-date basis, free cash flow conversion of net earnings is sitting at 147%. We took the opportunity to upsize the facility to $150 million and to add additional flexibility in the form of leverage covenants and an accordion feature among others. Our strong cash flow combined with our borrowing capacity provides us with ample liquidity to fund our ongoing capital allocation priorities. Turning to Slide 5. We updated the chart we introduced last quarter with actual second quarter data. Given the number of different variables at play in both the current year and prior year comparables, we think this chart can be helpful in understanding the uneven results we have and we'll continue to see in our sales. The robust growth rate we experienced this quarter excluding the acquisitions was the result of continued strong order rates as well as the record high backlog with which we started the quarter. Not surprisingly, it was also due in part to the easier comp from the most significantly COVID-19 impacted second quarter last year. As we enter the back half of the year, the strong order momentum and record high backlog will be supportive of our growth outlook. The third quarter will see a difficult comp, both in terms of sales and profitability based on the post-COVID lockdown recovery in both manufacturing output and orders last year. Our supply chain team continues to work tirelessly at [Indecipherable] with the varied electronic and other component shortages. While we don't expect to be back to normal, we do expect further backlog conversion as the year moves ahead. We are very pleased with the results from the last two water quality acquisitions this quarter contributing just over $12 million of revenue in the quarter, a pro forma growth rate in the double-digits. Their underlying performance along with the integration work underway to establish and cross-trained sales resources and harmonized product offerings within water quality validates our confidence in the underlying strategy of combining water quantity with quality in order to accelerate our customers' digital transformations. In summary here on Slide 6, the step change in order rates over the past several quarters confirms the fundamental market demand for intelligent water solutions to monitor, manage and support operational efficiencies throughout the water distribution system. We are uniquely positioned with a full line of smart water offerings encompassing both water quantity and quality to serve utility and industrial customers alike. A record backlog is one of those good problems to have and the challenge we expect will persist for some time as we migrate through the second half of the year and beyond. Electronic and other component suppliers are making good progress in restoring and building capacity, however, the rate of recovery is fluid and will continue to be uneven until inventory levels are able to be -- to fully meet demand. Despite the component availability, inflation and logistics challenges, our teams are working hard to build supply chain resiliency and actively communicate to suppliers and customers to proactively manage expectations. Our effective sourcing strategies, market driven innovation and operational agility are supporting Badger Meter's profitable business growth and delivering value for shareholders. Finally, I want to highlight several additional ESG related disclosures that we've added to our website. One is an outline of how Badger Meter works to align our ESG efforts with the United Nations Sustainable Development Goals, notably Goal 6, 3 and 11 that focus on water, health and safety and sustainable cities. The second is a stand-alone SASB focused report providing annual metrics and other information for 2020, which is cross-referenced to GRI. Badger Meter continues to advance its ESG journey as we work to understand and mitigate the most material and impactful risks of climate change and preserve and protect the world's most precious resource.

compname reports q2 earnings per share $0.48. q2 earnings per share $0.48. q2 sales $122.9 million versus refinitiv ibes estimate of $118.4 million.

As we begin 2021, we remain cautiously optimistic with the vaccine rollout gaining traction that will emerge from the global pandemic this year. I think it's only confirmed by the increased economic activity we're all seeing. That said, risks do remain. And if you're so inclined to follow along, I'm going to be speaking to the highlights slide, which is slide three. Our investment in key capabilities and the tremendous focus on our clients continues to produce good momentum in our business. We have now achieved nine straight months of net long-term inflows. In the first quarter, net long-term inflows were $24.5 billion. This is a record level of inflows for the firm. Net -- this follows net long-term inflows of nearly $18 billion in the second half of last year, and this represents nearly a 9% annualized long-term organic growth rate, led by net flows into ETFs, continued strength in fixed income and net inflows into the balanced funds. And as you can see on slide three, the key areas that were highlighted in January: we have scale, investment readiness and competitive strength drove the growth in the quarter. These are areas where investment performance is strong. We're highly competitive, and we're well positioned for growth. Retail flows significantly improved in the quarter and were $21.2 billion out of $24.5 billion of the net long-term flows. Our ETFs, excluding the Qs, generated net long-term inflows of $16.8 billion. This is also a record for the firm, which contributed significantly to the $10 billion of net long-term inflows generated in the Americas. Invesco's U.S. ETFs, excluding the Qs, captured 6.7% of the U.S. industry net ETF inflows. This is more than two times our 3% market share. Within private markets, we launched two CLOs, which raised $800 million. And we remain focused on our alternative capabilities of space, where we also see the benefits of our MassMutual. MassMutual has committed over $1 billion to various strategies, including providing a credit facility to one of our private market funds. We had net long-term inflows of $6.5 billion within active fixed income. And within active global equities, our nearly $50 billion developing markets fund, key capability acquired in the Oppenheimer transaction, saw $1.3 billion of inflows. That said, there's still areas of improvement within active equities, where we continue to work and remain focused on those opportunities. Net long-term inflows into Asia Pac were $16.7 billion in the first quarter, following $17 billion of net inflows in the second half of 2020. The China JV launched nine new funds with $6.2 billion of net long-term inflows. In addition, our solutions-enabled institutional pipeline has grown meaningfully and accounts for over 60% of our pipeline at the end of the quarter. Allison will provide more information in a few minutes on the flows, the pipeline, the results for the quarter. But I would note, we generated positive operating leverage, producing an operating margin of 40.2% for the quarter. Strong cash flows being generated from our operations improved our cash position, resulting in no drawdown on our credit facility at quarter end, a quarter where we experienced seasonally higher demand on our cash flow. The Board also approved a 10% increase in the quarterly dividend to $0.17 per share. Given our historical investments in the business and our most recent efforts to further align our organization with our strategy, I'm confident, talent, capabilities, the resources and the momentum to drive -- to deliver for our clients and drive further growth and success. Moving to slide four. Our investment performance improved in the first quarter, with 70% and 76% of actively managed funds in the top half of peers on a five year and a 10-year basis, respectively. This reflected continued strength in fixed income, global equities, including emerging markets equities and Asian equities, all areas where we continue to see demand from clients globally. This transition more closely aligns our data to the investment performance data reviewed by our U.S. clients and is more consistent with how our peers reflect investment performance. Additionally, we've expanded the population of AUM included in performance disclosures by about $150 billion for each period presented through the addition of benchmark-relative performance data for institutional AUM, where pure rankings do not exist. This approach is used by certain of our peers, and we believe it more meaningfully represents the contribution of our institutional AUM to our performance metrics. Moving to slide five. You'll notice we reorganized our ending AUM and net long-term flow slides to group the ending AUM and net long-term flows together for each cut of our data by total, investment approach, channel, geography and asset class. We believe this will better illustrate our flows in the context of our overall AUM for each category. We ended the quarter with just over $1.4 trillion in AUM. Of the $54 billion in AUM growth, approximately $25 billion is a function of increased market values. Our diversified platform generated net long-term inflows in the first quarter of $24.5 billion, representing 8.8% annualized organic growth. Active AUM net long-term inflows were $7.5 billion or 3.4% annualized organic growth rate. In passive AUM, net long-term inflows were $17 billion or a 31.3% annualized organic growth rate. The retail channel generated net long-term inflows of $21.2 billion in the quarter, an improvement from roughly flat performance in the fourth quarter, driven by the positive ETF flows. Institutional channel generated net long-term inflows of $3.3 billion in the quarter. Regarding retail net inflows. Our ETFs, excluding the QQQ suite, generated net long-term inflows of $16.8 billion, including meaningful net inflows into our higher-fee ETFs. Net ETF inflows in the U.S. were focused on equities in the first quarter, including a high level of interest in our SandP 500 Equal Weight ETF, which had $4 billion in net inflows in the quarter. In addition to the SandP 500 Equal Weight ETF, we had five other ETFs that reported net inflows of over $1 billion each. These six ETFs represented $10 billion in net inflows for the quarter. It's also worth noting that our Invesco NASDAQ Next Gen 100 ETF, the QQQJ, surpassed the $1 billion AUM mark in the quarter following its inception in October of 2020. This is on the heels of our successful QQQ marketing campaign and sponsorship of the NCAA Championship in the first quarter. Looking at flows by geography on slide six. You'll note that the Americas had net long-term inflows of $10 billion in the quarter, an improvement of $7.8 billion from the fourth quarter. The improvement was driven by net inflows into ETFs, institutional net inflows, various fixed income strategies, and importantly, focused sales efforts. Asia Pacific delivered one of its strongest quarters ever with net long-term inflows of $16.7 billion. Net inflows were diversified across the region. $9.4 billion of these net inflows were from Greater China, including $8.5 billion in our China JV. The balance of the flows in Asia Pacific were comprised of $3 billion from Japan, $1.9 billion from Singapore and the remaining $2.3 billion was generated from several other countries in the region. Net long-term inflows for EMEA excluding the U.K. were $3.7 billion driven by retail flows, including particularly strong net inflows of $1.2 billion into our Global Consumer Trends Fund, the growth equities capability, which saw demand from across the EMEA region. ETF net inflows in EMEA were $1.6 billion in the quarter, including interest in a wide variety of U.S.- and EMEA-based ETFs. Notably, we saw net inflows of $0.5 billion into our blockchain ETF and $400 million into one of our newly launched ESG ETFs in the quarter, the Invesco MSCI USA ESG Universal-Screened ETF. And finally, the U.K. experienced net long-term outflows of $5.9 billion in the quarter driven by net outflows in multi-asset, institutional quantitative equities and U.K. equities. Turning to flows across asset class. Equity net long-term inflows of $9.8 billion reflect some of the capabilities I've mentioned, including the Developing Markets Fund, the Global Consumer Trends Fund and ETFs, including our SandP 500 Equal Weight ETF. We continue to see strength in fixed income across all channels and markets in the first quarter with net long-term inflows of $7.6 billion. This following net inflows of $8.2 billion in fixed income in the fourth quarter. It's worth noting that the net inflows in the balanced asset class of $7.3 billion arose largely from China. In alternatives, net long-term inflows improved by $4.1 billion due to a combination of inflows in senior loan, commodities and newly launched CLOs during the quarter. Moving to slide seven. Our institutional pipeline grew to $45.5 billion at March 31 from $30.5 billion at year-end. The growth in the pipeline this quarter includes a large lower-fee passive-indexing mandate in Asia Pacific, assisted by our Custom Solutions Advisory team. This is an opportunity for us to offer solutions-based differentiated passive investment to meet the needs of a key strategic client with the potential to expand the relationship over time with access to higher-fee opportunities. We are also able to leverage our in-house indexing capabilities with this mandate. Excluding this large mandate in Asia Pacific, the pipeline remains relatively consistent to prior quarter levels in terms of size, asset mix and fee composition. While there's always some uncertainty with large client funding, we're currently estimating that between 50% and 65% of the pipeline will fund in the second quarter, including the large indexing mandate. The funding of this mandate will also have a slight downward impact on our net revenue yield next quarter. Overall, the pipeline is diversified across asset classes and geographies, and our solutions capability enables 61% of the global institutional pipeline and created wins and customized mandates. This has contributed to meaningful growth across our institutional network, warranting our continuing investment and focus on this key capability. Turning to slide eight. You'll notice that our net revenues increased $23 million or 1.8% from the fourth quarter as higher average AUM in the first quarter was partially offset by $71 million decrease in performance fees from the prior quarter. The net revenue yield excluding performance fees was 35.7 basis points, a decrease of 0.3 basis point from the fourth quarter yield level. This decrease was driven by lower day count in the first quarter that negatively impacted the yield by 0.8 basis point and higher discretionary money market fee waivers that negatively impacted the yield by 0.3 basis point. These negative impacts were partially offset by the positive impact of rising markets and net long-term inflows during the quarter. Going forward, we do expect money market fee waivers to remain in place for the foreseeable future until rates begin to recover to more normalized levels. Total adjusted operating expenses increased 0.7% in the first quarter. The $5 million increase in operating expenses was driven by higher variable compensation as a result of higher revenue as well as the seasonal increase in payroll taxes and certain benefits, offset by the reduction in compensation related to performance fees recognized last quarter and savings that we realized in the quarter resulting from our strategic evaluation. Operating expenses remained at lower than historic activity levels due to pandemic impact to discretionary spending, travel and other business operations that have persisted in the quarter. Moving to slide nine, we update you on the progress we've made with our strategic evaluation. As we've noted previously, we're looking across four key areas of our expense base: our organizational model, our real estate footprint, management of third-party spend and technology and operations efficiency. Through this evaluation, we will invest in key areas of growth, including ETFs, fixed income, China, solutions, alternatives and global equities while creating permanent net improvements of $200 million in our normalized operating expense base. A large element of the savings will be generated from compensation, which includes realigning our nonclient-facing workforce to support key areas of growth and repositioning to lower-cost locations. The remainder of the savings will come through property, office and technology and GandA expenses. In the first quarter, we realized $16 million in cost savings. $15 million of the savings was related to compensation expense. The remaining $1 million in savings was related to facilities, which is shown in the property office and technology category. The $16 million in cost savings were $65 million annualized, combined with the $30 million in annualized savings realized in 2020, brings us to $95 million or 48% of our $200 million net savings expectation. As it relates to timing, we still expect approximately $150 million or 75% of the run rate savings to be achieved by the end of this year, with the remainder realized by the end of 2022. Of the $150 million in net savings by the end of this year, we anticipate we will realize roughly 65% of the savings through compensation expense. The remaining 35% would be spread across occupancy, tax spend and GandA. The breakdown for the remaining $50 million in net cost saves in 2022 will be similar. With $95 million of the expected $150 million in net savings by the end of this year already in the quarterly run rate, the degree of net savings per quarter will moderate going forward. In the first quarter, we incurred $30 million of restructuring costs. In total, we recognized nearly $150 million of our estimated $250 million to $275 million in restructuring costs that were associated with this program. We expect the remaining transaction cost for the realization of this program to be in the range of $100 million to $125 million over the next two years, with roughly 1/2 of this amount occurring in the remainder of 2021. As a reminder, the costs associated with the strategic evaluation are not reflected in our non-GAAP results. Our expectations are for second quarter operating expenses to be relatively flat to the first quarter, assuming no change in markets and FX levels from March 31. We entered the second quarter with $1.4 trillion in AUM driven by net inflows and market tailwinds from the first quarter. These tailwinds will have a modest impact on both revenues and associated variable expenses. The impact on expenses will be offset by lower compensation expense related to seasonality in payroll taxes and benefits, plus incremental savings related to the strategic evaluation. We also expect a modest increase in marketing-related expenses as the first quarter is typically the low point in marketing spend annually. One area that is still more difficult to forecast at this point is when COVID-impacted travel and entertainment expense levels will begin to normalize. With the rollout of vaccines, we believe we might begin to see a modest resumption of travel activity later in the second quarter and perhaps more in the third quarter. Moving to slide 10. Adjusted operating income improved $18 million to $503 million for the quarter driven by the factors we just reviewed. Adjusted operating margin improved 70 basis points to 40.2% as compared to the fourth quarter. Most importantly, our degree of positive operating leverage reflected in our non-GAAP results was 2 times for the quarter, underscoring our focus on driving scale and profitability across our diversified platform. Nonoperating income included $25.9 million in net gains for the quarter compared to $31.9 million in net gains last quarter as higher equity and earnings primarily from increased CLO marks were more than offset by lower market gains on our seed portfolio as compared to the prior quarter. The effective tax rate for the first quarter was 24% compared to 21.7% in the fourth quarter. The effective tax rate on net income was higher in the first quarter primarily due to an increase in income generated in higher-taxing jurisdictions relative to total income. We estimate our non-GAAP effective tax rate to be between 23% and 24% for the second quarter. The actual effective tax rate may vary from this estimate due to the impact of nonrecurring items on pre-tax income and discrete tax items. Turning to slide 11. Our balance sheet cash position was $1.158 billion at March 31, and approximately $760 million of this cash is held for regulatory requirements. Cash balances are impacted by the typical seasonal increases in cash needs in the first quarter related to our compensation cycle. We also paid $117 million on a forward share repurchase liability in January. In addition to using excess cash to reduce leverage, we seek to improve liquidity and our financial flexibility. Despite the increased cash needs in the quarter, the revolver balance was 0 at the end of March, consistent with our commitment to improve our leverage profile. Additionally, the remaining forward share repurchase liability of $177 million was settled in early April. We also renegotiated our $1.5 billion credit facility, extending the maturity date to April of 2026 with favorable terms. We believe we're making solid progress in our efforts to build financial flexibility and as such, our Board approved a 10% increase in our quarterly common dividend to $0.17 per share. The share buybacks dating back to last year on slide 11, which reflects $45 million in the first quarter of this year, are related to vesting of employee share awards. We remain committed to a sustainable dividend and to returning capital to shareholders longer term through a combination of modestly increasing dividends and share repurchases. In summary, Marty highlighted the growth we've seen in our key capabilities and our continued focus on executing the strategy that aligns with these areas. We're also executing on our strategic evaluation and reallocating our resources to position us for growth. And finally, we remain prudent in our approach to capital management. Our focus on driving greater efficiency and effectiveness into our platform, combined with the work we've done to build a global business with a comprehensive range of capabilities, puts Invesco in a very strong position to meet client needs, run a disciplined business and to continue to invest in and grow our franchise over the long term.

q4 core earnings per share $0.10.

Earlier today, we published our third quarter 2020 results. A copy of the release is available on our website at oshkoshcorp.com. Our presenters today include Wilson Jones, Chief Executive Officer; John Pfeifer, President and Chief Operating Officer; and Mike Pack, Executive Vice President and Chief Financial Officer. I want to start today by sharing how proud I am of the hard work and disciplined execution our Oshkosh team members have demonstrated, as we manage through the current pandemic-induced environment. The underlying strength we derive from our people-first culture has been a key enabler to our success, as we navigate through these challenging times. We often talk about how we are better together, and we are exhibiting that with our results this quarter. For the third quarter, we delivered sales of nearly $1.6 billion, adjusted earnings per share of $1.29, and our consolidated backlog is up nearly 6% versus the prior year, as we controlled what we can control, while responding quickly to challenges outside of our control. Given the conditions present in our markets in the U.S. and around the world, we believe this represents solid performance. The duration impact of the pandemic on the economy remain uncertain, but the resiliency of Oshkosh team members has been impressive, as we responded to a variety of challenges, including changing customer demand, new working protocols and supply chain disruptions, among others. We believe our values and strengths as a different, integrated global industrial are even more pronounced versus our competitors in times like these. We implemented the temporary cost reductions we discussed last quarter. Those actions are evident, not only in our third quarter results, but should also benefit us as we manage through the ongoing uncertainty. Recently, we also announced some permanent cost reductions in areas of our business most significantly impacted by changes in customer demand as a result of the pandemic. John and Mike will discuss those actions and the related impacts in their sections. Also I want to take a moment to congratulate John on his recent promotion to President. It's a testament to John's strong leadership and dedication to a people-first culture. I look forward to continuing to work with him, as we lead this great team here at Oshkosh. Before I provide an update on each of our segments, I'd like to provide a brief update on our operations, including our people and supply chains. Across the company, we are focused on maintaining the safety of our team members and preventing the spread of the virus, with increased social distancing, both in the offices and throughout our manufacturing facilities. While this can make completing work more challenging, we have maintained strong efficiencies. I am proud of the way our team has remained disciplined in maintaining these strict protocols. We also successfully navigated through over 200 supplier shutdowns early in the quarter to continue production without any major supplier induced line stoppages. This is a true testament to the focused efforts of our supply chain team, our integrated capabilities and our strong supplier partners. While we've largely stabilized our operations and supply chains, elevated infection rates in parts of the U.S. extend production and supplier risks, and we will remain diligent in our actions. Additionally, we've carried out our return to work or return to the office actions for our team members. I won't go into all the details, but about half of our office workforce physically enters our facilities for work each day with appropriate social distancing and cleaning protocols in place. Essentially, we implemented changes that enable Oshkosh team members to work-from-home when they need to and work in our facilities when they need to and they can do it seamlessly. Now I'll move to our segment updates and kick it off with Access Equipment. Our Access Equipment segment has experienced the negative impacts of the current business landscape more intensively than any other segment in our company with year-over-year revenues down more than 60% in the quarter. Despite these challenges, our team rallied quickly with aggressive steps to reduce production at the factories and to lower our costs, resulting in solid, adjusted decremental margins of just under 20% and an adjusted operating income margin of 8.4%. This performance is impressive given the significant declines in access equipment markets in North America, Europe and other parts of the world. On our second quarter call, we discussed temporary manufacturing closures in the segment during the third quarter. And with market recovery timing still uncertain, we shutdown production for the month of July, and we will have two-week shutdowns in both August and September. Wilson mentioned that we also have taken some permanent actions to reduce our costs, particularly in this segment. We announced the closure of our Medias, Romania facility at the end of June, which will occur over the next 12 months. We remain committed to the EMEA market and will be able to serve it more efficiently from our existing global manufacturing footprint, including plants in France and the U.K. in addition to the facilities rationalization, we also reduced our office staffing in the segment with a modest workforce reduction. Our simplification framework has been an important enabler for our ability to deliver robust margins throughout the business cycle, as well as relocate production so that we can operate with improved logistics and customer service levels. While COVID-19 has impacted access equipment markets around the world, we are staying flexible and nimble in our approach to managing the business. However, given the uncertainty around the broader economic recovery, we are not in a position to provide an industry or Oshkosh specific outlook at this time. We know that access equipment will come back, but we do not currently have a time frame. We will control what we can and make the right decisions that we believe will facilitate our success when demand returns. We are further encouraged by the age of access equipment fleets, particularly in North America, that we expect will be a positive demand driver in future quarters. Finally, just as we discussed last quarter, our facility in China is back online, and we retain our positive outlook for this market as demand is returning. Our team in China has plenty of experience in both the demand and supply sides of the market, and we remain very bullish on our prospects for long-term growth in China. Please turn to page five, and I'll discuss our defense segment. Our defense segment performed well in the quarter as the team continues to ramp up the JLTV program, which helps provide a solid foundation for the company with a large backlog and multiyear visibility. Department of Defense and our allies. We continue to work with a number of foreign governments on JLTV opportunities. And while we are not making any announcements today, we have a strong pipeline of opportunities and expect that we will be discussing additional international successes in future quarters. Our defense backlog remains solid at nearly $3.3 billion, up over 15% from the prior year which provides good visibility, especially given the current environment where the pandemic has limited visibility across many industries. During the quarter, we announced a joint venture to manufacture tactical wheeled vehicles in Saudi Arabia. We have been working with our partner, Al-Tadrea, for the past two years to finalize the agreement. This is part of our longer-term plan to be an integrated strategic partner with his key U.S. Ally for defense vehicles and life cycle services. This is an important milestone for our international defense activities. Before I wrap up my comments on our defense segment, I want to congratulate both our production UAW team member in Oshkosh and our leaders in the business for agreeing to a new collective bargaining agreement which provides continuous coverage through September 2027. This is a great example of the benefits of working together and reaching solutions that provide security and peace of mind for our team members as well as continuity for our company. Fire & Emergency delivered a strong quarter with a 15.7% adjusted operating income margin. Last quarter, the segment experienced some challenges with a supplier issue that impacted both our shipping schedule and our margins. This supplier issue is behind us, which paved the way for a great quarter as the team focused on operations and delivered impressive results despite lower year-over-year sales. Customer travel restrictions implemented during March, eased midway through the third quarter. This was a positive development for the team, but given the recent increase in COVID-19 cases and states reinstating quarantines for travel, we may experience temporary sales headwinds in the fourth quarter. As we discussed on the last earnings call, we expected third quarter orders to be down year-over-year and sequentially and that was the case. Remember, we are coming off a quarter that was an all-time record for orders and we expected there to be a pause in orders due to the pandemic. The backlog continues to be robust, providing visibility well into 2021. Even with strong year-to-date orders, we will continue to monitor the pandemics impact on municipal budgets which could impact spending on fire trucks in the future. It's clear that customer demand for both concrete mixers and refuse collection vehicles has been impacted by the pandemic. As construction work was limited and often stopped at various locations across North America over the past three months, we expected concrete mixer sales and orders to slow. That has been the case. RCV demand tends to be more stable and we've seen residential trash collection remains strong and even elevated in some cases, but we've also seen nonresidential refuse collections slow during the shutdown and this has had a negative impact on demand for RCVs in the current environment. Despite these challenges, commercial really came through with a solid margin quarter. This can be attributed to quick actions and a passionate culture that permeates throughout the business. Those of you that have followed us for the past few years know that we are committed to simplification throughout Oshkosh and we began journey a couple years ago in the commercial segment. As part of this journey, we are transferring concrete mixer production from our facility in Dodge Center, Minnesota to consolidate production in our other mixer facilities in North America. Thus, Dodge Center will become a focused RCV operation. This will reduce costs and better position both the mixer and the RCV businesses for success in the future as they'll benefit from focused facilities. The transition will occur over the next six months for this important step in our simplification journey. Also, we recently sold our concrete batch plant business, Con-E-Co. We regularly review all of our business for value and strategic fit within our company. We determined that Con-E-Co was a better fit with a different owner and closed on the transaction last week. We think this will help us more effectively focused our resources in the commercial segment. Before I leave this segment, I wanted to mention the ramp-up of our new front discharge concrete mixer, the S Series 2.0 complete with industry-leading connectivity and productivity technologies. We're pleased with customer orders and interest levels, even against the backdrop of the pandemic. We believe this redesign mixer will be a long-term driver of solid performance for the company. Watch for new megatrend technologies applied to this vehicle in the future. This wraps it up for our business segments. During our last earnings call, we commented that we expected the third quarter to be a challenging quarter and it was. However, strong execution by our teams, combined with rapid implementation of cost reduction actions allowed us to effectively manage the business and deliver solid adjusted consolidated decremental margins of 15.9% for the quarter on a significant decrease in year-over-year sales. Consolidated net sales for the quarter were $1.6 billion, down 33.9% from the prior year quarter, a significant decrease in access equipment sales and, to a lesser extent, decreases in fire & emergency and commercial sales were the primary drivers of the lower consolidated sales, offset in part by higher defense sales. Access equipment sales were negatively impacted by customer pushouts, some cancellations and lower order intake rates as a result of COVID-19 and the related shelter-in-place restrictions driving low levels of job site activity throughout much of the U.S. and the world. Defense sales growth in the quarter reflected the continued JLTV production ramp and higher aftermarket parts and service sales, partially offset by lower FHTV volumes. Fire & emergency sales were lower than the prior year quarter, primarily as a result of decreased production line rates necessitated by COVID-19 related workforce availability and supply chain disruptions offset in part by a catch-up of units affected by the supplier quality issue we noted last quarter. And commercial segment sales were lower than the prior year quarter, driven by a combination of lower demand for refuse collection vehicles and concrete mixers as well as some production disruptions, both caused by COVID-19. Consolidated adjusted operating income for the third quarter was $128.8 million or 8.1% of sales compared to $257.8 million or 10.8% of sales in the prior year quarter. Access equipment adjusted operating income declined on lower sales and unfavorable manufacturing absorption as a result of the facility shutdowns during the quarter, offset in part by favorable price cost dynamics, lower incentive compensation expense, the benefit of temporary cost reductions, and more amortization expense. Defense operating income increased as a result of an unfavorable prior year cumulative catch-up adjustment, higher sales volume, and the benefit of temporary cost reductions, offset in part by higher warranty costs. Fire & emergency third quarter adjusted operating income declined due to lower sales volume and adverse sales mix, largely offset by improved pricing, lower incentive compensation expense, and the benefit of temporary cost reduction actions. Commercial segment third quarter operating income increased compared to the prior year quarter as a result of the absence of inefficiencies caused by a weather-related partial roof collapse in the prior year and favorable price cost dynamic, offset in part by lower sales volume. Adjusted earnings per share for the quarter was $1.29 compared to earnings per share of $2.72 in the third quarter of 2019. Third quarter results benefited by $0.03 per share from share repurchases completed in the prior 12 months. During the second quarter, we withdrew our financial expectations as a result of the evolving impact of COVID-19. While we have seen stabilization in our supply chain and operations, recent increases in infection rates in parts of the U.S. continue to drive potential supply chain and production risk. Further, the cadence of customer demand in our access equipment and commercial mixer businesses remains uncertain. As a result, we're not in a position to provide updated expectations for the fiscal year. Last quarter, we announced decisive actions to reduce pre-tax cost by $80 million to $100 million for the year in response to the uncertainties caused by COVID-19. These cost reduction actions include salary reductions, furloughs, temporary plant shutdowns, limiting travel and reducing project costs, and other discretionary spending. As a result of the outstanding focus by our teams, we now expect these temporary cost reduction measures to exceed $100 million in fiscal 2020. As John discussed, we have also announced permanent restructuring actions in our access equipment and commercial segments, which are expected to yield combined annualized cost savings of $30 million to $35 million once complete. We expect to begin realizing some benefits of these actions in 2021, with the full impact of these actions by 2022. As we shared with you on the last call, we established a playbook of options to respond to the pandemic. With recovery trending at a slower pace, permanent cost actions were prudent. Our balance sheet remains strong with available liquidity of approximately $1.1 billion, consisting of cash of approximately $300 million and availability under our revolving line of credit of approximately $800 million at the end of the quarter. Share repurchases remain paused during the quarter and we will reevaluate them as we gain further clarity on the recovery of our end markets. On the second quarter earnings call, we discussed our target of achieving mid-20% adjusted decremental margins, both on a consolidated basis and within the access equipment segment for the year. We were able to exceed those targets during the third quarter with disciplined execution and the help of our cost reduction initiatives. We expect the benefit of cost reduction activities to be lower in the fourth quarter compared to the third quarter as shelter-in-place restrictions have eased, leading to increased expenses. Nonetheless, we expect to achieve the targeted mid-20% adjusted decremental margins, both in the fourth quarter and for the full year on a consolidated basis. We have a strong culture with strong leaders at Oshkosh. Our revenues and earnings were down in the quarter from last year, but given the challenges we've been facing, we're proud of our performance. We have a strong balance sheet with ample liquidity. Our defense and fire & emergency backlog provide visibility well into 2021 and we took aggressive actions early during the pandemic to lower our costs. Our team has managed production and supply chain disruptions very effectively and has kept Oshkosh on the right path during these challenging times. I am reassured by our strength and resourcefulness and believe we can deliver solid sales and earnings performance over the long term. After the follow-up, we ask that you get back in queue if you'd like to ask additional questions.

q1 adjusted earnings per share $1.13 excluding items.

Earlier today, we published our fourth quarter 2021 results. A copy of the release is available on our website at oshkoshcorp.com. As we highlighted in our business update on October 8, 2021, we are changing our fiscal year to the calendar year. The October to December 2021 quarter will represent an abbreviated fiscal year or stub period to facilitate the transition to our first full calendar year, which will begin on January 1, 2022. This change should provide us with better visibility as our planning and reporting cycles will be aligned with those of many of our customers and suppliers. All references to 2022 or later years as to a quarter or a year are to a calendar year. Our presenters today include John Pfeifer, President and Chief Executive Officer; and Mike Pack, Executive Vice President and Chief Financial Officer. As we discuss our fourth quarter and full year results, I want to provide some color on the current business environment. It's clear that we're in a unique period of time with robust customer demand for our market-leading products while facing one of the most challenging global supply chain logistics and workforce availability environments in decades. These factors are limiting production and also contributing to manufacturing labor inefficiencies. At the same time, we're facing significant material cost inflation. We view these challenges as temporary, and we believe we are taking the right actions to position our company for success as we emerge from the current environment as a stronger, more resilient business. Some examples of the actions include: implementing multiple price increases in the last several months in our non-defense segments to mitigate cost inflation; redesigning many of our JLG products to accept higher capability microprocessors, which are produced in higher quantities by chip makers to reduce our risk of shortages; shifting production within our existing facilities to better align with labor availability; and we're undertaking a rigorous qualifying process to identify and engage hundreds of new suppliers to drive a more robust supply chain for key materials and components. Our long-term outlook is attractive based on strong market fundamentals, strategic program wins and a comprehensive offering of innovative new products that will drive continued market leadership. With this backdrop, we reported 15.6% higher revenues on sales growth in our access equipment, defense and fire & emergency segments. This led to fourth quarter adjusted earnings per share of $1.05, slightly above the estimated range included in our October eight business update. The modest increase was driven by a lower effective tax rate. And we continue our commitment to responsible capital allocation with increased share repurchases in the quarter, which Mike will discuss. I'm also pleased to announce that our Board approved a 12% increase in our quarterly dividend from $0.33 to $0.37, which represents the eighth consecutive year of double-digit percentage increases. Now let's move to the full year. We grew revenues by just under 13% for the year and adjusted earnings per share by 16.4%. This led to a full year record for free cash flow of more than $1.1 billion. Importantly, we have an opportunity to grow revenue and earnings per share over the next few years based on our innovative products and strong market drivers. We also have a strong foundation of programs in our defense segment, bolstered by our significant recent program wins, including the United States Postal Service Next Generation Delivery Vehicle and the U.S. Army's Medium Caliber Weapons System. 2021 was a year of significant electrification announcements for our company. Beyond the USPS win, we launched our revolutionary new Volterra family of electric firetrucks, including the Pierce Volterra electric custom pumper currently in service in Madison, Wisconsin; and the Volterra electric ARFF truck, which was a major highlight for attendees at the Advanced Clean Transportation Expo back in late August. The expo brings together participants from across the globe to discuss and demonstrate clean technologies for commercial applications. The customer response to these electrified products has been outstanding. We made several important investments in 2021, including the acquisition of Pratt Miller and a strategic investment and partnership with Microvast. We wrapped the year up with a minority investment and strategic partnership with Carnegie Foundry to build upon our autonomy and robotics capabilities. We also announced a minority investment in wildland firetruck market leader, Boise Mobile Equipment. These investments highlight our commitment to advance into new markets and leverage technology to both enhance our product offerings and drive profitable growth as part of our long-term strategy. We have also continued our commitment to environmental, social and governance leadership, as evidenced by our investments in electric vehicle technologies while fostering an inclusive culture and continuing to deliver on our high governance standards. For many years, MOVE, M-O-V-E, was our strategy. Over the past year, we evolved beyond MOVE and have introduced our strategy summarized with three simple words: Innovate. We believe this strategy provides the necessary framework to continue to drive long-term sustainable growth, and it is grounded in our purpose: making a difference in people's lives. We innovate customer solutions by combining leading technologies and operational strength to empower and protect the everyday hero. We serve and support those who rely on us with a relentless focus throughout the product life cycle. We advance by expanding into new markets and geographies to make a difference around the world. We're excited about the direction we're headed and believe that Innovate. provides the road map to get us there. I invite you to check out the details of our strategy on the Oshkosh website. Much like we discussed on our last call, demand for our industry-leading access equipment remains very strong, but near-term results are being meaningfully impacted by supply chain and logistics challenges as well as higher input costs. Access equipment, which faced an extreme decline in demand in 2020 as a result of the COVID-19 pandemic, has since experienced the most rapid rebound of any of our businesses. The rapid return of demand in 2021 exacerbated the supply chain challenges we have been facing, and we believe it will remain choppy well into 2022. Our access team continues to work hard to source components to build and shift products to customers around the globe. Despite these challenges, we delivered strong revenue growth of 37% in the fourth quarter, leading to 22% revenue growth for the full year. We have taken multiple pricing actions over the past several months based on rising input costs, which we expect will largely address price/cost challenges by the end of the second quarter of 2022. And of course, we will continue to be diligent in our pricing approach should input costs increase further. Orders came in at $1.9 billion in the fourth quarter, representing a quarterly record for the segment, leading to a record backlog of $2.8 billion at September 30. The rental equipment market is strong, and the access leadership team has taken measured steps to preserve the health of the industry by addressing unfair competition through our trade case. We believe that we are in the early stages of a multiyear growth cycle for access equipment as the rental companies work to lower the overall age of their fleets, which were at historically high levels entering 2021. I want to emphasize that our growth outlook is underpinned by strong market fundamentals, and our continued launch of innovative product offerings such as the DaVinci all-electric scissors that you've heard me talk about, and many other new product launches in recent quarters. Our trend of new product launches continues -- continued in the fourth quarter. We're entering the North American telehandler market for agriculture in a more significant way with a new 9,000-pound capacity model. We are also expanding our industry-leading U.S. telehandler family with a new line of rotating telehandlers with our Italian partner, Dieci. I look forward to discussing additional new products with you in the coming quarters. Our defense team delivered a solid fourth quarter, leading to a full year revenue of $2.53 billion, an increase of almost 10% and an operating margin of nearly 8% in this very challenging supply chain environment. You're all familiar with the JLTV, one of our foundational and enduring programs. We've been showcasing the vehicle's ability to serve as a long-range weapons platform in either manned or semiautonomous modes. These capabilities directly support the Department of Defense's focus on near-peer threats. Domestic and international customers continue to be impressed with the JLTV's outstanding versatility. We are also preparing for the upcoming recompete scheduled in 2022 and believe we are well positioned to win the follow-on contract. As we've discussed over the past several quarters, we are actively competing for a number of adjacent programs, including the CATV, a track vehicle for Arctic climates; the OMFV, which is planned to replace the Bradley Fighting Vehicle; and the EHET, or the Enhanced Heavy Equipment Transporter, among many others. The acquisition of Pratt Miller significantly enhances our ability to win adjacent programs just like it helped us win the MCWS contract earlier in 2021. Before I leave defense, I'd like to make a few comments about our Next Generation Delivery Vehicle contract with the United States Postal Service. We continue to work with the customer to finalize some of the vehicle's parameters. We are also on track with setting up our new facility in South Carolina and expect a successful product launch in the back half of 2023. This is a 10-year contract that calls for between 50,000 and 165,000 vehicles, with a mix of both zero-emission battery electric vehicles and fuel-efficient ICE vehicles and allows the USPS to electrify its fleet. The fire & emergency segment delivered another strong quarter with an operating income margin of 14% despite the challenging supply chain environment and extreme cost inflation. Even more impressive is the fact that our team at F&E delivered an all-time record for operating income margin for the full year at 14.2%. Of course, we expect to overcome these hurdles in time, and we are planning an expansion of our Appleton manufacturing sites that will support long-term growth. As I mentioned earlier, our Volterra electric custom pumper is serving frontline duty in Madison, and we recently announced an agreement with Portland to work with them on Volterra as well. Boise is the industry leader in wildland firefighting trucks. Our minority investment will bring the Boise product into our dealer network and allow both Pierce and Boise to take advantage of this growing segment of the market. Similar to our other segments, commercial delivered solid results in 2021. In fact, the team posted its best full year adjusted operating income margin in the past 15 years. That's an impressive accomplishment in this difficult supply chain environment with record high steel costs. As many of you are aware, we build RCVs and rear-discharge concrete mixers on third-party chassis either purchased by us and supplied to customers with a body and a complete package or furnished by our customers. This represents a meaningful risk as chassis availability has worsened over the past couple of months, and we expect it will remain challenged for much of 2022. Demand for RCVs and mixtures has been strong, and we have a solid outlook for both markets. Residential construction as well as other construction indicators are positive, and elevated customer fleet ages are creating additional demand for replacement. Our outlook is further supported by solid orders in the quarter for both RCVs and mixers as the U.S. and Canada moved beyond the pandemic. These orders led to an all-time high backlog of just under $570 million, providing good visibility into 2022. As John highlighted, we faced significant supply chain and logistics disruptions in the fourth quarter, well beyond our experience in the third quarter. We also experienced meaningful material cost inflation. Recall that we account for inventory on a last-in first-out basis, so the additional cost escalation we saw in purchases in the fourth quarter negatively impacted price/cost dynamics, particularly at access equipment. We previously expected a consolidated year-over-year price/cost headwind of $35 million in the quarter. The actual price/cost impact increased to approximately $60 million. Supply chain disruptions, unfavorable price/cost dynamics and labor constraints all contributed to fourth quarter financial results significantly lower than the expectations discussed on our third quarter call. Consolidated sales for the fourth quarter were $2.06 billion or $279 million higher than the prior year, representing a 16% increase. The consolidated sales increase was driven by a 37% increase at access equipment, a 5% increase at defense and a 10% increase at fire & emergency, partially offset by a 6% decrease at commercial. Access equipment sales increased by $230 million over the prior year quarter due to improved market demand led by North America. As the impact of the pandemic has waned, the sales increase was lower than our prior expectations by approximately $130 million, largely due to the previously mentioned supply chain disruptions. Defense sales increased in the quarter due to higher JLTV sales as well as the benefit of Pratt Miller sales, which we acquired in the second quarter, partially offset by lower FMTV and international sales. Fire & emergency sales increased in the quarter on higher ARFF deliveries and commercial sales were down on lower package sales. Consolidated adjusted operating income for the fourth quarter was $104.2 million or 5.1% of sales compared to $124.1 million or 7% of sales in the prior year quarter. Access equipment adjusted operating income decreased as a result of unfavorable price/cost dynamics, the return of spending subject to temporary cost reductions in the prior year and unfavorable product liability largely offset by an increase in sales and improved manufacturing absorption. Defense adjusted operating income decreased as a result of unfavorable product mix, increased material costs and unfavorable production variances partially offset by higher sales volume. Fire & emergency adjusted operating income decreased in the current year quarter as a result of higher material costs, unfavorable manufacturing efficiencies and the return of spending subject to temporary cost reductions in the prior year, offset in part by higher sales and improved pricing. The commercial segment adjusted operating income decreased as a result of unfavorable material costs and the return of spending subject to temporary cost reductions in the prior year, offset in part by improved manufacturing absorption and improved pricing. Adjusted earnings per share for the quarter was $1.05 compared to adjusted earnings per share of $1.30 in the prior year. During the quarter, we repurchased approximately 821,000 shares of common stock for a total cost of $95 million. We expect that the challenges we faced in the fourth quarter of 2021 will continue into the stub period. Demand remains robust across the company as indicated by our strong order rates in the fourth quarter and record year-end backlogs in several segments. However, the current supply chain and logistics disruptions are making it difficult to forecast sales volume. While our backlog supported a 10% to 15% sales increase in the stub period versus the first quarter of 2021, we expect parts availability will likely constrain our ability to deliver higher sales. As a result of this uncertainty, we are unable to provide quantitative expectations for the stub period at this time. We do expect that stub period earnings per share will be significantly lower than the first quarter of 2021 and may approach breakeven levels on a consolidated basis. We expect that unfavorable price/cost dynamics will be a $75 million to $85 million headwind versus the first quarter of 2021. Steel and other component costs have continued to increase. We have taken multiple pricing actions in our non-defense businesses over the past several months, and in many cases, prices are now greater than 10% above early 2021 levels. We believe these price increases will enable us to achieve price/cost equilibrium but will still need to -- but we still need to work through large backlogs, so will take until the end of the second quarter of 2022 for these pricing actions to largely catch up with cost escalation. If we experience further escalation, we expect to take further pricing action. We also expect higher spending levels in the stub period versus the first quarter of 2021. Last year, COVID-19 infection rates spiked early in our first quarter and our spending levels remained low. Since then, our spending levels have begun to normalize in areas such as travel, advertising and medical. We also expect that parts availability constraints will continue to drive labor inefficiencies. While the current environment is challenging, we are taking appropriate actions and believe that supply chain constraints will subside over time and the longer-term outlook for our businesses remains very strong. We'll provide further updates on 2022 during our January earnings call. We just completed a challenging quarter and expect those challenges to remain for the next few quarters. However, we believe we're taking the right actions as we manage through this period, position ourselves for success as supply chains improve. We also won significant programs in 2021 and are committed to driving long-term profitable growth as we innovate, serve and advance the company. Okay, Pat, back to you.

q4 adjusted earnings per share $1.30 excluding items. compname announces 10 percent increase in quarterly cash dividend to $0.33 per share. not providing a quantitative outlook for fiscal 2021. consolidated net sales in q4 of fiscal 2020 decreased 18.7 percent to $1.78 billion.

Today's discussion will also reference certain non-GAAP financial measures such as operating income and accident year loss and combined ratios excluding catastrophes among others. I will begin by discussing our third quarter financial highlights in the context of the current business and economic environment. We are pleased with our third quarter financial performance, especially given it was a particularly active catastrophe quarter across the industry. We reported earnings per share of $2.46 and an operating return on equity of 13.8% for the quarter. Our results reflect strong execution on the strategic tenants that drive our business forward. Our company and earnings stream are well-diversified and position us well to withstand environmental challenges, including weather volatility and the ups and downs of the economy and market. We remain steadfastly focused on the hallmarks of our company. Our unique distribution strategy and approach, broad-based profitability, disciplined underwriting, effective expense management and a thoughtful capital allocation strategy that includes returning excess capital to our shareholders. Turning to our third quarter highlights, first, we are very pleased with the trajectory of our growth and the consistent signs of building momentum in our top-line. We achieved 2.1% growth in the third quarter, which represents a significant and expected recovery from the 2.3% premium decline we reported in the second quarter normalized for one-time premium returns. Our leading production indicators are quickly improving and we are encouraged by agency support and commitments, which once again validate the strength of our differentiated strategy and our broad and relevant product offering. Looking ahead, we are confident in our ability to drive growth across our portfolio and continue to build on the strong pre-pandemic momentum we had established. Second, as noted in our pre-release on October 13th, our cat losses were slightly elevated in the quarter as a result of tropical storm systems, in particular, Hurricane Isaias and to a lesser extent, wildfires in California, and Oregon. Our ability to mitigate the impact of weather events in the quarter is a reflection of the concerted, proactive efforts we have made over the past decade to prudently refine our mix of business. To this end, we have expanded our specialty capabilities and struck the right balance between property and liability risks, while continuing to diligently manage our geographic concentrations and proactively adjusting our business mix. We counted the increasing frequency of weather losses, we reduced our exposures in vulnerable regions of the Southeast, Gulf Coast and West Coast, while reducing micro-concentrations and enhancing our reinsurance protections. These and other actions have enabled us to address potentially increasing weather-related property risks as we grow. Going forward, we are confident these actions along with our increasing use of advanced tools and analytics will position us to continue to deliver consistently strong results across our business. Third, we continue to benefit from lower claim frequency in the quarter, particularly in personal auto. While frequency declined year-over-year, it is beginning to trend toward pre-pandemic levels as the economy reopens. At the same time, we also experienced several large property losses in commercial multi-peril, which occurred in our book of business from time-to-time. After carefully reviewing the causes of loss and related circumstances, we found no clear correlation between the losses themselves or the prevailing economic environment. Given our strong underwriting guidelines and risk management practices, we have confidence in our ability to manage such risks while continuing to drive profitability through rate increases and prudent mix management. Lastly, the third quarter was a very active one for us from a capital management perspective. As announced last night, we entered into a $100 million accelerated share repurchase agreement, reflecting the strong excess capital we have generated so far this year from earnings. This decision further demonstrates our commitment to deliver value to our shareholders and the confidence we have in our strong prospects moving forward. Jeff will provide more details on these items shortly. Moving on to review our business highlights, starting with Personal Lines. We delivered net written premium growth of 2.3% in the third quarter compared to a decline of 5.5% in the second quarter or flat excluding premium return. New business submissions in the third quarter were consistent with the third quarter of last year across most territories. Contributions from renewal premiums continued to fuel growth, although retention was somewhat impacted from the backlog created by the lifting of cancellation and non-renewal moratoriums over the summer. Our disciplined account strategy enabled us to effectively manage our business in a highly competitive environment and to drive profitability. Our performance reflects a focus on striking the right balance between rate and retention, while achieving price increases where we need them the most. Overall, Personal Lines rate increases of 4.7% in the quarter were fairly consistent with prior trends and we are satisfied with the underlying retention when adjusted for the temporary increase in cancellations and non-renewals, following the temporary second quarter increases. Our Personal Lines year-to-date retention of 82% is a more indicative measure of our persistency, and should move back to the mid-80s over time. Additionally, we are encouraged by the continued success of our Prestige offering, which is adding 600 new accounts each month. Book consolidation activity also is continuing at an accelerated pace, with $71 million signed through the first nine months of the year, exceeding our expectations for the full year. This level of activity further validates our unique approach to cultivating deep partnerships across the independent agency channel. We continue to broaden and enhance those relationships by expanding our geographic reach and introducing product capabilities to address unmet customer needs across our footprint. From a strategic and operational standpoint, we made significant progress during the quarter. Earlier this week, we announced the expansion of our Personal Lines business in Maryland, further diversifying our book of business and expanding our Personal Lines presence to 20 states. We also are expanding our product capabilities in Personal Lines. We recently launched a new suite of products, home business solutions to cover home-based businesses. Entrepreneurs throughout the country are starting home-based businesses in record numbers, yet, nearly 60% of these businesses lack adequate insurance. To address that gap, our product provides ala carte options that could be bundled with the existing homeowner policies, including our Prestige offering. As importantly, our Personal Lines team continues to execute exceptionally well in a new regulatory environment in Michigan, following personal auto reform, which went into effect in July. As a top insurer and an industry thought leader in Michigan with 12% of our overall premiums in Michigan personal auto, we advocated for auto reform for more than a decade and it was essential that we excel in our implementation. The reform provides Michigan consumers with the ability to save money on premiums in exchange for a reduced personal injury protection limit. Cost control measures such as fee schedules and utilization controls should substantially reduce the severity of claims and increase the efficiency of the system once implemented mid-next year. At the beginning of last year, we laid the foundation for the transition with a proactive plan that included operational, educational and self-service tools for agents and consumers. Our third quarter Michigan auto premium grew approximately 4%, while average net premium per customer for us remain relatively consistent. In summary, we remain confident that we will maintain our underwriting profitability in Michigan, while we gain share of the high-quality risks in the state outperforming the market over time. Overall, we are very pleased with our Personal Lines performance and how we are navigating the market. Our predominantly full account and more complex customer profile position us well in the competitive environment. We are closely watching the competitiveness of our products and adjusting our rates to strike the right balance between growth and profit. We are keeping an eye on frequency in anticipation of it returning to more normal levels. Our unique agency inside tool coupled with comparative rate monitoring provides great transparency within our distribution and allows us to navigate the market successfully. Turning to Commercial Lines. We are very pleased with the growth momentum in our business. We delivered net written premium growth of 1.9%, up from a decline of 4.6% in the second quarter. We are encouraged by the accelerated pace in most production metrics, including renewal premiums, which are trending higher than historical averages and new business which has rebounded from a low point in the second quarter, but still remain subdued compared to pre-pandemic levels. In Small Commercial, we are pleased with policy exposure levels, which turned positive for the quarter. Although still slightly negative, middle-market exposures have come back significantly from the second quarter. Notably, the growth momentum in our specialty businesses has almost returned to pre-pandemic levels. We have rebounded to our 2020 direct written premium plan on a year-to-date basis with robust new business and renewals. Our management liability, healthcare, E&S and specialty property businesses have posted growth in the double-digits in the quarter, while Specialty overall growth was 5%. The success of our Specialty business goes back to our value proposition of providing a broad set of relevant and distinctive products and capabilities that are delivered to customers exclusively through high-quality independent agents. Rate continues to accelerate in our core Commercial Lines book, now standing at 5.7% while Specialty rates are meaningfully higher led by management and professional liability, healthcare and specialty property. In Core Commercial, we are seeing significant rate firming in Property Lines, while we continue to push double-digit rate in commercial auto. Over the last several quarters, we and others have commented on the need for rate across the commercial insurance space. The cumulative impact of rising social inflation, severe weather and continued lower interest rates should help continue to push commercial rates up in the near-term. While our social inflation was less obvious during the height of the pandemic with the backlog of court dockets and overall economic distress, we fully expect it to reemerge and perhaps even exceed previous levels. On the basis of focusing on these long-term loss trends, we believe that the rate we are achieving currently is meaningfully in excess of loss trend. We are very optimistic that Commercial Lines upward rate trajectory will continue. On the technology and innovation front, our newer product launches continue to expand with E&S growth accelerating and growing double digits with our best agents in our target markets. We continue to broadly leverage our core commercial infrastructure and relationships to drive Specialty growth. As a logical and important step in this evolution, we've recently expanded our TAP sales online quote and issuance capability to include management liability and miscellaneous professional liability products, enabling our agent partners to easily quote, rate, buy and issue stand-alone Small Business Specialty policies. The investments we are making in technology and innovation leverage our broad account base focus and drive meaningful efficiency solutions. Most importantly, with all of our businesses, we continue to execute on our differentiated agency centric strategy enabling our future growth. We remain incredibly committed to staying connected with our distribution partners. To that end, this quarter, for example, we conducted over 50 virtual CIAB executive meetings with many of the top 100 agents around the country, during which we discussed how we can enhance our capabilities to help all of us grow and better serve our customers. In addition, we are in the process of holding virtual roadshows with our agents in our key markets across the country. To-date, members of our senior management team have connected with over 500 of our agents, these engagements have been extremely fruitful. In response to these distribution touchpoints, our efforts to enhance our digital marketing capabilities are front and center. As is our next generation of our proprietary analytics tool, The Agency Insight. We pride ourselves on having our finger on the pulse of the market and on bringing contemporary capabilities forward to meet the needs of our agents. Our agents are responding very favorably and we expect these efforts will contribute to our accelerated growth trajectory going forward. I am very proud of our team and our outstanding performance in the face of so much adversity this year. I am excited about the opportunities we have as we build on the solid foundation we have established to drive our company forward. Over the next several quarters, we will continue to invest heavily in digital capabilities, finalize new product launches and advance underwriting capabilities across the portfolio as we position our firm for long-term success. We are better positioned today than ever to take our company to the next level, delivering for all of our stakeholders and achieving our goal to be the premier property and casualty franchise in the independent agency channel. I want to reiterate Jack's comments about the strength of our book of business, which is reflected in our terrific bottom-line performance. For the third quarter, we reported net income of $118.9 million, or $3.13 per fully diluted share compared with net income of $118.9 million or $2.96 per fully diluted share for the same period last year. After-tax operating income was $93.5 million or $2.46 per diluted share compared with $93.0 million or $2.31 per diluted share in the prior-year quarter. We recorded an all-in combined ratio of 94.2% compared with 94.4% a year earlier. Our ex-cat combined ratio was 88.4%, an excellent result compared to the 91.3% in the prior-year quarter. The improvement reflects the continued benefit of favorable frequency primarily in personal auto. While frequency continues to be lower across several lines in our portfolio, we are seeing signs that it's returning to more normal levels as economic activity resumes. At the same time, we continue to maintain a prudent reserving approach in longer-tail liability lines, given the continued uncertainty and the potential impact of increasing social inflation, as well as the potential for increased claim severity. We believe our balance sheet has never been in better shape. Catastrophe losses at $65.9 million, or 5.8% of net earned premiums came in slightly above our expectation for the quarter, but we were much more benign than the industry experience. Our performance is a testament to proactive actions taken over the past decade to better manage our exposures by line of business and geography to maintain our disciplined approach to underwriting and to diversify our footprint. In addition, in the quarter, we benefited from favorable prior year cat development of $9.6 million, which stems from a variety of events from recent accident years as well as to a much lesser extent, a small remaining favorable settlement from the 2018 wildfires. Turning to our ex-cat prior-year development, we reported net favorable development of $2.6 million with strong favorability in workers' compensation in other Commercial Lines, partially offset by additions in home, commercial auto and CMP. Commercial auto continues to be a focus area for us and a concern for the industry. Over the past couple of years, we have consistently achieved rate increases around 10% and executed on a variety of underwriting actions to better position our portfolio. We will continue to stay firm on rate to overcome the effects of continuing social inflation in this line. Our CMP business experienced unusual adverse development related to three large losses from recent accident years. Coincidently, this quarter, we incurred about $6.5 million of favorable development from a few large CMP property claims that stemmed from prior-year catastrophe events. There is a certain level of randomness we expect from property losses in our portfolio and this quarter results are a good example of this. I'm pleased to report that our loss activity related to the $19 million in COVID reserves we held at the end of the second quarter remains limited. We continue to hold these reserves in the event they are needed to pay COVID-19 related claims, including those related to sub-limited business interruption endorsements and workers' comp resumption orders. We continue to monitor the ongoing legislated and regulatory environment very closely. We believe recent court activity and recent pronouncements in the U.S. have been favorable and supportive of the sanctity of contracts. Turning now to expenses. Our expenses ticked up 10 basis points in the quarter due to the timing of certain agent and employee incentive costs. Year-to-date, our expense ratio is consistent with our original budget of 31.5% and we have a clear line of sight to the expected 10 basis point expense ratio improvement for full-year 2020. In a year of subdued growth, our deliberate business investment planning and expense discipline is serving us extremely well. We expect to continue delivering a 20 basis point improvement in the expense ratio going forward. Additionally, we recorded a non-ratio bad debt expense of approximately $3.6 million, which continues to gradually decline from the highs, we recorded in the first and second quarters. Consolidated net premiums written grew 2.1% in the third quarter, as we continue to see increasing momentum from the low point from the second quarter. Our trajectory was fueled by strong renewals and increasingly robust new business and agency book consolidation activity, all of this with a backdrop of continued lower economic activity. We have confidence that this momentum will continue over the coming quarters. Moving to a review of underwriting performance by segment. In Personal Lines, we delivered a combined ratio, excluding catastrophes of 83.5%, representing an improvement of 6.9 points from the prior-year quarter. This improvement was almost entirely driven by the temporary frequency benefit in personal auto. While such frequency continues to be lower, it is trending back toward historical averages. We continue to be especially prudent in reserving for potential liability exposures from delayed reporting, legal costs or social inflation. We are also monitoring our book carefully, remaining vigilant for increased severity from accidents at higher speeds. Homeowners current accident year loss ratio, excluding cats was 48.2%, essentially flat from the prior-year period. Turning to Commercial Lines, we reported a combined ratio, excluding catastrophes of 91.8%, relatively consistent with the prior-year quarter. Commercial Lines ex-cat current accident year loss ratio was also in line with prior-year. The temporary frequency benefit in certain property coverages was offset by elevated large property loss activity in CMP. CMP, current accident year loss ratio, ex-cat was 59.1%, up 2.7 points from the prior-year quarter, driven by several large property losses. We reviewed our underwriting and causes of loss and did not find any correlation to the current challenging environment or underwriting issues. These types of losses occur from time-to-time, we feel comfortable with our overall pricing as we continue to achieve rate above long-term loss trends in this line, including an increase in rate in the quarter. Commercial auto ex-cat loss ratio improved 3.2 points to 64.4%, reflecting temporary lower frequency in physical damage claims, although, not to the extent we reported in personal auto. Given the trends we are seeing in prior accident years, we are particularly focused on ensuring that we have a more conservative approach for liability effects. Workers' comp loss ratio was flat at 61.2% with some diminishing, but still favorable frequency of losses in the quarter. While underlying trends continue to be favorable, we remain prudent in our reserve decisions. Other commercial lines improved 1.4 percentage points to 54.1% due to slightly lower losses in short-tail property lines. Overall, we are very pleased with our underwriting performance and improved growth dynamics in the third quarter. Now moving on to investments. Net investment income of $67.6 million was down slightly from the same period of last year as we continued to experience pressure from lower new money yields. Our partnerships portfolio performed well, contributing $6 million to NII in the quarter. Barring any unusual market volatility moving forward, we expect partnership income to be consistent with pre-pandemic levels. With that said, we will continue to see some impact of the low-interest rate environment earn in increasingly over time. Cash and invested assets were $9 billion at the end of the third quarter, with fixed income securities and cash representing 86% of the total. Our fixed maturity investment portfolio has a duration of 4.7 years and is 96% investment grade. The well-laddered and diversified portfolio remains high quality with a weighted average of A plus. Turning now to our equity and capital position. We delivered a strong operating return on equity of 13.8% in the quarter and 12.1% on a year-to-date basis, despite elevated cash, particularly in the second quarter. Our book value per share of $84.32 increased 4% during the quarter, driven by operating income and both realized and unrealized gains in our investment portfolio, partially offset by the payment of our regular quarterly dividend. From a capital management perspective, this was a very active period. One of the strategic strengths Jack talked about earlier, is our capital allocation strategy. This year has highlighted the quality of our earnings as well as our ability to consistently generate excess capital. With this in mind and considering current market levels, we have entered into a $100 million accelerated share repurchase agreement. We expect to receive 80% of the total shares on October 29th and anticipate receiving the final delivery of the remaining shares no later than early February 2021. After the final delivery of all shares under the ASR agreement, we will have repurchased approximately 2.2 million shares or 6% of the outstanding shares from the beginning of 2020. We will have approximately $122 million remaining under the existing share repurchase authorization. In August, we issued a 10-year $300 million senior unsecured note at a very attractive annual coupon of 2.5%. We used a portion of the proceeds to retire $175 million of subordinate debentures with a 6.35% coupon, improving our capital cost and overall capital structure. The strong investor support we received for this issuance underscores the confidence they have in our strategy and future growth prospects. As we move into 2021, this transaction further enhances our financial flexibility and will support organic growth opportunities across our business, as well as other capital uses. We are confident in our earnings trajectory, growth prospects and earnings resilience going forward and we remain fully committed to our stated return on equity targets. We generate ample capital to support future growth and believe that the best use of excess capital is often to return it to shareholders, especially at such valuations. We take seriously our mandate to serve as stewards of our investors' capital and we're continuing to demonstrate that commitment, not only with words, but with actions that we believe are in the best interest of our shareholders. Turning to guidance, we expect full-year 2020 net premiums written growth to be slightly positive compared to 2019. We are increasing our full-year 2020 net investment income target to $260 million to reflect performance in the third quarter. Our fourth quarter ex-cat combined ratio expectation has improved to around 91%. As I mentioned earlier, we are maintaining our expectation of a 10 basis point expense ratio improvement in 2020 from full-year 2019 and then returning to 20 basis points improvement in 2021 forward. We have a fourth quarter cat load of 3.8% of net premiums earned and assume an effective tax rate to roughly equal the statutory rate of 21%. Given where we are in our corporate wide financial planning process, it is still too early to comment on most guidance items related to 2021, but we are confident in the improving top-line trajectory and our profitability moving forward, despite the many challenges and headwinds we have faced this year. In closing, we are pleased with our performance in the third quarter. While the market always presents challenges, our team continues to successfully deliver on our strategic imperatives, remaining agile and opportunistic as we advance our goals and those of our agents and customers. We enter the whole stretch of 2020 in a strong financial position with a unique and proven strategy, a strong and committed team more focused than ever on the opportunities that will enable us to continue growing profitability in the year ahead.

compname reports second quarter net income and operating income of $3.52 and $2.85 per diluted share, respectively. combined ratio of 94.4%. q2 operating earnings per share $2.85. q2 earnings per share $3.52.

Unless otherwise stated, all net sales growth numbers are in constant currency and all organic results exclude the impact of acquisitions, divestitures, brand closures, and the impact of currency translation. As a reminder, references to online sales include sales we make directly to our consumers through our brand.com sites and through third-party platforms. It also includes estimated sales of our products through Retailer's websites. I hope you and your families are in good health, and our hearts continue to be with those impacted by COVID-19. We delivered outstanding performance amid the pandemic in fiscal year 2021, capped with an exceptional fourth quarter and powered by our dynamic multiple engines of growth strategy, as well as the timeless desirability of prestige beauty. In a year of pain and sorrow, our employees cared for each other, their families, and our company with compassion, creativity, and resolve. While the challenges of COVID-19 persist, we confidently begin fiscal year 2022 as a stronger company, full of aspiration for the opportunities of tomorrow. For fiscal year 2021, sales rose 11% as we pivoted our energy resources to the growth engines of skin care, fragrance, Asia Pacific, travel retail in Asia Pacific, and global online. Impressively, eight brands grew double digits, led by Estee Lauder, La Mer, and Jo Malone London. Multiple waves and variants of COVID-19 to the extent the center reach were unexpected a year ago drove volatility and variability throughout the year. We saw reopenings revert to closing, and reopenings in one market meant with renewed lockdowns in other markets. Despite this, we delivered on the goal we set last August for sales growth to improve sequentially each quarter. Our sales exceeded $16 billion for the first time ever, up 9% from fiscal year 2019 on a reported basis, fueled by skin care and fragrance. Adjusted operating margin expanded to 18.9%, which is 140 basis points above fiscal year 2019 as we invested in today's strongest growth engines, managed cost with discipline, and funded long-term growth opportunities. Adjusted diluted earnings per share rose 21% relative to two years ago. We delivered these excellent results while pushing our social impact and sustainability goals and commitment. First and foremost, we remain focused on employee and consumer safety and well-being. We achieved important milestones for our 2025 sustainability goals, expanded our inclusion, diversity, and equity programs, defined a strategy for women's advancement and gender equality, and advanced work toward our racial equity commitments. Here are a few among the many areas of our progress. We achieved net-zero carbon emissions and 100% renewable electricity globally for our own operations. We also set science-based emissions reduction target, addressing Scope 1 and 2 for our direct operation and certain elements of Scope 3 for our value chain, signaling our new level of ambition for climate actions. We launched ingredient glossaries for seven additional brands, such that 11 brands now offer this insightful content. We transformed our traditional inclusion, diversity, and equity week into a blockbuster virtual experience, with 35 events involving thousands of participants from 25 countries. We also introduced new educational offerings, including four antiracism and inclusive leadership. We expanded our grassroots-led employee resource groups, which served as a source of support and comfort throughout the tumult of last year. The women leadership network is our largest group and is now global, with its expansion into Latin America and Asia Pacific. We created two new leadership programs for women and black employees. The Open Door women's leadership program is a unique intensive course to develop our next generation of women leaders. Building on its success, we designed the Open Doors collection, a self-guided program to bring these leadership skills to all our employees around the world. The form every chair leadership and development program is successfully held to ensure that black employees have equitable access to leadership trainings, mentorships, career development, and advancement opportunity, as well as to build a stronger, more inclusive network of talent across the organization by promoting visibility and facilitating leadership connections points with participants. Our new partnership with Howard University focused on its alumina-hosted 12 engaging events and launched an accelerator program to help increase the pipeline for black talent with career, coaching, professional training, and self-empowering networking. Let me now turn to product innovation, which serve as an impactful catalyst for growth in fiscal year 2021. Innovation represented over 30% of sales, exceeding our expectations. We combine data analytics with our creative talent and R&D to successfully anticipate scale and set trends across categories. The Estee Lauder brand achieved its fourth consecutive year of double-digit sales growth in fiscal year 2021, fueled by strength across its many hero franchises in skin care. Trusted products, along with innovation, were highly sold from Shanghai to New York, Paris, and now Sao Paulo given the brand's well-received launch in Brazil. Advanced Night Repair newly reformulated serum sparked excellent sales growth. Revitalizing Supreme's new Supreme+ Bright Moisturizer, further bolstered the accelerating franchise, while Re-Nutriv new eye serum served and created a halo effect on demand. In makeup, the brand's double wear Futurist and Pure Color franchises produced significant double-digit sales growth in the fourth quarter and exciting early signs of makeup renaissance. La Mer delivered outstanding double-digit sales growth in the fiscal year as innovation soared and engaging campaigns with iconic ingredient-based narratives drove demand for its hero products. Clinique skin care excelled in fiscal year 2021. Sales rose double digits and powered the brands to high single-digit sales growth. The brand successfully met consumer needs through the launch of Moisture Surge 100 Hour with its unique hydration benefits and target solution for hard-to-solve skin care problem like Even Better Clinical Interrupter. Clinique showcased its promise for makeup renaissance with stellar double-digit category growth in the fourth quarter with the new Even Better Clinical serum foundation and Even Better concealer capitalizing on its skin care authority. All told, our robust skin care portfolio from entry prestige to luxury and across subcategories is fulfilling this journey needs around the world. Dr. Jart+ with its [Inaudible] derma brand positioning and hero products delivered strong double-digit organic sales growth in the second half of fiscal year 2021. In May, we amplified the strength of our skin care portfolio as we became a majority owner of DECIEM with its coveted ingredient-based brand, The Ordinary, and emerging science-driven NIOD brand as part of its portfolio. Complementing skin care strength, fragrance delivered striking sequential sales growth acceleration throughout the year. Each of our luxury and artisanal fragrance brand contributed meaningfully from Jo Malone London to Tom Ford Beauty, Le Labo, Kilian Paris, and Frederic Malle in both established fragrance markets of the West and emerging fragrance market of the East. Tom Ford Beauty's private blend franchise is both recruiting new consumers and driving strong repeat in markets newly embracing the category, with the brand's drag in sales more than doubling in Mainland China during the year. The Asia Pacific region was another dynamic growth engine in fiscal year 2021 as annual sales growth accelerated from 18% to 22% led by Mainland China where sales rose strong double digits. Several smaller markets also contributed to Asia Pacific's strengths. The region, however, experienced increasing pressure from the pandemic as the year evolves with Japan and many markets in Southeast Asia, particularly impacted from renewed lockdowns in the second half. Mainland China prospered as we invested in its vibrancy of today, an opportunity of tomorrow. We entered more cities, reaching 145, expanded our presence in specialty-multi, opened the freestanding doors, and increased our advertising spending. Skin care and fragrance sales grew strong double digit for the fiscal year. We are encouraged that the makeup accelerated to double-digit sales growth in the second half. Our brands delivered excellent results for the key events of Tmall's 11/11 Global Shopping Festival and 6/18 Mid-year Shopping Festival as engaging live streaming generated product discovery for many new consumers. For the recent 6/18 among Tmall beauty flagship stores, the Estee Lauder brand ranked No. 1 in total beauty, while La Mer ranked first in luxury beauty and Jo Malone London led the fragrance category. To further capture the market recent online growth opportunity, we are continuing to invest in Tmall and brand.com to expand our capabilities. Most recently, some brands increased coverage of a different demographic by launching on JD in July. With international travel largely curtailed, we expanded our investment in the dynamic travel retail development of Hainan highland to serve the Chinese consumers in the best possible way given the island tremendous traffic growth and higher duty-free purchase limits. Our brands further elevated the in-store and prepaid shopping experiences, delivered ideal merchandising, and leveraged live streaming to drive strong sales growth. Online strive globally in fiscal year 2021, characterized by strong double-digit sales gain and step change in its power as a growth engine. We accelerated our consumer-facing digital infrastructure and fulfillment investments. The challenge is now more than twice as big as it was two years ago and greatly benefit from its diversification as each of brand.com third-party platforms, retail.com and pure-play retailers delivered outstanding performance. During the year, brand.com came to epitomize the allure of a luxury flagship store for each brands, localized by market and reimagined with our classic high-touch services. We expanded virtual trainer, live streaming, omnichannel capabilities, and consultations with our expert beauty advisors. Consumers at all ages explored, replenished, and engaged in an immersive environment of entertainment and community. Our brands increasingly leveraged the exciting trends in social commerce by integrating with Instagram, WeChat, Snapchat, and others. Estee Lauder launched on TikTok with the Night Done Right hashtag, driving nearly 12 billion views and the creation of almost 2 million videos. It challenged use-diverse creators to educate a younger audience on how important is to take care of your skin at night, showcasing Advanced Night Repair. Clinique zit happens campaigns on TikTok became a viral sensation, highlighting the brand acne solution and spurring the creation of nearly 700,000 videos on the app. Together, these and other strategic actions delivered exceptional results for brand.com as new consumers, conversion, basket size, repeat, and loyalty members grew considerably. Beyond the favorable growth rates, the direct relationship we fostered with consumers enabled us to better optimize engagement in-store and online, offering exciting future growth opportunities. We are investing across all channels of online, collaborating with traditional and pure-play retailers on initiatives to actualize prestige beauty online potential. We spoke on the last call about having expanded our presence with pure-play retailers, which continued into the fourth quarter, most especially in EMEA. And as I discussed a few minutes ago, we are expanding our consumer coverage in Mainland China. For fiscal year 2022, we expect these growth engines of skin care, fragrance, Asia Pacific, travel retail Asia Pacific, and global online to continue to try, owing to our strong repeat purchase rates, sophisticated data analytics, drive consumer acquisitions and retention, high-touch online services, and robust innovation pipeline. Three compelling skin care innovation recently launched: Estee Lauder new Advanced Night Repair Eye Matrix is focused on lines in every eye zone, while La Mer The Hydrating Infused Emulsion is designed to replenish, strengthen and stabilize skin with healing moisture and has already proven to attract new consumers. Clinique Smart Clinical Repair Wrinkle Correcting Serum is designed to visibly reduce stubborn lines. Our Shanghai innovation center is expected to open in the second half of this fiscal year, enriching our capability in product design, formulation, consumer insight, and trend analytics for Chinese and Asian consumers. Also with the new center, our East to West innovation will benefit, enabling us to create more successes like Estee Lauder Futurist Hydra or Supreme+ Bright and La Mer, The Treatment Lotion. As the world emerge from the pandemic, we will be the best diversified pure-play in prestige beauty as more engines of growth contribute across categories, geographies, and channels. Makeup and hair care are poised to gradually reignite as growth engines as our developed markets in the West and brick-and-mortar retail. Growth in emerging markets is expected to resume over time as vaccination rates increase. We anticipate the momentum in makeup will build around the world driven by local reopening and increase in socially professional user education, just as we saw in the fourth quarter. Indeed, makeup started to improve to the end of fiscal year 2021 driven by our hero subcategories of foundation and mascara. Newness in the category was highly sold, evidenced by the success of MAC Magic Extension mascara, Too Faced lip plumper, Smashbox Halo tinted moisturizer and Bobbi Brown Sheer pressed powder. Contributing to makeup emerging renaissance, MAC launched MAC The Moment, a campaign linking its makeup products and artists inspire trends to key experiences such as dead night parties, weddings, and back-to-school shopping. Too Faced expanded into browse in July with a collection that includes an innovative brow gel that add color and texture. Similar to makeup, hair care is set to benefit from the rise of socially professional user education, as well as salon reopenings. Aveda, which is now 100% vegan, and Bumble and bumble enter fiscal year 2022 with momentum, owing to desirable innovation and rich consumer engagement from strong online performance globally over the past year. As makeup and hair care reunite, we expect our engines of growth will gradually diversify by geography and channel, initially driven by developed markets in the West and, over time, by emerging markets. In the United States, the fourth quarter, we aligned innovation, advertised spending, and in-store activations as consumers returned to stores eager to explore beauty and experience high-touch services. Across brick-and-mortar from regional and national department stores to specialty-multi and freestanding stores, our business in the United States prospered, most especially in makeup and fragrance, and exceeded our expectations. As we start our new fiscal year, Bobbi Brown recently debuted in Ulta Beauty. Several of our brands launched online and in-store with Sephora at Kohl's and Ulta Beauty at Target. In closing, we leveraged the power of our multiple engines of growth strategy to elevate the company to new heights in fiscal year 2021. We did this while living our values with the health and well-being of our employees as primary focused and making important progress on our social impact commitment and sustainability goals. Our success and agility in operating amid the challenges of the past year give us confidence for fiscal year 2022 as we expect volatility and variability from the pandemic to persist for some time to come. This year, we are celebrating our 75th anniversary as a company and beginning our next 75 years incredibly inspired by the opportunities of tomorrow as the leading global house of prestige beauty with the most talented employees to whom I extend my deepest gratitude. Navigating through the highly uneven recovery this past year has certainly required greater agility and flexibility, and our teams across the globe rose to the occasion, delivering superb results for the fiscal year while also establishing a stronger foundation for future growth and profitability. We delivered exceptional net sales growth of 56% in our fourth quarter as we anniversary pandemic-related store closures in the prior-year period. The inclusion of six weeks of sales from DECIEM added approximately 3 points to growth in the quarter. Our performance also exceeded the prepandemic levels of the fiscal 2019 fourth quarter by 9% driven by significant sales increases in Mainland China, the skin care and fragrance categories, global online and travel retail in Asia. All three regions grew and all product categories within each region grew during the quarter. Net sales in the Americas region rose 86% against the prior-year period with almost no brick-and-mortar retail open. Throughout the quarter, consumer confidence in the U.S. grew as COVID restrictions abated and people resume shopping in stores again. Our brands responded with strong programs supporting recovery, new product launches, and animating key brand shopping events like Mother's Day. Sales in the region remain below fiscal '19 levels for the quarter, reflecting in part the loss of over 900 retail locations that represented nearly $170 million in annual sales. Additionally, makeup has historically been the largest category in the region, and the category has yet to fully recoup sales lost during the pandemic. Nevertheless, we are encouraged by the sequential acceleration in North American sales, which has been better than we expected. Net sales in our Europe, the Middle East, and Africa region increased 65%, with all markets contributing to growth as COVID restrictions eased throughout the quarter. Global travel retail, which is primarily reported in this region, continued to suffer from a significant drop in international passenger traffic but grew strong double digits in the quarter as comparisons eased and local tourism in China, especially to Hainan, remained robust. Across developed markets in the region, store traffic has begun to pick up, and retailers have become more comfortable with restocking. Emerging markets in the region saw strong retail in the quarter driven by locally relevant holiday activation, retailer events, and online performance. Sales in the region were slightly above fiscal '19 levels for the quarter, primarily due to the resilience of travel retail. Net sales in the Asia Pacific region rose 30%. Virtually every country contributed to growth, although the pace of improvement varies widely among the markets, and the resurgence of COVID has slowed a full recovery. Sales of our products online continued to rise strong double digits in the region driven by the successful 6/18 Shopping Festival Campaign in China and including the continued strength of social e-commerce. Mainland China continued to experience robust double-digit growth with broad-based improvement across product categories, brands, and channels. Other markets in the region, including Korea, Hong Kong, and Japan, grew exceptionally against prior-year brick-and-mortar lockdown. Sales in the region were 50% above 2019 levels, largely reflecting China's rapid emergence from the pandemic last year. Net sales in all product categories grew sharply this quarter. And skin care, fragrance, and hair care drove higher sales in fiscal 2019. Fragrance led growth with net sales rising 150% versus prior year. Luxury fragrances resonated with consumers looking for self-care and indulgence and among Chinese consumers increasingly attracted to the category. Home, Bath & Body products have also gained traction during the pandemic and help to attract new consumers. Jo Malone London saw recovery to prepandemic levels in brick-and-mortar. And the brand's blossom and brit collections were popular in Asia. Standouts from Tom Ford Beauty include the recent launch of Tubereuse Nue and the continued strength of Bitter Peach and Rose Prick. Net sales in makeup jumped 70% against the prior year that reflected the greatest beauty category impact of COVID-19, particularly in Western markets where makeup is the largest category. The makeup category in prestige beauty has proven to be especially sensitive to brick-and-mortar recovery due to the use of testers and in-store services by consumers. Estee Lauder saw strong growth of Futurist and double wear foundations in Asia, and MAC liquid lip color and eye products, especially mascara, outperformed. Hair care net sales grew 52% as salons and stores reopened. The launch of the Aveda's blonde revival shampoo and conditioner also contributed to category growth, adding to other strong innovation programs over the past several months from Aveda. Net sales in skin care continued to thrive. Jart+ brands, particularly in Asia. Skin care sales growth also benefited from the addition of DECIEM in the quarter by approximately 4 percentage points. Our gross margin improved 650 basis points compared to the fourth quarter last year. This favorability reflected significant improvements in obsolescence and manufacturing efficiencies compared to the prior-year impact of COVID-19 on our sales and on our manufacturing locations. Operating expenses rose 36% driven by the planned increase in advertising and selling costs to support the reopening of retail and the recovery. Additionally, we sharply curtailed spending last year in response to the onset of the pandemic, and some of these costs were reinstated, primarily compensation. We delivered operating income of $385 million for the quarter, compared to a $228 million operating loss in the prior-year quarter. Diluted earnings per share of $0.78 included $0.02 of favorable currency translation and $0.02 dilution from the acquisition of DECIEM. Our full-year results reflect the benefits of our strategic focus as we leaned into current growth drivers and invested behind future areas of growth while effectively managing both costs and cash. The sequential acceleration of our business throughout the year culminated in net sales growth of 11%. The strength of Chinese consumer demand, both at home and in travel retail, the resilience of the skin care and fragrance categories, and the momentum we drove in our online channels all supported our growth. Our distribution mix continued to evolve even as brick-and-mortar reopened. Sales of our products through all online channels continue to thrive as they rose 34% for the year and represented 28% of sales. Despite the continued curtailment of international travel, our business in the travel retail channel grew, ending fiscal 2021 at 29% of sales. Among brick-and-mortar retail, specialty-multi and perfumeries grew, while department stores and freestanding stores experienced the greatest impact from the ongoing pandemic and declined for the year. Operating expenses declined 300 basis points to 57.5% of sales. Selling and store operating costs decreased as high service stores were either closed for part of the year or they reopened with reduced traffic and staffing levels. Additionally, in-store merchandising costs decreased, while advertising investments, primarily digital media, rose faster than sales to support our brands and the recovery. We achieved significant savings from our cost initiatives, including Leading Beauty Forward and the preliminary benefits from the post-COVID business acceleration program, and this gave us the flexibility to reinvest in necessary capabilities, absorb some of the inflation in media and logistics costs, as well as support the reinstatement of certain compensation elements that were reduced or frozen due to the onset of the pandemic. Our full-year operating margin was 18.9%, representing a 420-basis-point improvement over last year and 140 basis points above fiscal 2019. This year also includes 50 basis points of dilution from the inclusion of Dr. Jart+ and DECIEM. Our effective tax rate for the year was 18.7%, a decrease of 450 basis points over the prior year, primarily driven by the geographic mix of earnings, which included a favorable one-time adjustment for fiscal years 2019 and 2020 related to recently issued GILTI tax regulations. Net earnings rose 57% to $2.4 billion and diluted earnings per share increased 57% to $6.45. Earnings per share includes $0.11 accretion from currency translation and $0.08 dilution from the acquisition of Dr. Jart+ and DECIEM. In fiscal 2021, we recorded $148 million after tax or $0.40 per share of impairment charges related to our Smashbox and GLAMGLOW brand, as well as certain freestanding retail stores. Restructuring and other charges related primarily to the post-COVID business acceleration program were $176 million after tax or $0.48 per share. These charges were more than offset by the one-time gain on our minority interest in DECIEM of $847 million after tax or $2.30 per share. The Post-COVID Business Acceleration Program is progressing quickly, with projects underway across all regions. We have closed nearly 500 doors or counters, including about 50 freestanding stores under the program in fiscal 2021. We also closed approximately 100 additional freestanding stores outside of the program and upon lease expiration, primarily in North America and in Europe. We realigned our go-to-market organizations to better reflect our evolving channel mix. We are also winding down certain brands such as BECCA and RODIN. These actions are expected to continue into fiscal 2022. For the total program, we continue to expect to take charges of between $400 million and $500 million through fiscal 2022 and generate savings of $300 million to $400 million before tax by fiscal 2023, a portion of which will be reinvested. We continue to focus on maintaining strong liquidity while also investing for future growth during the year. Cash generated from operations rose 59% to $3.6 billion, primarily reflecting the higher net earnings. We utilized $637 million for capital improvement, supporting increased capacity and other supply chain improvements, further e-commerce development, and information technology. We repaid $750 million of debt outstanding from our revolving credit facility, issued $600 million of new long-term debt, and retired $450 million of debt. We used $1.1 billion net of cash acquired to increase our ownership interest in DECIEM, and we returned $1.5 billion in cash to stockholders during the year via increased dividends and the reinstatement of share repurchase activity in the second half of the fiscal year. So looking ahead to fiscal 2022, we are encouraged by the increasing vaccination rates and reopening of markets around the world. We look forward to the resumption of international travel, increasing foot traffic in brick-and-mortar retail, and the development of our recent acquisitions. We are still mindful, however, that the recovery has evolved unevenly, and some markets are seeing their third or fourth waves of COVID, including increasing effects of new more contagious strains of the virus hindering a return to normal life. This has been particularly evident in the U.S. over the past several weeks. Additionally, increasing climate and geopolitical events make it difficult to predict the corresponding impact on our business. Nevertheless, given the strength of our programs, we are cautiously optimistic, and therefore, providing a range of sales and earnings per share expectations for the fiscal year, caveated with the following underlying assumptions: progressive recovery in the makeup category as full vaccination rates increase and mask-wearing abates in Western markets during the first half of the fiscal year; beginning of the resumption of international travel in the second half of the fiscal year; the addition of new retail accounts for some of our brands should provide broader access to new consumers, notably through Sephora at Kohl's and Ulta at Target in North America and the addition of JD.com in China online; the inclusion of incremental sales from DECIEM, benefiting sales growth for the fiscal year, primarily in the Americas and EMEA regions and in the skin care category; pricing is expected to add approximately 3 points of growth, helping to offset inflation risk in freight, media, labor and commodities; increased advertising support as markets reopen and further investment behind select capabilities, including data analytics, innovation, technology and sustainability initiatives while maintaining good cost discipline elsewhere. We forecast increasing benefits from our post-COVID business acceleration program as it ramps up this year. Approximately $200 million of the cost we cut during the pandemic are expected to be reinstated. These primarily include hiring, travel and meeting expenses, furloughs, and other leaves of absence and compensation. In addition to these assumptions, there are a few nonoperating items you should be aware of as you adjust your models. Our full-year effective tax rate is expected to return to a more normalized level of approximately 23% from 18.7% in fiscal 2021. Net interest and investment expense is expected to be around $150 million. The increase is primarily due to the comparison to last year when we recorded the benefit of our minority interest in DECIEM through May 18, 2021. At that time, we acquired a majority ownership in DECIEM, and we began to fully consolidate the entire business and deduct the portion of the income we don't own as a charge to net earnings attributable to noncontrolling interest. This charge is expected to be less than $5 million in fiscal 2022. Net cash flows from operating activities are forecast between $3.2 billion and $3.4 billion. Capital expenditures are planned at approximately 5% of projected sales as we develop additional manufacturing and distribution capacity, notably for the building of our new facility in Japan. We also expect to fund more robust research and development capabilities in China and North America, increase investment in technology and support new distribution and e-commerce for our brands. Our capex plan for the year also includes some spending deferred from last year. Organic growth adjusts reported sales growth for both currency and changes in structure such as acquisitions, divestitures, and brand closures. This should help provide a more meaningful understanding of the performance of our comparable business. Additionally, reflecting the level of volatility still in the environment, we are at this point widening our guidance ranges for the year. For the full fiscal year, organic net sales are forecasted to grow 9% to 12%. Based on August 13 spot rates of 1.17 for the euro, 1.381 for the pound, 1,164 for the Korean Won, and 6.479 for the Chinese yuan, we expect currency translation to add 1 point to reported sales growth for the full fiscal year. As I mentioned earlier, this range excludes approximately 3 points from acquisitions, divestitures, and brand closures, primarily the inclusion of DECIEM. Diluted earnings per share is expected to range between $7.23 and $7.38 before restructuring and other charges. This includes approximately $0.19 of accretion from currency translation. In constant currency, we expect earnings per share to rise by 9% to 12%. This also includes approximately $0.03 accretion from DECIEM. At this time, we expect organic sales for our first quarter to rise 11% to 13%. The incremental sales from acquisitions, divestitures, and brand closures are expected to add about 3 points to reported growth, and currency is expected to be accretive by approximately 3 points. Operating expenses are expected to rise in the first quarter as we invest in the reopening and recovery of brick-and-mortar retail around the world and some of the temporary cost measures start to ease. We expect first-quarter earnings per share of $1.55 to $1.65. Currency is expected to be accretive to earnings per share by $0.05, and DECIEM is forecast to have no impact. In closing, while we are cautious about the uneven recovery to date, we remain confident about the strategic actions we continue to take to support sustainable, profitable growth post-pandemic and the agility we have demonstrated this past year.

sees q3 earnings per share $1.55 to $1.65 excluding items. q2 adjusted earnings per share $3.01 excluding items. q2 sales rose 14 percent to $5.54 billion. q3 reported net sales are forecasted to increase between 10% and 12% versus prior-year period. full year fiscal 2022 reported net sales are forecasted to increase between 13% and 16% versus prior-year period. sees fy 2022 earnings per share $7.43 to $7.58 excluding items. q3 adjusted diluted net earnings per common share are projected to be between $1.55 and $1.65. expects to take charges associated with previously approved restructuring and other activities in fy 2022. company expects higher costs to negatively impact cost of sales and operating expenses for remainder of fiscal 2022.

After almost 17 years as CEO, this is the most optimistic I have been on Puerto Rico and OFG. We're certainly not out of the woods yet, but the island has been a far better place today than we were last year and our outlook is much better than the previous almost two decades. Looking at the macroeconomic environment, we're a lot more optimistic about the flow of federal stimulus and reconstruction funds, the increased liquidity for individuals and small- and medium-sized businesses, the rate that people are getting their vaccination and the airlines bankruptcy resolution. All these resulted in the overall improvement of Puerto Rico's economy. I hope this perspective helps investors understand the inflection point we are in and our potential to deliver consistent solid result as more of the macro distractions of the past finally are being resolved. At OFG, all our businesses are gaining very good momentum and we are in an excellent strategic position to grow our market share in the years to come. Combined with the continued success of our strategies focused on our agility and service, we generated very strong first quarter results while also increasing our dedication and purpose to help our customers, our people and our communities through the pandemic and beyond. For our customers, our proprietary digital PPP portal once again facilitated access by small businesses to another $126 million in credit to keep their doors open and staffs employed. Our teams helped our former Scotiabank customers to on board and take advantage of our more robust online mobile ATM and ITM offerings. For our people, we enabled vaccination for our staff. And so far, more than 40% have been inoculated. We continued our COVID-related spending to protect our staff and customers, and we stepped up our investment, as planned, to create a more secure hybrid infrastructure to make it easier for our teams to work seamlessly from the office or home. For our communities, we established a new outreach program to provide advice to small businesses affected by the COVID situation. We want to help them find better ways to manage through the pandemic. We also provided a series of virtual seminars doing Women's History Month and we sponsored virtual seminars for the next generation of college entrepreneurial leaders to help them better understand how innovation can solve business and community challenges. Please turn to Page 4. Confirming our multi-year strategy to bring digital solutions to our customers and help them simplify their lives, our overall digital adoption continue to grow. You can see this -- you can see it in this slide the adoption levels across different digital solution. These adoption levels confirm how much we have advanced our digital strategy, especially during COVID but more importantly how customers are sticking to digital online solutions even as restrictions subside and the economy reopens. A great example is how our customers are continuing to use our online or mobile platforms to schedule branch appointments. During the first quarter, we scheduled approximately 8,800 such appointments. Our goal is to convince customers that it is easier and more convenient to use our digital online technology for routine transactions, allowing our people to provide customers more [Technical Issues] service, build stronger relationships and in the process, increase business development opportunities. Please turn to page 5 to review our first quarter results. We reported $0.56 in earnings per share compared to $0.42 in the fourth quarter and breakeven in the year ago quarter, which was the first quarter to be impacted by the pandemic. Total core revenues were $128 million. Net interest income of $98 million benefited from PPP loan fees and lower cost of deposits. Provision was $6.3 million, primarily due to improved economic and credit trends. This included the release of some COVID-related loan reserves, partially offset by provisioning for a commercial loan in workout before COVID. Allowance remain virtually the same. Net interest margin picked [Phonetic] up to 4.26% from the fourth quarter. Banking and wealth management revenues totaled $29 million. That's roughly equal to what we did in the fourth quarter when you eliminate seasonal items. First quarter fee revenue reflected strong mortgage banking activities as we have consistently generated a higher level of origination and servicing fees, both benefits of the Scotiabank acquisition. Non-interest expenses totaled $78 million. This was relatively flat after excluding merger expenses in the fourth quarter and non-core items in this first quarter. First quarter expenses were also in line with our previously announced plans for spending this year. The effective tax rate was 32% compared to 22% in the fourth quarter. Looking at the balance sheet compared to December 31, assets increased reflecting higher cash balances. Loans declined due to higher mortgage refinancing activity and to a lesser degree, businesses with higher liquidity levels paying down lines of credit. Loan production total an impressive $528 million. We have good pipelines and momentum going forward in all business lines. We also saw strong deposit growth due to new PPP loans and COVID relief payments. Capital continued to build nicely and we are starting to return some of that to shareholders via increases in common dividends and optimization of the capital stack via redemption of preferred shares. In January, we increased the regular quarterly cash dividend -- common cash dividend 14%. In March, we announced the redemption of all three outstanding series of preferred stock in addition to improving our capital structure. This enables us to effectively deploy excess liquidity and increase net income available to shareholders -- to current shareholders by $6.5 million on an annualized basis. Stockholders' equity climbed to $1.11 billion. I would like also to point out that as of the first quarter, we more than earned back all the tangible book value per common share dilution anticipated in the Scotiabank acquisition significantly ahead of schedule. To sum up, the first quarter demonstrated another strong performance supported by the island's economic recovery, solid loan generation, improving payment activity and credit credit trends, and good banking and financial services fees. Now here is Maritza to go over the financials in more detail. Please turn to Page 6 for our financial highlights. First quarter core revenues were $127.7 million. This compares to $132.8 million in the fourth quarter. First quarter revenues included $1.6 million in interest income from $92 million of PPP loans that were forgiven. First quarter revenues included three items: $3.9 million in non-interest income from annual insurance commissions; $3.1 million in interest income from acquired loan prepayments; and $2 million in mortgage sales that were held back from the third quarter. When you take all that into consideration, core revenues increased $2.3 million or 1.9%. This was driven by $1.4 million in lower cost of deposits and higher mortgage banking activities. First quarter non-interest expense totaled $7.7 million. This compares to $89 million in the fourth quarter. The first quarter reflected previously announced cost savings. It also included $1.8 million primarily in gains on sales and improved valuation of foreclosed properties. The first quarter included $10.1 million in merger and restructuring expenses. As a result, the efficiency ratio improved to 60.84% from 67.06% in the fourth quarter and 66.49% in the year ago quarter. Our objective is to return to the mid-50% range. Looking at our performance metrics. Return on average assets increased to 1.21% from 94 basis points in the fourth quarter and virtually nil in the year ago quarter. Our objective continues to be a -- to be on return on average assets above 1%. Return on average tangible common equity rose to 13.11% compared to 9.99% [Phonetic] in the fourth quarter and virtually nil in the year ago quarter. Our objective continues to be achieving return on average tangible common equity of above 12%. We were pleased to see that all of our key performance metric significantly improve. Tangible book value was $70.39 per share. That's an increase of 11.5% year-over-year and 2.5% from the fourth quarter. The CET1 ratio increased to 13.56%. Please turn to Page 7 for our operational highlights. Average loan balances were $6.6 billion, a decline of 1% from the fourth quarter. Most of that was in our mortgage portfolio. This is to be expected considering the high level of refinancing activity in Puerto Rico and our own strategy of selling most of our own new production. Average core deposits were $8.5 billion, an increase of 1% from the first quarter. This reflected continue high liquidity in the economy from federal stimulus, which is especially meaningful in Puerto Rico, as well as our first quarter PPP lending. As Jose mentioned, loan generation totaled $528 million or $401 million excluding PPP originations. In addition to PPP production, loan generation was driven by a strong year-over-year increases in mortgage, auto and commercial lending. Mortgage reflect that new home sales and refinancing. Auto reflected the strong sales of new and used car. Most of our commercial lending was with small- and medium-sized businesses. Loan yield was 6.61%, an increase of 6 basis points from the fourth quarter, largely due to PPP loan forgiveness. As anticipated in our last call, a reduction in CD balances helped drive the decline in cost of funds. Cost of core deposit was 48 basis points, a decline of 5 basis points from the fourth quarter. We expect cost of core deposits to continue to improve this year as more CD balances be priced lower. During the first quarter, we acquired $127 million of mortgage-backed securities for our held-to-maturity portfolio. The result was that NIM increased 2 basis points from the fourth quarter. We expect a stable NIM this year. Please turn to Page 8. Although credit trended positive across all portfolios, our credit metric is also in line with general improving trends we have been seeing on a fairly consistent basis. Total net charge-offs were $9.1 million or 55% of total loans. This is a decline compared to net charge-off of $44.8 million or 2.67% in the fourth quarter, which included $31.2 million to charge-off to acquire Scotiabank loans that were substantially and previously reserved. With the exception of the fourth quarter of 2020, the charge-off rate has been improving steadily from the fourth quarter of 2019. I would like to highlight the auto net charge-off rate. This fell to 0.85% in the first quarter from 1.56% in the fourth quarter and 2.31% in the year ago quarter. Our non-performing loan rate on our early and total delinquency rate all fell as well from the fourth quarter. In particular, the early delinquency rate fell to 2.15% in the first quarter from 2.68% in the fourth quarter and 3.16% in the year ago quarter. Provision declined from $14.2 million in the fourth quarter. It should be noted that the fourth quarter included $4.7 million to cover the unreserved amount of disclosure loans that we [Technical Issues]. First quarter provision included a reserve release of $3.7 million. This reflects changes in our probability weight to the results of simulation using Moody's S3 and baseline scenarios. The first quarter also included a provision of $3.5 million for our commercial loan in workout prior to the pandemic. Excluding the large COVID-related provision in the year ago, provision also has been declining steadily from the first [Phonetic] quarter of 2019. Now here is Jose. Please turn to Page 9 for our conclusion. Culture, history, team and our facil, rapido, hecho approach are continuing to prove both successful and adaptable. As I said earlier, we're building good momentum in all our businesses. Our excess low-cost core deposits continue to provide us with significant dry powder. Our most recent capital actions solidify our record of deploying and returning capital to shareholders. Our agenda remains the same. We will continue as plan to invest for the future in transforming our business model. Our goal is to further simplify operations to improve efficiency and enhance our ability to serve customers. Our business focus is to utilize our excess liquidity, increase loan generation and grow fee income. We still face challenges from COVID, high unemployment levels, our government's ability to effectively deploy federal stimulus and reconstruction funds, and high cost of electricity, but the future is looking brighter. The island is experiencing early signs of recovery with individual and businesses benefiting from COVID relief and stimulus, vaccination being extensively deployed, reconstruction projects getting under way and a consensual agreement in principle to restructure Puerto Rico's debt and an end to out-migration last year with signs of possible in-migration this year. At OFG, we're more than ready to benefit from and play a major role in the recovery of Puerto Rico and the U.S. Virgin Islands. We want to help our customers rise up and fulfill their lives again. Operator, please start the Q&A.

q1 earnings per share $0.56. quarterly total core revenues were $127.7 million.

Speaking on the call will be Mike Doss, the company's President and CEO; and Steve Scherger, Executive Vice President and CFO. Information regarding these risks and uncertainties is contained in the company's periodic filings with the Securities and Exchange Commission. I'm excited to discuss quarterly results with you today and the positive developments that we are driving in our pursuing Vision 2025. We are delivering for customers and providing packaging solutions that are resonating with consumers in the marketplace. New innovative packaging introductions continue as our teams expand the new product pipeline and fuel our organic growth strategy. We are executing strategic M&A with transactions that are strengthening our capabilities, expanding our geographic reach and positioning us in growing markets and importantly, we are delivering on our commitments to stockholders. Notably these swiftly address the heightened inflationary environment with multiple price initiatives in the quarter that will play out in the second half of 2021 and 2022 in order to limit the impact of the current price cost dislocation and ensure is short-lived. Turning to second quarter highlights on Slide 3. We delivered a meaningful 5% net organic sales growth in the quarter across all our markets. We continue to see significant demand for more sustainable packaging solutions. Our focus on innovation and our design for the environmental approach, which is an integral part of our new product development process are providing continued opportunities to satisfy this demand. We are ahead of our 100 to 200 basis point organic sales growth goal for the first half of 2021, expect to be at or above the high end of that range for the full-year. Adjusted EBITDA in the second quarter was $248 million. Importantly, EBITDA was positively impacted by $15 million of improved volume mix related to net organic sales growth and $36 million of favorable net performance. Our teams did an excellent job of navigating the challenging operating environment to meet customer demand and deliver sales growth. The solid execution was however offset by $67 million of accelerated inflation across the broad basket of commodities. We address the inflationary environment head on during the quarter successfully implementing multiple pricing initiatives. This included Paperboard price increases across all 3 substrates as well as positive modification of other business terms. One example is our move to shift freight recovery and contracts where we are responsible for product delivery costs to 4 openers per year. A second example is the date specific implementation of price increases for paperboard purchases in the open market, replacing the linkage of price increases to industry trade obligations. We committed to stockholders that we would shorten the time period for price to offset commodity input cost inflation and we demonstrated commitment in the second quarter. We have changed the pricing dynamics in our business since the last period of dislocation between 2016 and 2018 and this will be on full display as we progress through the second half of 2021. I will talk more about this shortly. While navigating the challenges supply chain environment, our teams worked tirelessly to meet strong customer demand. Our foodservice business increased sales by 22% year-over-year as consumer mobility picked up well food, beverage and consumer sales improved a healthy 4% year-over-year. I'm excited to see the growing global interest for fiber-based consumer packaging solutions. Growth in fiber-based packaging is now being realized as we projected at our Investor Day in September of 2019. Since that time, we've continue to position the company to meet increased demand through our ongoing investments in our leading paperboard platform, our teams and through strategic acquisitions. In May, we announced the acquisition of payer packaging and more recently, we successfully completed the acquisition Americraft Carton. These transactions are aligned with our growth ambitions and have us on a path to achieving our Vision 2025 goals. On Slide 4, let me recap the compelling strategic rationale there packaging combination and provide an update on timing. The transaction brings together 2 highly innovative workforces serving diverse a complementary customer sets. The acquisition expands our global scale and strengthens our presence in Europe, which is driving the world and a push toward a more circular economy. We see significant opportunities to expand and grow with global customers as the premier fiber based consumer packaging leader, we are encouraged that the regulatory approval processes are proceeding as expected and anticipated close by the end of the year. Recognizing the impact to leverage from the announced day, our Packaging transaction. It is important to reiterate that we are fully committed to utilizing our significant cash flow generation to reduce leverage back to our targeted 2.5 to 3 times range. We intend to be back to targeted levels within 24 months following the close of the acquisition. Turning to Slide five. Innovation and new product development continue across our 3 growth platforms as we rollout packaging solutions designed to address retailer and producer calls for fiber-based packaging alternatives. Last quarter, I discussed the rapid acceptance we are seeing for our PaperSeal line the food trade Packaging in Europe and Australia and the excitement over the new Punnet tray line introduced from [Indecipherable] snacking size vegetables. Last week, we introduced a new product line OptiCycle to grow in our foodservice markets. Our OptiCycle line includes an innovative non-polyethylene coating alternative to traditional PE and PLA coated products. On Slide six, you can see the details of this latest innovation in the foodservice packaging. OptiCycle uses a water-based coating instead of polyethylene. The foodservice cup and containers feature should require less coating material versus traditional options and are designed to be more easily recyclable. When we pull 98% of the fiber, can be recovered and used to make other recycled products. We continue to push forward with our sustainability journey and OptiCycle fits squarely with our ESG commitment to decrease our LDPE usage by 40% by 2025. With this non-PE packaging solution, we are providing a new option for customers to evaluate as they pursue their own sustainability goals and meet the needs of today's consumer. We expect the line to be commercialized in North America in the next few months. As we enter the second half of 2021, I'm pleased with the path we are on. Employees have produced exceptional results and demonstrated commitment to customers as an essential supplier. We have rolled out new product innovations provided outstanding customer service and captured additional demand. In addition, in support of our investments for growth and expansion. We have prudently and effectively raised in deploying capital. We continue to differentiate ourselves by the investments we are making in our paperboard infrastructure. On Slide eight, you will see details of our transformational Kalamazoo recycled paperboard investment. This project is a pivotal case in point. We expect our new world-class coated recycled board machine to be producing paperboard in a few short months. With it, we will serve existing and new customers, delivering the highest quality product in the marketplace at the lowest cost to produce. Furthermore, the investment provides environmental and sustainability benefits through the reduction of greenhouse gases, purchased energy and water usage in the paperboard production process. We remain confident in $100 million of incremental EBITDA for this investment once it's fully implemented and expect to capture the first $50 million of additional EBITDA in 2022. Another area where we are redefining leadership in the industry is through our solid track record of execution and integration of strategic acquisitions. The announced acquisitions we have touched on today and our capabilities position us and new growing markets and allow us to further integrate our paperboard platform. Vertical integration is a strategic priority, and we expect meaningful increases in our integration rate in the quarters ahead. As we grow organically internalize more paperboard from recent acquisitions and unwind existing supply agreement. Our vertically integrated model price increase operating efficiencies that benefit both stakeholders and customers. The final point I will make on Slide seven is something I noted earlier, I would like to spend a bit more time discussing with you today. Over the past couple of years, we have successfully implemented numerous pricing model revisions that are now flowing through the business during this time of accelerated inflation. Realization of our pricing initiatives will be on full display over the next 2 quarters and then into 2022. This is the primary reason we expect to generate significantly stronger EBITDA in the second half of the year. Moving to slide 9. I will talk through material price cost spread of recovery that we expect will occur in the second half of the year and in the 2022. The on the left hand of the slide reflects the heightened inflationary environment we experienced in the first half of 2021 and our expectations for inflation during the second half. The right hand of the slide shows pricing that has been successfully implemented and recognized and it's flowing through our contracts over the coming 6 months. We expect approximately $120 million of pricing in the second half of 2021, which is intended to address the negative price cost spread experienced in the first half of 2021. The recovery occurring in just 6 months clearly demonstrates more constructive pricing dynamics inherent in our model. Implemented and recognized pricing will yield a cumulative $400 million over the 2021 and 2022 time horizon, as we actively address commodity input cost inflation. Overall, we are confident in the actions we are taking to address inflationary headwinds and more broadly, we remain confident in the fundamental drivers of our business and our ability to capitalize on the opportunities ahead. Simply put, we are running a different race. We are executing for customers driving our growth strategy forward and strategically positioning the company to capture global demand opportunities in the fiber based consumer packaging. We are on track to achieve our Vision 2025 growth goals. Moving to Slide 10, focused on key financial highlights in the second quarter of 2021, net sales increased 8% from the prior year to $1.7 million driven by 5% net organic sales growth. Adjusted EBITDA declined from the prior year due to the accelerated inflationary environment. Importantly, we are known organic volume growth, which positively impacted EBITDA performance by $15 million and we generated, of a favorable $36 million in net performance. I'd like just discussed, we have implemented multiple pricing initiatives to offset the current inflationary environment and we expect our adjusted EBITDA dollars and margins will improve in the second half of 2021 and 2022, all consistent with our Vision 2025 financial goals. Additional financial and market detail can be found on slide 11. AF&PA industry operating rates increased sequentially with SBS and CRB at 95% and 98% respectively at the end of the second quarter. Our CUK operating rate was over 95%, reflective of the continued strong demand environment. AF&PA Second quarter data also reflected continued declines and industry inventory levels with balances at multi-year logs, backlogs increased from the previous quarter and all three substrates we're an 8 plus weeks at quarter end. On Slide 12 and 13, you will see our year-over-year revenue and EBITDA waterfalls. Net sales increased $126 million very solid 8% in the second quarter of 2021. Strong growth was driven by $76 million of higher volume mix resulting from 5% organic sales growth of $14 million in pricing and $36 million of favorable foreign exchange. Adjusted EBITDA decreased $12 million to $248 million in the second quarter versus the prior year period. Adjusted EBITDA benefited from $14 million in price $15 million in volume mix, $36 million in improved net productivity and $4 million from favorable foreign exchange. Adjusted EBITDA was unfavorably impacted by $67 million of commodity input cost inflation and $14 million of labor benefits and other inflation. We ended the quarter with net leverage of 3.7 times. As we previously shared, leverage is currently above our long-term target of 2.5 to 3 times as we execute on critical investments to achieve our Vision 2025 goals. We have clear line of sight to the cash flow generation required to drive leverage down to our targeted levels of 2.5 to 3 times within 24 months following the close of the AR Packaging transaction. We have a substantial total liquidity with $1.9 billion available as of the end of the second quarter. In July, we raised approximately $530 million to support our acquisition activity at very effective interest rates below 2%, $250 million was raised in a 7-year floating rate term loan from the farm credit system in a similar structure to the farm credit loan we raised earlier this year. In addition, we raised Euro based debt when the EUR210 million delayed-draw term loan along with a EUR25 million increase in our European line of credit. We funded the farm credit loan last week. While we anticipate drawing the euro term loan in connection with the close of the AR Packaging transaction. Turning now to guidance on slide 14 and 15. We are updating our full-year EBITDA guidance to incorporate recent price actions expected commodity input cost inflation and the close of the Americraft Carton acquisition. 2021 adjusted EBITDA is projected to be in a range of 1.0-8 to $1.2 billion. Components of EBITDA have changed modestly as higher contribution from volume mix and net performance are being offset by the transitory negative price cost spread that occurred in the first half of the year. Notably on Slide 15, you'll see the significant increase in EBITDA, we are projecting in the second half of 2021. Implemented price initiatives are expected to yield a material price cost recovery benefit to EBITDA in the second half of the year in a range of $80 to $120 million compared to the first half. The Americraft acquisition closed on July 1 and is expected to provide an incremental $15 million to the second half adjusted EBITDA. Turning back to the cash flow guidance on slide 14, we anticipate a range of $175 to $225 million for the year. Guidance for capital expenditures in 2021 has been adjusted, modestly higher, as we are experiencing similar inflationary environment from materials and labor as we complete critical capital projects on time in 2021. Interest and working capital components to cash flow have improved related to the attractive refinancing from our debt completed this year at very low interest rates and the positive impact on working capital as we have worked down inventories on stronger demand. As we look through 2022, we remain committed to capital expenditures, returning to a more normalized range of $450 million and look forward to generating significant cash flow as we earn on the investments we've made to materially improve the profitability of the company. For reference, $450 million in capital expenditures, estimated in 2022 includes both the AR Packaging and Americraft acquisitions. Wrapping up my comments on Slide 16 and the conclusion of our successful partnership with International Paper during the quarter. Partnership was foundational to building the highly integrated fiber-based consumer packaging business we are today and it created value for stakeholders. Conclusion of the partnership with IP, return ownership interest of the partnership back to 100%.

compname reports second quarter 2021 results: 5% net organic sales growth driven by strong demand for fiber-based consumer packaging solutions. global liquidity was $1.9 billion at quarter end.

We have on the call today, Nick Pinchuk, Snap-on's chief executive officer; and Aldo Pagliari, Snap-on's chief financial officer. Aldo will then provide a more detailed review of our financial results. As usual, we have provided slides to supplement our discussion. These slides will be archived on our website along with a transcript of today's call. As usual, I'll start the call by covering the highlights of our third quarter and along the way I'll give you my perspective on our results. On our market, they are positive and more than resilient, and I'll speak about our progress. It's been considerable, each period demonstrating increasing strength even when in the midst of silencing headwind. And we'll also speak about what it all means for our future. And then Aldo will move into a more detailed review of the financials. Our reported sales in the quarter were $1,037.7 million. They were up 10.2%, including $9.6 million of favorable foreign currency and $19.5 million of acquisition-related sales. Organic sales growth was up 7%, with 7% gains in every group. It was our fifth straight quarter of above pre-pandemic performance and Snap-on value creation processes, safety, quality, customer connection, innovation and rapid continuous improvement, or RCI, as we call it, all combined to drive that progress and progress it was. opco operating income of $201.3 million was up $15.6 million from last year. The OI margin was 19.4%, down 30 basis points, impacted negatively by acquisitions, but still very strong at a strong level. For financial services, operating income of $70.6 million increased 7.6% and the delinquencies were down even below the 2019 pre-pandemic levels, a continued testimony to our unique business model and its ability to navigate the most threatening of environments. First quarter earnings per share was $3.57, up $0.29 or 8.8% from last year. And as I said before, we believe Snap-on is stronger now than when we entered this great withering and our third-quarter results testifies to just that. Compared with 2019, before we ever heard of the virus, our sales grew $135.9 million or 15.1%, which includes $21 million from acquisition-related sales, $13.6 million of favorable foreign currency and a $101.3 million or 11.1% organic gain. And that 2021 opco operating margin of 19.4% was up 80 basis points from the pre-pandemic levels, even while absorbing the impact from acquisitions and while meeting what we can call a considerable disruption of these days. Now let's talk about the markets. Water repair remains quite resilient. The technicians are prospering. They know they weather the depths of the COVID shock, learn to accommodate the virus environment and are well along the psychological recovery. They've been at their post for the last 18 months undoing it, and they won't be shots again, and they are optimistic about the future of their profession, about the outlook of individual transportation, and about the greater need for their skills as the vehicle park changes with new technology. Vehicle repair is a strong and resilient market. You can hear it in the franchisees voice and you can see it written clearly across our numbers every quarter. Also on auto repair, there are our shop owners and managers different from the tech. That's where our repairs information group, RS&I's trade. Demand for new and used cars is high despite limited supply in dealership prepared maintenance and warranty is rebounding, and dealers are starting to invest again. And we've been able to take advantage with groundbreaking products like our award-winning Tru-Point Advanced Driver Assistance calibration system. Our new diagnostic, our new diagnostic TRITON-D10, intelligent diagnostic and our claimed Mitchell 1 ProDemand repair estimating guide, all representing new technologies and data deployed to make work easier in the shop. Vehicle repair looks more promising than ever and Snap-on is poised to capitalize. Now let's talk about critical industries where Snap-on rolls out of the garage, solving tasks of consequence. These are commercial industrial or C&I operates. The virus had a much longer impact on these customers. They were slower to accommodate, but they are recovering. And in the quarter, our results showed that trend, gains in North America, Europe and in Asia, all over the globe. So overall, I describe our C&I markets as improving. And coupled with the strength of the auto repair sectors, our markets are beyond resilient, and we're ready and well positioned to make progress along those run rate to recover. At the same time, it's clear that we have ongoing potential on our runways for improvement. The Snap-on value creation processes. They never been more important, helping to counter the turbulence of the day, especially important with customer connection, understanding the work of professional technicians and innovation, matching that insight with technology, driving new products. And just this quarter, Snap-on was prominently represented with nine Professional Tool & Equipment News, we call it P10 People's Choice Awards where the actual users, the technicians make the selection. We're also recognized with two P10 innovation awards, and we're honored with two motor magazine Top Tool awards. An essential driver of Snap-on growth is innovative product that makes work easier and the awards, [Inaudible], our testimony that great Snap-on products just keep coming, matching the growing complexity of the task, becoming more essential to technicians and driving our forward progress. That's the environment, pretty positive. Now we'll move to the operating groups. In C&I, volume in the quarter rose 13.9% or $42 million versus 2020 on significant growth across all divisions, reflected a $32.9 million or 10.6% organic uplift and $7.5 million from our AutoCrib acquisition. And double-digit growth in our European hand tool businesses and a high single-digit rise in critical industries led the way. C&I operating income of $53.6 million was up $10.5 million or 24.4%, and the operating margin was 15.3%. That's an increase of 130 basis points versus last year. I'd say that's an intention getting rise against the wind. Now compared to the pre-pandemic 2019 results, sales were up 4.8%, including a 0.9% organic gain. And that OI margin of 15.3% was up 90 basis points against the 70-point impact of acquisitions and unfavorable currency. Once again, SNA Europe delivered double-digit growth beyond pre -- double-digit growth beyond pre-virus levels against the complex and varied marketing environment propelled by the customization power of their [Inaudible] to management system. And our Industrial division roles in critical industries, recording nice gains in general industry, heavy-duty education and U.S. aviation, a number of positive sectors overcoming weakness and continuing weakness in the military and natural resources. P&I is rising, and we're enthusiastic about the possibilities. We'll keep strengthening our position to capture those opportunities and enabling that intent is our expanding lineup of innovative new products. In the third quarter did see some great new offerings. Like our 14.4-volt 3h-inch drive brushless reaction, the CTR at 61. And it's no wonder. It's a powerful combination of strength and speed, high torque, 60-foot [Inaudible], the bus loose, very suborn bolts and rapid operations, 275 RPM for getting those fashions off in quick time. made our -- made in our Murphy, North Carolina plant, and it features a full frame brushless motor for longer run time and durability. It includes a safety switch that shuts in an [Inaudible] safety switch that shuts down the tool after two minutes of continuous use that's eliminating the chance of overheating. It also has a super bright aluminum front-facing light that stays illuminated after the trigger is released, allowing easy and immediate inspection of the work. This ratchet also features a built-in break that stops the tool from throwing or fasteners, which is -- it seems like not much, but it's an important safety feature for technicians. And it also offers a great cushion group that makes for more comfortable tool control even during extended use. The CGR861, power, speed and comfort, It's in a very compact package. It's a mighty mic for accomplishing critical tasks and the professionals love it. Well, that's C&I, continuing upward, exceeding pre-pandemic volumes, strong profitability and positions for more. Now onto the Tools Group. Sale of $471.4 million, up $21.8 million, including $4.9 million of favorable currency and a $16.9 million or 3.7% organic gain. Growth in the U.S. -- both in the U.S. and the international operations. And the operating margin was 20.8%, one of our highest effort and up 140 basis points from last year. Compared with the pre-virus 2019 level, the organic gain was $80.4 million or 20.6%. And the 20.8% operating margin was up 700 basis points compared with the pre-pandemic level, 700 basis points in the midst of operating turbulence. Tools Group is responding to the challenges of the day, increasing its product advantage, fortifying its brands and further enabling its franchisees, giving them more selling capacity, it's all working. Five strong quarters of above pre-pandemic performance says it's so. Now the third quarter is when we hold our -- most of you know this, the third quarter is when we hold our annual Snap-on Franchisee Conference, our SFC. This year, we're back again in person at the Gaylord in Orlando, Florida. Over 9,000 attendees, a record. We have training seminars in sales growth and intelligent diagnostics. They're well attended and well received. And we had several football fields of products. So our franchisees could get up close and personal with our latest innovations. For the franchisees, the SFC is an opportunity for learning, for touching and ordering new products and for recharging their Snap-on batteries and believe me, they are charged. For the company, the SFC is an opportunity to gauge the franchisees' outlook on the business. One quantitative way is orders. Well, they were up, strong double digits over last year's virtual live from the Forge event, and from the 2019 SFC live in Washington, D.C. And when I say up, I mean all of our product categories showed substantial gains over both of those events. And so that's the quantitative look at it qualitatively, I spoke with many of our franchisees. And I can attest that they were beaming, showing a lot of confidence in our business and declaring considerable optimism on their future days and decades ahead with Snap-on. We do believe our franchisees are continuing to grow stronger each quarter, and we continue to invest in our future. And if you were with us in Orlando, you would have seen it unmistakably, and we are investing, building franchisees' ability to use the direct interface with technicians, enabling them to better communicate their unique capability and the unique capability and growing technology of Snap-on product lines. We have great confidence in the power of our products and there are real reasons for the confidence. You heard about the product awards. Well, beyond that, there's a continuous stream of terrific new offerings. During the SFC, the Tools Group unveiled its new KHP415, portable 40-inch substation power card. It's targeted at entry-level technicians. The ones working on a narrow scope of repairs. It's built in our Algona, Iowa factory, and the new part enables young mechanics to invest a step on storage at a value price, while at the same time getting some very attractive professional features, a lockable comp compartment, fourfold distort and adjustable power tool rack that holds up the 10 tools and a power strip with five outlets and two USB ports for battery and device charging. New cart, it was well received. And it's quickly reaching what we call hit-product status. Over $1 million of sales, it's rising upward on a steep trajectory. Beyond products, we spent time working to expand franchisee selling capacity, harnessing social media, improving product training and RCI and the van operations, and it's working. Selling capacity is up, and you can see it clearly in the five straight gangbuster quarters for our van network. The Tools Group is on a very positive trend, ascending and leaving pre-pandemic levels way behind. Now on to RS&I. Sales were up 14.8% or $46.9 million, including a $31.7 million or 9.9% organic uplift. Growth was weighted toward undercar equipment. But our diagnostics and information businesses also chipped in with double-digit increases versus 2020. RCI operating earnings were $83.3 million, representing a rise of $3.2 million. Comparing with 2019, sales grew $41.7 million or 12.9%, including $24.2 million or 7.4% organic gain, nice growth. The RS&I OI margin was down versus the last two years, attenuated by business mix, acquisitions and currency, but it was still a strong 22.9%. So we clearly see the potential of our runway with RS&I, expanding Snap-on's presence in the garage with coherent acquisitions and a growing line of powerful products. That's a nice turnaround, and it was led by innovative products like our 15K [Inaudible] post alignment lift. It's really taking a hold in the repair shops as they've resumed investing. This new 15K provides professional grade alignment lifting for a variety of vehicle sizes. With open front columns, best-in-class ultrawide 26-inch runways and integrated 100-inch show long-wear plates. It's suited to accommodate vehicles from compact passenger cars, compact passenger cars to big pickup trucks. And it's low easy on approach angle makes it great, even for low-profile sports cars that are often a challenge for other lifts. Made in our Louisville, Kentucky plant on an Assembly line is made or Louisville that took a plan on assembly line, I'm very familiar with. I participated in an RCI event for that process. Our new 15K has helped drive the recovery for undercar equipment, and it's driven the rise in RS&I volumes. We're quite positive about RSI's possibilities to repair shop owners and managers as the vehicle industry evolves, it's got a great future. So that's the highlights of our quarter. Our fifth straight period exceeding pre-pandemic levels, C&I on track with strong sales and increasing profitability. RS&I, undercar coming back, the Tools Group, strong, pumped and moving vertically the credit company solid in a storm and profitable. The overall corporation, organic sales rising 7%. opco operating margin, 19.4% and earnings per share of $3.57 a considerable rise and most important, more testimony that Snap-on has emerged from the turbulence much stronger than we entered. It was an encouraging quarter. The third quarter of 2021 exhibited another period of solid financial performance. The results also compared favorably with the third quarter of 2019, which being a pre-COVID-19 time period, in some cases may serve to be the more meaningful baseline. Net sales of $1,037.7 million in the quarter increased 10.2% from 2020 levels, reflecting a 7% organic sales gain, $19.5 million of acquisition-related sales and $9.6 million of favorable foreign currency translation. Additionally, net sales in the period increased 15.1% from $901.8 million in the third quarter of 2019, including an 11.1% organic gain, $21.0 million of acquisition-related sales and $13.6 million of favorable foreign currency translation. Consolidated gross margin of 50.2% improved 30 basis points from 49.9% last year. The gross margin contributions from the higher sales volumes, 60 basis points of favorable foreign currency effects and benefits from the company's RCI initiatives more than offset higher material and other costs. Operating expenses as a percentage of net sales of 30.8% increased 60 basis points from 30.2% last year, primarily due to 60 basis points of unfavorable acquisition effects. Benefits from the higher sales volumes were offset by increased brand building, travel and other costs, including the restoration of our annual in-person Snap-on Franchisee Conference. Operating earnings before financial services of $201.3 million compared to $185.7 million in 2020 and $167.7 million in 2019, reflecting an 8.4% and a 20% improvement, respectively. As a percentage of net sales, operating margin before financial services of 19.4% compared to 19.7% last year and 18.6% in 2019. Financial services revenue of $87.3 million in the third quarter of 2021 compared to $85.8 million last year, while operating earnings of $70.6 million increased $5 million from 2020 levels, reflecting the higher revenue as well as lower provisions for credit losses. Consolidated operating earnings of $271.9 million increased 8.2% from $251.3 million last year and 18.9% from $228.7 million in 2019. As a percentage of revenues, the operating earnings margin of 24.2% compared to 24.5% in 2020 and 23.2% in 2019. Our third-quarter effective income tax rate of 23.7% compared to 23.4% last year. Net earnings of $196.2 million or $3.57 per diluted share increased $16.5 million or $0.29 per share from last year's levels, representing an 8.8% increase in diluted earnings per share. As compared to the third quarter of 2019, net earnings increased to $31.6 million or $0.61 per share, representing a 20.6% increase in diluted earnings per share. Now let's turn to our segment results. Starting with the C&I group on Slide 11. Sales of $351.4 million increased 13.9% from $308.4 million last year, reflecting a 10.6% organic sales gain, $7.5 million of acquisition-related sales, and $2.6 million of favorable foreign currency translation. The organic gain reflects higher activity in all of the segment's operations and includes high single-digit increases in sales to customers in critical industries. Within the critical industries, year-over-year sales gains were achieved in general industry, heavy-duty and technical education, but were partially offset by declines in sales to the military and international aviation, both of which had particularly robust sales in the prior year period. As a further comparison, net sales in the period increased 4.8% from 2019 levels, reflecting a $3 million organic sales gain, $7.5 million of acquisition-related sales and $5.6 million of favorable foreign currency translation. As compared to 2019, sales in our European-based hand tools business were up mid-teens. With respect to critical industry sales activity in that period, our lower sales to the military international aerospace and Natural Resources segments offset gains in our sales to technical education, heavy-duty, and general industry customers. Gross margin of 38.2% improved 90 basis points from 37.3% in the third quarter of 2020. Contributions from the higher sales volumes and benefits from RCI initiatives were partially offset by higher material and other costs. Operating expenses as a percentage of sales of 22.9% improved 40 basis points as compared to last year, primarily due to the improved volumes, which were partially offset by higher travel and other costs. Operating earnings for the C&I segment of $53.6 million compared to $43.1 million last year. The operating margin of 15.3% compared to 14% a year ago. Turning now to Slide 8. Sales of Snap-on Tools Group of $471.4 million increased 4.8% from $449.8 million in 2020, reflecting a 3.7% organic sales gain and $4.9 million of favorable foreign currency translation. The organic sales increase reflects a mid-single-digit gain in our U.S. business and a low single-digit gain in our international operations. Net sales in the period increased 22.4% from $385.2 million in the third quarter of 2019, reflecting a 20.6% organic sales gain and $5.8 million of favorable foreign currency translation. Gross margin of 45.8% in the quarter improved 30 basis points from last year, primarily due to the higher sales volumes and 130 basis points from favorable foreign currency effects, which offset higher material and other costs. Operating expenses as a percentage of sales of 25% improved from 26.1% last year, primarily reflecting the higher sales. Operating earnings for the Snap-on Tools Group of $98.2 million compared to $87.1 million last year. The operating margin of 20.8% compared to 19.4% a year ago, an improvement of 140 basis points. Turning to the RS&I Group shown on Slide 9. Sales of $364.4 million compared to $317.5 million a year ago, reflecting a 9.9% organic sales gain, $12 million of acquisition-related sales and $3.2 million of favorable foreign currency translation. The organic increase reflects double-digit increases in sales of undercar equipment and in sales of diagnostic and repair information products to independent shop owners and managers. While activity focused on OEM dealerships was essentially flat. As compared to 2019 levels, net sales increased $41.7 million from $322.7 million, reflecting a 7.4% organic sales gain, $13.5 million of acquisition-related sales and $4 million of favorable foreign currency translation. Gross margin of 46.8% declined from 47.3% last year, primarily due to the impact of higher sales and lower gross margin businesses, increased material and other costs and 10 basis points of unfavorable foreign currency effects. These declines were partially offset by savings from RCI initiatives and 60 basis points of benefits from acquisitions. As a reminder, undercar equipment, which had healthy sales increases in the quarter, typically has a gross margin rate that is below the RS&I segment's average. Operating expenses as a percentage of sales of 23.9% increased 180 basis points from 22.1% last year, primarily due to 170 basis points of unfavorable acquisition effects. Operating earnings for the RS&I Group of $83.3 million compared to $80.1 million last year. The operating margin of 22.9% compared to 25.2% a year ago. Now turning to Slide 10. Revenue from financial services of $87.3 million compared to $85.8 million last year. Financial services operating earnings of $70.6 million compared to $65.6 million in 2020. As a percentage of the average portfolio, financial services expenses were 0.8% and 0.9% in the third quarter of 2021 and 2020, respectively. In the third quarters of both 2021 and 2020, the average yield on finance receivables was 17.8%. The respective average yield on contract receivables were 8.5% and 8.4%, respectively. Total loan originations of $269.3 million in the third quarter increased $16.5 million or 6.5% from 2020 levels, reflecting a 5.7% increase in originations of finance receivables and a 9.5% increase in originations of contract receivables. Moving to Slide 11. Our worldwide gross financial services portfolio increased $7.5 million in the third quarter. The 60-day plus delinquency rate of 1.4% for U.S. extended credit compared to 1.5% in the third quarter of 2020 and 1.7% in the third quarter of 2019. On a sequential basis, the rate is up 20 basis points, reflecting the typical seasonal increase of 20 to 30 basis points we experienced between the second and third quarters. As it relates to extended credit or finance receivables, trailing 12-month net losses of $42.7 million represented 2.48% of outstanding at quarter end, down 22 basis points as compared to the same period last year. Now turning to Slide 12. Cash provided by operating activities of $186.4 million in the quarter reflects 92.5% of net earnings. While this represents a decrease of $37.6 million from 2020 levels, this cash conversion rate compares favorably with 77.5% of net earnings in both the third quarters of 2019 and 2018. The decrease from the third quarter of 2020, primarily reflects the higher net earnings being more than offset by net changes in operating assets and liabilities, including a $61.9 million increase in working capital. This change in working capital is largely driven by the more typical seasonal inventory build in the third quarter of 2021 as compared to the reduction of inventory experienced in the period last year. Inventory additions also reflect some increases in buffer stocks and higher levels of in-transit inventories associated with the supply chain dynamics being seen in the macro environment. Net cash used by investing activities of $29.7 million included net additions of finance receivables of $7.6 million and $16.2 million of capital expenditures. Net cash used by financing activities of $385.8 million included $250 million in senior note repayments, cash dividends of $66.3 million and the repurchase of 300,000 shares of common stock for $66.5 million under our existing share repurchase programs. As of quarter end, we had remaining availability to repurchase up to an additional $197 million of common stock under existing authorizations. Turning to Slide 13. Trade and other accounts receivable increased $12.5 million from 2020 year end. Days sales outstanding of 56 days compared to 64 days of 2020 year-end. Inventories increased $43.1 million from 2020 year-end. On a trailing 12-month basis, inventory turns of 2.7 compared to 2.4 at year-end 2020. Our quarter end cash position of $735.5 million compared to $923.4 million at year-end 2020. Our net debt to capital ratio of 10.3% compared to 12.1% at year-end 2020. In addition to cash and expected cash flow from operations, we have more than $800 million in available credit facilities. As of quarter end, there were no amounts outstanding under the credit facility, and there were no commercial paper borrowings outstanding. That concludes my remarks on our third-quarter performance. I'll now briefly review a few outlook items for the balance of 2021. We now forecast that capital expenditures will approximate $90 million. tax legislation that our full year 2021 effective income tax rate will be in the range of 23% to 24%. The Snap-on third quarter can be summarized in one word, momentum. Our markets are showing extraordinary possibilities, almost across the board with order repair the most advanced going beyond resilience. We sold the COVID-19 playing out with our customers in three phases: shock, interruption in the face of virus uncertainty. A combination of gradual learning to pursue essential work while staying safe and psychological recovery, our confidence in the future and return to normal buying. But now, we're seeing a fourth phase, exhilaration of certainty that we're moving sharply to higher levels, ignited by the conviction that we have met and manage the virus and they want -- and that we won't get shocked again. It's a bright outlook. And Snap-on with continuing investment in product and brand and people is well positioned to serve that trend. Of course, the COVID is still lingering, and its side effects, inflation and supply disruption around the loose, but Snap-on is strongly arrayed to engage those challenges. A direct selling model and strong brand position enables agile pricing. Our vertical integration and shorter supply chains make us less vulnerable to sourcing viscosities. Our broad product line, more than 80,000 SKUs supports flexible marketing to guide around shortages, and our RCI culture drives cost offsets. We found opportunities on our runway for growth and improvement even amid these challenging times, and you can see it in the numbers, encouraging. C&I sales up both from last year and 2019, OI margin, 15.3% strong and rising 130 basis points and 90 basis points versus 2020 and 2019, respectively. RS&I, up organically, 9.9% versus last year and 7.4% beyond the pre-pandemic levels. OI margins of 22.9%. And the Tools Group, organic volume rising 3.7% versus last year's record level and up 20.6% versus the day before the virus. OI margin, it was 20.8%, up 140 basis points from last year and up 700 basis points from 2019. It all led to our corporation being organically up 7% compared with last year and a strong 11.1% versus pre-pandemic numbers. Overall, OI margin was 19.4%, solid in the face of turbulence in our credit company, navigating then certainly without disruptions. And EPS, $3.57, rising emphatically versus all comparisons. We have emerged from the virus stronger than when we entered, and the numbers confirm it. We've now recorded 5, 5 straight quarters of above pre-pandemic performances, and we believe that with our markets reaching beyond resilience to exhilaration, with the capabilities of our model to overcome the challenges of the environment, and with a considerable advantage nurtured by our continuing investment in product, brand and people will continue to rise, maintaining our upward trajectory through the end of this year and well beyond. I always know you're listening. This is a period of great momentum for Snap-on. You are the fuel that is ignited and fan that drive forward and upward. For your success in creating this encouraging performance, you have my congratulations. For the capabilities you bring to bear in achieving our progress every day, you have my admiration.

compname posts q3 earnings per share $3.57. q3 earnings per share $3.57. now anticipates that capital expenditures in 2021 will approximate $90 million.

To access it, please go to www. First is the health, safety and well-being of our employees. The second is being responsible citizens and good neighbors in the communities in which we do business. As it relates to COVID-19 these two could not be more closely related. Regarding our safety response to COVID-19, we have been proactive in establishing protocols and processes that protect the safety and health of our employees, customers and business partners. This early action has enabled us as an essential business to remain open safely in all locations. We are fortunate in that we operate and serve the U.S. heartland and Sun Belt states, own and control our local raw material inputs and have a fully domestic supply chain. And most importantly, in this situation, virtually everywhere we operate construction has been deemed essential allowing us to make and sell our products, which brings me to our earnings this quarter. We entered the quarter with a strong momentum in terms of demand across our markets. We did not experience much business interruption for our fourth fiscal quarter in our markets. Posting record quarterly revenue should be no surprise for this reason. In the case of COVID-19, geography matters. In these unprecedented times rather than trying to predict the unpredictable, our emphasis is on deployment of rapid feedback groups. This involves being in intimate contact with our local operations as they navigate in this environment. We are a local business in many ways and can react quickly to any market changes as they occur. We have successfully navigated severe cycles before and some would say we have an unrivaled track record in this regard. We navigated through the longest and deepest construction recession in U.S. history and made money every year, which very few in our space can claim. We are well prepared to respond quickly as issues arise. Right now, part of our preparedness strategy is to conserve cash and strengthen our already strong balance sheet. Out of an abundance of caution, we announced during the quarter that we suspended our dividend. I want to emphasize and be very clear that suspending the dividend was part of a comprehensive plan of managing cash through this environment. This plan also entails internal -- curtailing nonessential capital expenditures, share repurchases, controlling inventory levels and a host of other prudent measures. It is timely and coincidental from a cash strategy standpoint that we have made some progress in our program of portfolio shaping. We announced this quarter the sale of a non-core ready-mix and Aggregates assets in California. The sale of these assets is the result of a long-term effort that emerge where alternatives ownership value exceeded operating value for us. We also were able to sell our frac sand distribution business during the quarter and we continue to explore alternatives for the remaining frac sand business. We fully expect that the uncertainties around COVID-19 and its effects on the economy will be released over time. We are well-prepared to capitalize on opportunities in construction materials that will arise in the wake of these uncertain times. We are three times larger on the Cement side of the business than we were a decade ago. We have built a strategic network of plants and terminals in the U.S. heartland. The latest addition was the recently acquired Kosmos Cement plant that we began operating as an Eagle plant in March. Our Wallboard business has attained unrivaled prominence for low-cost production and customer satisfaction. In March we completed the equipment installation to expand the capacity of Republic Paper. We will finalize all aspects of the installation over this summer when travel reopens but we are already seeing the benefits of this new equipment through added capacity. Our balance sheet is strong and we are poised to emerge from this uncertain time with the wins at our back. In this regard, I think it is important that we not underestimate the power that already announced monetary and fiscal government stimulus will create for our businesses. Construction has led the way to recovery in so many prior cycles and may well lead the way again. Our U.S. infrastructure needs are well chronicled one way or another roads and bridges will be built and repaired. Low interest rates make homes more affordable and we are not building at the pace that matches household formation and replacement needs. There are many reasons to remain constructive about the long-term. We still look forward to the separation of the two businesses, but currently have no updates on timing for that transaction. That's all for me as far as an introductory remarks. Fiscal year 2020 revenue was a record $1.5 billion, up 4% from the prior year reflecting increased Cement sales volume and pricing, improved Wallboard and Paperboard sales volume and the addition of two businesses acquired during the year. The acquired businesses contributed approximately $32 million of revenue during the year. Revenue for the fourth quarter improved 11% to $315 million reflecting a very strong end to our fiscal year. Annual diluted earnings per share improved 14% to $1.68. For fiscal 2020 diluted earnings per share includes the effect of a significant tax benefit related to the CARES Act, business development related expenses and the effect of an outage linked to the expansion of our paper mill. Excluding these non-routine items, annual earnings per share improved 10%. The CARES Act enabled us to use the tax assets generated primarily by the Kosmos acquisition and carried back to recover taxes paid in prior years at higher tax rates than we pay today. The fourth quarter earnings per share comparison is also affected by many of these same non-routine items. Adjusting for them consistently each year Q4 earnings per share would have increased by 45%. Turning now to our segment performance, this next slide shows the results in our Heavy Materials sector, which includes our Cement, Concrete, and Aggregates segments. Annual revenue in the sector increased 17% driven primarily by an 11% improvement in Cement sales volume, improved pricing in both Cement and Concrete and the results of the Concrete and Aggregates business we acquired in August of 2019. Operating earnings increased 12% again, reflecting the improvement in sales volume and pricing. Moving to the Light Materials sector on the next slide, annual revenue in our Light Materials sector declined 4% as improved Wallboard and Paperboard sales volume was offset by an 8% decline in Wallboard sales prices. Annual operating earnings declined 12% to $190 million reflecting lower net sales prices, partially offset by higher sales volume. The Light Materials annual results also reflect the impact of two extended outages at our paper mill to tie in new equipment. The impact of the outage on the annual results was approximately $4.5 million. In the Oil and Gas Proppants sector annual revenue was down 44% and we had an operating loss of $15 million. This business has come under increasing pressure in recent months as lower oil prices further reduced drilling and hydraulic fracturing activity and we continue to adjust our operations to minimize operating costs. In late March, we sold the distribution business of the Proppants sector and we continue to explore alternatives for the remaining mining business. Operating cash flow during fiscal 2020 increased 14% to $399 million. Total capital spending declined to $132 million. In early March, we completed the acquisition of the Kosmos Cement business funding the purchase through a term loan syndicated through our existing bank group. During fiscal 2020 Eagle returned approximately $330 million to shareholders through share repurchases and dividends. In fiscal 2021 we expect capital spending to decline nearly 50% to a range of $60 million to $70 million. And as we previously announced and Michael highlighted, we have suspended share repurchases and future dividends. Finally, a look at our capital structure; at March 31, 2020, our net-debt-to-cap ratio was 60% and we had $119 million of cash on hand. Our net-debt-to-EBITDA leverage ratio was 2.9 times. Total liquidity at the end of the quarter was nearly $300 million and we have no near-term debt maturities. In April, we announced the sale of our Concrete and Aggregates business in Northern California for $93.5 million. These proceeds combined with the tax refund stemming from our NOL carryback and operating cash flow further improves our liquidity position going forward. We'll now move to the question-and-answer session.

limiting capital spending to critical projects only. eagle materials - taking additional steps such as suspending share repurchases and future dividends.

The global pandemic created unprecedented challenges for all of us, as we saw the virus impact our family and friends, our end markets and disrupt our daily lives on a scale we have never experienced before. But throughout the year, our company faced into these challenges showing the resolve of our people, the strength of our market positions and the value of our enterprise. As a team, our collective focus was and continues to be working together to keep each other healthy and safe, to adapt to changing market conditions and service our customers and to provide needed support to the communities where we work and live. These efforts are aligned with our company's purpose and resulted in strong operational and financial performance. During today's call, I'll start with an overview of Owens Corning's fourth quarter and full-year 2020 results, before turning it over to Ken, who will provide additional details on our financial performance. I will then come back to talk about our outlook for the first quarter and how we are positioning the company to capitalize on both near-term market opportunities and longer-term secular trends. I'll begin my review with safety, where we continue to perform at a very high level. Our commitment to the health and safety of our employees is unconditional. In the fourth quarter, we achieved a recordable incident rate of 0.4, representing a 37% improvement over the same period in 2019. This lowered our full-year 2020 RIR to 0.61, which is an 8% improvement over the prior year. I'm pleased to note that over half of our global locations worked injury free in 2020. I'm pleased to note that over half of our global locations worked injury free in 2020. For the quarter, we delivered revenue of $1.9 billion, a 14% increase compared with the fourth quarter of 2019, and adjusted EBIT of $306 million, up 50% from the same period one year ago. All three of our businesses delivered double-digit EBIT margins for the second consecutive quarter. For the full-year, we delivered $7.1 billion in revenues, down 1%. Adjusted EBIT was $878 million, a 6% improvement over 2019. Increasing demand for our products, combined with strong manufacturing performance and improved operating efficiencies resulted in earnings growth for the year despite a slight decline in revenues. During the back half of the year, we continue to see our end markets recover and improve. In the US residential market, which impacts all three of our businesses and accounts for about half of the company's revenue. Demand grew at a strong pace, driven by increased repair and remodeling activity, as well as higher new construction start. Most of our commercial, industrial markets also strengthened throughout the second half as projects restarted, manufacturing activity increased, and customers replenished inventories. In 2020, Insulation EBIT margins grew to 10%, despite a 2% revenue decline. In addition to higher residential insulation demand, our ongoing focus on network optimization and manufacturing performance drove the earnings growth in the business. Our composites business also benefited from increased demand, delivering double-digit EBIT margins in both the third and fourth quarters. Our focus on higher value downstream businesses and key geographies where we have strong market positions, combined with increased manufacturing productivity continues to drive our financial performance. And in roofing, revenues increased 2% compared to 2019 and EBIT margins grew 22% driven by strong volumes and a positive price cost mix. Overall market demand for shingles grew by 10% versus 2019, driven by above-average storm demand and the strong second half remodeling market. Across our businesses, rapidly improving markets and high demand for our products have created supply shortages and extended lead times. Our manufacturing and supply chain teams continue to work hard to increase the availability of our products and reduce our lead times, leveraging the benefits of both improved productivity and capacity expansion investments. In Insulation, as I shared with you last quarter, we have initiated work to restart our Batt & Roll line in Kansas City. I'm pleased to report that this line is on track to start production in this month. We've also increased some additional loosefill production and took actions in our US mineral wool plants to meet growing customer demand. In composites, we are expanding our glass non-woven capacity, adding a new production line next to our current facility in Fort Smith, Arkansas. This will add needed capacity to our network and allow us to optimize costs by replacing our existing smaller production line at the site. We expect to start production in mid-2023 to service a growing number of building material applications. And in roofing, capital investments over the past two years have increased incremental capacity at several of our manufacturing facilities. Our strong earnings performance in 2020, combined with working capital management and disciplined capital investments, led to record operating and free cash flow of $1.1 billion and $828 million. During the year, we also returned approximately $400 million of cash to shareholders through share repurchases and dividend payments. At Owens Corning, sustainability is central to our purpose and represents a competitive advantage for our company. It also is becoming increasingly important to our customers and other key stakeholders. Even as we face near-term uncertainties from the pandemic, we continue to invest in achieving our 2030 sustainability goals, one of which is to double the positive impact of our products. Our new FOAMULAR NGX product line used in a variety of residential and commercial applications is a great example of this commitment and a testament to our teams who found creative ways to continue this important work remotely. NGX launched last month, uses a new blowing agent chemistry with 90% lower global warming potential compared with traditional products without sacrificing performance, demonstrating how product and process innovation can reduce the environmental impact. In addition, we were honored to be recognized as a leader in ESG, earning a position on the Dow Jones Sustainability World Index for the 11th consecutive year and being named Industry Leader for the DJSI World Building Products group for the eighth straight year. In early April, we'll release our 15th Annual Sustainability Report in which I invite you to read more about the full scope of our sustainability performance and progress. As Brian mentioned, Owens Corning delivered solid results in 2020 against the backdrop of global uncertainty from the pandemic. Our company results were highlighted by record performance across a number of key financial measures. The actions taken by the company enhanced by the recovery in US residential markets have driven the earnings growth, robust free cash flow conversion and a strong liquidity position for the company. Now, turning to our results on slide five. For the fourth quarter, we reported consolidated net sales of $1.9 billion, up 14% over 2019, as all three segments delivered revenue growth in the quarter. Adjusted EBIT for the fourth quarter of 2020 was $306 million, up $102 million compared to the prior year. Adjusted earnings for the fourth quarter were $207 million, or $1.90 per diluted share, compared to $125 million, or $1.13 per diluted share in Q4 2019. For the full-year 2020, our adjusted earnings were $566 million, or $5.21 per diluted share compared to $500 million, or $4.54 per diluted share in 2019. The full-year earnings per share comparison was affected by a few below the line items in 2020. In addition to tax items adjusted out in the first three quarters, we adjusted out at $32 million non-cash income tax benefit in the fourth quarter resulting from the inter-company transfer of certain intellectual property rights into the US. Depreciation and amortization expense for the quarter was $141 million, up $21 million as compared to last year. The growth in the fourth quarter of 2020 was mainly impacted by higher accelerated depreciation from this quarter's restructuring actions. For 2020, depreciation and amortization expense was $493 million, up from $457 million in the prior year, primarily due to higher accelerated depreciation from our restructuring actions and incremental amortization from new finance leases. Our capital additions for the year were $320 million, down $131 million versus 2019. Given the uncertain market environment early in 2020, we took actions to reprioritize capital investments and preserve liquidity. Looking ahead, we will continue to be disciplined in our capital spending as we focus on delivering strong free cash flow and will prioritize investments that drive growth and productivity. On slide six, you see adjusting items reconciling full-year 2020 adjusted EBIT of $878 million to our reported EBIT loss of $124 million. For the year, adjusting items to EBIT totaled approximately $1 billion, largely driven by $987 million of non-cash goodwill and intangible impairment charges recorded in the first quarter. In the first three quarters, we recognized $26 million of gains on the sale of certain precious metals. We've excluded these gains from our adjusted EBIT. During 2020, we recorded $41 million of restructuring costs, with $31 million of costs being recognized in the fourth quarter. The bulk of these fourth quarter costs are non-cash and are primarily associated with restructuring actions in our insulation and composites businesses as part of our ongoing network optimization activity to improve manufacturing productivity and reduce our cost position. Slide seven provides a high-level overview of full-year adjusted EBIT comparing 2020 to 2019. Adjusted EBIT of $878 million was a new record for the company and increased $50 million over the prior year. Roofing EBIT increased by $136 million, Insulation EBIT increased by $20 million and Composites EBIT decreased by $82 million. General corporate expenses of $128 million, were up $24 million versus last year, primarily due to higher incentive compensation expense associated with improved adjusted EBIT results and the absence of small one-time gains realized in 2019. Now, I'll provide more details on each of the business results, beginning with Insulation on slide eight. Insulation sales for the fourth quarter were $728 million, up 1% from Q4 2019. In the North American Residential Fiberglass Insulation business, while lagged, housing starts in Q4 were higher than the prior year. Supply constraints and limited inventories coming into the quarter caused volumes to be down slightly year-over-year. We continue to be encouraged by US residential new construction demand and the realization of our September price increase. In the technical and other Insulation businesses, volumes improved from the time of our Q3 earnings call and finished the quarter up slightly versus the prior year, driven primarily by strong performance in our US formular and global mineral wool businesses. EBIT for the fourth quarter was $106 million, up $17 million as compared to 2019. The EBITDA increase was driven by positive manufacturing performance and higher selling prices in North American residential. Overall volumes for this segment were relatively flat. For the full-year, sales in Insulation were $2.6 billion, down 2% versus 2019 with growth in North American residential more than offset by COVID-19 related declines in the technical and other Insulation businesses. Overall volumes for the segment were flat. The decline in revenue was driven by lower selling prices, unfavorable product and customer mix and the divestiture of a small business in the first quarter. In 2020, Insulation EBIT increased by $20 million to $250 million, primarily due to favorable manufacturing performance and strong cost controls, partially offset by lower selling prices and unfavorable product and customer mix. The business delivered EBIT margins of approximately 10% in 2020 with increased EBIT on lower revenues. Sales in Composites for the fourth quarter were $547 million, up 14% as compared to the prior year, driven primarily by higher sales volumes. During the quarter, we experienced robust volume improvements in many regional markets, particularly North America and India. Additionally, we saw a strong performance in our wind and roofing downstream specialty applications along with continued improvement in automotive. EBIT for the quarter was $60 million, up $4 million from the same period a year ago with the benefit of higher sales volumes and favorable manufacturing performance, partially offset by furnace rebuild and production curtailment cost and continued pricing headwinds. Composites delivered a 11% EBIT margins for the quarter. Full-year sales were about $2 billion, down 5% as compared to 2019. The decline was driven by weaker volumes due to COVID-19 primarily in the second quarter, lower selling prices from negative year-over-year carryover, unfavorable customer and product mix and negative foreign currency translation. In 2020, EBIT declined by $82 million to $165 million. For the year, favorable manufacturing performance and lower SG&A costs were more than offset by weaker volumes, the negative impact of production curtailments and negative pricing carryover. Slide 10 provides an overview of our Roofing business. Roofing sales for the quarter were $702 million, up 33% compared with Q4 2019. The increase was driven by 36% volume growth, partially offset by lower third-party asphalt sales. Price in the quarter was flat with favorable transactional shingle pricing on realization of the August increase offset by higher rebates associated with stronger 2020 shingle demand. In the fourth quarter, the US asphalt shingle market grew significantly as compared to the prior year. The market growth, which was higher than the expectation we provided in last quarter's call, was a result of milder weather that extended the Roofing season. Our volumes trailed the market in the fourth quarter as we continue to operate in sold out conditions with low inventory levels. EBIT for the quarter was $183 million, up $96 million from the prior year producing 26% EBIT margins for the quarter. The EBIT improvement was driven by higher sales volumes in both shingles and roofing components and the continued deflationary impact of asphalt. Roofing sales for 2020 were $2.7 billion, up 2% versus 2019. The increase was driven by higher sales volumes of about 6%, partially offset by lower selling prices and lower third-party asphalt sales. In 2020, Roofing EBIT improved by $136 million to $591 million. The increase was driven by strong market volumes in both shingles and components and strong manufacturing performance. We experienced additional EBIT improvement from a price cost perspective as the benefit of asphalt cost deflation and lower transportation costs more than offset lower selling prices. For the year, the business delivered EBIT margins of 22%, up approximately 500 basis points from 2019. Turning to slide 11. I'll discuss significant financial highlights for 2020. As a result of disciplined actions taken to manage working capital, operating expenses and capital investments and the recovery of our markets, US residential in particular, we delivered record full year levels of operating and free cash flow. Our free cash flow for 2020 was $828 million, up $238 million as compared to 2019. Free cash flow conversion of adjusted earnings was 146% in 2020, as compared to 118% in 2019. In December, the Board of Directors approved a new share repurchase authorization for up to 10 million additional shares. During 2020, we returned $396 million of cash to shareholders through stock repurchases and dividends. At the end of 2020, 9.5 million shares remained available for repurchase under the current authorization. During 2020, we completed several deleveraging activities to further improve our credit metrics. These actions included repaying the term loan in advance of the February 2021 due date, repaying the mid-2020 borrowing on our revolver and contributing $122 million to our global pension plans. Based on our strong cash flow performance and deleveraging activities, we've maintained an investment grade balance sheet and are operating within our target debt-to-adjusted EBITDA range of 2 times to 3 times with ample liquidity. At year-end, the company had liquidity of approximately $1.8 billion, consisting of $717 million of cash and nearly $1.1 billion of combined availability on our bank debt facilities. Earlier this month, the company's Board of Directors declared a quarterly cash dividend of $0.26 per share payable on April 2nd. Since inception in 2014, the dividend has grown an average of 7% per year. We remain committed to strong cash flow generation returning at least 50% to investors over time and maintaining an investment grade balance sheet. General corporate expenses are expected to range between $135 million and $145 million. Capital additions are expected to be approximately $460 million, which is below expected depreciation and amortization of approximately $480 million. While we're expecting growth in both capital and operating expenses as conditions begin to normalize over the course of the year, we remain committed to closely managing these investments. Interest expense is estimated to be between $120 million and $130 million. And finally, our 2021 effective tax rate is expected to be 26% to 28% of adjusted pre-tax earnings. We expect our 2021 cash tax rate to be 18% to 20% of adjusted pre-tax earnings. The growth in our cash tax rate as compared to our guidance in the last few years approximating 10% is due to the utilization of substantially all of our US federal net operating losses and foreign tax credits by the end of 2020. Our 2020 performance demonstrated the value of our enterprise and the ability of our global teams to successfully execute on our operating priorities even during challenging conditions. While uncertainties remain, we are well positioned to deliver another strong year in 2021 as we see the strength in our residential markets and improving conditions in our commercial and industrial markets continuing into the first half. In keeping with prior practice, I will focus my outlook comments on the current quarter. Based on trends we are seeing to start the year, we expect the company to deliver significant revenue and adjusted EBIT growth in Q1 versus prior year. Starting with Insulation, we are seeing continued strength in new US residential construction with lag starts in Q1, up 12% versus Q1 2020. Our North American residential volumes are expected to largely track with the market during the quarter, and we continue to see favorable pricing based on positive traction from our January price increase. We are beginning to see some inflationary pressure in the business, particularly transportation cost, and recently announced a price increase for April. Our technical and other building insulation businesses are expecting modest volume improvement in the first quarter, as we continue to experience a gradual recovery in our commercial and industrial end markets across the globe. Pricing in these businesses is expected to remain relatively stable. Overall for Insulation, we expect first quarter EBIT to be about double what we delivered in the first quarter last year. In Composites, we expect Q1 volumes to increase mid single-digits versus Q1 2020, given our strength in a few key regions and downstream applications supporting the wind and building and construction markets. We also expect to start realizing price gains from actions implemented as part of our annual contract negotiations. This along with continued strong manufacturing performance should generate first quarter EBIT generally in line with Q4 2020. And in Roofing, January shingle shipments were substantially higher than last year, reflecting the strength and carryover demand from 2020. Based on this, we expect to see market volumes of approximately 25% in the first quarter. Against this backdrop, we continue to ship our available capacity and would expect our volumes to increase in line with this growth. From a price cost perspective, we expect to deliver another strong quarter with some incremental price realization from our February increase combined with continued asphalt inflation, albeit at a slower rate than in Q4. We are seeing asphalt cost increasing and expect this to continue through the quarter turning to inflationary in Q2. Similar to our other businesses, we are also seeing an increased inflation and recently announced a price increase effective the first week in April. Based on these factors, Roofing EBIT margins in the first quarter are expected to be up year-over-year and more in line with the long-term operating margins we have discussed for this business of about 20%. With that view of our businesses, I'll turn to a few key enterprise areas. Our team remains committed to generating strong operating and free cash flow. In terms of capital allocation, our priorities remain focused on reinvesting in our business, especially productivity and organic growth initiatives, returning at least 50% of free cash flow to shareholders over time through dividends and share repurchases and maintaining an investment grade balance sheet. In addition, we are also evaluating investments in bolt-on acquisitions that leverage our commercial, operational and geographic strength and expand our building envelope offering. Overall, Owens Corning is well positioned to capitalize on our near-term market opportunities as well as several longer-term secular trends that will fuel our revenue and earnings growth moving forward, including the demand for new housing in the US, which has been under built for several years and continued remodeling reinvestments as homeowners renovate their living spaces and upgrade their homes. We also see growing opportunities to benefit from the drive for increased energy efficiency in homes and buildings, product safety and sustainability, material durability and performance and investments in renewable energy and infrastructure. Each of these trends creates opportunities for Owens Corning to leverage our material science, building science and unique product and process technologies to partner with our customers and help them win in the market through additional products, systems and services. Our team is proud of the results we delivered in 2020 and are excited about the opportunities we have in 2021 to service our customers, grow our company and deliver value for our shareholders.

q4 adjusted earnings per share $1.90. q4 sales $1.9 billion versus refinitiv ibes estimate of $1.8 billion. capital additions are expected to be approximately $460 million in 2021.

Sales in the fourth quarter were $123 million, up 7%, compared to the same period in 2019. Full-year sales were $424 million, compared to $469 million last year impacted by the pandemic in 2020. Today all of our plants are operational with varying levels of capacity from 85% to 100%. Fourth quarter gross margin was up 110 basis points to 34.7% from the same period last year. EBITDA margin of 21.4% was up from 20.3% in the fourth quarter of 2019. Fourth quarter adjusted earnings per share of $0.43, were up 16% from $0.37 in the fourth quarter of 2019. Full-year adjusted earnings per share of $1.12 were down from $1.45 last year. New business wins for the year were $442 million, down from the prior year as several OEMs push that sourcing decisions in 2020. Operating cash flow for 2020 was $77 million, up 19% and $64 million in 2019. In the fourth quarter, we acquired Sensor Scientific, a temperature sensing company, primarily serving medical customers. Ashish Agrawal, our CFO is with me for today's call as usual and he'll take us through the Safe Harbor statement. To the extent that today's discussion refers to any non-GAAP measures under Regulation G. The required explanations and reconciliations are available in the Investors Section of the CTS website. I will now turn the discussion back over to our CEO. In the fourth quarter, our sales increased to $123 million, up 8% sequentially and up 7% from last year. For full-year 2020 sales were down 10% from 2019, driven lower by the impact of the pandemic. The quarter's performance was solid. However, we are operating cautiously as we enter 2021 and monitor for any new pandemic disruptions, semiconductor shortages for our OEM customers and the consistency of the recent robust recovery. We continue to prioritize safety in our operations, our team's ability to effectively manage through the crisis, their resilience as well as the commitment and strength of the senior leadership team greatly helped us navigate these unprecedented market conditions this past year. The restructuring plan we announced last year is progressing with small delays due to the impact of COVID-19. We are still planning to deliver an annualized earnings per share improvement in excess of $0.22 by the second half of 2022. More importantly, we're focused on returning to growth, building on our performance in the fourth quarter and leveraging the recent acquisition of Sensor Scientific. Sensor Scientific is a manufacturer of high quality thermistors and temperature sensor assemblies, serving OEMs for applications that require precision and reliability in medical, industrial and defense markets. Sensor Scientific's products are used in a variety of medical applications; including neonatal equipment, lab freezers, fluid warmers and analytical instruments. SSI has locations in Turkey and New Jersey and in the Philippines. The acquisition expands our temperature sensing portfolio has complementary capabilities with our existing platform and expand CTS's presence in medical. The annualized revenue is in the range of $6 million, the purchase price was slightly less than 2 times revenue. We remain focused on our strategic growth investments as part of our planning for 2025. Growing our business and expanding our range of products that Sense, Connect, and Move is the priority. New business awards were $104 million for the quarter, we added six new customers in the quarter; four in transportation; one in medical and one in telecom. In Transportation, we were awarded passive safety sensor wins with three OEMs; one of the wins was with a North American customer for electric trucks, a new customer for CTS, this builds momentum on the large passive safety win we recorded last quarter with a Chinese electric vehicle application. We have accelerated our module wins with several OEMs across China, Europe and North America. A few of these wins were on plug-in hybrid electric platforms. We also added the new customer for passive safety sensors in Asia and a new Chinese JV customer for accelerated modules. We continue to focus on electric vehicle applications and products that are technology-agnostic and are not impacted by the transition from internal combustion engines to EV's. New electric vehicle applications in current temperature sensing and advanced E-break our innovation projects in our pipeline, as well as next-generation chassis right high sensing. Total EV wins for the year were in the range of 20% of new business awarded. In Europe, we continue to leverage our footprint and capabilities in Denmark and the Czech Republic with Tier 1 defense customers and are currently in sample qualification. In addition, we were awarded funding from a European Agency for the development of next-generation ceramic materials. We saw softness in the medical market in the fourth quarter. However, we are making progress in applications and renewed business with three ultrasound customers in the quarter with one for a multi-year period. We also secured a win for sleep apnea control application and a win for a medical temperature application. In other electronic components we had wins with application in EMC, as well as a Microactuator application. In Asia we secured a win for a two-wheeler throttle sensor application. With temperature sensing, we secured orders in pool and spa applications, which continue to be strong. We also have temperature wins in industrial for hatchback and a win for a satellite application. We are gaining momentum with our precision frequency product enabled by our reference design position. We secured wins for 5G applications linked to large telecom OEMs and shipped the quarter million of samples in the quarter. More recently in January, our product was designed in for a 5G application selected by India's largest telecom provider. The low power crystal product is also in sample testing with a new North American customer. Building and strengthening our M&A pipeline is the priority. This is more challenging due to the COVID restrictions, we are actively building relationships with companies in line with our strategy. We seek to expand our range of technologies, products, customers and geographic reach, while we continue to diversify our end-market profile and enhance the future quality of earnings. Given our strong balance sheet, we seek to gain momentum with the right strategic fit and evaluation. The focus 2025 initiatives, which we have previously highlighted has an important emphasis on building stronger customer relationships. As part of this initiative, we continue to focus on our go-to-market capabilities and skills. We are working to improve the quality of the sales funnel, optimize our target new accounts and align our functional areas to be more responsive and solution-oriented in line with our core values. As we progressed into the first quarter of 2021, we've seen a positive start and expect a good first quarter given current customer demand. As I mentioned earlier, we remain cautious for the full-year in case of unexpected pandemic supply chain disruptions and the current semiconductor shortage. We are monitoring the consistency of demand in this recovery, given there may have been some pull forwarding demand in 2020. We are all aware of the backdrop of higher unemployment and the potential for depressed economic and consumer confidence. Though, we are not experiencing it at this time. We are facing some headwinds on commodity pricing, higher freight charges, increased absenteeism due to the impact of COVID-19 and working diligently to offset these with our continuous improvement projects. We expect to stay within our targeted gross margin range. For the US light vehicle transportation market, volume is expected to improve in the 14 million to 16 million unit range. On-hand days of supply are now at 59 days. Approximately 9% below the five-year average of 65 days. We currently see reasonable control of inventory levels, European sales are forecasted in the 18 million to 19 million unit level, though there is some uncertainty given the recent lockdowns throughout the region with some OEMs announcing volume reductions. Our exposure to the European market is lower. The Chinese market is expected to remain solid with volumes of 24 million to 26 million unit range this year. The commercial vehicle market is on an improving trend that started last year. Larger backlogs and heavy duty are driven by increasing fleet orders. In the mid range and lower, demand has been driven by the increase in e-commerce deliveries. The medical end market is expected to remain soft in the first half of 2021, due to lower elective surgeries. We see good growth in industrial and defense markets. In terms of guidance for full-year 2021, we expect sales to be in the range of $430 million to $490 million, and adjusted earnings are expected to be in the range of $1.20 to $1.60. We are closely monitoring the impact of COVID-19 supply chain disruptions and the broader level of economic activity. We expect to narrow the range as the year progresses. In this more remote working environment, we continue to place an emphasis on connecting with our customers, monitoring products and development, effectively navigating supply chain improvements, innovations and importantly, our performance and results driven culture. Our employees globally continue to provide a tremendous support and demonstrate resilience to serve our customers, while operating safely. We are confident in our strategy and are using this pandemic period to enhance our foundation, strengthen our core business and to advance our technology capabilities. Our 2025 initiatives is focused on four key areas: 10% annualized profitable growth with active portfolio management; working more closely with our customers, building relationships and aligning our technology and product road maps; number three building the foundation of CTS's operating system to execute globally on a consistent basis, while we enhance our continuous improvement capabilities; and finally, advancing organizational capability to leadership and culture aligned to our customers' needs, our business performance, our core values, supporting our communities and environmental priorities. At this time Ashish will take us through the financial performance. Fourth quarter sales were $123 million, up 7%, compared to last year and up 8% sequentially. Sales to transportation customers increased by 12% versus the fourth quarter of 2019, sequentially we were up 17% in sales to transportation customers. Sales to other end markets were essentially flat year-over-year. We saw solid growth in sales to both the industrial and defense end markets and softness continued in the medical end market. Our gross margin was 37% for the fourth quarter, up 230 basis points, compared to last quarter, and up 110 basis points, compared to last year. Adjusted EBITDA in the fourth quarter was 21.4%, up 240 basis points sequentially and up 110 basis points from last year. Fourth quarter 2020 earnings were $0.46 per diluted share, adjusted earnings per diluted share were $0.43, compared to $0.37 last year and $0.34 last quarter. For full-year 2020, sales were $424 million, down 10% from 2019. Sales to transportation customers declined 19% and sales to other end markets increased by 7%. Industrial and aerospace & defense end markets sales experienced double-digit growth. Medical end market was soft, but sales down 7%. Our gross margin was 32.8% for the year, down from 33.6% last year. The major driver was lower volume attributable to COVID-19, which was partially offset by temporary and other cost reductions implemented throughout the year. Our focus is to drive improvements and move toward the higher end of our target range of 34% to 37% gross margin. In the second half of 2020, we generated $0.05 of earnings per share and savings from our restructuring program announced in July 2020. Foreign currency rates impacted gross margin favorably in 2020 by approximately $3 million. Based on recent exchange rates currency could impact our 2021 gross margin unfavorably by approximately 100 basis points. SG&A and R&D expenses were $92.1 million or 21.7% of sales for the year. Consistent with prior communication, we expect 2021 operating expenses to be higher as a result of the reinstatement of temporary cost measures. Our 2020 tax rate was 23.7%, we anticipate our 2021 tax rate to be in the range of 23% to 25%, excluding the discrete items. This is subject to change, due to the impact of any changes that may be introduced by the new US administration. 2020 earnings were $1.06 per diluted share, adjusted earnings per diluted share were $1.12, compared to $1.45 last year. Now I'll discuss the balance sheet and cash flow. Our controllable working capital as a percentage of sales was 15.5% in the fourth quarter, improved slightly from the third quarter. We have made progress over the last couple of quarters, but still have more work to do. We are balancing improvements in working capital with having some safety stock to minimize risk of supply chain disruptions. Capex was $14.9 million for the full-year, down from $21.7 million in 2019. We continue to manage capex carefully given the current environment. In 2021, we are expecting capex to be in the range of 4% to 4.5% of sales. The primary focus being on growth-related projects. We finished 2020 with a healthy balance sheet and a strong liquidity position. Our operating cash flow in the quarter was $26 million, for the full-year operating cash flow was $77 million, compared to $64 million in 2019. The end of the year with $92 million in cash, compared to $100 million in December 2019. In the fourth quarter, we reduced our long-term debt balance to $55 million from $106 million at the end of the third quarter. Our debt to capitalization ratio was at 11.4% at the end of 2020, compared to 19.7% at the end of 2019. The combination of a strong balance sheet with a net cash position and access to over $240 million through our credit facility gives the flexibility to appropriately deploy capital toward our strategic objectives. We are progressing on our SAP implementation as we communicated earlier, more than 80% of our revenue comes from sites that are running on SAP. We expect to complete the implementation in the second half of 2021. However, COVID-related restrictions could cause some delays. This concludes our prepared comments.

q3 loss per share $1.97. q3 sales rose 8 percent to $122.4 million. q3 adjusted earnings per share $0.46. raised and narrowed its 2021 guidance for sales to $495 - $505 million. sees 2021 adjusted diluted earnings per share to be $1.85 - $1.95.

Actual results may differ materially from these statements. For more information about the factors that can adversely affect the company's results, please see our SEC filings, including our most recent 10-K. Today's remarks also include certain non-GAAP financial measures. We closed on the transaction in late October, and since then have been working tirelessly to complete the integration and implement KRG's culture and operating philosophy across the combined organization. The timing of the merger was impeccable and KRG was positioned perfectly to take advantage of the opportunity. It's now become clear that the merger is even better than we anticipated. Today, I'm going to speak about three horizons of opportunity for KRG. Those opportunities that are immediately in front of us, those that will cultivate over the next 18 to 24 months, and those that will materialize over the long term. The most immediate benefit of the merger, of course, is the significant earnings accretion. Heath will give additional color as to the underlying assumptions. While we've only owned the legacy RPA assets since October 22, we quickly jumped headfirst into attacking operational efficiencies with an intense focus, as always, on our leasing efforts. Against the backdrop of strong demand from a deep and diverse set of retailers, KRG is experiencing significant leasing momentum across all of our open-air product types. In fact, we're noticing that national retailers are now looking more intently for space across the open-air spectrum, which dovetails nicely with our high-quality and well-located properties. These positive trends are readily evidenced in our fourth quarter and full year leasing results. During the fourth quarter, KRG leased over 900,000 square feet at a very strong 12.9% blended cash spread on comparable new and renewal leases. The blended spread on our fourth quarter comparable non-option renewals was 10.2%. This is a strong indicator of where market rents are headed for the KRG portfolio. For the full year, KRG leased over 2.6 million square feet at blended cash spreads on a comparable deals of 10.7%. As a reminder, those leasing statistics including the leasing activity from the legacy RPAI portfolio are since October 22nd. If we include the active -- the activity from the legacy RPAI assets for all of 2021, we leased over 5.1 million square feet for the combined portfolio. Based on this progress, our retail lease percentage stands at 93.4%, up 220 basis points over last year, and yet, we still have significant upside. The portfolio has signed not-open NOI of approximately $33 million, which will primarily come online during the back half of 2022 and the first half of 2023. This bodes extremely well for our growth trajectory going into 2023, as the rents from all these leases will be fully annualized. The good news is that the $33 million of signed not-open NOI represents about half of the near-term leasing-related NOI opportunity. Our increased scale and improved balance sheet represent a host of immediate opportunities, including the potential for lower debt costs, increased liquidity in our stock, and enhanced relevance with our tenants and vendors. We are marching toward completing the active development projects detailed in our supplemental. Based on KRG's underwritten incremental NOI related to the active developments, we are anticipating very solid returns. We're meticulously reviewing the land bank, also disclosed in our investor deck, in addition to a multitude of other opportunities embedded within the KRG portfolio. We have learned over the years that each project is unique and requires a customized approach in order to achieve the best risk-adjusted returns. Sometimes that means bringing in an experienced JV partner or monetizing the land. For example, during the quarter, we entered into an agreement with Republic Airways to develop a new $200 million corporate campus on an outdated retail location owned by KRG in Carmel, Indiana. We knew the highest and best use of the land was no longer retail. Therefore, we sold a portion of the land to Republic for approximately $7 million and will serve as the master developer of their campus. KRG will not only receive a sizable development fee but also a profit component, all the while putting 0 KRG capital at risk. The cash from this development will be recycled into an income-producing investment. A big win for KRG on a site that was not generating any NOI. I'm very optimistic about the long-term outlook. It should come as no surprise that in the near term, we will be spending a significant amount of capital on leasing. Looking beyond the next few years, we begin to generate substantial additional free cash flow, while also naturally deleveraging. We are setting up to be in a very liquid and favorable position with a net debt to EBITDA in the low to mid-five times. While I can't predict the macro environment, I'm confident we will be ready to respond aggressively regardless. We did this deal because we love the real estate and saw significant upside potential period. Having been in this business for over 30 years, having visited nearly every legacy RPAI asset, I can unequivocally tell you that the quality of our portfolio improved by virtue of the merger. When I see what's happened in the private market valuations over the past six months, I couldn't be happier with respect to the timing of our transaction. We doubled down on the amount of GLA that we have in our warmer cheaper markets. These markets continue to benefit from household and employer migration, which is a trend we don't see changing anytime soon. We have a sector-leading presence with over 60% of our ABR in these markets, 40% alone being in Texas and Florida. The merger also provided KRG with a new or enhanced scale in key gateway markets such as Washington, D.C., New York, and Seattle. These world-class cultural, educational, health, and lifestyle hubs have endured the test of time and are home to many of the opportunities that we discussed. In summary, there's nothing better than owning high-quality assets in high-quality places. As the world opens back up, I encourage each one of you to join us on a property tour and see the quality firsthand. KRG is nothing without our tremendous people. I can't emphasize enough how excited I am about what we've accomplished as a team, but more importantly, what we'll accomplish together in the future. I want to echo John's excitement and confidence in the path that lies ahead. The opportunity in front of us is absolutely energizing. On the integration front, our substantial efforts to date have enabled the combined organization to operate at a high level, and truly embrace our internal model of one team, one focus. Before I discuss KRG's fourth quarter results, please keep in mind that they're a bit clunky by virtue of the fact that we closed the merger on October 22. While the results are from the combined portfolios, we only have two months and nine days of contribution from the legacy RPAI assets. For the fourth quarter, KRG generated $0.43 of FFO per share. As compared to NAREIT, our as adjusted FFO results add back in the $76 million of merger-related costs and deduct the $400,000 of net prior period activity. For the full year, KRG generated $1.50 of FFO per share, as compared to NAREIT, or as adjusted FFO adds back in the $87 million of merger-related costs and deducts the $3.7 million of prior period activities. Our same-property growth for the fourth quarter and full year is 7.2% and 6.1%, respectively. These results were primarily driven by a reduction in bad debt as compared to the prior-year periods. Absent the net contribution from prior-period activities, the fourth quarter and the full year same-property NOI growth is 6.8% and 4.3%, respectively. These metrics and a host of others are set forth on the news summary page in a revised supplemental. We hope you like the changes. Our balance sheet and liquidity profile not only remains solid but continue to improve. Our net debt to EBITDA was 6x, down from 6.1 times last quarter. Adding in $33 million of signed, but not-open, NOI from the combined portfolio, our net debt to EBITDA would be 5.6 times. We are in a great position to not only weather any storm but to also take advantage of any opportunities that present themselves. As John alluded to earlier, we are providing FFO as adjusted guidance of $1.69 to $1.75 per share. The variance from NAREIT FFO is approximately $0.02, which represents our estimate of $4 million of nonrecurring merger-related costs. Furthermore, the accounting adjustments related to the legacy RPAI below-market leases and above-market debt, contribute an incremental $0.06 of FFO per share to our 2022 guidance. This is a good indicator of our future ability to drive rents and reduce borrowing costs. Additional assumptions at the midpoint include neutral impact from any transactional activity and bad debt of 1.5% of total revenues. As you all know, providing same-property NOI growth is a SKU proposition for the sector, given all the noise over the past few years. It is especially tricky right after a merger of two companies that approach the potential pandemic credit loss from different perspectives. In order to avoid any confusion, we are assuming same-property NOI growth of 2% at the midpoint, excluding the net impact of prior period adjustments. This estimated 2% same-property growth is primarily driven by occupancy gains and contractual rent bumps. Last week, KRG declared a dividend of $0.20 per share for the first quarter. This represents a 5% sequential increase and an 18% year-over-year increase. The dividend will be paid on or about April 15th to shareholders of record as of April 8. One last thought before turning the call over for Q&A. I think another compelling comparison is to look at our original 2020 FFO guidance of $1.50 per share at the midpoint. Like our peers, we gave this guidance before the pandemic set in and reflected KRG's run rate after selling over $0.5 billion of assets in connection with Project Focus. Our 2022 per share guidance represents a 15% increase over our original 2020 per share guidance at the midpoint. During the course of 2021, many of you asked, when will your earnings return to pre-pandemic levels. On a per-share basis, not only we return to pre-pandemic levels, but we tacked on another 15%. Just another testament to the compelling accretion and synergies associated with our well-timed merger.

kite realty group trust q4 adjusted ffo per share $0.43. q4 adjusted ffo per share $0.43. generated ffo, as adjusted, of operating partnership of $82.4 million, or $0.43 per diluted share in q4. expects to generate ffo, as adjusted, of $1.69 to $1.75 per diluted share in 2022.

stepan.com under the Investors section of our website. Although many parts of the world are slowly improving, the Delta Variant continues to spread, and vaccine rates in much of the developed world have stalled. Global supply chain disruptions are impacting commerce and many of the products we all use every day have been impacted. At Stepan, our team continues to navigate through the turbulent environment to help our customers serve the market. Adjusted third quarter net income was $36.4 million flat with prior year. The negative impact of the global supply chain disruptions and inflationary pressures was offset by one-time tax benefits. Year-to-date adjusted net income was $121 million or $5.20 per diluted share. Both adjusted net income and adjusted earnings per share were up 22% versus the first nine months of 2020. Surfactants was also negatively impacted by lower consumer demand for cleaning, disinfection and personal wash products which have dropped since the pandemic peak in 2020. In the third quarter, each of our Company's three global business segments was negatively affected by raw material price inflation and significant supply chain disruptions including raw material shortages and logistics constraints. Surfactant operating income was down 16% largely due to higher North American supply chain cost, driven by inflation, higher planned maintenance costs and the $2.2 million insurance recovery related to the Millsdale plant in 2020. Our Polymer operating income was down 12%, mostly due to the non-recurrence of the insurance recovery and the compensation received from the Chinese government in the third quarter of 2020. Global Polymer sales volume rose 27% and was largely driven by the INVISTA acquisition. Our Specialty Product business rose by 53%, and was mainly due to order timing differences within our food and flavor business. Our Board of Directors declared a quarterly cash dividend on Stepan's common stock $0.335 per share payable on December 15, 2021. With this 9.8% increase, Stepan has now increased and paid its dividend for 54 consecutive years. The Board also authorized the Company to repurchase up to $150 million of its common stock, further demonstrating our commitment to deliver stockholder value through disciplined capital allocation. Our strong balance sheet and cash generation will allow us to invest in our current business and pursue strategic opportunities while we return capital to our stockholders. Luis will now share some details about our third quarter and year-to-date results. Let's start with the Slide 4 to recap the quarter. Adjusted net income for the third quarter of 2021 was $36.4 million or $1.57 per diluted share, basically flat versus the third quarter of 2020. Because adjusted net income is a non-GAAP measure, we provide full reconciliations to the comparable GAAP measures. Specifically, adjustment to reported net income this quarter consists of adjustment for deferred compensation, environmental reserves increase, and minor restructuring expenses. Adjusted net income for the quarter exclude deferred compensation income of $1.1 million or $0.05 per diluted share compared to deferred compensation expense of $2.6 million or $0.11 per diluted share in the same period last year. The deferred compensation numbers represent the net expense related to the Company's deferred compensation plan as well as cash-settled stock appreciation rights for our employees. Because these liabilities change with the movement in the stock price, we exclude these items from our operational discussion. Slide 5 shows the total Company earnings bridge for the third quarter, compared to last year's third quarter, and breaks down the increase in adjusted net income. Because this is net income, the figures noted here are on an after-tax basis. We will cover each segment in more detail. But to summarize, Surfactants and Polymers were down, while Specialty Product was up versus the prior year. Corporate expenses and all others were slightly higher due to inflation. The Company's effective tax rate was 20% for the first nine months of 2021 compared to 24% in the same period last year. This year-over-year decrease was primarily attributable to a favorable tax benefit recognized in the third quarter of 2021. The tax benefits are related to the merger of the Company's three Brazilian entities into a single entity and more favorable R&D tax credits. We expect the full year 2021 effective tax rate to be in the 20% to 22% range. Slide 6, focuses on Surfactants segment results for the quarter. Surfactant net sales were $388 million, a 16% increase versus the prior year. Selling prices were up 20% primarily due to improved product and customer mix as well as the pass-through of higher raw material costs. The effect of foreign currency translation positively impacted sales by 2%. Volume decreased 6% year-over-year. Most of this decrease reflect the lower volume sold into the North America consumer product end market as demand for cleaning, disinfection and personal wash products dropped from the peak of the pandemic. This was partially offset by very strong growth in our functional product end markets and solid growth in the industrial and institutional cleaning market. Surfactant operating income for the quarter decreased $6.7 million or 16% versus the prior year, primarily due to supply chain disruption impacts and the one-time insurance payment of $2.2 million recognized in the third quarter of 2020. We estimate the supply chain disruption had a negative impact of approximately $4 million during the current quarter. We implemented price increases in October to continue recovering our margins. Latin America operating results were lower due to planned maintenance and expansion activities. Europe results increased slightly due to higher demand in functional products, partially offset by a decrease in consumer products. Now turning to Polymers on Slide 7, net sales were $199 million in the quarter, up 70% from prior year. Selling prices increased 44% primarily due to the pass-through of higher raw material costs. Volume grew 27% in the quarter driven by 33% growth in global rigid polyol. This volume growth is mostly related to the INVISTA acquisition. Global rigid polyol volume excluding INVISTA was flat, driven by supply chain disruptions. Higher demand within the Specialty polyol business also contributed to the volume growth. Polymer operating income decreased $2.6 million or 12%, driven by one-time benefits of $4 million in the third quarter of 2020 and significant supply chain disruptions in the current quarter. We estimate the supply chain disruptions had a negative impact of approximately $3 million during the quarter. North America polyol results decreased due to one-time benefit recognized in the third quarter of 2020 and supply chain disruptions, partially offset by higher volume. In October, we implemented price increases in the market to recover our margins. Europe results increased driven by the INVISTA acquisition. China results decreased due to the one-time benefit recorded in the third quarter of 2020 as well as higher supply chain costs. The Specialty Product net sales were up 15% driven by volume up 9% between quarters. Operating income increased $0.8 million or 53% due to order timing differences within our food and flavor business and improved margins within our MCT product line. Moving on to Slide 8. Our balance sheet remains strong, and we have ample liquidity to invest in the business. Our leverage and interest coverage ratios continues at very healthy levels. We had a strong cash from operations in the first nine months of 2021 which we have used for capital investments, dividends, share buybacks and working capital given the strong sales growth and raw material inflation. We executed a $50 million private placement note at a very attractive and fixed interest rate of around 2%. We will use a new cash to fund our organic and inorganic growth opportunities and for other general corporate purposes. For the full year, capital expenditures are expected to be in the range of $200 million to $220 million. This new estimate includes today's announced alkoxylation investment at our Pasadena, Texas facility. Beginning on Slide 10, Scott will now update you on our 2021 strategic priorities. As we wrap up the first nine months of 2021, we believe our business will remain relatively strong despite the supply chain challenges we and our customers are experiencing. We continue to prioritize the safety and health of our employees as we deliver products that contribute to the fight against COVID-19. Consumer habits have changed and these new behaviors include the higher use of disinfection, cleaning and personal wash products. We believe our Surfactant volumes in the consumer product end market will remain higher versus pre-pandemic levels, however, lower than peak pandemic demand in 2020. We are seeing institutional cleaning and disinfection volumes grow as economies around the world reopen and people demand higher standards for cleaning and disinfection in public settings. Our diversification strategy into functional markets continues to be a key priority for Stepan. During the first nine months of the year, global agricultural volume increased double-digits. High commodity prices for corn and soybeans coupled with higher planted acreage in the 2021 growing season drove the demand for crop protection products in North America. Latin America and Asia sales continue to grow in the post-patent pesticide segment with new products being launched throughout the world. Oilfield volume was up strong double-digits during the first nine months of the year due to higher oil prices and a depressed 2020 base. We remain optimistic about future opportunities in this business as oil prices have recovered to the $80 per barrel level, and we continue to promote our new cost-effective product solutions that improve oilfield operator ROI and protect their wells. We will continue working on improving operational productivity as well as product and customer mix to improve Surfactant operating income and margins. Globally, we are increasing capacity in certain product lines, including biocides and amphoteric to ensure we can meet higher requirements from our customers. As discussed previously, we are increasing North American capability and capacity to produce low 1,4-dioxane sulfates. 1,4-dioxane is the minor byproduct generated in the manufacture of ether sulfate surfactants which are key cleaning and foaming ingredients used in consumer product formulations. Through a combination of process optimization and additional manufacturing equipment, Stepan will be prepared to supply customers ether sulfates that meet the new January 2023 regulatory requirements. This project, along with our announcement today to invest $220 million to build under an EPC contract 75,000 metric tons per year Alkoxylation production facility at our Pasadena, Texas site are the primary drivers of our 2021 capital expenditure forecast of $200 million to $220 million. We are excited about the capability and future growth that these investment projects will deliver to Stepan Company. Tier 2 and Tier 3 customers continue to be a focus of our Surfactant growth strategy. We added 300 new customers during the quarter and approximately 800 customers during the first nine months of the year. We finished our consulting work in our Millsdale plant and are focusing now on executing the recommended changes. We accelerated investments in both expense and capex to improve productivity and to increase capacity. We expect this project and the investment level to continue through the remainder of the year, and we should see benefits including productivity enhancements, increased capacity in several high margin product lines and improved service levels to our customers next year. Polymers had good performance during the first nine months of the year as market demand recovered after a challenging year in 2020 due to COVID restrictions. The business has also benefited from the INVISTA acquisition which closed in January. However, in the third quarter, we saw significant impact to our margins due to raw material availability and cost escalation while orders from customers remained restrained by their own raw material availability and other supply chain issues. For perspective, we had suppliers declare force majeure on critical raw materials, while our customers experienced market shortages on MDI and flame retardants, which are used in their finished foam insulation formulations. We are currently working to recover our margins in the fourth quarter. The long-term prospects for our polyol business remain attractive as energy conservation efforts and more stringent building codes should increase demand. The integration of the business acquired from INVISTA is going well and expect this acquisition to deliver more than $20 million of EBITDA in 2021. Given the strength of our balance sheet, we plan to continue to identify and pursue acquisition opportunities to fill gaps in our portfolio, and to add new platform chemistries aligned with our Company's growth strategy. The Company delivered record first nine month earnings in 2021. Looking forward, we believe our Surfactant volumes in North American consumer product end markets will continue to be challenged by raw material and transportation availability. While we believe, industrial and institutional cleaning volume will grow versus prior year, we do not believe it will compensate for lower consumer consumption of cleaning, disinfection and personal wash products. We believe that the demand for Surfactants in the agricultural and oilfield markets will exceed prior year demand. We believe our Polymer business will deliver growth versus prior year due to the ongoing recovery from pandemic-related delays and our first quarter acquisition of INVISTA's aromatic polyester polyol business. We continue to believe the long-term prospects for rigid polyols remain attractive. We anticipate our Specialty Products business will improve slightly year-over-year. Despite continued raw material sourcing issues, raw material price increases, higher planned maintenance expenses and supply chain challenges, we believe underlying market demand remains strong and we are optimistic about delivering full-year earnings growth this year. Low inventories across the value chain should provide opportunities in 2022. Frank, please review the instructions for the question portion of today's call.

q4 adjusted earnings per share $1.17. qtrly revenue grew $73 million, or 8%, over prior year quarter to $1,043 million. sees 2022 adjusted earnings per share $2.80 - $3.20.

I appreciate you joining us today to discuss our fourth quarter and full-year fiscal 2021 results. Before I comment on the results, I would like to take a moment to reflect on the last fiscal year. The reduction of commercial passenger air travel to nearly zero shortly before our fiscal year began and the persistently depressed levels of commercial traffic throughout the year tested our industry and our company to agree that was previously hard to imagine. At AAR, we have a strong set of values, one of them is to Every Day, Find a Way. That has never been more important than it has been over the last 16 months, and I'm proud of the results we have delivered. And I'm pleased to be able to say that we are now emerging from this crisis an even stronger, more focused company. Turning to our results. Sales for the year decreased 20% from $2.07 billion to $1.65 billion, and our adjusted diluted earnings per share from continuing operations decreased 39% from $2.15 per share to $1.31 per share. These results reflect the impact of COVID-19 on the demand for commercial air travel, but also our team's ability to reduce costs and increase efficiency to mitigate that impact. As you may recall, our Q4 of last year was only partially impacted by COVID as our hangars completed work on aircraft that were already in the hangar when the pandemic began. As such, I'm particularly pleased to report that sales for the fourth quarter were up 5% from $417 million to $438 million, and I'm even more pleased to report that adjusted diluted earnings per share from continuing operations were up 81% from $0.26 per share to $0.47 per share. Our sales to commercial customers increased 3%, and our sales to government and defense customers increased 7%. Sequentially, our total sales growth was 7% and our adjusted diluted earnings per share growth was 27%. The earnings per share growth was driven by our operating margin, which was 5.2% for the quarter on an adjusted basis, up from 3.2% last year and 5% in the third quarter. We saw strong performance in our MRO operations as airlines performed maintenance in advance of the anticipated return to summer leisure travel as well as the strong performance in our government programs' contracts. Notably, we have not seen much of a recovery in our commercial parts supply businesses as operators continue to consume their existing inventory. Parts supply is one of our higher margin activities, and the performance in the quarter did not yet reflect the recovery of that business. It was another strong quarter, as we generated $23.5 million from operating activities from continuing operations. We also continue to reduce the usage of our accounts receivable financing program. Excluding the impact of that AR program, our cash flow from operating activities from continuing operations was $33.3 million. The results for the year reflect our accomplishments in three key areas. First, we moved quickly at the outset of the pandemic to reduce costs and optimize our portfolio for efficiency. We did this by consolidating multiple facilities, making permanent reductions to our fixed and variable costs, exiting or restructuring several underperforming commercial programs' contracts and completing the divestiture of our Composites business, which had been unprofitable in recent quarters. Second, we continued to win important new business. In particular, we created a partnership with Fortress to supply used serviceable material on the CFM56-5B and -7B engine types. We were awarded a follow-on contract from the Navy that extended and expanded our support of its C-40 fleet. We expanded our distribution relationship with GE subsidiary Unison. We entered into a 10-year agreement with Honeywell to be an exclusive repair provider for certain 737 MAX components. And most recently, we signed a multi-year agreement with United to provide 737 heavy maintenance in our Rockford facility. Finally, we focused on our balance sheet and working capital management, which allowed us to generate over $100 million of cash from operating activities from continuing operations, notwithstanding the investments that we made to support new business growth. We demonstrated that we can generate cash even in a downmarket. And as a result, we are now well under one times levered and exceptionally well positioned to fund our growth going forward. There are very few companies in commercial aviation that are emerging from the pandemic with a debt level that is actually lower than when they entered. Our sales in the quarter of $437.6 million were up 5% or $21.1 million year-over-year. Sales in our Aviation Services segment were up 6.5%, driven by continued strong performance in government, as well as the recovery in commercial. Sales in our Expeditionary Services segment were down slightly, reflecting the divestiture of our Composites business. Gross profit margin in the quarter was 16.4% versus 8.7% in the prior year quarter. And adjusted gross profit margin was 16.5% versus 13.6% in the prior year quarter. Aviation Services gross profit increased $32.9 million, and Expeditionary Services gross profit increased $2.5 million. Gross profit margin in our commercial activities was 13.4%. This reflects the relative strength in MRO where we've been able to drive margin improvement through the efficiency actions we have taken. As the commercial market continues to recover, we would expect higher overall commercial gross margins. Gross profit margin in our government activities was 19.7%, which was driven by continued strong performance as well as certain events that occurred during the quarter. The adjustments in the quarter include $2.1 million related to the closure of our Goldsboro facility, which had supported our Mobility business within Expeditionary Services. We have completed our consolidation of those operations into Mobility's Cadillac, Michigan facility, and the adjustment reflects our current estimate of sale proceeds from the building. Looking forward, subsequent to the end of Q4, one of our commercial programs' contracts was terminated. As a result, we expect to recognize impairment charge of between $5 million and $10 million in the first quarter of fiscal '22. This contract had been underperforming for us in recent quarters. And with this termination, our restructuring actions in commercial programs are largely complete. As John described, we have taken steps over the last year to rationalize certain underperforming operations, including the divestiture of our Composites business, the closure of our Duluth heavy maintenance facility and the exit or restructuring of certain contracts. These activities, along with the terminated contracts I just described, collectively contributed approximately $140 million of annualized pre-COVID sales, which will not return as commercial markets recover. However, the absence of these operations is now part of what's driving our increasing profitability. SG&A expenses in the quarter were $48.8 million. On an adjusted basis, SG&A was $46.7 million, up only $0.2 million from the prior year quarter despite the increase in sales. As a reminder, SG&A in the prior year quarter already reflected our cost reduction actions. For fiscal year '22, we would expect a modest increase in SG&A compared to FY '21 as we invest in certain initiatives such as digital that will drive improved performance in future years. We continue to focus on driving SG&A as a percent of sales to 10% or lower as our top line recovers. As John indicated, we generated cash flow from our operating activities from continuing operations of $23.5 million as we continued to reduce our inventory balance. In addition, we reduced our accounts receivable financing program by $9.8 million in the quarter from $48.4 million to $38.6 million. As a result, our balance sheet remains exceptionally strong with net debt of $83.4 million versus $197.3 million at the end of last year. And our net leverage as of year-end was only 0.7 times. Looking forward, we are optimistic that the significant recent increase in US domestic leisure flying is both enduring and a leading indicator of return to business in international travel. We've seen a nice recovery in heavy maintenance and expect that performance to continue. On that note, while we are aware of the tight labor market, we believe that the labor-related programs that we have established to recruit, train and retain skilled technicians will continue to serve us well, particularly when those programs are coupled with our ongoing investment in innovation to drive efficiency and differentiation inside of our hangars. Also, although the commercial parts supply business has lagged behind the recovery, we have recently seen some early and modest signs of a rebound in that market as well, both in our USM and new parts activities. On the government side, which has been very strong for us, we do expect a moderation in the pace of growth as buying under previous administration normalizes and some of our programs come to a natural completion, such as the C-40 aircraft procurement program for the Marine Corps, but the valuable past performance that we have continued to build and the cost reduction actions that we've taken put us in a strong position to continue to take market share, and our government pipeline remains strong. The path and pace of the commercial air travel recovery continue to remain uncertain, which is underscored by the emergence of the delta variants. As such, we are not issuing full-year guidance. However, in the immediate term, we expect to see performance in Q1 that is similar to or modestly better than Q4. As you know, Q1 is typically our slowest quarter, whereas Q4 is typically our strongest quarter. So normally, you would see a decline from Q4 to Q1. However, this year's expectation of similar performance reflects our belief that our commercial markets will continue their recovery. Over the medium and longer term, we are exceptionally well positioned, we are stronger today than where we were when we entered the pandemic, and we are excited to leverage our efficiency gains, optimize portfolio and strong balance sheet to continue to drive growth and margin expansion going forward.

q4 adjusted earnings per share $0.47 from continuing operations. q4 sales $438 million versus refinitiv ibes estimate of $422.6 million.

Now to kick this off, the beginning of a new year, I believe, is a good time to take stock of where KMI stands as an investment opportunity for its present and potential shareholders. Whether you look at the results for the fourth quarter of 2021, the full year '21, or our budget outlook for 2022, which we released in December, it's apparent that this company produces substantial cash flow under almost any circumstances. In my judgment, this is the bedrock for valuation because it gives us the ability to fund all our capital needs out of the recurring cash flow. As I've stressed so many times, we can use that cash to maintain a solid balance sheet, invest in selected high-return expansion capex opportunities, pay a very rewarding and growing dividend and buy back shares on an opportunistic basis. But I believe there's more of the story than that. While we demonstrated by assets that we acquired during 2021 that we are participating meaningfully in the coming energy transition, it's also become apparent, particularly over the last several months that this transition will be longer and more complicated than many originally expected. In short, there is a long runway for fossil fuels and especially natural gas. Investing in the energy sector has been very lucrative recently with the energy sector, the best-performing sector of the S&P 500 during 2021. We expect that favorable view to continue in 2022, and the year has started out that way. Within the energy segment, I would argue that midstream pipelines are a good way of playing this trend. They generally have less volatility and less commodity exposure than upstream and most have solid and growing cash flow underpinned by contracts to a large extent with their shippers. We believe KMI is a particularly good fit for investors. We are living within our cash flow. We paid down over $12 billion in debt since 2016 and 2022 marks the fifth consecutive year we have increased our dividend, growing it over those years from $0.50 per share to $1.11 per share. In addition to returning value to our shareholders through our dividend, our board has approved a substantial opportunistic buyback program, which we have the financial firepower to execute on during this year if we so choose. Finally, this is a company run by shareholders for shareholders with our board and management owning about 13% of the company. I hope and trust you'll keep these factors I have mentioned in mind when making investment decisions about our stock over the coming year. More to come on all these subjects at our Investor Day conference next Wednesday. As to 2021, we wrapped up a record year financially. Much of that was due to our outperformance in Q1 as a result of the strong performance of our assets and our people during Winter Storm Uri. Putting Uri aside, we were running a bit shy at plan in the full year guidance that we were giving you through our quarterly updates. But by the end of the year, we closed the gap and met our EBITDA target, even excluding Uri, but including the benefit of our Stagecoach acquisition. We also set ourselves up well for the future, getting off to a fast start in our energy transition ventures business with the acquisition of Kinetrex renewable natural gas business and adding to our already largest in the industry gas storage asset portfolio with the acquisition of Stagecoach. Both of those acquisitions are outperforming our acquisition models. Third, as we'll cover in detail at next week's conference, our future looks strong. Our assets will be needed to meet growing energy needs around the world for a long time to come. And over the long term, we can use our assets to store and transport the energy commodities of tomorrow. And we have opportunities, as we have shown you, to enter into new energy transition opportunities at attractive returns. We're entering 2022 with a solid balance sheet, including the capacity to repurchase shares with well-positioned existing businesses and with an attractive set of capital projects. Our approach to capital allocation remains principled and consistent. First, take care of the balance sheet, which we have with our budget showing net debt to EBITDA of 4.3 times, then invest in attractive return projects and businesses we know well at returns that are well in excess of our cost of capital. Our discretionary capital needs are running more in the $1 billion to $2 billion range annually, and at $1.3 billion, we're at the lower end of that range in our 2022 budget, not at the $2 billion to $3 billion that we experienced in the last decade. We're also generally seeing -- or we're continuing to tilt, I guess, I would say, toward generally smaller-sized projects that are built off of our existing network, and we can do those at very attractive returns and with less execution risk. The final step in the process is return the excess cash to shareholders in the form of an increasing and well-covered dividend that's $1.11 for 2022 and in the form of share repurchases. As we said in our 2022 budget guidance released in December, we expect to have $750 million of balance sheet capacity for attractive opportunities, including opportunistic share repurchases. Given the current lower capital spending environment we are now experiencing, we would expect to have the capacity to repurchase shares even if we add some investment opportunities as the year proceeds in the form of additional projects, etc. As we've always emphasized when discussing repurchases, we will be opportunistic, not programmatic. We believe the winners in our sector will have strong balance sheets, invest wisely in new opportunities to add to the value of the firm, have low-cost operations that are safe and environmentally sound and the ability to get things done in difficult circumstances. We're proud of our team and our culture. And as always, we will evolve to meet the challenges and opportunities in the years ahead. Starting with our Natural Gas business unit for the quarter. Transport volumes were down 3% or approximately 1.1 million dekatherms per day versus the fourth quarter 2020 that was driven primarily by continued decline in Rockies production, the pipeline outage on EPNG and FEP contract expirations, which were offset somewhat by increased LNG deliveries and PHP and service volumes. Physical deliveries to LNG facilities off of our pipeline averaged about 5 million dekatherms per day that's a 33% increase versus the fourth quarter of '20. Our market share of LNG deliveries remains around 50%. Exports to Mexico were down in the quarter when compared to the fourth quarter of 2020 as a result of third-party pipeline capacity recently added to the market. Overall deliveries to power plants were up slightly, at least in part, partially driven by coal supply issues, while LDC deliveries were down as a result of lower heating degree days. Our natural gas gathering volumes were up 6% in the quarter. For gathering volumes, though, I think the more informative comparison is the sequential quarter. So compared with the third quarter of this year, volumes were up 7%, with a big increase in Haynesville volumes, which were up 19% and Bakken volumes, which were up 9%. Volumes in the Eagle Ford increased slightly. In our products pipeline segment, refined product volumes were up 9% for the quarter versus the fourth quarter of 2020. Compared to prepandemic levels using the fourth quarter '19 as a reference point, road fuel, gasoline, and diesel were down about 2% and Jet was down 22%. In Q3, road fuels were down 3% versus the prepandemic number, though we did see a slight improvement. Crude and condensate volumes were down 3% in the quarter versus the fourth quarter of '20. Sequential volumes were down approximately 1%, with a reduction in Eagle Ford volumes, partially offset by an increase in the Bakken. If you strip out Double H pipeline volumes from our Bakken numbers that pipeline is impacted by alternative egress options. And you look only at our Bakken gathering volumes, they were up 7%. In our Terminals business segment, our liquids utilization percentage remains high at 93%. If you exclude tanks out of service for required inspection, utilization is approximately 97%. Our rack business, which serves consumer domestic demand is up nicely versus Q4 of '20 and also up versus prepandemic levels. Our hub facilities, primarily Houston and New York, are driven more by refinery runs, international trade and blending dynamics are also up versus the Q4 of '20. But those terminals are still down versus prepandemic levels. We've seen some green shoots in our marine tanker business with all 16 vessels currently sailing under firm contracts. On the bulk side, volumes increased by 8%, and that was driven by coal and bulk volumes are up 2% versus the fourth quarter of '19. In our CO2 segment, crude volumes were down 4%, CO2 volumes were down 13% and NGL volumes were down 1%. On price, we didn't see the benefit of increasing prices on our weighted average crude price due to the hedges we put in place in prior periods when prices were lower. However, we did benefit from higher prices on our NGL and CO2 volumes. For the year versus our budget, crude volumes and price were better than budget, CO2 volumes and price were better than budget and NGL price was better than budget. So a good year for our CO2 segment relative to our expectations and CO2 volumes have started the year above our '22 plan. As Steve said, we had a very nice year. We ended approximately $1 billion better on DCF and $1.1 billion better than our EBITDA with respect to -- our EBITDA budget. And most of that was due to the outperformance attributable to winter storm or all of it was due to the outperformance attributable to Winter Storm Uri. If you strip out the impact of the storm and you strip out roughly $60 million in pipe replacement projects that we decided to do during the year that impacts sustaining capex, we ended the year on plan for both EBITDA and DCF. So for the fourth quarter 2021, we are declaring a dividend of $0.27 per share, which brings us to $1.08 of declared dividends for full year 2021, and that's up 3% from the dividends declared for 2020. During the quarter, we generated revenue of $4.4 billion, up $1.3 billion from the fourth quarter of 2020. That's largely up due to higher commodity prices, which also increased our cost of sales in the businesses where we purchase and sell commodities. Revenue less cost of sales or gross margin was up $107 million. We generated net income to KMI of $637 million, up 5% from the fourth quarter of 2020. Adjusted net income, which excludes certain items, was up -- was $609 million, up 1% from last year, and adjusted earnings per share was $0.27 in line with last year. Moving on to our segment performance versus Q4 of 2020. Our Natural Gas segment was up driven by contributions from Stagecoach and PHP, partially offset by lower contributions from FEP where we've had contract expirations, NGPL because of our partial interest sale and EPNG due to lower usage and park and loan activity. Products segment was up due to refined products volume and favorable price impacts. Our terminals segment was down driven by weakness in the Jones Act tanker business and an impact from a gain on sale of an equity interest in 2020. CO2 was down, as favorable NGL and CO2 prices were more than offset by lower CO2 and oil volumes, the oil volumes were above plan. G&A and corporate charges were higher due to larger benefit costs, as well as cost savings we achieved in 2020 driven by lower activity due to the pandemic. Our JV DD&A was lower primarily due to lower contributions from the Ruby Pipeline. And our sustaining capital was higher versus the fourth quarter of last year that was higher in natural gas, terminals, and products, and that is a fairly large increase, but we were expecting the vast majority of it has -- much of the spend from early in the year was pushed into later in the year. For the full year versus plan on sustaining capital, we are $72 million higher and roughly $60 million of that is due to the pipe replacement project that Kim mentioned. The total DCF of $1.093 billion or $0.48 per share is down $0.07 versus last year's quarter, and that's mostly due to the sustaining capital. On the balance sheet, we ended the year with $31.2 billion of net debt with a net debt to adjusted EBITDA ratio of 3.9 times, down from 4.6 times at year-end 2020. Removing the nonrecurring Uri contribution to EBITDA, that ratio at the end of 2021 would be 4.6 times, which is in line with the budget for the year. Our net debt declined $404 million from the third quarter, and it declined $828 million from the end of 2020. To reconcile the change for the quarter, we generated $1.093 billion in DCF. We spent -- or paid out $600 million in dividends, we spent $150 million in growth capex, JV contributions, and acquisitions, and we had a working capital source of $70 million, and that explains the majority of the change for the quarter for the year. We generated $5.460 billion of DCF. We paid out dividends of $2.4 billion. We spent $570 million on growth capex and JV contributions. We spent $1.53 billion on the Stagecoach and Kinetrex acquisitions. We received $413 million in proceeds from the NGPL interest sale, and we had a working capital use of approximately $530 million. And that explains the majority of the $828 million reduction in net debt for the year. But if you've got more questions, get back in the queue, and we will come back around to you.

kinder morgan q3 earnings per share $0.22. q3 earnings per share $0.22. consistent with guidance in q2 currently anticipate generating 2021 dcf of $5.4 billion and adjusted ebitda of $7.9 billion. qtrly terminals segment earnings were down compared to the third quarter of 2020. kinder morgan - contributions from the products pipelines segment in quarter were up compared to the third quarter of 2020 as demand recovery continued.

Earlier today, we published our third quarter 2020 results. A copy of the release is available on our website at oshkoshcorp.com. Our presenters today include Wilson Jones, Chief Executive Officer; John Pfeifer, President and Chief Operating Officer; and Mike Pack, Executive Vice President and Chief Financial Officer. I want to start today by sharing how proud I am of the hard work and disciplined execution our Oshkosh team members have demonstrated, as we manage through the current pandemic-induced environment. The underlying strength we derive from our people-first culture has been a key enabler to our success, as we navigate through these challenging times. We often talk about how we are better together, and we are exhibiting that with our results this quarter. For the third quarter, we delivered sales of nearly $1.6 billion, adjusted earnings per share of $1.29, and our consolidated backlog is up nearly 6% versus the prior year, as we controlled what we can control, while responding quickly to challenges outside of our control. Given the conditions present in our markets in the U.S. and around the world, we believe this represents solid performance. The duration impact of the pandemic on the economy remain uncertain, but the resiliency of Oshkosh team members has been impressive, as we responded to a variety of challenges, including changing customer demand, new working protocols and supply chain disruptions, among others. We believe our values and strengths as a different, integrated global industrial are even more pronounced versus our competitors in times like these. We implemented the temporary cost reductions we discussed last quarter. Those actions are evident, not only in our third quarter results, but should also benefit us as we manage through the ongoing uncertainty. Recently, we also announced some permanent cost reductions in areas of our business most significantly impacted by changes in customer demand as a result of the pandemic. John and Mike will discuss those actions and the related impacts in their sections. Also I want to take a moment to congratulate John on his recent promotion to President. It's a testament to John's strong leadership and dedication to a people-first culture. I look forward to continuing to work with him, as we lead this great team here at Oshkosh. Before I provide an update on each of our segments, I'd like to provide a brief update on our operations, including our people and supply chains. Across the company, we are focused on maintaining the safety of our team members and preventing the spread of the virus, with increased social distancing, both in the offices and throughout our manufacturing facilities. While this can make completing work more challenging, we have maintained strong efficiencies. I am proud of the way our team has remained disciplined in maintaining these strict protocols. We also successfully navigated through over 200 supplier shutdowns early in the quarter to continue production without any major supplier induced line stoppages. This is a true testament to the focused efforts of our supply chain team, our integrated capabilities and our strong supplier partners. While we've largely stabilized our operations and supply chains, elevated infection rates in parts of the U.S. extend production and supplier risks, and we will remain diligent in our actions. Additionally, we've carried out our return to work or return to the office actions for our team members. I won't go into all the details, but about half of our office workforce physically enters our facilities for work each day with appropriate social distancing and cleaning protocols in place. Essentially, we implemented changes that enable Oshkosh team members to work-from-home when they need to and work in our facilities when they need to and they can do it seamlessly. Now I'll move to our segment updates and kick it off with Access Equipment. Our Access Equipment segment has experienced the negative impacts of the current business landscape more intensively than any other segment in our company with year-over-year revenues down more than 60% in the quarter. Despite these challenges, our team rallied quickly with aggressive steps to reduce production at the factories and to lower our costs, resulting in solid, adjusted decremental margins of just under 20% and an adjusted operating income margin of 8.4%. This performance is impressive given the significant declines in access equipment markets in North America, Europe and other parts of the world. On our second quarter call, we discussed temporary manufacturing closures in the segment during the third quarter. And with market recovery timing still uncertain, we shutdown production for the month of July, and we will have two-week shutdowns in both August and September. Wilson mentioned that we also have taken some permanent actions to reduce our costs, particularly in this segment. We announced the closure of our Medias, Romania facility at the end of June, which will occur over the next 12 months. We remain committed to the EMEA market and will be able to serve it more efficiently from our existing global manufacturing footprint, including plants in France and the U.K. in addition to the facilities rationalization, we also reduced our office staffing in the segment with a modest workforce reduction. Our simplification framework has been an important enabler for our ability to deliver robust margins throughout the business cycle, as well as relocate production so that we can operate with improved logistics and customer service levels. While COVID-19 has impacted access equipment markets around the world, we are staying flexible and nimble in our approach to managing the business. However, given the uncertainty around the broader economic recovery, we are not in a position to provide an industry or Oshkosh specific outlook at this time. We know that access equipment will come back, but we do not currently have a time frame. We will control what we can and make the right decisions that we believe will facilitate our success when demand returns. We are further encouraged by the age of access equipment fleets, particularly in North America, that we expect will be a positive demand driver in future quarters. Finally, just as we discussed last quarter, our facility in China is back online, and we retain our positive outlook for this market as demand is returning. Our team in China has plenty of experience in both the demand and supply sides of the market, and we remain very bullish on our prospects for long-term growth in China. Please turn to page five, and I'll discuss our defense segment. Our defense segment performed well in the quarter as the team continues to ramp up the JLTV program, which helps provide a solid foundation for the company with a large backlog and multiyear visibility. Department of Defense and our allies. We continue to work with a number of foreign governments on JLTV opportunities. And while we are not making any announcements today, we have a strong pipeline of opportunities and expect that we will be discussing additional international successes in future quarters. Our defense backlog remains solid at nearly $3.3 billion, up over 15% from the prior year which provides good visibility, especially given the current environment where the pandemic has limited visibility across many industries. During the quarter, we announced a joint venture to manufacture tactical wheeled vehicles in Saudi Arabia. We have been working with our partner, Al-Tadrea, for the past two years to finalize the agreement. This is part of our longer-term plan to be an integrated strategic partner with his key U.S. Ally for defense vehicles and life cycle services. This is an important milestone for our international defense activities. Before I wrap up my comments on our defense segment, I want to congratulate both our production UAW team member in Oshkosh and our leaders in the business for agreeing to a new collective bargaining agreement which provides continuous coverage through September 2027. This is a great example of the benefits of working together and reaching solutions that provide security and peace of mind for our team members as well as continuity for our company. Fire & Emergency delivered a strong quarter with a 15.7% adjusted operating income margin. Last quarter, the segment experienced some challenges with a supplier issue that impacted both our shipping schedule and our margins. This supplier issue is behind us, which paved the way for a great quarter as the team focused on operations and delivered impressive results despite lower year-over-year sales. Customer travel restrictions implemented during March, eased midway through the third quarter. This was a positive development for the team, but given the recent increase in COVID-19 cases and states reinstating quarantines for travel, we may experience temporary sales headwinds in the fourth quarter. As we discussed on the last earnings call, we expected third quarter orders to be down year-over-year and sequentially and that was the case. Remember, we are coming off a quarter that was an all-time record for orders and we expected there to be a pause in orders due to the pandemic. The backlog continues to be robust, providing visibility well into 2021. Even with strong year-to-date orders, we will continue to monitor the pandemics impact on municipal budgets which could impact spending on fire trucks in the future. It's clear that customer demand for both concrete mixers and refuse collection vehicles has been impacted by the pandemic. As construction work was limited and often stopped at various locations across North America over the past three months, we expected concrete mixer sales and orders to slow. That has been the case. RCV demand tends to be more stable and we've seen residential trash collection remains strong and even elevated in some cases, but we've also seen nonresidential refuse collections slow during the shutdown and this has had a negative impact on demand for RCVs in the current environment. Despite these challenges, commercial really came through with a solid margin quarter. This can be attributed to quick actions and a passionate culture that permeates throughout the business. Those of you that have followed us for the past few years know that we are committed to simplification throughout Oshkosh and we began journey a couple years ago in the commercial segment. As part of this journey, we are transferring concrete mixer production from our facility in Dodge Center, Minnesota to consolidate production in our other mixer facilities in North America. Thus, Dodge Center will become a focused RCV operation. This will reduce costs and better position both the mixer and the RCV businesses for success in the future as they'll benefit from focused facilities. The transition will occur over the next six months for this important step in our simplification journey. Also, we recently sold our concrete batch plant business, Con-E-Co. We regularly review all of our business for value and strategic fit within our company. We determined that Con-E-Co was a better fit with a different owner and closed on the transaction last week. We think this will help us more effectively focused our resources in the commercial segment. Before I leave this segment, I wanted to mention the ramp-up of our new front discharge concrete mixer, the S Series 2.0 complete with industry-leading connectivity and productivity technologies. We're pleased with customer orders and interest levels, even against the backdrop of the pandemic. We believe this redesign mixer will be a long-term driver of solid performance for the company. Watch for new megatrend technologies applied to this vehicle in the future. This wraps it up for our business segments. During our last earnings call, we commented that we expected the third quarter to be a challenging quarter and it was. However, strong execution by our teams, combined with rapid implementation of cost reduction actions allowed us to effectively manage the business and deliver solid adjusted consolidated decremental margins of 15.9% for the quarter on a significant decrease in year-over-year sales. Consolidated net sales for the quarter were $1.6 billion, down 33.9% from the prior year quarter, a significant decrease in access equipment sales and, to a lesser extent, decreases in fire & emergency and commercial sales were the primary drivers of the lower consolidated sales, offset in part by higher defense sales. Access equipment sales were negatively impacted by customer pushouts, some cancellations and lower order intake rates as a result of COVID-19 and the related shelter-in-place restrictions driving low levels of job site activity throughout much of the U.S. and the world. Defense sales growth in the quarter reflected the continued JLTV production ramp and higher aftermarket parts and service sales, partially offset by lower FHTV volumes. Fire & emergency sales were lower than the prior year quarter, primarily as a result of decreased production line rates necessitated by COVID-19 related workforce availability and supply chain disruptions offset in part by a catch-up of units affected by the supplier quality issue we noted last quarter. And commercial segment sales were lower than the prior year quarter, driven by a combination of lower demand for refuse collection vehicles and concrete mixers as well as some production disruptions, both caused by COVID-19. Consolidated adjusted operating income for the third quarter was $128.8 million or 8.1% of sales compared to $257.8 million or 10.8% of sales in the prior year quarter. Access equipment adjusted operating income declined on lower sales and unfavorable manufacturing absorption as a result of the facility shutdowns during the quarter, offset in part by favorable price cost dynamics, lower incentive compensation expense, the benefit of temporary cost reductions, and more amortization expense. Defense operating income increased as a result of an unfavorable prior year cumulative catch-up adjustment, higher sales volume, and the benefit of temporary cost reductions, offset in part by higher warranty costs. Fire & emergency third quarter adjusted operating income declined due to lower sales volume and adverse sales mix, largely offset by improved pricing, lower incentive compensation expense, and the benefit of temporary cost reduction actions. Commercial segment third quarter operating income increased compared to the prior year quarter as a result of the absence of inefficiencies caused by a weather-related partial roof collapse in the prior year and favorable price cost dynamic, offset in part by lower sales volume. Adjusted earnings per share for the quarter was $1.29 compared to earnings per share of $2.72 in the third quarter of 2019. Third quarter results benefited by $0.03 per share from share repurchases completed in the prior 12 months. During the second quarter, we withdrew our financial expectations as a result of the evolving impact of COVID-19. While we have seen stabilization in our supply chain and operations, recent increases in infection rates in parts of the U.S. continue to drive potential supply chain and production risk. Further, the cadence of customer demand in our access equipment and commercial mixer businesses remains uncertain. As a result, we're not in a position to provide updated expectations for the fiscal year. Last quarter, we announced decisive actions to reduce pre-tax cost by $80 million to $100 million for the year in response to the uncertainties caused by COVID-19. These cost reduction actions include salary reductions, furloughs, temporary plant shutdowns, limiting travel and reducing project costs, and other discretionary spending. As a result of the outstanding focus by our teams, we now expect these temporary cost reduction measures to exceed $100 million in fiscal 2020. As John discussed, we have also announced permanent restructuring actions in our access equipment and commercial segments, which are expected to yield combined annualized cost savings of $30 million to $35 million once complete. We expect to begin realizing some benefits of these actions in 2021, with the full impact of these actions by 2022. As we shared with you on the last call, we established a playbook of options to respond to the pandemic. With recovery trending at a slower pace, permanent cost actions were prudent. Our balance sheet remains strong with available liquidity of approximately $1.1 billion, consisting of cash of approximately $300 million and availability under our revolving line of credit of approximately $800 million at the end of the quarter. Share repurchases remain paused during the quarter and we will reevaluate them as we gain further clarity on the recovery of our end markets. On the second quarter earnings call, we discussed our target of achieving mid-20% adjusted decremental margins, both on a consolidated basis and within the access equipment segment for the year. We were able to exceed those targets during the third quarter with disciplined execution and the help of our cost reduction initiatives. We expect the benefit of cost reduction activities to be lower in the fourth quarter compared to the third quarter as shelter-in-place restrictions have eased, leading to increased expenses. Nonetheless, we expect to achieve the targeted mid-20% adjusted decremental margins, both in the fourth quarter and for the full year on a consolidated basis. We have a strong culture with strong leaders at Oshkosh. Our revenues and earnings were down in the quarter from last year, but given the challenges we've been facing, we're proud of our performance. We have a strong balance sheet with ample liquidity. Our defense and fire & emergency backlog provide visibility well into 2021 and we took aggressive actions early during the pandemic to lower our costs. Our team has managed production and supply chain disruptions very effectively and has kept Oshkosh on the right path during these challenging times. I am reassured by our strength and resourcefulness and believe we can deliver solid sales and earnings performance over the long term. After the follow-up, we ask that you get back in queue if you'd like to ask additional questions.

compname reports q3 adjusted earnings per share $1.29 excluding items. q3 adjusted earnings per share $1.29 excluding items.

Leading today's discussion are Vince McMahon, WWE's Chairman and CEO; Nick Khan, WWE's President and Chief Revenue Officer; Stephanie McMahon, WWE's Chief Brand Officer; and Kristina Salen, WWE's Chief Financial Officer. Their remarks will be followed by a Q&A session. Actual results may differ materially, and undue reliance should not be placed on them. Additionally, the matters we will be discussing today may include non-GAAP financial measures. You should note that all comparisons are versus the year ago quarter, unless otherwise described. As you can see, our solid financial results are pretty strong as a result of the global demand of all things WWE, including a return to live event touring, which is unlike any other media company. This is where the WWE brand really comes alive in so many different respects. And as a result of the strong indication, we're going to -- we're going to raise our guidance, our 2021 guidance. And that's with the lack of one event in Riyadh. Normally we have 2. Because of the COVID situation, we have one at end the year. But nonetheless, notwithstanding, we're raising our guidance, which I think is pretty good. We saw a lot of positive trends, which Stephanie will get to in a minute. And -- but even with the strong recovery, it's opened or eyes to many more ways that we can take advantage of our IP and the evolution of sports entertainment. It's nice to speak with you all again. This quarter, I'd like to first offer perspective on our Media segment, hitting on both near-term opportunities as well as our long-term position in a marketplace that continues to put a premium on live rights. After an update on media, I will run through a number of deals we closed over the past quarter that have created new revenue streams for WWE and increased the value of existing ones. Looking first at near-term media rights opportunities. We have two key negotiations in our sites that will drive value for our company. The first is our RIA rights for Raw on Hulu, which expire in the back half of 2022. The second is the licensing of our direct-to-consumer service, WWE Network, in international markets, which we have discussed previously. A competitive landscape has already formed around both initiatives. In terms of the Raw RIA rights, we know from the data that there is a substantial and recurring audience who watch the program via delayed viewing week-to-week on Hulu. When we closed the Hulu deal in 2018, the media landscape was quite different, as we all know. NBCU was an active owner of Hulu, and Peacock was just a nascent dream. We now all know that in a 2021 world, NBCU is a passive Hulu owner and barring exigent circumstances, NBCU's stake will be bought out by Disney at Hulu's 2024 valuation. Let's keep in mind what we all know. In addition to Disney's initial Hulu ownership percentage, Disney picked up Fox's ownership stake in Hulu with Disney's acquisition of a large majority of FOX two-plus years ago. We also recently saw executive shifts from Hulu to Peacock, and we believe that in addition to all other platforms looking for event programming that resonates that the battle for Raw's RIA rights will be intense and fun. Regarding WWE Network, we continue to execute on a strategy to optimize our value across international markets. We have a model that buyers are responding to. As so many U.S.-based companies look to go international overnight, it sets up a competitive global landscape that none of us have seen over the course of our careers. We continue to believe that will garner great results. Outside of those media deals tied to our live rights, we are continuing to expand our original programming slate. This quarter, NBCU announced Miz and Mrs would be returning for a third season. Earlier in October, we debuted Escape the Undertaker on Netflix, an innovative interactive show featuring WWE Superstars. six months ago, we merged our content units into one place, WWE Media. We recently completed a children's animation scripted project with a streamer and will soon announce a slew of scripted and unscripted programming that demonstrates the weight of our content pipeline. This is an area that will continue to be a priority for us. We recognize these productions not only generate meaningful economic returns for our company, but that they also expand WWE's brand and help us establish relationships with myriad media companies while making sure that our programming remains young and diverse. All of this is directly related to our next U.S. rights negotiations. We are as bullish now on those rights as we were when we went into the prior negotiations, which saw an increase in the U.S. from 130 million a year AAV to 470 million a year AAV for Raw and SmackDown. We have previously discussed numerous deals that demonstrate the continued rise in the value of live. These included recently negotiated media rights for the NFL, NHL, Major League Baseball, the SEC, La Liga and Wimbledon. Media rights that are coming up for renewal are also drawing interest from new buyers, which is expected to further the trend of meaningful increases for those rights. As an example, we know the English Premier League is looking to get $300 million a year annually versus U.S. rights, doubling the $150 million a year average annual value currently paid by NBCU. That bidding process is expected to be highly competitive, due in large part to the combination of traditional buyers and new buyers like Amazon, ESPN Plus and Peacock. They're all looking for live with dedicated fans to quickly build up their subscriber bases. Yesterday, Fox announced on its earnings call that they closed a multiyear deal with UEFA for its next two European Championships in 2024 and 2028 and for over 1,500 soccer matches, a rights package in excess of which Disney currently pays for its portion of it. We have all read the rumors of Fox partnering with Fubo, a virtual MVPD on this rights deal. With this sort of tonnage, that partnership made complete sense to us, creative and smart. Live continues to dominate linear while helping to build other platforms, and we are seeing scripted content continue to migrate to streamers. Both Apple TV and Amazon have been considered front runners for the NFL Sunday Ticket package. Ted Sarandos has publicly expressed that Netflix would rather buy than run sports properties. He seemed to be referring to Formula One coming off of the success of their Drive to Survive program. Speaking of Netflix, we have seen early cuts of our upcoming Vince McMahon multipart Netflix documentary, which is executive produced by WWE and Bill Simmons, who did the acclaimed Andre the Giant documentary with us. The Vince cuts are out of this world, amazing. Wait until you see it. As it relates to Bill Simmons, who some have referred to as the godfather of podcasts or the pod father, this past quarter, we closed the deal with Spotify and The Ringer for Spotify to become the exclusive audio network of WWE. The partnership jump starts us in this all-important space while allowing us to leverage the resources and reach of Spotify and its 165 million subscribers. That partnership was announced this past August at SummerSlam when The Ringer hosted live shows for our fans in Las Vegas. We're confident that with Spotify's expertise alongside our library of intellectual property and our talent that we will deliver an audio product that excites existing fans while also introducing WWE content to the millions of Spotify listeners. I would also like to discuss some new business with you. As we focus on extracting more value from our IP wheel, further establishing new businesses that expand WWE's brand and drives revenue is a key for all of us. We've had an active quarter creating new revenue streams and increasing the value of existing lines of business. One area we've spent the last year examining is our strategic approach to pay-per-views. We've looked into all parts of that business that are making adjustments that we believe will enhance our results by making each pay-per-view a special event not only in its content, but in all things surrounding each event. As promised last quarter, we recently announced our pay-per-view calendar for 2022, the dates, cities, venues. For the first time in our history, we're hosting at least four pay-per-view nights in stadiums in the United States. First, Royal Rumble on January 29 at the Dome at America's Center in St. Louis, a Saturday night, where there is no real competitive programming on the sports calendar. Typically, we have done Royal Rumble a week later during Pro Bowl weekend. However, this year, we wanted to support our NBCU partners and not go up against the Winter Olympics. Thus far, ticket sales are off the charts, tracking as well as this year's SummerSlam, where we ended up with a gate four times the gate of SummerSlam 2019, a clear sign of the value of bringing our tentpole events to major venues on the right night. Next, in terms of stadium events, a 2-night WrestleMania at AT&T Stadium in Dallas, Saturday, April two and Sunday, April 3. In 2016 at AT&T Stadium, we had over 100,000 fans in attendance for WrestleMania. Let's see what two nights brings for our Super Bowl. Tickets go on sale next week. Our stadium event after that, another on of our big five pay-per-views, Money in the Bank, the weekend going into July 4, will be back at Allegiant Stadium in Las Vegas. Over 400,000 people are expected to travel to Las Vegas that weekend to celebrate the Fourth. We expect to see many of them at Money in the Bank. About a month later, SummerSlam at Nissan Stadium in Nashville, again on a Saturday, July 30. If you've been to Nashville in the summer on a weekend, it's booming and growing, and we are growing SummerSlam with it. What we found from this past SummerSlam in Las Vegas, of the 50,000 plus who attended, not one ticket was purchased from Tennessee, not 1. So many similarities between those two cities on the weekends, not much crossover between those two cities on the weekends and a robust ticket buying market in each for us to tap into and grow with. One other item to highlight relating to our pay-per-view events. For the first time, we're holding an event on the night of New year's Day from State Farm Arena in Atlanta. As we discussed previously, this upcoming New year's Eve is a Friday. Both college football playoff games are on that Friday. Usually the NFL will go to a Saturday and Sunday schedule once the college football regular season is over. That is no longer happening on Saturdays late in the season with the NFL's new 18-week regular season, and over 350,000 people are expected in Atlanta for that New year's weekend. With the removal of NFL competition and the city packed with visitors, we thought it might be smart to have an event there the next night, again, Saturday, January 1. We expect to benefit from all of those weakened guests looking for entertainment the night after New year 's eve. You may recall seeing Atlanta Hawks NBA All-Star Trae Young interfere in one of our matches at Madison Square Garden in September, all part of our Atlanta strategy. Look for more integration like that across our product. Another area where we've strategically pivoted in an effort to further grow our business is with a new trading card partner, Panini. As all of you know, the trading card market is booming right now with a handful of companies competing for a select number of deals with the top sports properties. We received multiple bids from those companies. Panini, with their expertise, doggedness and domestic and international knowledge, proved out to be the best partner for us in this space. The deal is considered -- is a considerable financial step up from our previous trading card deal. We also recently announced a new multiyear agreement with Fox to launch an NFT marketplace for licensed digital WWE tokens and collectibles. Fox is obviously our existing partner in the U.S. for SmackDown. And coming out of the pandemic, we've been able to spend considerable in-person time with Fox's senior executive team to think of additional ways to work together. As Lachlan Murdoch, Fox's Executive Chairman and CEO, said on their earnings call yesterday relating to Fox and WWE together in the NFT space, this type of deal will drive new business and the creative and entrepreneurial spirit in all of it. This new collaboration will create authentic NFTs that showcases WWE's catalog of digital assets, including iconic moments, legendary superstars and premier events such as WrestleMania and SummerSlam. With our wholly owned intellectual property, we have a competitive advantage in our ability to leverage the immense popularity of NFTs as well as the activities surrounding trading cards and other collectibles. It's been a busy quarter with a sustained focus on strengthening our existing businesses and establishing new revenue streams. She will cover a number of items, including our significant growth in sponsorship over the past year. And unfortunately, everyone, I have to start with some bad news. WWE Superstar The Miz was eliminated from Dancing With the Stars this week. He did make it to the top 10, and his weekly appearance was seen by nearly six million viewers on ABC, raising awareness for both Miz and WWE. As Nick mentioned, we are changing from an arena-based touring model to a stadium-based touring model, allowing us to better align all lines of business around our key tentpole events. For example, SummerSlam was held at Allegiant Stadium, the first time SummerSlam has ever been held in an NFL stadium, attracting a record 51,000 fans and drawing a record gate. As Nick mentioned, more than 4 times greater than the last SummerSlam held with fans in 2019. Merchandise was up 155% year-over-year and more people watched SummerSlam across Peacock and WWE networks than any other SummerSlam in WWE history, with a viewership increase of 55% from 2020. SummerSlam also marked the finish of The Summer of Cena, a strategic move to use one of our biggest superstars to help kick off our return to live events that began on July 16. John Cena became our top-selling talent for merchandise, especially with youth audiences, and he increased ratings for audiences two to 17 and 18 to 49 by 20% and 10% during his appearances on Raw and SmackDown. An Instagram video featuring Cena became WWE's most watched native Instagram video with 4.3 million views. And while The Summer of Cena came to an end at SummerSlam, we began new storylines by surprising the audience with the return of The Man, Becky Lynch, and the Beast Incarnate, Brock Lesner. Brock's return broke Cena's Instagram record at 4.5 million. Sales and sponsorship revenues for SummerSlam were up 18% year-over-year and 25% over 2019, featuring our first-ever official water with Blue Triton's Pure Life and our first-ever official beer with Constellation's Victoria beer brand. We also had an array of sponsors across betting, gaming, wireless, energy and credit card categories with DraftKings, 2K, Cricket Wireless, Cellucor C4 and Credit One. Just as WWE's overall business is nearly 80% contractual, we have shifted our sales and sponsorship strategy from transactional to contractual, pivoting to multiyear seven-figure deals. In 2021, the number of these deals has increased 60%. Additionally, our client spend has increased 44% year-over-year with over 50% returning partners. In the quarter, gross sponsorship sales are up over 20%, excluding a 2020 YouTube bonus payment and partnership allocation. To help give perspective, there are four key areas of growth across sales and sponsorship: content integrations, superstar brands, digital, social and international. In terms of content integration, would you ever see a Pure Life truck drive into Arrowhead Stadium in Kansas City and have Patrick Mahomes spray down fans with a Pure Life branded Super Soaker as part of a touchdown celebration? Or have zombies replace the offensive line for one down? My guess is no. But you can in WWE and because we have all the exciting action of a live game but are scripted like a great movie, we can write those integrations in ways that are fun and memorable for the audience and our partners. Or we can leverage our creative writing and media teams to create customized content across digital and social media that is relevant to that platform, like we did with P&G's Old Spice when we introduced a new WWE Superstar with the same name as their new scent, the Night Panther. We produced 16 pieces of original content that delivered over 0.5 billion impressions and 40 million views with 96% of our audience saying they would take action toward Old Spice. In terms of Superstars, the best comparison I can think of is Disney's Marvel Superheroes. Each Superhero is their own individual franchise and WWE has just begun to unlock some of our incredible IP, which dates back generations with each Superstar being their own brand with their own story. Our biography series with A&E is one example. Xavier Woods' UpUpDownDown YouTube gaming channel is another. Becky Lynch on the cover of Golden Crisp or The Miz with his own reality show are just a few examples. And international sales are just getting up to bat as we focus on creating more localized content. Additionally, engagement metrics continue to be strong for WWE, with a slight increase in television ratings for both Raw and SmackDown despite tough competition from the return of live sports. Digital consumption increased to a quarterly record of 410 million hours, and video views increased 38% to 12.8 billion as compared to a prior year period that had benefited from COVID-19-related viewing trends. And with our renewed emphasis on producing more content for emerging platforms and younger audiences, our video views on Snapchat and TikTok are up 22% and 29%, respectively, year-over-year. Speaking of TikTok, while it is a tight race, we are the number one sports brand on TikTok over the NBA with 14.5 million followers. With the continuing focus on innovation and interactivity, WWE was recently announced as one of three launch partners with Snapchat's new augmented reality division, Arcadia, in which we will be creating fun and unexpected AR experiences for fans at upcoming events. And I would be remiss if I didn't recognize how excited we are for the launch of our console game 2K 22 in March 2022. On yesterday's earnings call, Take-Two President Karl Slatoff said it will be the biggest WWE 2K launch to date. We are pleased with our overall performance in the quarter, highlighting our ability to deliver on strategic initiatives, captivate a passionate audience and drive value for our business partners and shareholders. Today, I will discuss WWE's financial performance. As a reminder, all comparisons are versus the year ago quarter, unless I say otherwise. In the third quarter, WWE generated solid financial results as we focused on optimizing our return to live event touring, driving fan engagement and increasing efficiency in our content production. Total WWE revenue was $255.8 million, an increase of 15%, driven by higher ticket and vending merchandise sales associated with our return to live event touring, including SummerSlam. Adjusted OIBDA declined 8% to $77.9 million as the growth in revenue was more than offset by higher television and event-related production expenses. Looking at the WWE Media segment. Adjusted OIBDA was $85.6 million, a decline of 16%, primarily due to the increase in production expenses, which I just described. That increase reflected in part the lower cost of producing televised content from our training facility in the prior year quarter. Media segment revenue increased slightly as the contractual escalation of WWE's core content rights fees from the distribution of Raw and SmackDown were partially offset by a decrease in network revenue. The latter was driven by the timing of license fees associated with the delivery of WWE Network content to Peacock as compared to the recognition of subscription revenue in the prior year quarter. In mid-July, we transitioned our television and pay-per-view production from the Yuengling Center in Tampa Bay to the arenas and stadiums that are part of our touring model. Recall that in the third quarter of 2020, we were producing a barebones production out of our performance center in Orlando for much of the quarter until we established our WWE ThunderDome experience in late August 2020. These changes in venue were the primary determinant of the year-over-year increase in production expense. Live Events adjusted OIBDA was $9.3 million, an increase of more than 3 times or $13.5 million due to a 39 times increase in revenue with the return to live event touring, including the staging of SummerSlam. Recall that in the year ago quarter, we staged no live events or ticketed fare. As we said, we are thrilled by the return to live event touring. During the third quarter, average attendance for our 38 events in North America was significantly above 2019, reflecting heightened consumer demand for our live events. And for the fourth quarter, we continue to anticipate ticket demand and profit per event that is at least on par with 2019. In our Consumer Products business, we've continued to develop new partnerships and products as we align with evolving consumer preferences, including the tremendous interest in NFTs, trading cards and memorabilia. Earlier, Nick described our newly formed partnership with FOX in the NFT space and Panini. Importantly, he also extended our global master toy licensing agreement with Mattel, a partner whose popular WWE action figures and other toy products comprise a meaningful share of our licensing revenue. During the third quarter, WWE generated approximately $45 million in free cash flow, declining $66 million primarily due to the timing of collections associated with our large-scale international events in the prior year quarter and to a lesser extent, an increase in capital expenditures. Notably, during the third quarter, WWE returned $31 million of capital to shareholders, including approximately $22 million in share repurchases and $9 million in dividends paid. To date, we've repurchased approximately $200 million of stock, representing approximately 40% of the authorization under our $500 million repurchase program. As of September 30, 2021, WWE held approximately $449 million in cash and short-term investments. Debt totaled $221 million, including $200 million associated with WWE's convertible notes. The company has no amounts outstanding under its revolving line of credit and estimates related debt capacity of approximately $200 million. And finally, a word on WWE's business outlook. In January, WWE issued adjusted OIBDA guidance of $270 million to $305 million for the full year 2021. During this third quarter, key performance metrics demonstrated positive trends, and we continue to realize heightened demand for live events and better-than-expected television production efficiencies. Based on outperformance to date and revised expectations for the full year, we are raising our guidance. Adjusted OIBDA is now expected to be within a range of $305 million to $315 million with the staging of one large-scale international event. The revised full year guidance implies fourth quarter adjusted OIBDA of $75 million to $85 million as compared to $51.2 million in the fourth quarter of 2020. The projected year-over-year growth reflects the impact of staging one large-scale international events, which we were unable to stage in the fourth quarter of last year, contractual increases in media rights and higher revenue and profits from the return to live event touring. These factors are partially offset by an expected increase in operating expenses. Turning to WWE's capital expenditures. Through the first nine months of 2021, WWE has incurred about $24 million in capital expenditures, primarily to support our technology infrastructure and restart the construction of our new headquarters. While we continue to anticipate increased spending in the fourth quarter to support these initiatives, we also anticipate lower capital expenditures during the remainder of the year than previously estimated. For the full year 2021, total capital expenditures are expected to be within a range of $60 million to $75 million, lower than the previous guidance of $85 million to $105 million. The revised range does incorporate some potential supply chain disruption and associated potential timing-related changes in spending. In the third quarter, WWE generated better-than-expected revenue and adjusted OIBDA results. The robust demand for our events and increased consumption programming across platforms highlights the strength of our brand and reinforces our belief that continued innovation can enhance the value of our content and our products.

q3 revenue $221.6 million versus refinitiv ibes estimate of $222.3 million. not reinstating guidance at this time. world wrestling entertainment - qtrly wwe network average paid subscribers were 1.6 million, an increase of 6%. anticipates $40 - $45 million in incremental q4 expenses (4q 2020 versus 3q 2020). currently developing its 2021 annual operating and strategic plans. remains challenging to quantify potential impact of covid-19 on its business.

We are off to a great start in 2020. The strong fundamentals we discussed on our fourth quarter call not only continued, but actually accelerated as we move through the first three months of the year. Same-store occupancy remained at all time highs for Extra Space with sequential growth in January and February at a time of the year when occupancy normally declines. Occupancy increased further in March, ending the quarter with the year-over-year positive delta of 480 basis points. Our elevated occupancy has given us significant pricing power, which has also accelerated during the quarter with achieved rates increasing from 10% in January to well into the teens by the end of March. These trends fueled same-store revenue growth of 4.6% despite a 110 basis point drag on revenue growth from lower year-over-year late fees. We had excellent expense control with 0.2% decrease in same-store expenses. The result with same-store NOI growth of 6.5% a sequential acceleration of 310 basis points from Q4 and year-over-year core FFO growth of 21%. With fundamentals holding and performance comps becoming much easier in the upcoming months, we expect continued acceleration in revenue growth through the second quarter. Our concern of a dramatic increase in vacates has not materialized and now we are into our busy leasing season when demand is typically strongest. We believe that vacate risk to our elevated occupancy has likely been postponed until the end of the summer or even into the fall. Turning to external growth. The acquisition market continues to be expensive and we remain disciplined but opportunistic. Year-to-date, we've been able to close or put under contract a little over $300 million in acquisitions. These are primarily lease-up properties and several of the properties came from our bridge lending program. Looking forward, we anticipate the majority of additional acquisitions to be completed in joint ventures and we have plenty of capital to invest if we find additional opportunities that create long-term value for our shareholders. We were very active in Q1 on the third-party management front, adding 61 stores in the quarter, which includes the previously announced JCAP stores. Our growth was partially offset by dispositions. We have only sold to other operators at prices we viewed as unattractive to the region. While this trend presents a headwind, we still expect solid growth in our third-party management platform for the year. As I said on our last call, we are mindful of the risks we face. These include difficult fourth quarter operational comp, a tight labor market and new supply and state of emergency orders in certain markets. That said, current fundamentals are the strongest we have seen in some time. And our team is prepared to use all our available tools to optimize performance. Our first quarter outperformance coupled with steady external growth and the improving 2021 outlook allow us to increase our industry-leading annual guidance $7.5 at the midpoint. I would now like to turn the time over to Scott. As Joe mentioned, we had a good first quarter with accelerating same-store revenue growth driven by all-time high occupancy and strong rental rate growth to new customers. Late fees and other income continue to be down and partially offset rental income, but we will lap this comp in the second quarter, which will enhance same-store revenue growth. Existing customer rate increases will also provide a tailwind in the second quarter since they were paused during much of Q2 2020. We delivered a reduction in same store expenses despite property tax increases of 6.9% and repairs and maintenance increases of 20% due to higher year-over-year snow removal costs. These increases were up and were offset primarily by savings in payroll and marketing. We believe payroll savings will continue throughout the year, albeit perhaps at lower levels due to wage pressure in certain markets. Marketing spend will depend on our use of this lever to drive topline revenue growth, but it should also remain down for the year. Core FFO for the quarter was $1.50 per share, a year-over-year increase of 21%. Same-store property performance was the primary driver of the outperformance with additional contribution from growth in tenant insurance income and management fees. As we announced during the quarter, Moody's issued Extra Space a BAA2 credit rating, our second investment grade credit rating now providing us access to the public bond market. We continued to strengthen our balance sheet during the quarter through ATM activity and an overnight offering, which combined for net proceeds of $274 million. We sold 16 stores into a joint venture and obtained debt for that venture, resulting in cash proceeds to Extra Space of $132 million and an ownership interest of 55%. We plan to add a third partner to this venture in the second quarter, which will reduce our ownership interest to 16%. Our equity and disposition proceeds reduced revolving balances and we ended the quarter with net debt to EBITDA of 5.1 times lower than our long-term debt target of 5.5 times to 6 times. Last night, we revised our 2021 guidance and annual assumptions. We raised our same-store revenue range to 5% to 6%. Same-store expense growth was reduced to 2% to 3%, resulting in same-store NOI growth range of 6% to 8%, a 175 basis point increase at the midpoint. These improvements in our same-store expectations are due to better-than-expected first quarter performance, relaxed legislative restrictions in certain markets, and better-than-expected resilience in storage fundamentals as the vaccine rolls out. We raised our full year core FFO range to be $5.95 to $6.10 per share, a $7.5 increase at the midpoint. We anticipate $0.14 of dilution from value-add acquisitions in C of O stores, $0.02 less than previously reported due to improved property performance. We are excited by the strong performance year-to-date, as well as the acceleration we see heading into the second quarter.

q1 ffo per share $1.50 excluding items. sees ffo per share $5.95 - $6.10 for 2021.

Although we believe estimates reflected in these statements are based on reasonable assumptions, we cannot give assurances that the anticipated results will be achieved. So as we begin our prepared comments, first and foremost, all of us at Brandywine sincerely hope that you and yours continue to be safe, healthy, and as engaged as possible during this challenging time. This pandemic continues to disrupt all of our lives and as a result [Indecipherable] in a new landscape for everyone, including every business. The duration of this crisis is increasingly unclear. On our April 23rd earnings call, we did expect a return to the workplace environment by mid-summer. Given the events of recent weeks, however, that timeline has been extended. We are continually assessing COVID-19's impact on every element of our business and based on this detailed review, we remain confident in our ability to execute all components of our 2020 business plan. Additional details on our approach to this crisis are outlined in our COVID-19 Insert, that is found on pages 1 to 5 of our supplemental package. So during our prepared comments, as we always do, we'll review second quarter results and an update to our 2020 business plan. We'll also review the announced joint venture of our -- on our One and two Commerce Square properties in the central business district of Philadelphia. Tom will then summarize our financial outlook and update you on our strong liquidity position. So I'm looking at the second quarter, we continue to execute on every component of our 2020 business plan. For spec revenue, we are 99% complete, with only 69,000 square feet and $300,000 remaining to achieve our spec revenue target for the year. We had good second quarter leasing activity that 400,000 square feet of both new and renewal activity, with strong rental rate mark-to-market of 19.4% on a GAAP basis and 10.3% on a cash basis. Same-store numbers had been tracking in line with our business plan, but the delayed opening of Philadelphia resulted in about a $2 million NOI decline from our parking operations for the balance of the year. Our parking operations are included in our same-store pool and as such, this NOI decline has reduced our cash and GAAP ranges by about 100 basis points each. Office operations are progressing in accordance with our business plan. Our cash collection rates continue to be extremely good, and we have collected over 99% of our second quarter billings and our July collection rate tracks very well, also with about 98% collected as of yesterday. Capital costs were at the low end of our targeted range. And we have lowered our estimated full-year 2020 capital ratio by 100 basis points, down to a 11% to 12%, really reflecting the experience we're having with generating short-term extensions that require minimal capital at with outlays and I'll touch on that in a moment. Retention was only 37%, which was mainly driven by known -- the known move out of SHI in our Austin portfolio as they began occupying their newly owned building that we built for them at our Garza Ranch project. As noted previously, we have backfilled 80% of their space, which will commence later this year at a 19% cash mark-to-market. And look, well, SHI was the primary driver in our occupancy decline, we had several other tenants expirations. All of those move-outs were known and part of our plan. And of the known move-outs, a 183,000 or 51% has already been relet and will recommence in 2020. I should also note that about 70 basis points of our occupancy decline were due to removing Commerce Square from our same-store pool. Most importantly though, we do expect occupancy returning to our targeted range of 92% to 93% by the end of this year. We did post FFO of $0.34, which is in line with consensus and Tom will amplify that in during his comments. And then looking at our 2020 business plan, as we talked about on our last call, this crisis really embodies both danger and opportunities for our company. Our clear priority has been to assess all elements of risk and institute plans to effectively mitigate and anticipate any adverse impact. We do remain focused forward on opportunities to enhance our business plan execution, whether that'd be by lease, early lease renewals, margin improving, rebidding programs or working with institutional partners to seek investments where we can create growth opportunities. And just a quick recap of our COVID-19 key components. We have maintained in accordance with all local, state and CDC guidelines, a door is open and lights on approach to our building operations. While it's a little bit difficult to quantify in some of our buildings. We estimate the current occupancy range of our buildings is around 5% to 10% in CBD Philadelphia, up to about 20% our DC assets, Austin is around 10% with some pullback in that given the situation down there, and the Pennsylvania suburban operations seem to be around 15%. Secondly, the stability of our operating platform remains a top priority with particular attention on rent collections and rent deferrals, all of which were amplified on page one of our supplemental package. One of our real top priorities has been a strategic outreach to all of our tenants. So we are in extremely close touch with all of our tenants, understanding their concerns, listening to their transition plans and providing help wherever we can, so we fully understand their objectives. As such as part of that program, while we've reached out to our entire tenant base, our particular focus has been on those tenants whose [Phonetic] spaces role in the next two years. The results of those efforts are framed out on page three of our supplemental and have resulted in 73 active tenant discussions totaling about 950,000 square feet that to date have resulted in 28 tenants, totaling about 216,000 square feet, executing leases since March 15th. These leases have an average term of 24 months with a 4.2% cash mark-to-market and a 5% capital ratio. On the construction front, all of our markets are allowing construction activities. And we've not programmed any additional pull back in construction activity delays this year. On a positive front, we are beginning to see downward pressure in select [Technical Issues] upon construction cost, hard construction costs, as well as some soft costs as the overall forward construction pipeline continues to shrink. Our leasing pipeline stands at 1.5 million square feet and we've actually had better than expected progression in that pipeline during the quarter. Once again, our team has been in an extensive touch with every prospect and the breakdown of the 1.5 million [Phonetic] is as follows: deals progressing but execution uncertain -- timing of that uncertain and we're targeting in the next 90 days that 24% or 354,000 square feet. Deals progressing, but too early to tell when they would actually could execute it about 900,000 square feet or over 60% of the pipeline. And that's really the noticeable change. Since April's call, many more deals have advanced from the on-hold due to COVID, which right now comprises about 14% of that current pipeline into the deal progressing but too early to call. So tenants are slowly beginning to refocus their attention on their office space requirements. On the capital front, we're really delighted to announce a joint venture on our One and Two Commerce Square buildings in Philadelphia. The joint venture is with an extremely high-quality global institutional investor, who is making their first office investment in Philadelphia, which from our perspective, further demonstrates the attractiveness of our Philadelphia market to institutional investors and really validates investors perception on Brandywine's ability to create value. Our investor has requested that we do not disclose their name and certain terms of the agreement at this point in time. But the general framework of the venture meets many, many of our key objectives. It's a $115 million preferred equity investment, which represents 30% of the venture's capitalization at a total value of $600 million or $316 per square foot, which we believe is exceptionally strong pricing. The going-in cap rate is 5.1%, that cap rate improves based upon the rollover, but we really view that it's simply a data point due to the pending level of vacancy and the value creation opportunity. So right now over 97%, that does drop to 70% over the next 18 months. After providing for payments for transitional leases and closing costs, Brandywine received over $100 million of net proceeds, which as Tom will amplify added to our excellent liquidity position. The transaction is a 70-30 joint venture with shared control on decisions. And while we can't close some of the specific terms, we can share that our partners targeted rate of return on an all-in basis is in the very low-double digits. So we view it as very effectively priced capital. It provides for the same level of returns on preferred equity with a liquidation preference upon a capital event to our partner and in return for that preference, Brandywine receives a significant promote structure upon a capital in that [Phonetic]. Both Brandywine and our partner had each committed $20 million of incremental capital to reposition the properties and retenant known vacancies. We will continue to manage and lease the property. Frankly, due to the leasing status and the price, the transaction will have minimal dilution, less than $0.01 a share on '20 [Phonetic] earnings primer and will improve our net debt-to-EBITDA ratio by approximately between 3 and 4 turns between now and the end of the year. The transaction does reduce our Ford [Phonetic] rollover exposure by 1.8 million square feet in our wholly owned portfolio. And Brandywine will also recognize a gain of about $270 million on this transaction. Very important point to note in the structure, given the state of the debt markets and the near-term rollover profile of this property, we closed the venture with the existing $221 million mortgage in place at selling at 37% loan to value. As leasing progresses and the debt markets continue their recovery, we plan to refinance at a higher LTV, thereby affording both Brandywine and/or partner and other opportunities to generate liquidity. And speaking of liquidity, the company is in excellent shape, as outlined on page four of our supplemental package. We are projecting to have a $500 million line of credit availability at year-end 2020. And if we refinance rather than pay off an $80 million mortgage later this year, that liquidity increases to $580 million. We have only one $10 million mortgage that matures in 2021. We have no unsecured bond maturities until 2023. We anticipate generating $55 million of free cash flow after debts and payments for the second half of '20. And our dividend remains extraordinarily well covered with a 56% FFO and 75% CAD payout ratio. So with those items addressed, let me just spend a few moments on our development set. First of all, all of our production assets that's Garza and Four Points in Austin, 650 Park Avenue in King of Prussia and 155 in Radnor are all fully approved, fully documented, fully ready to go, subject to identifying pre-leasing. And as we've noted previously, these are near-term completions that we can complete within four to six quarters and there are individual cost range between $40 million and $70 million. As you might expect, we didn't really make any significant advancement in our deal pipeline of almost 600,000 square feet during the quarter and frankly don't really anticipate any significant advancement of some of these major discussions until the crisis begins to abate and there is more focus on return to the workplace. And looking at our existing development projects on 405 Colorado, look, this exciting addition to Austin skyline remains on track for completion in the first quarter of '21, at a very attractive 8.5% cash-on-cash yield. We have a pipeline of 125,000 square feet. But frankly, as I noted on the production assets, we don't expect any significant decision-making to occur until after the crisis begins to abate. On the board and building, delighted to report that's now been placed in service at 94% occupancy and 98% leased. The property will stabilize on schedule in the fourth quarter of 2020. 3000 Market Street is a 64,000 square feet life science renovation that we undertook and within Schuylkill Yards. As noted last quarter, we did sign a lease with one of our existing life science tenant Spark Therapeutics who has taken the entire building on a 12-year lease. We expect that lease will commence in the third quarter of next year and deliver a development yield slightly north of 9%. Quickly looking at Broadmoor and Schuylkill Yards. At Broadmoor, we continue fully advancing our development plans on Block A, which is 360,000 square feet of office and 340 apartment units. And we've gotten through a final design in pricing and we'll be in a position to have all of that ready to go by the end of Q3 this year, subject to financing and pre-leasing. Schuylkill Yards, within Schuylkill Yards, we really continue a very, very strong life science push. The overall master plan for Schuylkill Yards provides with at least 2.8 million square feet can be life science space. So we really do view that we have a tremendous opportunity to establish a full ecosystem. 3000 Market in the Bulletin Building conversions, I just mentioned, to life science really evidence is the first part of that pivot to create a life science hub. We are also well into the design, development and marketing process for a 400,000 square foot life science building with the goal of being able to start that by Q2 '21, assuming market conditions permit. Finally, we are converting several floors within our Cira Center project to accommodate life science use that the aggregate square footage for that converted space is 56,000 square feet, and we have a current pipeline of 137,000 square feet for that space. Schuylkill Yards West, our residential office tower is fully approved to go and ready, subject to finalizing our debt and equity structure. We have also modified the design of the office component to accommodate some level of life science use. As I mentioned in the last quarter and I'll mention again this quarter, the COVID-19 crisis has clearly had a big impact upon the timing of moving forward this project and getting the financing in place. We continue to work with our preferred equity partner, but the crisis clearly slowed the pace of procuring and finalize both at equity piece as well as the debt piece. We do remain optimistic that we'll get this across the finish line as soon as the situation returns to some level of normalcy. In general, we do continue to maintain a very active dialog with a broad cross-section of institutional investors and private equity firms. In addition to our Commerce Square announcement, we continue to explore other asset level of joint ventures that will both improve our return on invested capital and continue to enhance our liquidity and provide growth capital for our development pipeline. These discussions are active and ongoing and they certainly encompassed both our Broadmoor and Schuylkill Yards projects. Based on the current uncertain business climate, we will not provide that 2020 guidance as part of our third quarter call, but we do plan on issuing guidance no later than our fourth quarter earnings cycle. Now, I'll turn the mic over to Tom, who will provide an overview of our financial results. Our second quarter net income totaled $3.9 million or $0.02 per diluted share and FFO totaled $57.7 million or $0.34 per diluted share. Some general observations regarding the second quarter results. Operating results were generally in line with our first quarter guidance with a couple of items to highlight. On our portfolio, operating income, we estimated 8 million -- $80 million in portfolio NOI [Phonetic] and we were $1.1 million higher than that. While we did have parking being about $1 million below our anticipated reduced parking level, primarily due to the transit and monthly parking. We did have lower physical occupancy and therefore, sequential operating expenses were lower and we experienced higher operating margins in 2Q '20, offsetting the lower parking income. Interest expense improved by $0.8 million primarily due to lower interest rates than forecast. Our second quarter fixed charge and interest coverage ratios were 3.4 times and 3.7 times, respectively. Both metrics were similar to the second quarter of 2019. As expected, our second quarter annualized net debt-to-EBITDA increased, the increase to 7.0 times was primarily due to the lower anticipated sequential EBITDA outlined in the prior quarter. Adjusting for the Commerce Square transaction on a pro forma basis for the second quarter, that 7.0 were decreased to 6.7. Two reporting items to highlight for the second quarter, cash collections, as reported, overall collection rate for the second quarter was a very strong 99.6% based on actual quarterly billings. However, if we did include the second quarter deferred billings, our core portfolio collections rate would still have been a very strong 97%. In addition, cash same-store as outlined on page one of our supplemental, we have included $2.3 million of rent deferrals in our second quarter results. Looking then to third quarter guidance. Looking forward, we have portfolio operating income will total approximately $74 million and will be sequentially lower by $7.1 million. This decrease is primarily due to Commerce Square JV. The joint venture will result in deconsolidation of the property and that will lower the NOI by $7.5 million. One good pick up on the other side, if there is $1.2 million of incremental income for the Bulletin Building, which has been placed into service in June and the building is now 94% occupied. FFO contribution from our unconsolidated joint ventures with total $6.5 million for the third quarter, which is up $4.1 million from the second quarter and that's primarily due to Commerce Square joint venture, which has been deconsolidated effective [Indecipherable] with our earnings yesterday. For the full-year 2020, the FFO contribution is estimated to be $19 million. G&A for the third quarter will total 7.3 [Phonetic] and will be sequentially $1 million lower than this -- than the second quarter. This is primarily due to lower compensation award amortization and it's pretty consistent with prior years. Full-year G&A expense will approximate $31 million. Interest expense will be $1.5 million sequentially compared to the second quarter and will total $18 million for the third quarter with 94.5% of our balance sheet debt being fixed rate at the end of the second quarter. The reduction in interest expense is primarily due to the $100 million of net proceeds received from the Commerce Square joint venture paying off our line of credit at Commerce Square mortgage debt. And then also the Commerce Square mortgage debt will now be deconsolidated. Capitalized interest will approximate $1 million for the third quarter and full-year interest expense were approximately $76 million. We extend -- we plan to extend our Two Logan mortgage beyond the August 1st maturity date, and we are looking to either pay that off or have an extended and we'll be working on that during this quarter. Termination and other fee income. We anticipate terminations and other income totaling $2.2 million for the second -- for the third quarter and $10.5 million for the year. Net management, leasing and development fees will be $4 million and will approximate $10 million for the year. We have no planned land sales and tax provisions of any significance. No anticipated ATM or additional share buyback activity. And our guidance for investments, we have only the two -- the one property in Radnor, Pennsylvania that we will acquire for $20 million and that is scheduled for redevelopment. So we know generating of earnings of any kind in 2020. Looking at our capital plan, as we outlined, we have two development projects in our 2020 capital plan with no additional developments plan for the balance of the year. Based on that, our CAD range will remain at 71% to 78%. And uses for this year will total $285 million, $67 million of development, $65 million of common dividends, retained -- revenue creating will be $25 million, revenue maintain will be $27 million, mortgage amortization of $1 million. We are including the $80 million pay-off of the mortgage at Two Logan and the acquisition of 250 King of Prussia Road, sources for all those uses. Our cash flow from after interest payments $115 million [Phonetic]. $100 million of net proceeds from Commerce Square joint venture, when you use the line of credit for $39 million, cash on hand of $21 million and land sales of $10 million. Based on the capital plan outlined, we are in excellent position on our line of credit and liquidity. We also project that our net debt will range between 6.3 and 6.5. It will likely be at the low end of that range as a result of the Commerce Square joint venture, which has reduced our leverage in the second quarter. In addition, our net debt -- our debt to GAV will approximate 38%, which is down from 43%, primarily again due the joint venture improvement in that metric. In addition, we anticipate our fixed charge ratio will continue to approximate 3.7 on an interest coverage basis and 4.1 -- 3.7 on a debt service coverage and interest coverage would be 4.1. With that, wrapping up. As we always do, we ask that in the interest of time you limit yourself to one question and a follow-up.

q2 ffo per share $0.34. qtrly earnings per share $0.02. do not plan on providing our 2021 guidance during q3 earnings cycle.

We appreciate you joining us. Let me begin by outlining our plan for this evening's call. First, I'm going to discuss the details behind our second quarter 2020 financial results, which were strong considering the current economic environment brought upon by the pandemic. Paul will then comment on the key drivers behind our Q2 results and our outlook for the remainder of the year. I'll return to provide our financial guidance for the third quarter and an update to the full-year 2020 guidance. We will then end the call with a question and answer session. In addition, some of our discussion may include non-GAAP financial measures. Now let's discuss our second quarter results, in which we achieved a $1.54 in adjusted EPS, an 86% increase over Q2 of 2019, and adjusted EBITDA of $92 million, an increase of 62%. Average paid worksite employees declined by just 1.8% from Q2 of 2019 compared to our forecast of 1% to 5% decline that took into account the impact of the COVID-19 pandemic on our clients and prospects. All three drivers including worksite employees paid from new sales, client retention and net losses in our client base from layoffs and hiring were better than expected. Worksite employees paid from new client sales were approximately 20% above forecasted levels, driven by 15% increase in trained Business Performance Advisors and success in our mid-market segment. Client retention held up at our historical high level of just over 99% during Q2. This points to the financial strength and actions taken by our clients during the pandemic and our quick and effective response to assist our clients with our premium level of HR services. Net losses in our client base in Q2 were lower than expected as the level of worksite employees laid off, returning to work from furlough and general hiring were all favorable. This was particularly the case in the month of June. In a few minutes, Paul will share the details on the actions we've taken recently to assist our clients and provide thoughts around more recent trends in our updated 2020 worksite employee outlook. So let's move on to gross profit, which increased by 27% over Q2 of 2019. These results included lower-than-forecasted benefits and workers' compensation costs partially offset by our decision to provide comprehensive service fee credits to our clients. Lower benefit costs were primarily due to lower utilization, especially lower levels of elective healthcare procedures, some of which is expected to be offset in subsequent quarters with the resumption of deferred care and future COVID-19 costs. Lower workers' compensation costs were primarily a result of the effective management of claims incurred in prior periods and largely unrelated to the pandemic. Due to the structure of our workers' compensation program, any reduction in the number and severity of workers' compensation claims associated with the work from home status of many of our clients and employees would likely impact our cost in later periods as these claims develop over time. During the quarter, we proactively engaged with our vendors in successfully negotiating savings to support our clients through this difficult period. As a result, we provided a comprehensive service fee credit to our clients based upon their worksite employee levels at June 30. These credits totaled approximately $12 million and were accrued in the second quarter. Also, under the CARES Act and Family First Act, clients were able to take advantage of payroll tax deferrals and credits offered through government stimulus packages. These deferrals and credits totaled approximately $45 million during Q2 and were reported as both a reduction to revenue and direct costs. So in total, these two items reduced Q2 reported revenues by approximately $57 million and gross profit by approximately $12 million. Second quarter operating expenses increased by 9% and included continued investments in our growth, including costs associated with the increase in the number of Business Performance Advisors. Other corporate employee headcount has remained level over the first half of this year, even though HR demands have increased with the pandemic and its impact on the economy and a number of HR issues, including diversity and inclusion. Second quarter compensation costs included an acceleration in the timing of a portion of our corporate employees' annual incentive compensation to reward them in a period of increased service demands. Additionally, Q2 operating costs included an increased paid time off accrual associated with higher-than-normal unused vacation hours during the pandemic. These expenditures were partially offset by cost savings in other areas, including travel, training and business promotion costs. Our effective tax rate in Q2 came in at 27%, and we expect a similar rate over both the latter half of this year and for the full-year 2020. Our strong financial position and liquidity continued to improve over the first half of 2020 in the face of the challenges and dynamics of the pandemic. Adjusted cash totaled $269 million at June 30, up from $108 million at December 31, 2019, while borrowings totaled $370 million at the end of Q2, up from $270 million at December 31, 2019. Over the first half of this year, we have repurchased 879,000 shares of stock at a cost of $61 million, paid $31 million in cash dividends and invested $39 million in capital expenditures. Today, I'll begin with a discussion of our efforts over the recent quarter to support our small and medium-sized business clients throughout the historic disruption arising from the pandemic. Secondly, I'll cover our view of the dynamics driving our expectations over the balance of the year for growth and profitability. And I'll finish my remarks with some thoughts about the long-term effect on demand for Insperity services, which represents a silver lining in the cloud of COVID-19. This quarter was an eye opener in many ways, including highlighting the absolute necessity and the tangible value of a sophisticated HR function for small to medium-sized businesses. The unexpected events that played out over the course of the quarter cast a spotlight on the HR department, which, of course, is what Insperity is to our clients. The sequence of events beginning with the health crisis evolved into economic disruption and the transformation to working from home, followed by the emotionally charged dynamic of prolonged stay-at-home orders and political and social unrest. When you add in federal, state and local legislative and regulatory responses, with new obligations and opportunities for businesses, you have a monumental challenge and opportunity for an HR services provider to demonstrate value to clients. Insperity Workforce Optimization has long been the most comprehensive business service offered in the marketplace and our competitive distinction is the breadth and the depth of our services and the level of care of our service providers. Our clients were relying on us to help them work through decisions that directly affected the livelihood of their businesses, employees and families. Our service teams continue to serve our clients and worksite employees with genuine care and excellence in an unprecedented time of need and constant change. In more than 30 years, I've never seen a quarter where clients experienced more of what we are designed to offer in such a compressed time period. The effort put forth was exceptional and could have only been delivered by the combination of an amazing team and an incredible culture like we have at Insperity. The workload across the company escalated substantially with call volumes and length doubled, service interactions tripled and a long list of other services spiking. HR solutions were required for the myriad issues businesses were facing, including layoffs and staffing strategies, PPP loan application forgiveness and reporting, work from home, return to work, FICA deferral, and diversity and inclusion, just to name a few. Allow me to say we could not be prouder of our staff across the board the way they stepped up and delivered on our mission to help businesses succeed so communities prosper through a very challenging period. Now in addition to passing this service stress test with flying colors, we also were able to see our business model perform well under the pressure of these unprecedented events. We were pleased with the dynamics across the business from sales and retention to pricing, direct cost and operating expenses. On our last call, we indicated our objective in new account sales operating in this virtual selling environment would be to fall within a range of 60% to 80% of our original 2020 pre-COVID sales budget. As you may recall, the sales budget is the internal metric we use to monitor and track performance in our sales organization. Our entire sales organization, both core and mid-market performed remarkably well, achieving total booked sales above 70% of our original 2020 pre-COVID sales budget and in the higher end of our own revised targeted range. As a reminder, once the sales booked, our service teams worked to onboard those clients and actually generate revenue as paid worksite employees. In this environment, client retention may also be a concern due to an increase in the business failure rate in the marketplace at large. As Doug mentioned, our client retention has remained solid, reflecting the strong client base we have, and demonstrating the benefit of our strategy of targeting the best small and mid-sized businesses onto our premium services platform. Another stress test during a period like this was around pricing of our services on both new and renewing accounts. It is certainly another credit to our staff and further validation of the value of our services that our standard pricing on our book of business did not reflect unusual pricing pressure in this environment. We were also very responsive to the immediate financial needs of our clients in providing a COVID-19 related service fee credit. During the quarter, we worked with vendors and negotiated $12 million in fee reductions to pass along to clients. We felt it was important to act quickly in this regard and get the funds to clients as soon as possible, and clients will begin seeing this credit on invoices starting this week. Another area to evaluate during this unusual time was the matching of price and cost on our primary direct cost items, including payroll taxes, workers' compensation and employee benefits. As I mentioned, pricing has remained on track. And although our quarterly direct cost pattern has changed, we anticipate a strong year overall at the gross profit line. So we have navigated the disruption and the immediate aftermath of the pandemic and related events of Q2 successfully, and our business model demonstrated substantial resiliency. Now in order to determine our expectation for the balance of the year, we need to zero in on the most recent behavior of our clients, particularly in layoffs and new or rehires in the base and consider the economic outlook for small business. Now in the second quarter, layoffs due to COVID drove a 6% reduction in paid worksite employees from March, reaching a low point at the end of May. Now since then, we've recovered approximately 40% of this reduction, primarily due to the return to work of just over 50% of furloughed employees. At the same time, approximately 17% of furloughed or temporarily laid off employees have been reclassified to permanent layoffs, so the number of potential rehires has been reduced by two-thirds. At this point, the rate of both layoffs and furloughed employees returning to work have moderated considerably. So determining what happens in the near term and that change in employment in our client base is somewhat of a toss-up. On one hand, it seems the small to medium-sized business community is adapting and dealing well with the new realities they're facing. We believe our client base has been particularly impressive in this regard. However, the continuing spread of the virus and the corresponding economic uncertainty may temper the rebound we have seen recently. Also, in our experience, there is sometimes a pause or hesitancy in decision-making with the uncertainty of an upcoming election, which may weigh in over the second half of the year. We do expect new account sales to ramp up over the last half of the year. However, most of the booked sales in Q4 typically do not become paid worksite employees until Q1 of the following year. These sales would contribute to growth in 2021, but not contribute significantly to this year's results. With this backdrop, our guidance [Phonetic] for growth is somewhat conservative over the balance of the year. Although the pandemic-driven circumstances make us appropriately cautious about the near term, recent events have made us even more bullish about the long-term prospects for Insperity. Our outlook for profitability over the last half of the year also has an appropriate measure of conservatism built in. The wildcard here is in our direct costs, and particularly our health plan where some portion of lower cost experienced in Q2 is expected to shift to Q3 and Q4. This creates an unusual quarterly pattern to our profitability for 2020 shifting more of the profits to the first half than usual. With this in mind, I believe it's very important for investors to look at the range of expectations for the full-year 2020 in context of the pandemic and focus on how we are positioned for 2021. Our full year guidance for 2020 implies a range of minus 1% to minus 3% unit growth in paid worksite employees. We expect a range of adjusted EBITDA growth that straddles to the level we achieved last year at minus 6% to plus 2%. So the big picture for the full-year 2020 is layoffs due to COVID and the economic shutdown, are expected to be partially offset by higher gross profit per worksite employee and lower operating expenses than our original budget. So while we're continuing to focus on meeting the intense need of our client base in the current environment, we are also looking to the longer term and the straightest path to regaining our growth momentum in 2021 as COVID-19 moves further into the rearview mirror. We believe we are very well positioned for growth as we look ahead to next year. The front of our growth engine is the number of trained Business Performance Advisors, which is currently at the highest level in our history. We have deliberately continued to invest in this team throughout this economic disruption due to the likelihood of a quicker and stronger growth surge once the uncertainty diminishes. We also believe we have an opportunity to hone our marketing message, utilizing the recent positive client experiences, and we intend to increase our marketing spend in the fall to drive leads and test this new messaging. In many ways, the unexpected and unusual developments of the last quarter validated the need for our services and the distinct advantage we provide to improve the success equation for small and medium-sized companies. Even though the pandemic has been quite a challenge, over the long term, we believe this experience will serve to increase demand within the small to medium-sized business community for Insperity services in the years ahead. At this time, I'd like to pass the call back to Doug. Now let me provide our guidance for the third quarter and an update to the full-year 2020. With the first half of the year behind us, we have more visibility as to the impact of the pandemic on our business and have seen signs of gradual improvement as businesses have started to reopen and employees have gradually returned to work. However, a high level of uncertainty associated with the pandemic, its impact on the economy and any further government stimulus packages continues to exist. The current political environment and upcoming election adds another element of uncertainty. Our guidance intends to take this into account and continues to reflect a wider range of possibilities than that provided in the past. Based upon the details that Paul just shared on our expected worksite employee levels, we are now forecasting a 1% to 3% decrease in the average number of paid worksite employees for the full-year 2020. This is a substantial improvement over our previous guidance of a 1% to 6% decrease and reflects the more favorable starting point for the second half of the year. The low end of this guidance assumes a persistent level of pandemic cases, continued economic disruption and ultimately, a recurrence of layoffs in our client base, exceeding both new hires and furloughed employees returning to work. The high end of our paid worksite employee guidance assumes a gradual improvement in conditions associated with the pandemic and its impact on the economy, and therefore, a nominal level of growth in our client base through both furloughed employees returning to work and general hiring. For the full-year 2020, we are raising our earnings guidance and now forecasting adjusted EBITDA of $235 million to $255 million, ranging from a decrease of 6% to an increase of 2% when compared to 2019. This compares to our previous guidance, which ranged from a decrease of 14% to flat with 2019. A component of this revised guidance is a further shift in the expected timing of healthcare utilization during the pandemic. As I mentioned a moment ago, the level of Q2 benefit cost savings largely tied to lower utilization and fewer non-essential procedures came in significantly better than our previous expectations. We expect that a portion of these non-essential procedures were deferred and some will shift into the latter half of the year, including costs associated with participants with chronic conditions that miss treatments. We also continue to expect ongoing COVID-related testing and treatment costs. As for our operating costs, we expect continued cost savings in various areas while operating in the current pandemic environment. As we are ahead of plan on the growth in Business Performance Advisors, we intend to grow BPAs modestly over the remainder of 2020, while we intend to continue to hold our other corporate headcount flat. We are forecasting for an increase in marketing costs associated with the upcoming 2020 fall sales campaign as we promote our premier HR services in this period of increasing demand. Finally, our updated earnings guidance assumes a reduction of approximately $3 million in net interest income from our previous guidance due to the recent decline in interest rates. As for the full year 2020 adjusted EPS, we are now forecasting a range of $3.67 to $4.04, up from our previous guidance of $3.19 to $3.86. Now as for Q3, we are forecasting average paid worksite employees in a range of 227,500 to 230,000, which is a small sequential increase over Q2. We are forecasting adjusted EBITDA in a range of $29 million to $38 million and adjusted earnings per share in a range of $0.37 to $0.54.

compname posts q1 adjusted earnings per share $1.82. q1 adjusted earnings per share $1.82. sees q2 adjusted earnings per share $0.60-$0.70. sees fy 2021 adjusted earnings per share $3.83-$4.40.

Our expectations contain many risks and uncertainties. Principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filings. As we close out this fiscal year, Ralph and I are proud and inspired by the way our teams have navigated through the pandemic. They have demonstrated their resilience, agility and ongoing passion for our brand and our consumers in a year unlike any other. Their commitment and execution shined through in our better-than-expected fourth quarter results. Against the volatile backdrop of the past year, we took action that has enabled us to emerge from this period a fundamentally stronger company than when we came into it. This includes: first, across all three regions, we accelerated our work to elevate our brands while also strengthening and simplifying our brand portfolio. We're also engaging more meaningfully with consumers and driving increased marketing to deliver higher brand awareness and purchase intent coupled with higher AURs. Second, we repositioned each of our channels and reduced our exposure to secularly challenged areas of distribution, particularly in North America. Within wholesale, we focused our brick-and-mortar presence on our healthier stores and significantly reduced our off-price penetration. Within direct-to-consumer, we accelerated our shift to digital, step-changing profitability by over 1,000 basis points as we added new connected retail capabilities and drove quality of sales. Your conference will resume momentarily. Confirm that you have the correct script. Confirming with Alyssa right now. We'd rather go with the recording, if that's an option. Otherwise, we'll read it. We can't wait for 10 minutes for the recording. Our expectations contain many risks and uncertainties. Principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filings. Hey, if there's one thing we've learned over the past 18 months, it's agility and the importance of agility. So apologies for the false start. Our teams delivered exceptional first quarter performance on both our top and bottom line results and across every geography. Our brand is resonating with consumers around the world as we lean into the breadth of our offering to deliver the products they are craving in this new normal. And all of our regions are in a healthier, more profitable growth trajectory. Even as we continue to execute through COVID-related challenges, it is clear that Ralph Lauren is back on offense. A few highlights to note. First, building on our consistent brand elevation work in direct-to-consumer business, we are now seeing accelerated demand and increased AUR in our wholesale channel. Second, our digital growth is accelerating, following our pricing and promotional reset work last year, and our digital margins continue to be accretive across every region. And third, we continue to make strong progress toward our long-term target of mid-teens operating margins. We delivered the highest Q1 company operating margin since fiscal '14, even as we more than doubled our marketing investment and continued to reinvest in key areas of growth like digital, key city ecosystem expansion and our consumer targeting and personalization. Our performance demonstrates consistent execution against the five strategic pillars that we outlined at the start of our Next Great Chapter plan. Let me share a few highlights from the quarter. First, on our efforts to win over a new generation. As we continue to invest in marketing, we are focused on new consumer acquisition and retention and both global and localized campaigns that capture consumers' optimism and desire to come together as we progressively emerge from the challenges of the past year. Some of our key campaigns in the first quarter included our Summer of Sports, which we kicked off with our Olympics campaign in North America as the official outfitter of Team USA. In June, we amplified our Wimbledon campaign with the diverse group of athletes, celebrities and influencers, such as South Korean superstar and Tottenham forward, Son Heung-Min; British pro surfer, Lucy Campbell; and G2 Esports League of Legends superstar, Rekkles. In the world of golf, we celebrated our brand ambassador, Yuka Saso's first major win at the U.S. Women's Open Championship. Combined, these Summer of Sports campaigns generated more than eight billion total impressions globally in the quarter. And there's still more to come in August and September with the 2021 Ryder Cup and the U.S. Open Tennis Championships right here in New York. We also announced our launch this quarter as the official outfitter of G2 Esports, one of the world's premier professional esports organizations. We are proud of this first-of-its-kind partnership in fashion and gaming as we continue to drive new ways of reaching next-generation consumers in key channels where they engage. In all, we added more than one million new consumers to our direct-to-consumer channels alone this quarter. And our total social media followers continue to grow, exceeding 46 million globally led by Instagram. This takes me to our second key initiative, energize core products and accelerate high-potential underdeveloped categories. As markets reopen around the world, consumers are shifting back to many of the key categories that drove our business prior to the pandemic while we also continue to develop new and high-potential categories. While casual styles are still resonating, we're also seeing a progressive return to sophisticated casual. Given the breadth of our assortment, we have the unique ability to respond to consumer shifting appetite, reintegrating more elevated styles into our assortments as we scale back on stay-at-home categories. On the men's side, we're seeing a resurgence in polo shirts, sports coats and trousers, denim, footwear and accessories for our core brands. In women's, we're seeing improvements across dresses, elevated sweaters, novelty fleece, jackets and handbags. And we're also driving better performance in bottoms, including new fashion silhouettes like wide leg as well as new fabrications like silk and linen. We are rebuilding the penetration of these categories into fall '21 and beyond as consumers make the transition back to the office and social activities. Our Spring performance gives us increased confidence that we will have the right assortments to meet consumers' needs moving forward. Other product highlights from the quarter included our first of several special collections with Major League Baseball. These limited capsules celebrate the heritage of America's favorite past time and evoke Ralph's lifelong love of the sport. Launched in May, across all of our channels, including social, digital, our stores and wholesale, the initial capsule generated over five billion media impressions along with significantly higher spend compared to our average total consumer. Our Spring Polo shirt campaign included the launch of our Polo Color Shop, fully made-to-order customized Polos and our updated Earth Polo in expanded colors. And we launched Polo Cologne Intense, an updated fragrance for a new generation and our new stir of eyewear collection as we continue to elevate and innovate across our licensed categories as well. Moving on to our third key initiative, drive targeted expansion in our regions and channels. With most of our key markets now fully reopened, we are back on offense this year with the build-out of our brand-elevating key city ecosystems around the world. This ecosystem approach ensures a consistently elevated experience across our digital, social and physical channels both in our direct-to-consumer and wholesale networks. As part of this, in the first quarter, we opened 18 new stores and concessions in priority locations globally, mostly in Asia, and closed 11 locations. China continues to be a significant long-term growth opportunity, and our ecosystem approach delivered strong growth again this quarter with Mainland sales up more than 50%. We are opening two new emblematic store experiences this year in Beijing and Shanghai. With a smaller footprint than our existing flagships around the world, this new format offers consumers an elevated, immersive brand experience at a significantly lower investment than our traditional flagships. Our Beijing store opened at the end of April in Sanlitun Mall, one of the top shopping locations in the country. In addition to featuring our Ralph's Coffee, Sanlitun integrates innovative, smart retail and digital activations throughout the store in partnership with Tencent. This includes endless aisle technology, virtual try ons and in-store treasure hunt using QR codes and customization stations where consumers use our WeChat Mini Program to order customized products from their mobile phones. Though still early, the store has significantly outperformed our initial expectations, and we're excited to build on our presence in China with the opening of our emblematic Shanghai location in just a few weeks. Both stores will immerse consumers in the world of Ralph Lauren and will help further develop our ecosystems in these key markets, which already include our smaller format Polo boutiques, concessions and digital presence across our own site and key partners such as Tmall. And as foreign tourism continues to be a headwind compared to fiscal '20 levels, we have shifted more of our marketing, clienteling and merchandising to capture local shoppers and regional tourists along with driving digital commerce. This takes me to our priority of leading with digital. Our global digital ecosystem, including our directly operated sites, department store dot-com, pure players and social commerce, accelerated to more than 80% growth in the first quarter in constant currency, up from about 60% in Q4. While traffic is returning -- is starting to return to physical stores, the strength in digital is exceeding our expectations, driving a benefit to our overall operating margin mix. North America drove the biggest improvement this quarter, increasing more than 50% across both owned and wholesale digital channels. Meanwhile, Europe and Asia momentum continued with growth of more than 100% in each region in Q1, led by our wholesale digital and pure-play channels. Our investments in digital continue to focus on content creation for all of our platforms, enhanced digital capabilities to improve the user experience and continuing to leverage AI and data to serve our consumers even more effectively. Touching on our work to operate with discipline to fuel growth. We continue to drive expense discipline in the first quarter in order to fund our long-term strategic investments in global expansion, digital and brand building while also working toward our target of mid-teens operating margins. We also successfully completed the sale of Club Monaco at the end of the first quarter as planned. And as previously announced, Chaps will transition from our North America wholesale business to a licensed model in Q2. These actions will enable us to further focus our resources on our core namesake brands and elevated positioning in the marketplace. I also want to take a moment to highlight our ongoing work to integrate citizenship and sustainability into everything we do. In June, we published our Annual Design the Change report, outlining our updated commitments and actions to drive our impact and champion the lives touched by our business. We committed to comprising our global leadership team of at least 20% underrepresented race and ethnic groups by 2023. As part of our comprehensive circularity strategy, we set a target to use 100% recycled cotton in our products by 2025 and to launch additional resale and recycle opportunities for our consumers by 2022. We also announced a goal to achieve net-zero greenhouse gas emissions across our operations and supply chain by 2040 as we continue to work on reducing our carbon footprint throughout our value chain. And beginning this fiscal year, we will incorporate key ESG metrics into our executive compensation plans. In closing, Ralph and I are very encouraged by the strong start to the fiscal year. Our teams are executing with passion and continue to embrace the agility they demonstrated throughout the challenging and unpredictable last 18 months. While we will continue to monitor key macro challenges closely for the balance of the year, notably around inflation, supply chain disruptions, COVID resurgences and the pace of traffic recovery, the actions we took to strengthen the foundations of our brand and our business last year are enabling us to deliver results even earlier than we expected. Looking beyond this period of unusual COVID compares, we are increasingly confident in our ability to drive sustainable growth. More than ever, led by Ralph's iconic vision, our teams are intensely focused on executing on our strategic plan to continue to protect and elevate our brand while realizing the significant growth opportunities that exist for our business in every market. With their passion, talent and careful execution, Ralph and I are confident in our ability to deliver attractive, long-term growth and value creation for all of our stakeholders. Our first quarter performance exceeded our expectations as our teams navigated challenges with agility, our brands connected with consumers and our strategy drove high-quality growth. Upside performance this quarter was driven by faster recovery in both North America and Europe led by our wholesale channel. Strong performance across Asia despite extended COVID headwinds in Japan accelerated digital growth with further digital margin expansion and continued brand elevation with high-teens AUR growth. And we continue to drive expense discipline across our business while investing in high-ROI initiatives to drive operating margins significantly above our expectations. First quarter revenues increased 182% to last year on a reported basis and 176% in constant currency. Growth was positive in every region led by North America. Compared to first quarter fiscal '20 or LLY, revenues declined 4%. However, this includes approximately seven points of negative impact from last year's strategic reset to our distribution and to our Chaps business, which transitions to a licensed model this month. Total digital ecosystem sales accelerated to more than 80% growth in constant currency both to last year and LLY, including 50% growth in our own digital business. Our performance improved sequentially in every region, reflecting our strong assortments, expanded connected retail capabilities and high-impact marketing. North America delivered the strongest sequential improvement with digital ecosystem sales increasing more than 50%, up from low double digits last year. Digital margins also continue to strengthen and were strongly accretive to every region's profitability. Total company adjusted gross margin was 69.8% in the first quarter, down 200 basis points to last year on a reported basis and down 260 basis points in constant currency. This was significantly better than expected as we lapped last year's unusual COVID mix benefits driven by better pricing and promotion, along with favorable product mix and the benefit of supply chain organization streamlining. Adjusted gross margins increased 30 basis points to LLY. First quarter AUR growth grew 17%, marking our 17th consecutive quarter of AUR gains as we continue on our brand elevation journey. This came on top of 25% growth last year while stores were closed. Adjusted operating expenses increased 39% driven by higher compensation and rent as we lapped last year's furloughs and store closures during COVID shutdowns. Adjusted expenses declined 2% compared to LLY. We more than doubled our first quarter marketing investments over the last year's substantially reduced levels at the start of the pandemic. Compared to first quarter fiscal '20, marketing increased 39% as we focused on digital initiatives and reactivating key brand moments as markets reopened around the world. We expect to maintain an elevated level of marketing this year at around 6% of sales to support consumer engagement, acquisition and our long-term brand-building initiatives. Adjusted operating margin for the first quarter was 16.8% compared to a margin loss of negative 35.7% last year and 460 basis points ahead of LLY operating margin. This was well above our guidance of 7% to 7.5% due to stronger-than-expected replenishment in our wholesale and digital channels, which generate highly accretive margins versus our total company rate. Moving on to segment performance, starting with North America. First quarter revenue increased 300% to last year driven by strong Spring assortments, improving consumer sentiment and expanded store reopenings as we lapped the peak of store lockdowns last spring. Compared to LLY, North America revenues declined 8%, but included an 18% headwind from our strategic distribution resets and Chaps. In North America retail, revenues grew 189% to last year. Comps increased 176% on improved traffic and nearly 40% AUR growth, reflecting our continued elevation around product marketing and more targeted pricing and promotions. Brick-and-mortar comps increased 278% driven by stronger AUR, basket sizes and traffic as most stores reopened. Although foreign tourist sales improved significantly to last year, they were still nearly 70% below LLY due to continued softness in international traffic and travel. Comps in our own digital commerce business grew 51% this quarter, accelerating from 25% in Q4 as we continued to focus on new consumer acquisition, product elevation and enhancing the user experience. While we expect continued momentum in this channel, we note the prior year compares build sequentially after Q1. In North America wholesale, revenues increased to $250 million compared to $23 million last year as we carefully restocked into the channel and lapped last year's minimal shipment to customers during the shutdown. Sales meaningfully outperformed our expectations, driving the biggest upside to our guidance this quarter. The foundational work we completed through COVID to reset and elevate our inventories, exit lower-tier wholesale doors and significantly reduce our off-price penetration is starting to deliver strong early results across every key metric. In North America wholesale, full-price sellout is exceeding our sell-in. Total sellout was up high teens to LLY in Q1, led by market share gains in men's, kids, home and women's footwear. And we are also encouraged by early sequential improvements in women's ready-to-wear. Wholesale AUR growth continues to accelerate, up more than 20% to LLY. This represents our strongest wholesale pricing gains in the last six years. And our focus on Wholesale Dot Com is working with digital sellout up more than 50% in Q1 and more than 75% to LLY. Coming out of the pandemic, our wholesale partnerships are stronger, healthier and more collaborative with a focus on marketing, improved digital capabilities and the right product assortment and an appropriate level of inventories as we build back into demand. And we see more to come as we are still in the early stages of driving our brand elevation strategy in this channel. Moving on to Europe. First quarter revenue increased 194% on a reported basis and 179% in constant currency, above our expectations. First quarter comps increased at 98% with a 154% increase in brick-and-mortar as stores reopened and a 23% increase in digital commerce. The strong early pent-up demand that started in the U.K. this April was followed by better-than-expected reopening trends across France, Germany and Italy despite extended lockdowns in the quarter. Approximately 20% of our stores were fully closed in Q1 with additional stores operating under partial closures or other restrictions. All of our major markets reopened by the end of June. Digital commerce outperformed despite a challenging 44% comparison last year when COVID-related closures shifted more business online. While our digital comps partially benefited from extended lockdowns across Europe this quarter, the results also reflected stronger Spring assortments, growth in connected retail and our targeted marketing efforts. Europe wholesale exceeded our expectations again this quarter driven by stronger sellout and reorders in both digital wholesale as well as traditional wholesale accounts. Revenues increased 68% on a reported basis and 61% in constant currency. Our Asia retail comps increased 43% driven by similar performance across our brick-and-mortar stores and digital commerce. Our digital ecosystem continued to accelerate in Asia. In Q1, this was supported by our successful 5/20 gift day campaign, 6/18 shopping event live streamed from our newly opened Sanlitun store and momentum in our newest digital flagships in China, Japan and Hong Kong. Japan, our largest market in Asia, was negatively impacted by an extended state of emergency for the majority of the quarter. These restrictions drove a roughly six-point headwind to the region's overall growth in Q1. Despite this, our teams were able to successfully mitigate these headwinds with stronger performance across the rest of the region. This was led by the Chinese Mainland, which was up more than 50% to last year and 70% to LLY in constant currency driven by a strong product assortment, localized marketing initiatives and new store openings. Korea was also up more than 30% to last year and 40% to LLY. Japan returned to normal operations in late June and started to ramp up vaccinations. However, the government declared another state of emergency in July ahead of the Olympic Games, and we expect a slower recovery in Japan this year. Moving on to the balance sheet. We ended the year with $3 billion in cash and investments and $1.6 billion in total debt, which compares to $2.7 billion in cash and investments and $1.9 billion in total debt last year. We are confident in our ability to meet our debt leverage requirements, ratio requirements in Q2 and eliminate capital allocation restrictions in our bank waiver. Net inventory increased 4% to support increasing demand. This compared to a 22% decline last year when we limited shipments to brick-and-mortar channels at the height of COVID shutdowns last spring. Supply chain challenges are increasing the variability of inventory flows quarter-to-quarter. Looking ahead, our outlook is based on our best assessment of the current macro environment, which includes ongoing COVID-related disruptions, the global supply chain challenge -- and the global supply chain challenges. We expect the quarter cadence this year to be volatile given dynamic conditions across our markets. This includes potentially uneven pace of recovery by region and channel as well as the timing of investments as markets reopen. For fiscal '22, we now expect constant currency revenues to increase approximately 25% to 30% to last year on a 53-week basis. Excluding approximately $700 million in annualized revenues, we deliberately reduced during the pandemic, including department store exits, off-price and daigou reductions, Chaps and Club Monaco, this implies revenues up slightly to fiscal '20. Foreign currency is expected to contribute about 30 basis points to full year revenue growth. We now expect gross margin to expand 50 to 70 basis points even as we lap meaningful geographic and channel mix benefits due to last year's COVID closures. This implies roughly 440 basis point increase to fiscal '20. Our outlook includes slightly higher freight headwinds of approximately 100 to 120 basis points versus our previous expectation of about 100 basis points. However, this is more than offset by our expectation of stronger AUR growth of mid to high single digits above our long-term guidance of low to mid-single digits annually as we continue our long-term elevation work. We now expect operating margin of 12% to 12.5%, up from our 11% outlook previously. This compares to a 4.8% operating margin last year and 10.3% in fiscal '20. We expect operating margin for the remaining three quarters to moderate from Q1 levels based on increased marketing investments as planned to get to our target of 6% of sales this year, increased freight pressure in the back half of the year and our assumption that the higher-margin wholesale replenishments that we saw in the first quarter does not continue as demand start to normalize. For the full year, we expect operating profit dollars to increase meaningfully compared to fiscal '20 pre-COVID levels. For the second quarter, which no longer includes Club Monaco, we expect constant currency revenues to increase approximately 20% to 22%. Foreign currency is expected to contribute about 50 basis points to revenue growth. We expect operating margin of about 13% to 14% in the second quarter. This includes gross margin of flat to up 20 basis points as we continue to drive AUR and product mix, largely offset by higher freight as we lap last year's COVID mix benefits. We also expect modest operating expense leverage and restructuring savings, partially offset by higher marketing and new stores. We expect full year tax rate to be about 24% with the second quarter tax rate about 24% to 25%. In closing, we are proud of our team's agility and execution around the world this quarter. As Patrice mentioned, we are still managing through a highly dynamic environment. We are firmly back on offense with this strong start to the year, and this is only the beginning. Guided by Ralph's original vision and our purpose of inspiring the dream of a better life through authenticity and timeless style, we are connecting with consumers in more exciting and innovative ways than ever before. Over the coming quarters and beyond, you'll continue to see us driving our targeted strategic investments in key growth opportunities in order to deliver value for all our stakeholders.

global digital ecosystem revenues accelerated to more than 80% growth in q1. ralph lauren - full year fiscal 2022 outlook raised with constant currency revenues now expected to grow 25% to 30% on a 53-week basis. full year fiscal 2022 adjusted operating margin expected in range of 12.0% to 12.5%. continued momentum in chinese mainland, with q1 sales increasing more than 50% to last year. q2 fiscal 2022 revenues are expected to increase approximately 20% to 22% in constant currency to last year. inventory at end of q1 of fiscal 2022 was $803 million, up 4% compared to prior year period. foreign currency is expected to positively impact q2 2022 revenue growth by approximately 50 basis points. europe revenue in q1 increased 194% to $355 million on a reported basis and increased 179% in constant currency. asia revenue in q1 increased 68% to $288 million on a reported basis and 61% in constant currency. q2 gross margin is expected to be flat to up 20 basis points to last year.

The second quarter exceeded our expectations, both in terms of our results and outlook for 2021 and beyond. With our exceptional portfolio and team, we set high watermarks across several measures this quarter. Demand for space is robust and diverse and market conditions remain the healthiest in our 38-year history. In the second quarter, lease signings were 64 million square feet and lease proposals were 84 million square feet, both remained above average and were driven by new and development leasing. Likewise, at the largest IBI Customer Activity Index reached a new high in the second quarter, and early indicator of strong future demand. Our leasing mix is broad. Currently, the greatest demand is for spaces above 100,000 square feet. For smaller spaces, activity is picking up. We signed 518 leases totaling 18 million square feet in the quarter, the highest volume in this segment in three years. For customer segments, e-commerce continues to lead the way, representing 30% of new lease signings in the second quarter. While Amazon remains steady at 6% of total new leasing, we have seen many mortgage commerce players come to the table. For example, we signed 168 new e-commerce leases in the first half of 2021 versus 53 in the first half of last year. Supply chains are racing, beginning to restart. And as they do, it will create more demand going forward. Containerized imports are up 33% through May versus pre-pandemic levels as retailers replenish their supply chains. While inventories have risen 3% from their trough, they have struggled to grow this year as retail sales are up 19% from pre-pandemic levels. We see the current low level of inventories in our space utilization, which at 84.3% is below the long-term average of 85%. This is yet another sign that our customers are operating with sub-optimal levels of inventory. Putting together recent outperformance and ongoing momentum, we are raising our 2021 U.S. forecast for net absorption by 20% to 360 million square feet and deliveries by 8% to 325 million square feet. Looking forward, we foresee continued supply balanced by demand with historic low vacancy of 4.5% carrying into 2022. With balanced demand and supply, acute scarcity in our markets is driving the record rent and value growth. Our operating portfolio lease percentage rose by 80 basis points to 97.2% at quarter end. Customers continue to compete for space and are making decisions faster with lease gestation in the quarter of just 44 days. When we look at the factors impacting supply, significant barriers exist in our markets and include a lack of buyable land, increasingly difficult and expensive permitting and entitlement processes and rapidly escalating replacement costs. Our research team released an excellent paper on this last month, which you can find on our website. Our supply watchlist remains quite small. We reviewed Houston in the quarter, leaving just Spain and Poland. Accelerating demand in the quarter combined with ultra-low vacancies translated to a very strong rent growth of 4.1% in our U.S. markets, exceeding our expectations. As a result, we are raising our 2021 rent forecast an all time high of 10.3% for the U.S., up approximately 40 basis points from our prior estimate and 8% globally, which is up 300 basis points. Our in-place to market rent spread is now the widest in our history at 16.9%, up 330 basis points sequentially. This represents future gas in the tank of nearly $700 million in NOI or $0.90 per share. Our assets have strongest quarterly uplift in our history, rising 8% in the second quarter alone with the U.S. up more than 10% and Europe up 5.6%. On the topic of valuation, I want to point out that we enhanced the NAV disclosure in our supplemental related to property management fees. Given the size and scale of our portfolio, we created substantial value through our operational advantages. As a result, we know the real estate is worth more in our hands. Accordingly, we are now including net property management fee income as the bone in the adjusted NOI in our NAV disclosure. Switching gears to results for the quarter, our team and portfolio continued to deliver excellent financial results. Core FFO was $1.01 per share with net promote earnings effectively zero, rent change on rollover was 32%. Occupancy at quarter end was 96.8%, up 110 basis points sequentially. Cash same-store NOI growth accelerated by 5.8%, up 290 basis points year-over-year. We tapped into favorable market conditions and disposed off $880 million of non-strategic assets across our portfolio. In addition, just last week, we completed the sale of a $920 million owned and managed portfolio including all of the non-strategic IPT assets. It's worth noting that to date we have sold $2 billion of non-strategic assets from our IPT and LPT acquisitions by pricing more than 23% above underwriting. Turning to strategic capital. Our team raised almost $600 million in the second quarter. Equity cues from our open-ended vehicles [Indecipherable] $3.3 billion at quarter end, hitting another all-time high. Robust investor interest has prompted private equity limited partners to shift away from diversified to more sector specific funds, particularly for the logistics sector. In light of recent asset management transactions and public comps, the value being ascribed to our strategic capital business is legally understated. For the balance sheet, we continue to maintain excellent financial strength with liquidity and combined leverage capacity between Prologis and our open-ended vehicles totaling $14 billion. Moving to guidance for 2021. Our outlook is further improved given higher rent growth, higher valuations and robust demand. Here are the key updates on an our share basis. We're increasing our cash same-store NOI growth midpoint by 75 basis points to now range between 5.25% and 5.75%. We expect bad debt expense to be approximately 10 basis points of gross revenues, down from our prior guidance midpoint of 20 basis points and well below our historical average. We are increasing the midpoint for strategic capital revenue, excluding promotes, to $470 million, up $15 million from prior guidance. This upward revision is due to increased asset management fees resulting from higher property values. Faster development lease-up and higher asset values are also leading to an increase in promotes. We now expect net promote income of $0.02 for this year, an increase of $0.04 from our prior guidance. We're also increasing development starts by $300 million and now expect a midpoint of $3.2 billion. Build-to-suits will comprise more than 40% of development volume. Our owned and managed land portfolios compose of land, options and covered land place supports $18 billion of future development over the next several years. We are also increasing the midpoint for dispositions and contributions by $650 million in total. This increase will have roughly a $0.02 drag on earnings this year given the timing to redeploy incremental proceeds. We now expect to generate net deployment sources of $200 million at the midpoint with leverage remaining effectively flat in 2021. Taking into assumption there is no account, we're increasing our core FFO midpoint by $0.07 and narrowing the range to $4.04 to $4.08 per share. Core FFO excluding promotes will range between $4.02 and $4.06 per share, representing year-over-year growth at the midpoint of almost 13%. We continue to maintain exceptional dividend coverage, and our 2021 guidance implies a payout ratio in the low-60% range and free cash flow after dividends of $1.3 billion. In closing, the first half of the year has been extraordinary and our outlook is equally promising. Visibility into our strong future organic earnings potential is very clear. We have a significant embedded in place to market rent spread, the development ready land portfolio, substantial balance sheet capacity and ability to create value for our customers beyond the real estate.

core funds from operations per diluted share was $1.01 for quarter. sees 2021 core ffo per share of $4.04 to $4.08. sees 2021 core ffo per share, excluding net promote income, of $4.02 to $4.06. qtrly cash same store noi per prologis share 5.8%.

I'm Charlotte Rasche, Executive Vice President and General Counsel of Prosperity Bancshares. David Zalman will lead off with a review of the highlights for the recent quarter. He will be followed by Asylbek Osmonov who will review some of our recent financial statistics; and Tim Timanus, who will discuss our lending activities, including asset quality. During the call, interested parties may participate live by following the instructions that will be provided by our call moderator, Eric. Before we begin, let me make the usual disclaimers. Our merger with LegacyTexas was completed on November 1, 2019, and our management teams continue to find commonalities and strengths that we expect will benefit our company, our shareholders and associates going forward. Our planned operational integration remains on schedule for June of this year. In our efforts to continue to enhance shareholder value, Prosperity repurchased 2,092,000 shares of its common stock at an average weighted price of $52.59 per share during the first quarter of 2020. The net income was $130 million for the three months ended March 31, 2020, compared with $82 million for the same period in 2019. Our earnings per diluted common share were $1.39 for the three months ended March 31, 2020, compared with $1.18 for the same period in 2019, a 17.8% increase. For the first quarter of 2020, on an annualized basis, return on average assets was 1.67%, return on average common equity was 8.86% and return on average tangible common equity was 20.1%. Prosperity's efficiency ratio, excluding net gains on the sale of assets and taxes, was 42.9% for the three months ended March 31, 2020. Our loans at March 31, 2020, were $19.1 billion, an increase of $8.7 billion or 83.7% compared with the $10.4 billion at March 31, 2019. Linked quarter loans increased $281 million, 1.5% or 6% annualized compared with the $18.8 billion at December 31, 2019. Our deposits at March 31, 2020, were $23.8 billion, an increase of $6.6 billion or 38.5% compared with the $17.1 billion at March 31, 2019. Our linked quarter deposits decreased $373 million or 1.5% from the $24.2 billion at December 31, 2019. A portion of this decrease was due to our planned reduction of higher cost and broker deposits assumed in the LegacyTexas merger. Excluding deposits we assumed in the merger and new deposits we generated at the acquired banking centers since November 1, 2019, deposits at March 31, 2020, grew $1 billion or 6% compared with March 31, 2019, and grew $162 million, nine basis points, or 3.6% compared annualized with December 31, 2019. Our nonperforming assets totaled $67 million or 25 basis points of quarterly average interest-earning assets at March 31, 2020, compared with $40 million or 21 basis points of quarterly average interest-earning assets at March 31, 2019, and $62 million or 25 basis points of quarterly average interest-earning assets at December 31, 2019. The increase during the first quarter of 2020 was primarily due to the merger. During the first quarter of 2020, Prosperity increased its allowance for credit losses to $327 million from $87 million in the fourth quarter of 2019 after adopting accounting standard ASU 2016-13, also known as CECL. The amount of the allowance is based on our CECL methodology. We believe these additional reserves should help to insulate the company during these challenging and unprecedented times. Our allowance for credit losses to total loans excluding the warehouse purchase program loans, now stands at 1.88% compared with 51 basis points at December 31, 2019. With regard to acquisitions, as one would expect, conversations with other bankers regarding potential acquisition opportunities have subsided. However, we remain ready to enter into negotiations when it's right for all parties and is appropriately accretive to our existing shareholders. While today's challenges are certainly extraordinary, Prosperity has a deep management team with experience in navigating and adopting in difficult times. We enter this economic downturn from a position of strength, with sound credit quality, robust capital and liquidity and solid operating fundamentals. We believe that our team will see us through, and we remain confident in our long-term future. Throughout the past several months, while dealing with various personal challenges related to the pandemic, our retail team operated at full capacity enabling us to keep our locations open and serve our customers' daily needs. Additionally, our operational staff and lending team were crucial in accepting processing and submitting thousands of SBA PPP applications and closing loans working around the clock to assist our customers. Let me turn over our discussion to Asylbek, our Chief Financial Officer, to discuss some of the specific financial results we achieved. Net interest income before provision for credit losses for the three months ended March 31, 2020, was $256 million compared to $154.9 million for the same period in 2019, an increase of $101.1 million or 65.3%. The increase was primarily due to the merger with LegacyTexas in November 2019 and $28.5 million in loan discount accretion in the first quarter of 2020. The net interest margin on a tax equivalent basis was 3.81% for the three months ended March 31, 2020, compared to 3.2% for the same period in 2019 and 3.66% for the quarter ended December 31, 2019. Excluding purchase accounting adjustments, the core net interest margin for the quarter ended March 31, 2020, was 3.36% compared to 3.16% for the same period in 2019 and 3.26% for the quarter ended December 31, 2019. Noninterest income was $34.4 million for the three months ended March 31, 2020, compared to $28.1 million for the same period in 2019. The increase in noninterest income was primarily due to the merger with LegacyTexas. Note, the debit card income from LegacyTexas is now impacted by the Durbin amendment. Noninterest expense for the three months ended March 31, 2020, was $124.7 million compared to $78.6 million for the same period in 2019. The increase was primarily due to the merger with LegacyTexas. For the second quarter 2020, we expect normalized noninterest expense to range around $120 million to $125 million. In addition to this, we expect $3 million to $5 million in onetime merger expenses related to upcoming June conversion. Further, we expect to incur expenses related to SBA Paycheck Protection Program in the second quarter, which are not included in the normalized noninterest expense guidance. As we discussed in prior quarters, we expect to realize most of our cost savings from the LegacyTexas merger beginning in the third quarter of 2020 after the system integration that is planned for June. To date, we have already realized some cost savings from the merger and eventually expect additional cost savings of approximately $8 million to $9 million per quarter. Combined, this will be in line with announced 25% cost savings. The efficiency ratio was 42.9% for the three months ended March 31, 2020, compared to 42.94% for the same period in 2019 and 58.07% for the three months ended December 31, 2019, which included $46.4 million in merger-related expenses. The bond portfolio metrics at 3/31/2020, showed a weighted average life of 3.08 years and projected annual cash flows of approximately $2.2 billion. Our nonperforming assets at quarter end March 31, 2020, totaled $67,179,000 or 35 basis points of loans and other real estate. The March 31, 2020, nonperforming assets total was made up of $61,449,000 in loans, $278,000 in repossessed assets and $5,452,000 in other real estate. Of the $67,179,000 in nonperforming assets, $13,187,000 or 20% are energy credits, $12,869,000 of which are service company credits and $318,000 are production company credits. Since March 31, 2020, there have been no material deletions from the nonperforming assets list. Net charge-offs for the three months ended March 31, 2020, were $801,000. There was no addition to the allowance for credit losses during the quarter ended March 31, 2020. The average monthly new loan production for the quarter ended March 31, 2020, was $476 million. Loans outstanding at March 31, 2020, were $19.127 billion. The March 31, 2020, loan total is made up of 36% fixed rate loans, 36% floating rate loans and 28% that reset at specific intervals. Eric, can you please assist us with questions?

prosperity bancshares q1 earnings per share $1.39. q1 earnings per share $1.39.

I'm Larry Mendelson, Chairman and CEO of HEICO Corporation. The dedication to HEICO's customers and to the safety of their fellow team members has been commendable. I'd now like to take a few moments to address the impact of COVID-19 on HEICO's recent operating results. Results of operations in the first six months and the second quarter of fiscal '21 continue to reflect the adverse impact from COVID-19. Most notably, demand for our commercial aviation products and services continues to be moderated by the ongoing depressed commercial aerospace market which, we know, is beginning to rebound and return to normal. Looking ahead to the remainder of fiscal '21, we are cautiously optimistic that the ongoing worldwide rollout of COVID-19 vaccines will have and, in fact, is having a positive influence on commercial air travel and will generate more favorable economic environments in the markets that we serve. Summarizing the highlights of the first six months and second quarter of fiscal '21, we are pleased to report record quarterly net sales within the ETG Group, and our third consecutive sequential increase in quarterly net sales and operating income of the Flight Support Group. The ETG Group set a quarterly net sales and operating income record in the second quarter of fiscal '21, improving 11% and 9%, respectively. These increases, principally reflect the impact from our profitable fiscal '20 and '21 acquisitions, as well as very strong organic growth of 19% for our other electronic products. The Flight Support Group reported sequential growth in operating income and net sales in the second quarter of fiscal '21, and they improved 37% and 16% respectively, as compared to the first for fiscal '21. Our total debt to shareholders' equity reduced and improved to 27.1% as of April 30, '21 and that compared to 36.8% as of October 31, '20. Our net debt, which is total debt less cash and cash equivalents, of $199 million as of April 30, '21 compared to shareholders' equity ratio improved to 9.2% as of April 30, '21 and that was down from 16.6% as of October 31, '20. And this provides HEICO with substantial acquisition capital in the balance of our $1.5 billion unsecured revolving credit facility as well as other available capital. We are not a capital constrained company. Our net debt to EBITDA ratio improved to 0.47 times as of April 30, '21, down from 0.71 times as of October 31, '20. During fiscal '21, we successfully completed one acquisition, and we completed -- we have completed five acquisitions over the past year. We have no significant debt maturities until fiscal '24, and we plan to utilize our financial strength and flexibility to aggressively pursue high-quality acquisitions of various sizes, which will accelerate growth and maximize shareholder returns. Cash flow provided by operating activities remained strong, increasing 2% to $210.1 million in the first six months of fiscal '21 and that was up from $205.9 million in the first six months of fiscal '20. In March '21, we acquired all of the business assets and certain liabilities of Pyramid Semiconductor. Pyramid is a specialty semiconductor designer and manufacturer, which offers a well-developed line of processors, static random-access memory, electronically erasable programmable read-only memory and logic products on a diverse array of military, space and medical platforms. We do expect this acquisition to be accretive to earnings within the first 12 months following the closing. The Flight Support Group's net sales were $429.6 million in the first six months of fiscal '21, as compared to $553 million in the first six months of fiscal '20. The Flight Support Group's net sales were $230.3 million in the second quarter of fiscal '21, as compared to $252 million in the second quarter of fiscal '20. The net sales decrease in the first six months and second quarter of fiscal '21 is principally organic, and reflects lower demand for the majority of our commercial aerospace products and services resulting from the significant decline in global commercial air travel attributable to the pandemic. The Flight Support Group's operating income was $61.3 million in the first six months of fiscal '21, as compared to $109.6 million in the first six months of fiscal '20. The operating income decrease in the first six months of fiscal '21 principally reflects the previously mentioned lower net sales, as well as a lower gross profit margin, higher performance-based compensation expense and the impact from lost fixed cost efficiencies stemming from the pandemic. The Flight Support Group's operating income was $35.5 million in the second quarter of fiscal '21, as compared to $47.5 million in the second quarter of fiscal '20. The operating income decrease in the second quarter of fiscal '21 principally reflects higher performance-based compensation expense, directly resulting from the strong improvement in operations during the past three consecutive quarters. The Flight Support Group's operating margin was 14.3% in the first six months of fiscal '21, as compared to 19.8% in the first six months of fiscal '20. The operating margin decrease in the first six months of fiscal '21 principally reflects an increase in SG&A expenses as a percentage of net sales, mainly from the previously mentioned higher performance-based compensation expense and lost fixed cost efficiencies, and the lower gross profit margin. The Flight Support Group's operating margin was 15.4% in the second quarter of fiscal '21, as compared to 18.9% in the second quarter of fiscal '20. The operating margin decrease in the second quarter of fiscal '21 principally reflects the previously mentioned higher performance-based compensation expense. The Electronic Technologies Group's net sales increased 9% to a record $466.6 million in the first six months of fiscal '21, up from $427.4 million in the first six months of fiscal '20. The net sales increase in the first six months of fiscal '21 principally reflects our fiscal '20 and '21 acquisitions as well as organic growth of 1%. The organic growth principally reflects increased demand for other electronic and space products, partially offset by demand for commercial aerospace products. The Electronic Technologies Group's net sales increased 11% to a record $243.1 million in the fiscal second quarter of '21, up from $219 million in the second quarter of fiscal '20. The net sales increase in the second quarter of fiscal '21 principally resulted from our fiscal '20 and '21 acquisitions, as well as organic growth of 3%. The organic growth principally reflects increased demand for our other electronic and defense products, partially offset by decreased demand for commercial aerospace products. The Electronic Technologies Group's operating income increased 7% to a record $131.4 million in the first six months of fiscal '21, up from $123 million in the first six months of fiscal '20. The operating income increase in the first six months of fiscal '21 principally reflects the previously mentioned net sales growth, partially offset by a lower gross profit margin mainly from lower net sales of defense and commercial aerospace products that were partially offset by an increase in net sales of certain other electronic products. The Electronic Technologies Group's operating income increased 9% to $71.3 million in the second quarter of fiscal '21, as compared to $65.5 million in the second quarter of fiscal 2020. The operating income increase in the second quarter of fiscal '21 principally reflects the previously mentioned net sales growth, partially offset by a lower gross profit margin mainly from a less favorable product mix for our defense products, as well as a decrease in net sales of commercial aerospace products that were partially offset by a net increase in sales of certain other electronic products. The Electronic Technologies Group's operating margin was 28.2% in the first six months of fiscal '21, as compared to 28.8% in the first six months of fiscal '20. The Electronic Technologies Group's operating margin was 29.3% in the second quarter of fiscal '21, as compared to 29.9% in the second quarter of fiscal '20. The operating margin decrease in the first six months and second quarter of fiscal '21 principally reflects the previously mentioned gross profit margin, partially offset by a decrease in SG&A expenses as a percentage of net sales mainly from efficiencies gained from the previously mentioned net sales growth. Moving on to details, the diluted earnings per share, consolidated net income per diluted share was a $1.03 in the first six months of fiscal '21, and that compared to $1.44 in the first six months of fiscal '20. The decrease in the first six months of fiscal '21 principally reflects the previously mentioned lower operating income of Flight Support and higher income tax expense, and that was partially offset by the previously mentioned higher operating income of the ETG Group and lower interest expense. Consolidated net income per diluted share was $0.51 in the second quarter of fiscal '21, as compared to $0.55 in the second quarter of fiscal '20. The decrease in second quarter fiscal '21 principally reflects the previously mentioned lower operating income of Flight Support, partially offset by lower income tax expense as well as higher operating income of the ETG Group and lower interest expense. Depreciation and amortization expense totaled $22.9 million in the second quarter of fiscal '21, that was up from $21.7 million in the second quarter of fiscal '20, and totaled $45.9 million in the first six months of fiscal '21, up from $43.3 million in the first six months of fiscal '20. The decrease in the second quarter and first six months of fiscal '21 principally reflects incremental impact from the fiscal '20 and '21 acquisitions. R&D expense increased to $34.2 million or 3.9% of net sales in the first six months of fiscal '21, and that was up from $33.1 million [Phonetic] or 3.5% of net sales for the first six months of fiscal '20. R&D expense increased to $18 million or 3.9% of net sales in the second quarter of fiscal '21, and that was up from $16.8 million or 3.6% of net sales, second quarter fiscal '20. We note that significant ongoing new product development efforts are continuing at both ETG and Flight Support. Our consolidated SG&A expense were $161.2 million in the first six months of fiscal '21, as compared to $157.8 million in the first six months of fiscal '20. Consolidated SG&A expenses were $83 million in the second quarter of fiscal '21, and that compared to $70.7 million in the second quarter of fiscal '20. The increase in consolidated SG&A expense in the first six months and second quarter of fiscal '21 principally reflects higher performance-based compensation expense and the impact from our fiscal '20 and '21 acquisitions, partially offset by reductions in other G&A expenses and selling expenses. Consolidated SG&A expenses as a percentage of net sales increased to 18.2% in the first six months of '21, up from 16.2% in the first six months of fiscal '20. Consolidated SG&A expense as a percentage of net sales increased to $17.8 million [Phonetic] in the second quarter of fiscal '21, and that was up from 15.1% in the second quarter of '20. The increase in consolidated SG&A expense as a percentage of net sales in the first six months and the second quarter of fiscal '21 principally reflects higher performance-based compensation expense. Interest expense decreased to $4.5 million in the first six months of fiscal '21, down from $8 million in the first six months of fiscal '20. Interest expense decreased to $2.1 million in the second quarter of fiscal '21, and that was down from $3.8 million in the second quarter of fiscal '20. The decrease in the first six months and second quarter of fiscal '21 was principally due to a lower weighted average interest rate on borrowings outstanding under our revolving credit facility. Other income in the first six months and second quarter was not significant. Talking about income taxes. Our effective rate in the first six months of fiscal '21 was 12%, as compared to 0.3% in the first six months of fiscal '20. As previously mentioned, HEICO recognized a discrete tax benefit from stock option exercises in both the first quarter of fiscal '21 and '20, and that accounted for the majority of the decrease in the year-to-date effective tax rate. The tax benefit from stock option exercises in both periods was the result of strong appreciation in HEICO's stock price during the optionees' holding period, and the larger benefit recognized in the first quarter of fiscal '20 was the result of more stock options exercised in that period. Our effective tax rate decreased to 19.5% in the second quarter of '21 -- fiscal '21, and that was down from 22.6% in the second quarter of fiscal '20. The decrease principally reflects the favorable impact of higher tax exempt unrealized gains in the cash surrender values of life insurance policies related to the HEICO Leadership Compensation Plan. Net income attributable to non-controlling interest was $11.5 million in the first six months of fiscal '21, and that compared to $13.4 million in the first six months of fiscal '20. The decrease in net income attributable to non-controlling interest in the first six months of fiscal '21 principally reflects a decrease in the operating results of certain subsidiaries of the Flight Support Group, in which non-controlling interest are held, and that was partially offset by higher allocations of net income to non-controlling interest as a result of certain fiscal '20 acquisitions, as well as an increase in the operating results of certain subsidiaries of the ETG Group in which non-controlling interest are held. Net income to non-controlling interest was $5.8 million in the second quarter of fiscal '21, as compared to $5.5 million in the second quarter of fiscal '20. For the full fiscal '21 year, we continue to estimate a combined effective tax rate and non-controlling interest rate of between 24% and 26% of pre-tax income. Now let's talk about the balance sheet and cash flow. One thing I want to mention that in the second quarter of fiscal '21, cash flow from operations was a 146% of reported net income. So the net income was $70.7 million and the cash flow was almost $103 million. Our financial position and forecasted cash flow remain very strong. As we discussed earlier, cash flow provided by operating activities increased 2% to $210.1 million in the first six months of fiscal '21, and that was up slightly from $205.9 million in the first six months of fiscal '20. Our working capital ratio was 4.5 times, '21 as of April 30, compared to 4.8 times as of October 31, '21 [Phonetic]. Our days sales outstanding of receivables improved to 41 days as of April 30, '21, that was down slightly from 44 days as of April 30, '20. We continue to closely monitor receivable collection in order to limit our credit exposure. No one customer accounted for more than 10% of net sales. Our five -- top five customers represented approximately 23% and 24% of consolidated net sales in the second quarter of fiscal '21 and '20, respectively. Inventory turnover rate was 153 days for the period ending April 30, '21 compared to 139 days for the period ended April 30, '20. The increased turnover rate principally reflects lower sales volume from the pandemic's impact on demand for certain of our commercial aerospace products and services. Despite the increased turnover rate, our subsidiaries has done an excellent job controlling inventory levels in the first six months of fiscal '21, and we believe that's appropriate to support expected future net sales as well as our increased backlog as of April 30, '21, which increased by $51 million to $895 million. Looking ahead, as we look ahead to the remainder of fiscal '21, we are cautiously optimistic that the ongoing worldwide rollout of COVID-19 vaccines will have a positive influence and, in fact, is having a positive influence on commercial air travel, and it will generate favorable economic environments in the markets that we serve. The pace of recovery in the global travel remains difficult to predict, and can be negatively influenced by new COVID variance and varying vaccine adoption rates. Given those uncertainties, we cannot provide fiscal '21 net sales and earnings guidance at this time. We continue to estimate capital expenditures of approximately $40 million for fiscal '21. That strength will manifest from the culture of ownership, mutual respect for each other and the unwavering pursuit of exceeding our customers' expectations. I want to remind the listeners that a very high percentage of HEICO members are HEICO shareowners through their 401(k) plans. We have many millionaires, multi-millionaires and wealthy team members who all support the operation of HEICO.

compname reports q2 earnings per share of 51 cents. q2 earnings per share $0.51. cannot provide fiscal 2021 net sales and earnings guidance at this time.

You will also find our 10-Q on Range's website under the Investors tab or you can access it using the SEC's EDGAR system. For additional information, we've posted supplemental tables on our website to assist in the calculation of EBITDAX, cash margins and other non-GAAP measures. The second quarter of 2021 saw Range make continued steady progress toward our key objectives: improving margins through cost controls, generating free cash flow, operating safely and efficiently and ultimately positioning the company to return capital to shareholders as the most efficient natural gas and NGL producer in Appalachia. I'll touch briefly on each of these before turning it over to Dennis and Mark to cover in more detail. Starting with unit cost and margin improvements. Range's unit costs for the quarter were in line with our expectations. As NGL prices strengthened during the quarter, processing costs increased as expected as a result of our percent of proceeds contracts, but this was more than offset by the improvement in natural gas liquids prices, resulting in vast improvements in Range's margins and cash flow. This pricing uplift from liquids reduces ranges breakeven natural gas price and improves margins when compared to producing only dry gas. In fact, Range's cash margin of approximately $1 per Mcfe for the first half of the year is roughly double where we were last year. Given the improved fundamental backdrop for NGLs with approximately 65% of our activity in the liquids-rich window this year, Range is very well positioned to continue to benefit. In the second quarter, Range produced $177 million in cash flow with capital spending coming in at just $120 million for the quarter, Range generated solid free cash flow despite seasonally weak pricing and the second quarter being the high point of capital spending for the year. The team did an outstanding job leveraging our large contiguous acreage position to complete the operational plan safely and with peer-leading capital efficiency. Range's blocky acreage position affords us operational advantages on multiple fronts, including water recycling, infrastructure, rig mobilization, long lateral development and e-fleet optimization. When combined with the dedicated and focused technical team with years of experience in the basin, this equates to class-leading well cost and capital efficiency. And having delivered operational programs below budget for the last three years, Range remains on track to do the same for the fourth consecutive year in 2021. Taking this level of efficiency and combining it with strong recoveries, a shallow base decline of under 20%, a sizable inventory and liquids optionality, Range has what we believe is an unmatched foundation for generating sustainable free cash flow for the long term. This organic free cash flow, supported by thoughtful hedging through the end of this year and into 2022, puts us well on our way toward meeting our balance sheet targets in the near future. Mark will provide more detail, but at recent strip prices, leverages forecast below two times early next year. The significant rate of improvement on our balance sheet is a testament to the progress we've made, reducing debt and improving our cost structure in recent years and that reflects the free cash flow potential of the business. We are excited about where Range is today and equally excited about what the future holds. Natural gas and natural gas liquids will continue to play a critical role as the world moves toward cleaner, more efficient fuels. We believe that producers who can most efficiently deliver these products to end markets from a cost and emissions perspective will be the most successful. And we believe Range is well positioned within that framework. We remain ahead of schedule in achieving our absolute emissions reduction targets in our 2025 goal of net zero, and our emissions profile is near best-in-class among producers globally. Importantly, what further differentiate Range from peers is our ability to efficiently deliver clean burning natural gas for an extended period of time given our multi-decade core inventory. For context, Range's 2021 activity of approximately 60 wells is just a fraction of our 2,000 Marcellus locations with EURs that are greater than two Bcfe per 1,000 foot of lateral. The average recovery of these thousands of wells is very similar to the wells Range has turned to sales for the last several years, providing Range and unmatched runway of high-quality wells that's measured in decades, A.nd that's before counting other horizons, such as the Utica, Mount Pleasant or Upper Devonian. This type of runway is not found in most natural gas producers, and we believe Range's position as well as any upstream company to generate competitive returns and free cash flow over the medium and long term. Before turning it over to Dennis and Mark, I'll just reiterate that Range remains committed to disciplined capital spending. Over time, we believe Range will stand out among peers as a result of our low sustaining capital, competitive cost structure, liquids optionality and importantly, our multi-decade core inventory life, which is an increasingly competitive advantage as other operators exhaust their core inventories. We will continue to focus on safe, efficient and environmentally sound operations, prudent capital allocation and generating sustainable returns to our shareholders. Over to you, Dennis. As we look back on the second quarter, all-in capital came in at $120 million, with drilling and completion spending of approximately $116 million. Capital spend for the first half of the year totaled $226 million or approximately 53% of our annual plan. During our first quarter call, we touched on some of our recent efficiencies driving this capital result, and we'll expand on those during the operations update today. Looking forward, consistent with our activity forecast for the second half of the year, the remainder of our capital spending is expected to taper through year-end, in line with our activity forecast previously communicated and placing us at or below our all-in budget of $425 million. Production for the quarter closed out at 2.1 Bcf equivalent per day. Our activity resulted in 25 wells being turned to sales with 75% of the turn-in-line activity landing in the back half of the quarter, setting us up for higher sequential production for the balance of this year. Looking back at the quarter, I'd like to point out six of our Marcellus wells turned to sales on an existing pad in the heart of our wet gas acreage position. Initial development and production on this pad occurred in 2016. Similar to the example we walked through during our first quarter call, we returned to this pad to add additional wells, building upon our prior technical learnings, efficiencies and cost savings. Initial production rate for three of the new wells placed them at the top of our Marcellus program history, and the pad itself is now Range's top Marcellus pad to date based on average initial production per well. And lastly, production from this pad was comprised of approximately 50% liquids from an average lateral length of just under 14,000 feet, and aligns with our liquids marketing results we will cover later in this section. Not only does this provide further evidence of the quality and sustainability of our large contiguous acreage position, but it also demonstrates that even after more than a decade of Marcellus development. We continue to optimize and enhance well performance through technical and operational innovation. Looking at some of our operational highlights. The drilling team operated two dual-fuel horizontal rigs during the second quarter, split between our dry and super-rich acreage footprint. Average lateral lengths for the wells drilled in Q2 was approximately 12,000 feet with five wells exceeding 16,500 feet. Similar to updates from prior quarters, we returned to pad sites for a significant portion of our activity in Q2, with approximately 75% of our new wells drilled on pads with existing production. In addition to maximizing infrastructure utilization. A combination of longer laterals and returning to existing pads continues to drive efficiency improvements and reduced drilling costs. As an example, in the first half of 2021, we've seen a 10% reduction in average drilling cost per lateral foot versus full year 2020, which fell below $200 per foot. It is improvements such as this that further support our year-to-date capital spend and ensuring that we deliver within our capital budget. On the completion side, the team completed 20 wells with a total lateral footage of more than 225,000 feet with an average horizontal length of approximately 11,300 feet per well, including four wells with lateral lengths exceeding 18,000 feet per well. These long laterals were turned to sales covering the end of Q2 and beginning of Q3, driving our second half of year production. Similar to our drilling results, the completions team is capturing continued efficiency gains from longer laterals and cost savings by returning to pads with existing production. The team successfully executed over 1,100 frac stages in the second quarter, while hydraulic fracturing efficiencies in the first half of the year increased by more than 6% versus the same time period a year ago. In addition to these efficiency gains, our emissions reduction strategies were advanced by expanding the operations associated with our electric frac fleet to include electric powered pump-down equipment, wireline units, along with other supporting equipment. The testing of electrification of additional on-site equipment, coupled with our production facility design and pilot program with Project Canary are just a few examples underway to deliver on our broader ESG goals and our emissions target of net zero by 2025. Water operations once again exceeded our operational and capital efficiency expectations in the second quarter through increased utilization of third-party produced water. The team was able to efficiently utilize just under one million barrels of third-party water in addition to Range's produced water. And as a result, completion costs were reduced by over $1.6 million for the second quarter. The continued success of our water operations, along with the efficiencies captured by the completions team has reduced our overall water costs for the first half of the year by just under $7 million or $15 per foot less in cost. And it represents a 28% improvement in water costs versus the same time last year. Water savings can vary each quarter, depending on the location of our operations, but generating these types of cost reductions has become a repeatable part of our program, and it aids in our ability to deliver at or below our 2021 drill and complete cost per foot target of $570 per foot. Strong field run time continued in the second quarter. Like the first quarter, unseasonable weather conditions threatened to hamper production with prolonged high ambient temperatures and storm events in June. But the production and facilities teams worked diligently to keep the field running at a high rate with minimal impact to production or operating expenses. With the winter behind us, lease operating expenses for the quarter closed out at $0.10 per Mcf equivalent and are projected to remain at a similar level for the remainder of the year. To complement our operational results, I'd like to provide a quick update on Range's safety performance. When looking at our key safety metrics year-to-date, we continue to see improvements compared to the same time period a year ago. With our team's ongoing dedication to hazard identification and training, it has been over a year since our last employee recordable incident. Year-to-date, this contributed to a total workforce recordable incident rate in line with last year, which was Range's best safety performance in the program history, and benchmarks in the top quartile for safety performance among our peer group. Now shifting over to marketing. Echoing the theme from our last call, market prices strengthened during the quarter for both NGLs and condensate with Mont Belvieu propane prices ending the quarter at its highest level in almost three years. Demand for both NGLs and condensate continues to increase with supply remaining stable. As a result of these tightening fundamentals and the corresponding improvement in prices throughout the quarter, Range's NGL price was $27.92 per barrel, a $2.24 premium to Mont Belvieu. This represents a record for the highest premium to Mont Belvieu in company history, and the highest quarterly NGL price in absolute terms since 2014. A key driver for the higher premium in the quarter was the new and diverse LPG export strategy that allowed Range to optimize its sales portfolio through increased flexibility in product placement and sales timing. Due to the timing of Range's LPG exports, the second quarter average NGL barrel was heavier than normal, meaning that it included a higher propane and heavier component percentage than prior quarters. During the second half of this year, we expect strong fundamentals to result in higher absolute prices for domestic propane and butane, which should compress our premiums of U.S. LPG exports. Coupled with a lighter barrel from export timing and seasonality in domestic sales, we expect lower premiums to Mont Belvieu but improving overall NGL price realizations. Range's premium NGL differential remains an expected positive $0.50 to $2 per barrel for the full year, showing the benefit of our diversified NGL portfolio and access to international markets. On the condensate side, realized price for the second quarter was $57.60, a differential of $8.36 per barrel. As expected, the condensate differential to WTI narrowed slightly quarter-over-quarter and is expected to stabilize near this level for the rest of the year. As we previously discussed, condensate values are primarily supported by continued recovery in demand for transportation fuels as business and personal travel around the world continues to increase to prepandemic levels. As we enter the second half of the year and continue into 2022, the value of Range's entire liquids portfolio is strongly supported by both domestic and international fundamentals. -- and Range is uniquely positioned to maximize value in this constructive environment. Similar to our results and view for liquids, positive movement is the theme of the day for natural gas. During our Q1 call, several signs pointed toward the potential of an under supplied market. With operators administering capital and production discipline this year, ongoing strength in LNG exports at 11 Bcf per day and overall storage levels running below the five year average, an undersupplied market has materialized, further impacting 2021 pricing and movement in the forward curve above $3 for 2022. As we look at the second quarter, Range reported a Q2 natural gas differential of $0.39 under NYMEX, including basis hedging. Looking ahead, we see potential for additional positive improvements for natural gas pricing and basis with regional storage levels behind the five year average. As we reach the midyear point for the 2021 program, our second quarter and year-to-date results showcase some of our best milestones to date for the program by looking at our environmental and safety performance, operational efficiencies, cost and well results. We will build on these operational results during the second half of the year while delivering our best program yet. During first quarter comments, I started by saying efficient operations, delivering planned production, combined with margin-enhancing expense management drove free cash flow. In other words, delivering on stated objectives, which is Range's fundamental strategy and something the team successfully executed again during the second quarter. Reliably efficient operations again delivered planned production. Our relentless focus on expenditures that drive cash flow in addition to diversity in sales points for natural gas, natural gas liquids and condensate resulted in cash flow from operations of $177 million before working capital compared to $120 million in capital spending. Significant improvements in free cash flow compared to past periods were driven by a 100% improvement in pre-hedge realized prices per unit of production versus the prior year period, with realized price per unit reaching $3.25 in the second quarter. This realized price per unit is $0.41 above NYMEX Henry Hub, driven by a 118% increase in NGL price per barrel, which reached $27.92 pre-hedge. Realized NGL price on an Mcfe basis equates to $4.65 and condensate realizations equate to $9.60 per Mcfe, hence, the realized premium to Henry Hub. Additionally, Range's NGL prices exceeded a Mont Belvieu equivalent NGL barrel by $2.24 due to our unique portfolio of domestic and international sales contracts. Realizing the benefit of higher commodity prices during Q2 was possible in part due to a thoughtful approach to hedging. We maintained our strategy of reducing risk through an active hedge program. However, hedging too early before prices reached levels estimated as sufficient to support industry maintenance capital could have resulted in the loss of significant revenue. For 2022, we've continued to be balanced in risk management, so as to not hedge away improved fundamentals. Such that at quarter end and assuming the election of outstanding swaptions, Range was approximately 40% hedged on natural gas at a floor of $2.80 and with a ceiling of $3.04. NGLs are typically hedged on a rolling three to six month basis. Meaning exposure to higher NGL prices in the second half of 2021 was largely retained with improving hedge averages by quarter. As an example, Range's average swap for condensate production improves by $10 per barrel in the third quarter, while propane, butane and natural gasoline averages all improved by approximately $0.20 per gallon versus second quarter. This hedge book compares very favorably to the industry, allowing Range to capture improved pricing, growing cash flow per share while also accelerating deleveraging, particularly in the next several quarters. and ultimately, cash returns to shareholders. Margin-enhancing focus on unit cost is a constant state of mind at Range. Lease operating expenses remain near historic lows at $0.10 per unit on the back of consistent efficient Marcellus operations. Cash G&A expenses increased slightly to $31 million or $0.16 per unit. The increase stems from two line items. First, roughly $1.5 million related to legal expenses that should tail off next quarter. And second, what appears to be a temporary increase in medical costs. Absent these two transitory items, G&A spending was in line with the preceding quarter. Cash interest expense was roughly $55 million, flat with the preceding quarter and with reduced debt balances should begin to decline in coming quarters. Gathering, processing and transportation expense increased, but it is important to keep in mind that this is a positive byproduct of strong NGL prices that resulted in significantly higher NGL margins. Recall that Range's processing costs are from percent of proceeds contracts such that we pay a percent of NGL revenues as the fee. Consequently, a fraction of the materially higher prices received for NGLs is paid as a higher processing cost in the quarter. As discussed previously, an increase in revenue of $1 per NGL barrel equates to approximately $0.01 per Mcfe in cost. This structure is unique to range in the Appalachian Basin and is a right way risk arrangement that has led to reduced costs for several quarters of lower prices, and now continues to drive material margin expansion. For reference, since February, Range's forecasted NGL realizations in 2021 have increased by approximately $7 per barrel, potentially resulting in an increase of approximately $250 million in pre-hedge revenue. Net of price-linked processing costs, forecasted '21 pre hedge cash flow from NGLs has increased by approximately $200 million since February, demonstrating the significant margin expansion from rising NGL prices. In aggregate, revenue improvements stemming from diverse marketing arrangements, coupled with prudent hedging and thoughtful expense management resulted in cash margin per unit of production expanding to $0.93. Turning to the balance sheet. As described last quarter, near-term maturities have been a focus such that we reduced bond maturities through 2024 by almost $1.2 billion, while at the same time, improving liquidity to nearly $2 billion. During the second quarter, we reduced total debt by $66 million, including all subordinated bonds. Forecasted cash flows at strip pricing are expected to exceed debt maturities in coming years and are backstopped by ample liquidity. There has been substantial improvement in the debt markets, and it's evident in the trading levels of Range's bonds that both access to and cost of capital has improved. Future debt retirement is expected to be funded primarily by organic free cash flow. We will be cost conscious to effectively manage debt retirement, while also being mindful of the costs and benefits of potential refinancing activity. Liability management over the last few years has, as expected, temporarily increased interest expense. However, this avoided much higher cost forms of capital that allowed Range to retain per share exposure to growing free cash flow and a substantially improved natural gas and natural gas liquid environment. Further improving the balance sheet remains a principal objective. At current commodity prices, forecast indicates leverage in the mid-1 times area is achievable in the first half of 2022. Tangible shareholder value accretion is first being driven by using free cash flow to reduce absolute debt, as target leverage levels come into sight, potentially as early as the first half of next year, the discussion of Range's return of capital framework becomes a logical next step in a balanced macro environment. The second quarter and year-to-date results are a byproduct of relentless work by the entire Range team being focused on enhancing per share exposure to what we believe is the largest portfolio of quality inventory in Appalachia. To put it concisely, we believe we are delivering on stated objectives. We seek to continue this trend of disciplined value creation for our shareholders. Jeff, back to you. Operator, we'll be happy to answer questions.

qtrly production averaged 2.10 bcfe per day, about 31% liquids. remains on track to spend at or below total capital budget of $425 million in 2021.

Both are now available on the Investors section of our website americanassetstrust.com. First and foremost, I would like to wish all of our stakeholders and their loved ones continued health and safety during these truly unprecedented times. We remain optimistic that a vaccine will be forthcoming over the next six to nine months and trust me, I'm going to be one of the first in line. But nevertheless, we are prepared to endure a prolonged pandemic with our solid balance sheet world-class properties and tenants, and incredibly dedicated and competent employees. Fortunately now, the second and third quarters are behind us and I can tell you that our operations and financial results were nowhere near as catastrophic as my worst case projections that we modeled in April 2020. As most of you know, for many years -- for many years many outsiders believed our asset diversification was perceived negatively relative to any of our best-in-class peers. However, we now know that our ownership of a combination of irreplaceable office, multifamily, retail and mixed-use properties as opposed to a single asset class provided us with much needed stability and protection from the risks associated with the changes in economic conditions of a particular market, industry or even economy, such as those changes created by COVID-19. Would we have declared a larger dividend? Yes, probably and I would have benefited more than anywhere, but as fiduciary store stockholders and its staunch defenders of our balance sheet, we felt it's most prudent to remain conservative on our dividend until there is more visibility into a vaccine and an economic recovery. In any case, a year or so from now, once there is a vaccine, we expect to look back and hope that this will be nothing but a bad memory. One of our primary focuses over the past quarter has been collections in our retail segment. We are pleased to have made meaningful progress on that front where we began the pandemic initially collecting approximately 40% of retail rents in April to collecting approximately 80% retail rents in the third, quarter a number that we expect to get better. No doubt this was in large part due to the tireless work of our in-house collection team comprised of our property managers, lease administrators, legal staff and direct engagement by our executives with retailers. And though we remain sensitive and at times accommodating to the financial challenges of certain impact to tenants, we have certainly taken a more aggressive position with better capitalized tenants knowing the high quality of our underlying real estate and the clear rights we have embedded in our leases. We expect those tenants to adhere to their contractual obligations and we continue to refuse to agree to deals that are not in the best interest of our company and our shareholders. As such, we expect our third quarter collections to improve further as we continue our efforts, and in fact we know more significant checks and wires are currently in transit from tenants on account of third quarter collections. Our most notable collection challenges in the retail segment remain with our movie theaters, gyms and apparel stores as well as many of our retailers at Waikiki Beach Walk which until mid-October, had no incoming tourism to sustain meaningful revenue for our tenants. It is likely going to take several more months or quarters for us to have better visibility -- recovery by these more challenged tenants. That said, our focus continues to prioritize long-term strategic growth over the short term. So, we've entered into lease modifications that have provided certain tenants relief during the pandemic by way of deferrals or other monetary concessions where necessary, provided we obtain something in return whether by lease extensions, waiver, a certain tenant-friendly lease rights or incremental percentage rent. Otherwise, we intend to pursue all means to enforce our rights under leases, including litigation as necessary, particularly for those unilaterally withholding rents when we believe they have the funds to pay. Additionally, we are pleased to report that 100% of our properties continue to remain open and accessible by our tenants in each of our markets and anecdotally the majority of our employees are voluntarily working in person at our properties or at our corporate offices each week while taking absolutely all prudent safety precautions, despite having the flexibility to work from home. We continue to firmly believe that post pandemic, being together in person will promote much better productivity, collaboration and innovation and we expect and I've heard similar sentiment from the majority of our office tenants. Finally, on the election front, we are closely following two propositions on the California ballot that take direct aim at commercial real estate. Of course, we are firmly against Prop 15 which would eliminate Prop 13 Taxpayer Protection. If it passes, we would not expect it to create an immediate, meaningful impact to our company but rather would place a significant pass through financial burden on our tenants at a time when they are already struggling, not to mention the likely negative impact of those property taxes on future rent growth. And also, we are against Prop 21 which we believe is a flawed measure that would implement a significant amendment to existing rent control laws on the multifamily side, limiting landlords' rights and likely making the housing crisis in California even worse. We are contributing, our resources to impose those propositions. While the challenges we face today are complex, whether relating to the pandemic, racial, [Indecipherable] technology or legislative matters to name a few, we do believe that we are well positioned to navigate through and manage these challenges with, as Ernest mentioned our best-in-class assets, our 200 talented and dedicated employees and the strength of our balance sheet. Last night we reported third quarter 2020 FFO of $0.44 per share and net income attributable to common stockholders of $0.08 per share for the third quarter. Let me begin with my perspective that I am optimistic with the overall performance of this portfolio, even in light of the pandemic we are all going through. We too are feeling the bumps along the road like everyone else in our sectors. What makes me optimistic about our portfolio and its future are the following. Number one, our collections of monthly recurring billings continue to improve in Q3 over Q2 with total collections of approximately 89% in Q3 versus 80% in Q2. Number two, we believe we have ample liquidity to weather the storm that we are going through. We prepared for the worst-case scenario by modeling a $50 million quarterly burn rate at the beginning of this pandemic, not knowing what we were going into and in Q2, our actual burn rate was approximately $6 million. In Q3, we ended up with a cash surplus of approximately $9 million and this is after the operating capital expenditures and the dividend. We started Q3 with approximately $146 million of cash on the balance sheet and ended Q3 with approximately $155 million of cash on the balance sheet, primarily as a result of increased cash NOI, quarter-over-quarter due to our successful collection efforts outlined earlier by Adam. Number three, we have additional liquidity of $250 million available on our line of credit, combined with an entire portfolio of unencumbered properties with the exception of our only mortgage which is on City Center Bellevue. Number four, we believe we have embedded growth in cash flow in our office portfolio with approximately $30 million plus of growth in the office cash NOI between now and the end of 2022 as Steve will discuss later. And lastly, once we get a vaccine, we believe our high quality West Coast portfolio will rebound. We believe our Embassy Suites which is currently at approximately a break-even cash NOI will rebound based on its location and tourism. On October 15, Hawaii allowed tourists to come back to the island as they can demonstrate that they have had a negative COVID tests within the last 72 hours. On the first day, there were approximately 10,000 tourists that landed in Hawaii, we expect that tourism inflow to continue to increase each week and to start benefiting our Hawaiian properties over the coming quarters. Let's take a moment to look at the results of the third quarter for each property segment. Our office property segment continues to perform well, as expected during these uncertain times. Office properties excluding One Beach Street in San Francisco, which is under redevelopment were at 96% occupancy at the end of the third quarter, an increase of approximately 2% from the prior year. More importantly, same-store cash NOI increased 13% in Q3 over the prior year, primarily from increases in base rent at La Jolla Commons, Torrey Reserve campus, City Center Bellevue and the Lloyd District portfolio. Our retail properties continue to be significantly impacted by the pandemic, although the occupancy at our retail properties remain stable for the third quarter at 95% occupancy which was a decrease of approximately 3% from the prior year our retail collections have been challenging during the pandemic, as reflected in our negative same store cash NOI. Our multifamily properties experienced a challenging quarter, as same-store cash NOI decreased approximately 5.4% due primarily from the increase in average occupancy -- or I'm sorry, due primarily from the decrease in average occupancy at Hassalo in Portland, offset by favorable master lease signed with a private university in San Diego area at the beginning of the quarter. On a segment basis, occupancy was at 87.5% at the end of the third quarter, a decrease of approximately 3% from the prior year. We expect our occupancy to return to normal, stabilized levels at Hassalo as we have recently adjusted pricing and concessions. With these adjustments, in the last 10 days we have already seen leasing traffic increase from a weekly average of four to six tour's per week, to 10 to 12 tours per week. We have captured a total of 11 new leases in just the last week. Our mixed use property consisting of the Embassy Suites Hotel and the Waikiki Beach Walk Retail is located on the Island of Oahu. The State of Hawaii remained in a self-quarantine throughout most of the third quarter, significantly impacted the operating results for the third quarter of 2020. The Embassy Suites' average occupancy for the third quarter of 2020 was 66% compared with the average occupancy in the second quarter of 2020 of 17%. The average daily rate for the third quarter of 2020 was $209, which is approximately 40% of the prior year's ADR. Waikiki Beach Walk Retail suffered considerably with virtually no tourists on the island until recently. We are working daily with our tenants at Waikiki Beach Walk to formalize a recovery plan that benefits both our tenants and the company utilizing all resources necessary, including state and city grant programs and lobbying efforts. We had COVID-19 adjustments amounting to 2% of what was billed in Q3 to our tenants and the balance of approximately 9% is the amount outstanding of what was billed in Q3. This is compared to the second quarter collections of 81%, COVID-19 adjustments of 5% and Q2 amounts that were billed and still outstanding of 14%. This is compared to a bad debt expense accounts receivable of approximately 14% of the outstanding uncollected amounts at the end of Q2 and bad debt expense of straight-line rent receivables of approximately 7% at the end of Q2. It's easy to get confused on all these percentages. However, from a big picture perspective, at the end of the third quarter, our total allowance for doubtful accounts, which reflects the cumulative bad debt expense charges recorded totals approximately 39% of our gross accounts receivable and approximately 3% of our straight-line rent receivables. Let's talk about liquidity; as we look at our balance sheet and liquidity at the end of the third quarter, we had approximately $405 million in liquidity, comprised of $155 million of cash and cash equivalents and $250 million of availability on our line of credit, and only one of our properties is encumbered by mortgage. Our leverage, which we measure in terms of net debt to EBITDA was 6.7 times on a quarterly, annualized basis. On a trailing 12 month basis, our EBITDA would be approximately 6.0 times. Our focus is to maintain our net debt-to-EBITDA at 5.5 times or below. Our interest coverage and fixed charge coverage ratio ended the quarter at 3.6 times on a quarterly annualized basis and 3.9 times on a trailing 12 month basis. As it relates to guidance, as previously disclosed, we withdrew our 2020 guidance on April 3 due to the uncertainty that the pandemic would have on our existing guidance, particularly in our hotel and retail sectors. Until we have a clear view of the economic impact of the pandemic or more certainty as to when a vaccine becomes available, we will refrain from issuing further guidance. As Bob said earlier, at the end of the third quarter, net of One Beach, which is under redevelopment our office portfolio stood at over 96% leased with just under 6% expiring through the end of 2021. Given the quality of our assets and the strength of the markets in which they are located with technology and life science as key market drivers, we continue to execute new and renewal leases at favorable rental rates delivering continued NOI growth in our office segment. The weighted average base rent increase for our nine renewals completed during the quarter was 6.7% and it's also as Bob pointed out earlier, with leases already signed, we have locked in approximately $30 million of NOI growth in our office segment priced at approximately [Indecipherable] in 2020, $14 million in $2021 and $10 million in 2022. We anticipate significant additional NOI growth in 2022 and 2023 through the redevelopment of leasing of 102,000 square feet at One Beach Street in San Francisco and 33,000 rentable square feet at 710 Oregon Square in the Lloyd submarket in Portland. In addition, we have the ability to organically grow our office portfolio by up to an additional 768,000 square feet or 22% on sites we already own by building Tower 3 at La Jolla Commons, a 213,000 square foot tower that's currently into the city for permits and Blocks 90 and 103 at Oregon Square with two configuration options, one at 392,000 square feet and the other at 555,000 square feet, which we recently received the entitlements on from the Portland Design Review Commission. We continue evaluating market conditions, prospective tenant interest and hopefully decreasing construction costs on these development opportunities. In summary, we have a stable office portfolio, little near term rollover, significant build in NOI growth and additional upside through repositioning and redevelopment within our existing portfolio plus substantial new development on sites we already are on.

q3 ffo per share $0.44. qtrly earnings per share $0.08. collected 89% to date of rents that were due during q3.

New factors emerge from time to time and it is simply not possible to predict all such factors. On our call today, Allan will review highlights from the second quarter, and discuss the supportive macro environment. He'll then provide a preview for the remainder of the year and outline our expectations for growth in fiscal 2022. I'll then provide more details and our results projections and balance sheet. We will conclude with a wrap up by Allan. We had an extraordinary quarter, highlighted by an unprecedented increase in our sales pace, and significant growth in our gross margin, EBITDA and net income. At the same time, we invested for the future, grew our share of lots, controlled by options and continued to reduce debt. In some, we had a nearly perfect balanced growth quarter, with profitability growing faster than revenue, while operating from a less leveraged and more efficient balance sheet. Perhaps the best news is that our team is poised to translate continuing strength and market conditions into even better results in the quarters ahead. As I'm sure you've heard, the strength in new home demand has contributed to both longer cycle times and higher construction costs. To-date, we have successfully adapted to this environment by raising prices, limiting sales paces and extending delivery dates on sold homes. As we work through these issues, our objectives remain the same. We expect to create value for customers, partners, employees and shareholders by delivering great homes on time and at the margin we intended when we made the sale. Our commitment to creating value for our stakeholders can also be seen in our recent accomplishments and goals on the ESG front as summarized on slide five. This quarters highlights included being named an ENERGY STAR Partner of the Year for the sixth consecutive year, representing another significant step toward our goal of having every home we build Net Zero Energy Ready by 2025. We believe the strength in the housing market will prove to be pretty durable. And the reasons are simple, strong demographic demand, exceptionally limited supply and the recovering economy. On the demand side, we expect many of the COVID housing norms to be persistent, namely the desire for more space, better space and outdoor space, even as we return to offices and schools, our homes have clearly taken on new roles in our lives, couple that with a great awakening of Millennials to the benefits of homeownership and the desire of many boomers to simplify, you have a recipe for depth and breadth of demand that isn't likely to disappear anytime soon. On the supply side, the shortage of owner occupied homes we described on our call in January turns out to be even more acute than we suggested. On that call, we conservatively estimated that the deficit was more than one million homes. In recent weeks, Freddie Mac published a deeply research report, which demonstrated the housing shortage is closer to four million homes. There's simply no way for our industry to accelerate entitlement, development and construction to make a serious dent in that number anytime soon. Finally, on the economy, while there are still many COVID related challenges, there's ample evidence about job growth and wage growth, which bode well for consumer spending and housing. In sum, our industry is in a highly advantageous position, with demographically driven demand in a recovering economy, faced with seriously constrained supply beyond 2021. Turning now to our expectations, with our sold and already started backlog up more than 50% and continuing strength in lead and traffic trends, our visibility and confidence in fiscal 2021 results is quite high. Dave will provide details on our outlook for the third quarter and full-year. But I'm happy to share that we're raising our expectations again. The headline is that we now expect full-year earnings per share to be above $3. Looking beyond this year, our balanced growth strategy is a longer-term approach to generating shareholder value while carefully managing risk. Over the past several years, our strategy has yielded a big jump in profitability, even bigger improvements in our returns and a meaningful reduction in debt. And we're not done. Well, it's too early for us to give any type of detailed guidance for next year, there are three factors that give us confidence that we can again improve profitability and returns in fiscal 2022. First, our current backlog already contains nearly 700 homes scheduled to close in the first quarter of next year, that's more than half of our typical first quarter closings. With our normal cycle times, most of these homes would have closed this year. But these aren't normal times. So instead, we have a great start on next year. Second, community count growth is coming. Credibly strong sales over the past six months in the depth in our community count arrived a little sooner than we previously anticipated. But next year, the positive progression in our community count will be evident. And remember, these communities were tied up six to 12 months ago, before the recent run-up in home prices. And third, we'll finally see real interest savings. We have dramatically deleveraged our balance sheet in recent years, but haven't really benefited from a reduction in interest expense in our earnings. That's because of the timing difference between the immediate cash benefit of much lower interest costs and the non-cash GAAP expense that arises from previously capitalized interest. Next year, we expect to realize a multimillion dollar reduction in our GAAP interest expense based on actions we have already taken. These factors and our confidence in the industry supply and demand equation should yield another successful year for our balanced growth strategy. Before closing, I'd like to again express our appreciation for the scientists, doctors, first responders and essential workers who saw us through what appears to be the worst of the pandemic in a position to our country to begin to recover. Looking at the second quarter compared to the prior-year, new home orders increased approximately 12% to 1,854 as our sales pace was up more than 40% to 4.7 sales per community per month. Homebuilding revenue increased about 12% to $547 million on 9% higher closings. Our gross margin, excluding amortized interest, impairment and abandonment was 22.2% up approximately 140 basis points. SG&A was down 100 basis points as a percentage of total revenue to 11% as we benefited from improved overhead leverage. Adjusted EBITDA was $64.2 million up over 45%. Our EBITDA margin was 11.7%, the highest second quarter level in the past 10 years. Interest amortized as a percentage of homebuilding revenue was 4.4% down 20 basis points, and that led to net income from continuing operations of $24.6 million, yielding earnings per share of $0.81, more than double the same period last year. With the strength of our current backlog and positive macro outlook, we're in a position to once again increase our financial expectations for fiscal 2021. We now expect EBITDA to be up over 20% or more versus the prior-year, a significant increase from the previous guidance. This level of improvement implies EBITDA growth of more than 10% in the second half of this year, with greater year-over-year growth expected in the third quarter. Our full-year EBITDA guidance equates to earnings per share above $3 up from last quarter's guidance of at least $2.50. We now expect our return on average equity for the full-year to be approximately 14%. If you exclude our deferred tax asset, which doesn't generate profits, our ROE would be over 20%. The current production environment is going to impact both sales and closings in the third quarter as a second quarter progressed in the face of the elongating cycle times, we deliberately slowed home sales to provide a better experience for customers and increase the value of our communities. Many of these restrictions remain in place and as such, we anticipate new homeowners to be down 10% to 20%. On the closing side, because of the challenging production environment, it is difficult for us to predict the timing and mix of closings between the third and fourth quarter of this year. We're focused on delivering great homes, not maximizing third quarter closings. Even with this caution, we still expect closings to be up in the high single digits in the third quarter year-over-year. Our ASP should be above $400,000 for the first time ever, gross margin should be up over 100 basis points. SG&A as a percentage of total revenue should be down at least 20 basis points. Our interest amortized as a percentage of homebuilding revenue should be around 4% and our tax rate will be about 25%. Combined, this should drive a sequential increase in quarterly earnings per share. We ended the second quarter with over $600 million of liquidity more than double this point last year, with unrestricted cash in excess of $350 million and no outstanding draws in our revolver. During the quarter, we retired approximately $10 million of our senior notes. And with two remaining terminal repayments, we're on a clear path to achieve our goal of bringing our total debt below $1 billion by the end of fiscal 2022. During the quarter, we spent almost $100 million on land acquisition and development. Based on land pipeline and approvals, we expect our land spend to accelerate in the remaining quarters of fiscal 2021, resulting in over $600 million of total land spend for the year. We also increased our option percentage in the second quarter and now control more than 45% of our active lots or options up from less than 30% in the same period last year. We still anticipate community count troughing around 120 later this year, but we expected to grow steadily from there in fiscal 2022 as we benefit from our increased land spending. The second quarter of fiscal 2021 was very successful for us as we maintain the momentum of the last several quarters highlighted by very strong new home orders and substantially improved margins, while also improving the efficiency of our balance sheet. These results and continued strength in the market have enabled us to raise our expectations for the year. Perhaps more importantly, our performance should help investors understand the longer-term opportunity for value creation embedded in our balanced growth strategy and our ESG leadership. I'm confident that we have the people, the strategy and the resources to create durable value over the coming years.

compname reports q1 earnings per share $0.40. q1 earnings per share $0.40. net new orders for q1 increased to 1,442, up 15.3% from prior year.

With us on the call from National Fuel Gas Company are Dave Bauer, President and Chief Executive Officer; Karen Camiolo, Treasurer and Principal Financial Officer; and Justin Loweth, President of Seneca Resources. We may refer to these materials during today's call. While National Fuel's expectations, beliefs and projections are made in good faith and are believed to have a reasonable basis, actual results may differ materially. The third quarter was another strong one for National Fuel with our Upstream and Midstream businesses continuing the positive momentum they established during the first half of the year. Seneca had a great quarter with production up nearly 50% on the strength of last year's acquisition and its 2021 drilling program. That growth in production, along with higher commodity prices, drove nearly 70% increase in EBITDA from our combining Upstream and Gathering operations. The acquisition continues to impress with both production and operating costs better than we expected. With the near-term run up in winter natural gas prices, along with increased confidence around online date for Leidy South, we've decided to move up some completion connectivity at Seneca. This will allow us to more fully utilize our Leidy South capacity from the start and capture some of the valuable winter premiums in the Transco Zone 6 market. As a result, we expect them [Phonetic] to shift forward a few months. And while we aren't raising the upper end of guidance, now it's likely Seneca's capital spending for 2021 will be closer to high end of our previous range. Justin will have a full update on Seneca's operations later on the call. At the pipeline storage business, construction of the FM100 project has been going well despite a really rainy month of July. At this point, everything remains on schedule for a late calendar 2021 in-service date. Pipeline construction is well underway. Almost 90% of the pipe has been strung on the right away and nearly 40% is in the ground. The two compressor stations are nearing mechanical completion and once automation and electrical work is complete, commissioning will begin. I took a tour of the construction site a couple weeks ago and was really impressed with what the team and our contractors have accomplished in such a short period of time. Truly a great job by all. As I've said in the past, this is a great project for National Fuel. It increases revenues on our regulated pipelines by $50 million a year and when combined with Seneca capacity [Phonetic] on Transco's companion Leidy South project will allow for higher E&P production volumes and gathering throughput; the perfect example of the power of our integrated approach to the business and positions National Fuel to deliver solid near-term growth and sustainable free cash flow. Turning to the utility, our summer construction program is well underway. Consistent with prior years, our goal is to replace 150 miles of older pipeline, and the team is right on track to hit that mark. Replacing older pipe goes a long way to reducing methane emissions on our system. To-date, our program has been the driver of a 64% reduction in emissions from our delivery system compared to 1990 levels. Earlier this year, we filed for an extension of our system modernization tracking mechanism in our New York division, which makes up a little more than two-thirds of our replacement program. As you recall, that mechanism allows us to recover in near real time the costs associated with our modernization spending. It's a great program and that we're able to lower emissions on our system and make it more reliable all without the need to file annual rate cases. We expect the New York Commission will act on this petition during our fiscal fourth quarter. Looking to next year on the strength of the FM100 project, our preliminary guidance for fiscal 2022 is $4.40 per share to $4.80 per share and to mid-point a 12% increase from our expected 2021 earnings. In addition NYMEX pricing of $3.50, we expect about $250 million in free cash flow, which is well in excess of our expected dividend payments and which positions us well to continue to improve our investment grade balance sheet. Those of you who have followed us for a while, know that we have a disciplined hedging program designed to mitigate price volatility and protect the returns on our upstream and gathering investments. The goal of that program is to be between 50% and 80% [Indecipherable] at the beginning of a fiscal year, and we typically layer in those hedges over the preceding three to five years. Our fiscal 2022 hedging program is right on track with those targets through a combination of fiscal firm sales and financial instruments. We have hedges on roughly three quarters of our expected fiscal 2022 Appalachian production. So we're well ahead, we still have considerable upside from natural gas prices. Every $0.25 change in realized prices impacts cash flows by about $20 million and earnings by about $0.15 per share. Switching gears, as we all know, natural gas has been a significant, if not the biggest driver of greenhouse gas emissions reductions since 2005. In addition, natural gas and its related delivery systems have consistently proved their reliability, resilience, and affordability. And without a doubt, consumers recognize and appreciate those benefits. Notwithstanding the anti-fossil fuel commentary from Washington and Albany, we continued to add customers to our utility system year in and year out. But in spite of these obvious benefits, our policymakers, particularly on the Coast are pursuing avenues to restrict consumers access to natural gas, including in some cases outright bans. Taking an electrify everything approach is neither rationale nor practical. The natural gas delivery [Phonetic] system is safe and largely underground, which ensures greater reliability and resilience compared with above-ground electric infrastructure. And this past winter was a textbook example of the importance of resilience. In addition, unlike the tens of thousands of windmills and millions of solar panels that would be needed to electrify the country's heating load, the natural gas delivery system already exists and is largely paid for. To abandon it makes little sense, particularly when you consider that aggressive emissions reduction targets can be met through a mix of energy efficiency measures, hybrid heating technologies and low carbon fuels like renewable natural gas and hydrogen. I'm all in favor of reducing emissions. So then all of the above approach is necessary, if we're to have reliable, affordable energy in this country. Before I give you -- before I close, I'd like to give you a heads up on the second annual edition of our Corporate Responsibility Report, which will be published early next month. Last year's report was a great first start to our efforts to enhance our ESG related disclosures. We look to build on it in several important ways this year. In addition to reporting under the sustainability accounting standards board framework, we'll also include due disclosures under the Task Force on Climate-related Financial Disclosures or TCFD framework. We're also enhancing our emissions disclosures to include full Scope 1 and 2 CO2 and methane emissions. And importantly, we'll be using this data to establish what we think are very credible and realistic methane and greenhouse gas emissions reduction targets. Now, lastly, we're expanding our diversity disclosures using the EO1 framework. Overall, it's a great report that's responsive to the disclosure requests our shareholders had asked for. In closing, this is an exciting time for National Fuel. Construction of the largest pipeline in our Company's history is on time and on budget. Seneca's production is an all-time high and will continue to increase as new capacity on Leidy South and FM100 becomes available. And at the same time, the stability of our utility business adds to our financial strength. All the while, we remain committed to reducing the emissions profile of our operations. When you bring it all together, National Fuel is in a great position to deliver significant earnings and free cash flow to our shareholders. Seneca had a strong third quarter with operational results slightly ahead of our expectations. We produced 83.1 Bcfe, an almost 50% increase from last year, driven by increased Tioga County volumes from our acquisition, which closed in late July 2020, combined with solid results from our Appalachian development program. We continued to see the benefits of our increased scale with per unit cash operating expenses dropping $0.06 per Mcfe versus the prior year to a $1.13 per Mcfe driven by a significant year-over-year decrease in our per unit G&A expense. During the quarter, we drilled 12 new wells, five in the WDA and another seven in the EDA. Notably, this included the commencement of drilling on our first Tioga County pad from our acquisition. Similar to our activity in the WDA over the past few years, the Tioga pad will be a return trip. This allows us to utilize existing roads, pads and gathering infrastructure, which significantly enhances our consolidated E&P and gathering returns. We have approximately ten additional pads within the acquired acreage footprint, where we believe we can take advantage of similar capital efficiencies. Further, given the contiguous nature of this acreage and continued operational success, we expect most of our Tioga Utica Wells will exceed 10,000 feet treated lateral link generating outstanding returns. For the remainder of the year, we were on track with our plans to ramp up production to fill Leidy South and capture premium winter pricing. We have begun the process of accelerating our completion phase, and now have two active completion crews, which is a level of activity we expect to continue throughout the first half of fiscal 2022. This will drive our production cadence in the coming quarters with most of our new production coming online toward the end of our current fiscal year and in the first half of next year. As a result, we expect modestly lower sequential production in Q4 of fiscal 2021. Later this quarter, we plan to turn in line one operated pad within our Western Development Area. Additionally, in the next few weeks, we expect to see production brought online for six well non-operated pad in Lycoming County. Seneca holds a 25% working interest in this pad. However, 100% of the production will flow through National Fuel's wholly owned gathering system, driving throughput growth and revenues for our sister company. Moving to fiscal 2022, our operations plan is right on track, as we expect to turn in line about 40 wells during the first half of the fiscal year and another ten or so wells over the balance of the year. As a result, we expect sequential quarter-over-quarter production growth in the first three quarters of the year with production leveling out in our fourth quarter. Our increased completion base, along with our plans to operate two drilling rigs throughout fiscal 2022 is projected to drive an increase in our capital expenditures by $45 million year-over-year, which is consistent with our prior expectations. Looking beyond next year, we expect capital to trend downward as we decrease our activity levels and move to a maintenance to low growth mode. On the marketing front, Seneca's Appalachian production is well protected in fiscal 2022. With firm sales contracts in place for approximately 93% of our expected fiscal 2022 production volumes, minimizing our exposure to invasive spot pricing. We also have hedges in place on approximately three quarters of our expected Appalachian production. Overall, the setup remains very constructive for natural gas prices. With Appalachian producers, currently exercising capital discipline, LNG and Mexico exports near all-time highs, and storage levels remaining below both last year and five-year inventories. However, with prices north of $3.50 per MMBtu for our fiscal 2022 and $3 for fiscal 2023, the caveat will be whether this capital constraint will continue over the coming months and whether producers will stick to their current focus on free cash flow generation and maintenance production levels. While I'm cautiously optimistic the new found discipline will hold, at Seneca, we expect to continue adhere to our long-standing methodical approach to risk management, by layering in additional hedges over the coming quarters. At current forward prices, our program will continue to generate attractive returns and significant free cash flow. Looking out beyond fiscal 2022, our activity level will be geared toward generating sustainable free cash flow. Absent the ability to enter into significant additional long-term firm sales or acquire firm capacity that would result in strong realized prices. Seneca expects to shift into a maintenance to low growth production mode focused on fully utilizing our existing and diverse marketing portfolio. Moving to California, we expect to invest $10 million to $15 million a year, generating substantial free cash flow or moderating production declines, and we'll look for ways to increase our activity to the extent oil prices remain at current levels. That said, our opportunities to increase our activity levels remain limited by the challenging regulatory environment and tempered by the lengthy timeline to obtain new permits. On the renewable side, we're making excellent progress on our new solar plant at our South Midway Sunset field in California, which is expected to be completed later this year. We are also moving forward on an additional solar plant at our South Lost Hills production field, which we expect to complete in fiscal 2022. With the ability to generate California low carbon fuel standard credits and reduced grid power consumption, these projects are not only highly economic, but they also reduce our emissions. Upon completion of these projects, approximately 20% of our power needs in California will be met with solar. We also continue to make considerable strides in our sustainability initiatives in Appalachia. Last month, we commenced a comprehensive real time in-field study, evaluating the emissions generated by various types of completion equipment. And just last week, we announced that we are in the process of completing a six-well EDA pad using e-frac technology. The results of these field trials will provide Seneca with high quality comparative data on the emissions profile of these completion technologies, supporting our efforts to select equipment that aligns with our long-term sustainability goals. Additionally, we are also actively evaluating the various responsibly sourced gas initiatives and expect to move toward one or more of these frameworks over the coming months. As a best-in-class operator and the lowest carbon intensity shale basin in United States, we are well positioned to be an upstream leader in ESG. National Fuel's third quarter GAAP earnings were $0.94 per share and after adjusting for an unrealized gain on our non-qualified benefit plan investments, operating results were $0.93 per share. Last night's release explained the major drivers for the quarter. So I'll focus on our guidance updates for the remainder of the year and our initial projections for next year. Starting with fiscal 2021, we're increasing and tightening our earnings guidance to a range of $4.05 per share to $4.15 per share. In addition to the strong results from the third quarter, we've incorporated the significant strengthening of natural gas prices for the remainder of the year. Moving into fiscal 2022, we are projecting a 12% increase in earnings at the mid-point with our preliminary guidance in the range of $4.40 per share to $4.80 per share. At a high level, the increase in earnings relative to fiscal 2021 can be boiled down to three main drivers. The first two are related to integrated upstream and midstream development tied to the FM100 expansion and modernization project. Starting first with the Pipeline and Storage segment, the direct benefit of the project will be approximately $50 million per year of incremental revenues. Given the late calendar [Technical Issues] we expect approximately $30 million to $35 million of revenue from this project during fiscal 2022. A large portion of this revenue will flow through to the bottom line, but will be partially offset by the associated operating costs and depreciation expense. In addition, in fiscal 2022, we expect a decrease in AFUDC that was accrued during the FM100 construction period. Next, this project along with its companion Leidy South expansion will provide Seneca with a key outlet for its growing natural gas production. Seneca's expected production range for next year is 335 to 365 Bcfe. This nearly 8% increase relative to fiscal 2021 will also benefit our gathering business, driving higher throughput and related revenue. While there is a modest amount of associated expected gathering segment expense, the vast majority of this incremental revenue will flow through to the bottom line. The third major driver is higher commodity price expectations. For fiscal 2022, we're assuming $3.50 per MMBtu with spot prices of $2.85 in the winter months, and $2.25 in summer period. On the oil side, we're assuming $65 per barrel. As Dave mentioned, we're well hedged going into next year, but for reference, even with the level of hedges we have given our base of production, changes in pricing could impact earnings for the year. For reference, a $0.25 change in natural gas prices is expected to impact earnings by $0.15 per share, a $5 change in oil by $0.03 per share. While those are the major drivers year-over-year, I'll touch on a few other smaller assumptions around our guidance range. In our utility for the first three quarters of this year, we averaged about 13% warmer than normal -- warmer than normal weather. For fiscal 2022, we're forecasting a return to normal weather, and as a result, we expect margins to be higher by approximately $10 million year-over-year, particularly in our Pennsylvania jurisdiction where we don't have a weather normalization clause. This will be largely offset by modestly higher expected O&M expense, which we anticipate to increase 3% to 4% compared to fiscal 2021 driven by higher personnel costs, principally related to negotiated wage increases with our collective bargaining units along with normal inflationary increases to labor and other items that we see each year. In the Pipeline and Storage business, we expect O&M to increase by 4% to 5% versus fiscal 2021. This was principally driven by a one-time favorable benefit to O&M expense of approximately $4 million in fiscal 2021 that will not recur in fiscal 2022. Outside of this item and operating expenses related to FM100 underlying cost in this business will be relatively flat year-over-year. Lastly, from a guidance standpoint, we're expecting a modestly lower effective tax rate next year at 25% to 26% to stem from our ability to take advantage of tax credits related to our enhanced oil recovery activities at our California facilities for fiscal 2022. These credits are available based upon historical oil prices and given the low pricing environment in calendar 2020 we expect to be able to take advantage of this credit next year. However, where oil prices are today we'd expect this to phase out again for fiscal 2023. Turning to our capital plans for next year, we're projecting a roughly 10% decrease relative to fiscal 2021. This is driven by the completion of the $280 million FM100 project early in the year. We expect that reduction would be somewhat offset by modestly higher upstream and associated gathering spending that we'd been planning for over the past year. As a reminder, Seneca added second drilling rig in January, and we expect to see an increase in our completion phase this fall in advance of new transportation capacity. With respect to our cash position as we discussed previously, we expect to live within cash flow this year when you consider the proceeds of our timber sale and our dividend payments. This hasn't changed as the slightly higher expected spending at the mid-point of our updated guidance is largely offset by higher cash flows from the expected increase in earnings for the year. We started the year with a modest amount of short-term borrowings and well, we've had roughly $120 million of cash on hand at the end of June. We expect to be back in a borrowing position as we continue to spend on the FM100 project. As we look to fiscal 2022, assuming a $3.50 NYMEX natural gas price we expect funds from operations to exceed capital expenditures by roughly $250 million. This more than covers our dividend and is expected to leave us nearly a $100 million of excess cash flow positioning as well going into fiscal 2023. While our balance sheet is already in a good spot, we expect the combination of higher EBITDA and increased cash flows along with lower leverage to lead to continued improvement in our investment grade credit metrics. We would have stepped over the course of fiscal 2022 to trend toward 2.5 times debt to EBITDA and with sustainable free cash flow beyond next year to seek further improvement beyond that level. With this leverage trajectory, we will have significant flexibility to deploy capital, whether that's in making growth investments or returning cash to shareholders, we will look to deploy capital in the most valued creative manner for our shareholders.

q3 gaap earnings per share $0.47. sees fy earnings per share $3.40 to $3.70.

On our call today, we have Andy Rose, Worthington's president, and chief executive officer; and Joe Hayek, Worthington's chief financial officer. Today's call is being recorded and a replay will be made available later on our worthingtonindustries.com website. Our teams executed very well in the quarter, and the result was a strong financial performance. For Q3, we reported earnings of $1.11 per share versus $1.27 in the prior-year quarter. Excluding a small restructuring and impairment charge, we generated $1.13 in the quarter versus $1.36 in the prior year, after adjusting for restructuring and a small gain on our investment in Nikola. In the quarter, we had inventory holding losses estimated to be $25 million or $0.37 per share. In the prior-year quarter, we had inventory hoarding gains of $31 million or $0.44 per share. Consolidated net sales in the quarter of $1.4 billion were up significantly compared to $759 million in Q3 of last year. The increase in sales was primarily due to higher steel prices, the inclusion of our most recent acquisitions, and higher average selling prices in both consumer and building products. Gross profit for the quarter decreased to $143 million from $164 million in the prior-year quarter, and gross margin was 10.4% versus 21.6%, primarily due to the swing from inventory holding gains to losses, which were partially offset by increases in both consumer, and building products. Adjusted EBIT in Q3 was $112 million, down slightly from $126 million in Q3 of last year, and our trailing 12 months adjusted EBIT is now $662 million. And I spend a few minutes on each of the businesses, In steel processing, net sales of $1.1 billion more than doubled from $504 million in Q3 of last year, are mainly due to the average selling prices being higher, and the inclusion of both Tempel Steel and Shiloh BlankLight business. Total ship tons were down 2% compared to last year's third quarter despite the recent acquisitions which contributed 80,000 tons during the quarter. Excluding the impact of acquisitions, total ship tons were down 9% year over year. Direct tons in Q3 were 51% in mix compared to 48% in the prior year. Despite the decrease in ship tons, underlying demand during the quarter was healthy. Volumes were impacted by COVID-related production challenges, last shipping days due to weather, the US Canada bridge closings, and the ongoing semiconductor chip shortage that continues to impact automotive schedules. Automotive volume increased from the prior-year quarter, but demand was below seasonal norms and is still difficult to predict as production levels demands remain choppy. Construction demand continued to be solid, but our volumes decreased slightly from the prior year, as we had reserved some capacity for automotive demand that did not materialize. And market demand is good, and the war in Ukraine, and its impacts on the steel supply chain pricing, and end-market demand are difficult to predict. Our teams are best in class and continue to navigate market volatility, and supply chain challenges exceptionally well as they remain focused on taking care of each other, their customers, and our partners. In Q3, steel generated an adjusted EBIT of $7 million compared to $62 million last year. Large year-over-year decrease was driven by the inventory holding losses I mentioned earlier, estimated to be $25 million in the quarter compared to inventory holding gains of $31 million last year. An unfavorable swing of $56 million. Inventory holding losses for the current quarter included a $16 million charge to write inventory down to net realizable value, and to the expected future decline of steel prices at year-end, at quarter-end. Steel prices have since risen, but based on current steel prices, we believe we will have higher inventory hoarding losses in Q4 than we did in Q3. In consumer products, net sales in Q3 were $162 million, up 41% from $115 million in the prior year. The increase was driven by higher average selling prices, combined with higher volumes across the board, and the inclusion of GTI. Adjusted EBIT for the consumer business was $27 million and the EBIT margin was 16.5% in Q3, compared to $15 million and12.7% last year. Year on year growth in margin is a credit to the exceptional job our consumer team is doing managing through the current inflationary environment, and this quarter we realized the price, the benefit of price increases that were implemented late in Q2. Demand remained strong across the board for our consumer business, and while inflationary pressures, shipping, and supply chain issues will likely persist, we're confident in our team's ability to continue growing the business, and delivering value to our customers with a focus on increasing production while developing new, and innovative offerings. Building products generated net sales of $133 million in Q3, which was up 38% from $96 million in the prior year. The increase was driven by higher average selling prices. Building products adjusted EBIT was $50 million, and adjusted EBIT margin was 37.3%, up significantly from $27 million and 28.4% in Q3 last year. Our wholly owned building products business generated a nearly five-fold year-over-year increase in EBIT during the quarter, due to healthy demand combined with higher average selling prices. ClarkDietrich's results improved by $15 million year over year, while WAVE was down slightly from a year ago. ClarkDietrich and WAVE contributed equity earnings of $21 million and $19 million respectively. The building products team has done a great job navigating a very challenging environment by continuing to focus on serving our customers. Going forward, we believe that strong demand in the commercial and residential building markets that we serve will persist, though inflationary conditions will also persist. In Sustainable Energy Solutions', net sales in Q3 were $31 million, down slightly from $32 million in the prior year, despite significantly lower volumes through the divestiture of our LPG gas business. Excluding the divestiture, net sales were up 31% in Q3 versus last year. Business reported an adjusted EBIT loss of $3 million in the quarter compared to break-even results in the prior year, as higher average selling prices were more than offset by the impact of significantly increased input costs. This business is in the early stages of repositioning itself to serve the global hydrogen ecosystem, and adjacent sustainable energies like compressed natural gas, and will benefit as those volumes ramp at the European market remains challenged, and the ongoing war in Ukraine has caused business conditions in Europe to deteriorate further, with materially increased energy prices and demand uncertainty. However, longer-term, the conflict may accelerate Europe's planned adoption of hydrogen and alternative fuels. Now, our plan is to be prepared to be a leader in serving that market. With respect to cash flows and our balance sheet. Cash flow from operations was $74 million in the quarter, with free cash flow totaling $51 million. We started to see our operating working capital levels decrease during the quarter, primarily due to lower steel prices, which added $49 million cash flow. During the quarter, we received $29 million in dividends from our unconsolidated JVs', spend $270 million on the acquisition of Tempel, invested $24 million in capital projects, paid $14 million in dividends, and spent $54 million to repurchase a million shares of our common stock at an average price of $54.26. Following the Q3 purchases, we have slightly over $7 million shares remaining under our share repurchase authorization. Looking at our balance sheet and liquidity position. Funded debt at quarter end of $813 million increased $111 million sequentially, primarily to fund the acquisition of Tempel. Interest expense of $8 million was up slightly due to higher average debt levels, and we ended Q3 with $44 million in cash and $396 million available under our revolving credit facility. Yesterday, the board declared a $0.28 per share dividend for the quarter, which is payable in June of 2022. We had another very good quarter despite the continuation of a difficult operating environment and the emergence of inventory holding loss headwinds. I'm not surprised, but continue to be humbled, and grateful for the commitment of our employees to doing what it takes to deliver for our customers. And market demand remains strong across most of our product lines. But operating challenges remain, including labor availability, supply chain disruptions, transportation shortages, and an extremely volatile steel pricing environment. Our commercial purchasing and supply chain teams have done an excellent job reacting quickly, and effectively to higher input costs by passing through price increases as appropriate. Our experts in steel processing continue to prove that they are world-class at managing through this volatility without compromising customer quality and service. The benefit of higher selling prices was particularly noticeable in the year-over-year improvement in consumer products, in building products this quarter. ClarkDietrich had another strong quarter, and an exceptional calendar year, but we expect their business to gradually return to more normalized levels in 2022. Sustainable Energy Solutions' are struggling due to lower automotive demand in Europe, and higher input costs. We continue to be very bullish on the future of all these business segments as we refine and execute more dynamic growth strategies that will continue to leverage innovation, transformation, and M&A. Most of you on the call know there was a precipitous decline in steel prices during the quarter from an all-time high for hot roll of $1958 per ton. During the quarter, it fell briefly below $1 thousand per ton. However, the recent events in Ukraine have reverse this trend significantly, as hot roll now sits around 1300 in upward pressure. The decline during the quarter helped us achieve a modest level of working capital relief, although this may be short-lived. But we've yet to establish specific targets, so this is in process. Worthington today has many products and solutions that enable emissions reductions, and we intend to increase our focus on these products to capitalize on the growth opportunity in those businesses. We believe firmly that we have a huge opportunity to play a central role in building the bridge to a cleaner environment. We are positioning our businesses to maximize this opportunity. Several of these areas include laser welding, lightweight applications, electrical steel eliminations for batteries and transformers, and gas systems for the hydrogen ecosystem. Many other of our existing products already offer cleaner fuel alternatives that can bridge us to a future dominated by wind, solar, hydrogen, and hydroelectric. The business environment continues to be very challenging. Our teams continue to go above and beyond to manage through these difficulties and deliver for our customers and shareholders. We are well-positioned for whatever the market brings us next. Will now take questions.

q3 sales rose 82 percent to $1.4 billion. q3 earnings per share $1.11. qtrly adjusted earnings per share $1.13. steel price volatility is expected to remain a headwind for co. overall, our businesses are performing well, and underlying end market demand remains healthy.

[Technical Issues] meaning of the federal securities laws. These reconciliations, together with additional supplemental information, are available at the Investor Relations section of our website herbalife.com. Additionally, when management makes reference to volumes during this conference call, they are referring to volume points. During the second quarter we delivered worldwide reported net sales of $1.6 billion, growth of 15% compared to the prior year. Net sales grew by double-digits for the fourth straight quarter. All three of our core product categories grew double-digits, led by the Energy, Sports and Fitness category, which increased 45% compared to the prior year. All of our regions, except China, experienced net sales growth in the quarter with four of our six regions increasing by more than 20%. We will discuss China in detail toward the end of my remarks. The underlying fundamentals of our business remain strong. For the third quarter we are guiding reported net sales to be in the range of down 1% to up 5%. For the full year, we expect net sales growth to be within a range of 8.5% to 12.5% compared to the prior year. In addition to our net sales and earnings per share guidance, this quarter we have initiated guidance for adjusted EBITDA. For the full-year 2021, we expect to generate between $875 million and $935 million of adjusted EBITDA, which highlights the ongoing profitability and underpins the cash flow generation of our business. Alex will provide detail on our new guidance and why we believe this incremental metric is valuable for investors as they analyze our business. Now let me get into our Q2 performance in more detail. The North America region grew by 7% in the quarter, primarily driven by continued strong momentum in the US. It is important to note that the single-digit growth is up against an extraordinarily high prior year comparison period. However, the two-year stack growth rate of 47% in the US accelerated compared to last quarter's two-year stack. We have seen significant growth in our US Nutrition Club business as many parts of the country returned to more in-person activities. Over the first half of the year, we have had an increase of over 2,000 Nutrition Club locations in the US, with the total club count now exceeding 11,000. While we continue to monitor pandemic conditions, we are currently planning a return to some of our in-person training activities and sales events in the second half of the year, utilizing a hybrid format. The Asia Pacific region had another quarter of powerful growth, up 38% compared to the prior year. The region had notable strength in Vietnam, which grew 60%, Malaysia, which was up 45%, Taiwan, which increased 21% and South Korea, which returned to growth with a 19% increase. Herbalife Nutrition India has emerged as the number one direct selling company in that country based on a recent market research store report. Our Indian business grew 93% this quarter compared to Q2 of 2020. Recall that in Q2 2020, our business in India was disrupted by the severe public health-related restrictions imposed in response to the onset of COVID-19. Over the past year our business in India has adapted well to ongoing pandemic conditions, implementing several successful digital strategies, including a virtual nutrition club model. Virtual nutrition clubs incorporate many elements of traditional in-person nutrition clubs, but are conducted through virtual platforms such as Zoom or Facebook Live. Virtual clubs establish a sense of community and a personal sense of connection elements that proved incredibly important during the pandemic. The virtual club strategy is now being shared as a model of success with other regions around the world. The EMEA region set a second straight quarterly net sales record with year-over-year growth of 22%. Strong performances continued to be seen in markets such as Turkey, which was up 63%, Italy, which grew 38%, Belgium, which was up 25%, and Spain, which increased 21% in the quarter. The United Kingdom delivered 24% growth, which was on top of a challenging comparison of 73% growth experienced in Q2 of 2020. Although combined new distributor and preferred customer numbers are lower than the peak of Q2 2020, we had significant growth of 56% compared to the more normalized 2019 comparison period. We have also seen a 27% year-over-year increase in the number of active supervisors, which reflects the continued strength of the EMEA business over the past 18 months and helped drive the record performance. Mexico grew 23% in the quarter, its first quarter of double-digit growth since 2013. Net sales growth was aided by a currency tailwind in the quarter. Our members in Mexico are beginning to adopt the preferred customer program, which was implemented in March. We'll talk more about preferred customers in a moment. Additionally, the South and Central American region grew 23% in the quarter. The region was led by Chile, which grew over 200%, Bolivia, which was up 58%, Guatemala, which increased 57%, and Peru, which was up 20% compared to the prior year. The region also benefited from the implementation of the preferred customer program, which is now live in eight of that region's markets. Let me go a little deeper on the preferred customer program, which is one of our key strategic elements. Segmentation, which for us means bifurcating our member base into two groups, distributors who intend to sell product and preferred customers or as they're known in the US, preferred members who are only product consumers. The preferred customer program is now live in 25 markets around the world. These markets represent approximately 70% of our total net sales. The ability to identify and distinguish preferred customers from distributors provides us with a powerful dataset on each group. We believe this primary customer data will be incredibly valuable. We will talk more about our preferred customer program and segmentation in our upcoming Investor Day. We're also seeing more interest in our business from young adults as approximately two-thirds of new distributors and preferred customers who joined Herbalife Nutrition during the second quarter were Millennials or Gen Z. The ability to run their business through digital platforms and to utilize social media to connect with consumers is appealing to this tech savvy demographic. As we evaluate future product launches, we have Gen Z and their consumer preferences in mind. This demographic is particularly interested in sports nutrition, clean label products, and offering such as our recently launched hemp cannabinoid products. Now returning to China, in China net sales declined 16% compared to the second quarter of 2020. This year-over-year decline for the quarter was below our expectations. We'd like to speak about China in more detail to give you a sense of what we're seeing and more importantly, what we're doing about it. China represented approximately 11% of global net sales and just under 6% of global volume in the second quarter. We're intensely focused on two key metrics that have decreased recently in China. One, the number of new service providers joining the business and two, the activity levels of our sales representatives and service providers. We are taking a number of actions in the market to adapt our business and to turn these two metrics around. First, we are continuing to invest in our digital platform. We recognized in 2019 that our powerful digital platform was going to be a crucial component of our efforts for the China market. Since we began our digital transformation, we have formed partnerships with Tencent and Alibaba to help support our efforts. We are just now beginning to see the initial results through the increased usage of our tools. Through the first half of the year, approximately 50% of our business was transacted through our recently launched digital platforms. Second, many of our service providers are shifting their focus to a newer Nutrition Club model, which includes a smaller scale, more rural location with an increase in daily customer interactions. This type of Nutrition Club more closely resembles the very successful Nutrition Club businesses we have in many other parts of the world such as our US market. Third, with the goal of improving the activity and quality of our service providers in China, we elected to modify our qualification requirements. Historically, in our business, we found that strategic changes to qualification methods often create short-term disruption, but eventually, lead to long-term positive results. Fourth, beginning this month, we believe we've secured the ability to expedite the business licensing processes for our new service providers, where they can obtain their license significantly faster than getting their license on their own. We anticipate this accelerated business licensing timeline will lead to incremental new entrants. Overall, we believe these initiatives will improve the number of new entrants joining the business and create a more active base of service providers in the long term. While below our expectations, China's volume has been more stable sequentially from month-to-month this year. The China comparisons continue to be difficult for Q3, but they actually get much easier toward the end of 2021 and into early 2022. And we expect China to be additive to the total company growth within the next year. Lastly, let me add that although at its current level China is a relatively small part of our overall business, we believe it offers significant growth opportunity long term and we remain firmly committed to the market. So we've set a date for our Virtual Investor Day, which will take place on September 14th at 8:00 AM Pacific Time. We look forward to sharing a deep dive on our company, on our strategy and on many of the initiatives that we have underway to drive continued growth. Second quarter net sales of $1.6 billion represents an increase of 15% on a reported basis compared to the second quarter in 2020. This was the largest quarterly net sales result in company history. The growth was broad-based as over 50 of our markets grew by double-digits or more. We had net sales growth in four of our five largest markets, consisting of the US, which grew 6%, China, which was down 16%, India, up 93%, Mexico, up 23% and Vietnam up 60%. Currency was a tailwind to net sales in the quarter, representing a benefit of approximately 520 basis points, excluding Venezuela. Reported gross margin for the second quarter of 79.2% decreased by approximately 60 basis points compared to the prior year period. The decrease was largely driven by unfavorable country mix, primarily from China representing a smaller portion of our overall company sales. Second quarter 2021 reported an adjusted SG&A as a percentage of net sales were 32.6% and 32.9%, respectively. Excluding China member payments, adjusted SG&A as a percentage of net sales was 26.6%, approximately 30 basis points unfavorable compared to the second quarter of 2020. This was largely due to a return to more normal levels of advertising promotion and sales event spending, which was significantly disrupted during the second quarter 2020. For the second quarter, we reported net income of approximately $144.2 million or $1.31 per diluted share. Adjusted earnings per share of $1.52 was a beat of $0.15 above the top end of our Q2 guidance. Our expected year-over-year currency benefit for the second quarter should have been approximately $0.10 lower than originally projected, which translates to our actual currency adjusted earnings per share exceeding the top end of our guidance range by $0.17. This resulted in the largest quarterly adjusted EBITDA result in company history for the second quarter in a row, with adjusted EBITDA of approximately $262 million. Combined with the prior record in Q1, we have generated over $500 million of adjusted EBITDA during the first half of the year. We are issuing guidance for the third quarter 2021, as well as updating our full-year 2021 guidance. For the third quarter, we estimate net sales to be in the range of down 1% to up 5%, which includes an approximate 200 basis points currency tailwind. The third quarter 2021 represents the most challenging comparison period of the year as we are comping 22% growth in Q3 of 2020. Looking back over the past four quarters, the two-year stack has range between approximately 19% and 28%. This quarter's guidance implies a two-year stack of 21% to 27% growth. Third quarter adjusted diluted earnings per share is expected to be in a range of $1.05 to $1.25. Adjusted diluted earnings per share includes a projected currency benefit of $0.06 compared to the third quarter of 2020. John described earlier the strategic initiatives we have in place to return China to growth. With that said, our expectations for China have come down in 2021. This is reflected in our updated net sales guidance of 8.5% to 12.5% growth on a reported basis. Despite the reduction from China, the midpoint of our guidance still implies double-digit net sales growth for the year. Currency remains a tailwind and we now project an approximate 220 basis point tailwind due to currency for the full year compared to the expected 200 basis points benefit from a quarter ago. We are updating full-year 2021 guidance for adjusted earnings per share to a range of $4.70 to $5.10. Despite the reduction to the midpoint of our sales guidance, the midpoint of our adjusted earnings per share range is increasing by approximately $0.05. This raise to the midpoint of our adjusted earnings per share guidance is primarily driven by the Q2 beat, partially offset by lower sales expectations in China for the remainder of the year. For the full year, our guidance includes a projected currency tailwind of approximately $0.15 per diluted share, which is $0.03 higher than the currency benefit included in our prior guidance. Incrementally, we are initiating adjusted EBITDA guidance for the third quarter and full-year 2021 of $205 million to $235 million and $875 million to $935 million, respectively. We believe this incremental metric will be helpful to investors as they analyze the profitability and cash flow generation potential of our business. Now we will turn to our cash position, capital structure and our share repurchase activity. Through the first half of the year, we have generated $287 million of operating cash flow. This was lower than our cash flow generation in the prior year period. However, for the full year we continue to anticipate cash flow will be stronger than the $629 million we generated in 2020. At the end of the second quarter, we had $838 million of cash on hand. During the second quarter, we completed approximately $98 million in share repurchases. Our expectation is that we will complete approximately $200 million of share repurchases over the remainder of the year, resulting in over $900 million of share repurchases for the full-year 2021. During the quarter, we completed a $600 million offering of 2029 senior notes at a rate of 4.875%. We used a portion of the net proceeds from the offering to redeem all outstanding $400 million 2026 senior notes that paid a coupon of 7.25%. Given the favorable rate differential of approximately 240 basis points, we were able to raise nearly $200 million more debt at effectively the same interest payment. This transaction resulted in a charge of approximately $25 million from the loss on the extinguishment of the 2026 notes. This one-time charge was excluded from our adjusted results. Also, just last Friday, we announced a repricing and upsizing of our term loan A and revolver credit facilities. The borrowing margins of both facilities were reduced by at least 25 basis points in a new pricing grid to 2.25% or lower. The revolver was increased by approximately $48 million to $330 million with the term loan A increasing by approximately $41 million to $286 million. The amendment and incremental commitment from our bank group demonstrates their confidence in our current and future business outlook. We also incorporated into the term loan A and revolver facilities a sustainability linked pricing grid relative to certain ESG KPIs. These KPIs include our use of virgin plastic materials, reductions in greenhouse gas emissions and female diversity in our senior management ranks. Herbalife Nutrition is proud to demonstrate our commitment to an ESG strategy that is measurable through financial incentives.

compname reports q4 gaap earnings per share of $0.74. q4 gaap earnings per share $0.74. q4 adjusted earnings per share $1.00. sees q1 adjusted earnings per share $0.87 to $0.94. sees fy adjusted earnings per share $3.70 to $4.00. qtrly revenue of $755 million increased 9%.

I'm joined by our President and CEO, Joe Raver; and our Senior Vice President and CFO, Kristina Cerniglia. These statements are not guarantees of future performance and our actual results could differ materially. I'd like to begin by acknowledging the continued dedication of Hillenbrand's employees in managing the business through the COVID-19 pandemic. We remain vigilant in our commitment to ensure the health and well-being of our employees and their families, to meet the needs of our customers, and to execute strategic initiatives that we believe will position Hillenbrand well now and into the future. This past quarter we marked the one-year anniversary for the close of Milacron acquisition. Over the past year, our teams have made rapid progress integrating the business and capturing synergies. We also continue to adapt successfully to the challenges brought about by COVID-19. We ended fiscal year 2020 in a strong position and in the first quarter of fiscal 2021, continued to build on that momentum, delivering strong results. Each segment exceeded our top line expectations in Batesville and the Molding Technology Solutions segment also achieved meaningful margin expansion by driving the benefit of higher volume to the bottom-line. In addition to our solid operating performance in the quarter, we made significant progress against our previously announced plan to exit the Flow Control businesses, Red Valve and ABEL, and we remain on track with our plan to divest TerraSource Global. Overall, I'm pleased with our execution in the first quarter. And while uncertainty regarding the pandemic remains, we are focused on navigating the environment to drive profitable growth in our large platform businesses, capture the full benefits of the Milacron acquisition, and strategically deploy cash flow to drive long-term shareholder value. Before I get into the highlights of the quarter, let me spend just a few minutes on the execution of our strategy as outlined on Slide 5. As we've consistently communicated, we are focused on executing four key strategic pillars as we work to build Hillenbrand into a world-class global industrial company. The first is to strengthen and build business platforms, both organically and through M&A. The Milacron acquisition represented a major step in the execution of the strategic pillar. With Milacron, we added industry-leading and complementary hot runner and injection molding product lines to the Hillenbrand portfolio, further strengthening our customer offering, increasing our global scale, and enhancing our capabilities across the entire plastics value chain from base resin production all the way through recycling. Given that we have materially improved our balance sheet over the past year, we expect to continue to increase growth investments, both organically and inorganically with a focus on strengthening and building our large business platforms in APS and MTS. Our second strategic pillar is to manage Batesville for cash. Batesville has a long history of manufacturing excellence in burial caskets with solid and predictable cash flow that we can invest to grow our industrial platforms. Batesville's outstanding cash flow over the past several quarters, which we used to pay down debt, underscores the important role Batesville plays in our portfolio. The third pillar of our strategy is to build a scalable foundation for growth using the Hillenbrand operating model. The acquisition of Milacron is providing a unique opportunity for us to transform and scale many of our shares back-office functional business processes in areas such as IT, HR, health and welfare benefits and finance. We believe that our efforts, to standardize processes and services and to leverage best practices across our operating companies globally, will drive meaningful efficiencies, improve effectiveness and quality and provide a scalable foundation for future growth. We're also driving efficiencies and best practices in operations by leveraging our combined spend through the Global Supply Management Group and driving lean business practices, which really are the core of the Hillenbrand operating model to improve safety, quality, delivery, cost and working capital. Our fourth and final pillar is to effectively deploy strong free cash flow. We have a track record of maintaining a flexible balance sheet, so we can grow through strategic acquisitions and a history of quickly reducing leverage following acquisitions. This past quarter, we reduced our leverage ratio by approximately 0.5 turn to 2.2 times net debt-to-EBITDA. We are confident in our ability to continue to generate robust free cash flow, maintain a strong balance sheet and grow our company, both organically and inorganically while returning capital to shareholders. Today, given our current leverage, we are lifting the temporary suspension of our share repurchase program and we will resume consideration of strategic bolt-on acquisitions. As always, we will remain disciplined in our approach to deploying cash. Now, let me turn to some highlights for the quarter. Total company performance exceeded our expectations led by higher burial casket demand at Batesville associated with the COVID-19 pandemic and strong hot runner systems growth in the MTS segment, driven by medical and packaging demand. Additionally, we drove productivity and synergies across all of our segments. The 30% growth at Batesville in the quarter was well above our expectations. While this significant increase in burial casket demand is both unfortunate and unprecedented, we were well positioned to handle this increase in volume at Batesville. And the results for the quarter reflect that. Over the past few years, the team has made significant progress in simplifying operations, reducing costs and improving the supply chain. And that was evident in the way Batesville responded to the spike in demand and drove the benefits of operating leverage to the bottom line. The mental and physical challenges associated with the pandemic over the past year have been significant, and I continue to be proud of the Batesville team for their resilience and their ability to execute at a high level in such a demanding environment. This is a company that is truly living its mission of helping families honor the lives of those they love. In the Advanced Process Solutions segment, sales came in higher than we expected when we spoke to you last quarter. This is despite lower year-over-year revenue due to continued delays on specific large polyolefin projects in our backlog. The large project delays in the quarter were partly offset by faster delivery for smaller and mid-sized equipment. We've had no cancellations of large projects from our backlog and demand for this type of project continues to be strong overall, particularly in China, which is offsetting lower North American demand for large polyolefin projects. The strength we saw in the food and pharmaceutical end markets at the end of fiscal 2020, continued into the first quarter of this year. Other industrial end markets continue to remain challenged. In Molding Technology Solutions, sales and margins were strong with hot runner system sales up in all regions and injection molding strength in India. We saw an uptick in several end markets, including medical packaging, consumer goods and electronics. Sales within automotive were up modestly sequentially, but continued to be soft compared to historical levels. Parts and service revenues were lower compared to the prior year. Our MTS backlog increased 100% year-over-year on a pro forma basis, driven primarily by continued strength in orders for injection molding equipment. Total company backlog increased over 32% year-over-year on a pro forma basis, to a new record of $1.4 billion a real sign of continued strong demand for our highly engineered solutions and applications expertise. We continue to take the appropriate steps to convert our backlog to revenue, while following all necessary COVID-19 safety protocols and managing customer-induced schedule changes. Overall, I believe we executed well in the quarter and the businesses are well positioned for the future. As some of you may have seen in our recently released annual report, sustainability is an important topic and one that we've been working on for a number of years at Hillenbrand. In 2018, we took a big step forward in our efforts by forming a cross-functional sustainability steering committee, that's been effective in guiding our actions in a more coordinated way across the entire enterprise. In 2019, we conducted a materiality assessment to identify the sustainability-related topics most important to our stakeholders, including employees, customers and investors. In that same year, we also signed on to the United Nations Global Compact, because we believe that incorporating sustainability in our business activities will improve all aspects of our company, including the impact we have on society and the environment. And in the summer of 2020, we issued our first sustainability report, which shares some of the activities that we've undertaken. One particularly impactful program is our global community engagement initiative that we call the One Campaign. In the past years, the Hillenbrand One Campaign has focused on the UN Sustainable Development Goals, or SDGs, of quality education, reduced inequalities with a focus on diversity and inclusion and responsible consumption and production. Leveraging the results of our recent materiality assessment has been instrumental in identifying the SDGs most important to our stakeholders and focusing our efforts in areas that can have the greatest impact to our company and society. In 2021, the One Campaign is focused on the SDG good health and well-being. In fact, currently, a number of our employees are volunteering to support a vaccination clinic in our local Batesville community. Given the impact of the COVID-19 pandemic in the communities in which we operate and across the nation and world, this is an initiative we feel strongly about lending our time and talents too. Throughout my section, I will be referencing pro forma results which exclude Red Valve in the APS segment and the Cimcool business which was divested on March 30, 2020, in the MTS segment. It also assumes the Milacron acquisition closed on October 1, 2019. We believe these pro forma results provide a better comparison of our ongoing operations and you will find a comparison of as-reported and pro forma results on Slide 19 of the earnings slide deck. Turning to the quarter, our teams sustained their strong momentum, with continued revenue growth, significant margin expansion and solid free cash flow. We finished the quarter with results that were better than we anticipated, particularly given uncertainties caused by the pandemic. We delivered total revenue of $693 million, an increase of 22%. Excluding the impact of foreign exchange, total revenue increased 19%. On a pro forma basis revenue increased 6%, driven by strong burial casket demand at Batesville and hot runner systems sales in MTS. Adjusted EBITDA of $138 million increased 50% and adjusted EBITDA margin of 19.9%, increased 370 basis points. On a pro forma basis adjusted EBITDA of $137 million, increased 51% and adjusted EBITDA margin was 20%. With the benefit of additional volume along with the actions, we've taken to contain costs across all segments we expanded our adjusted EBITDA margin, 600 basis points over the prior year on a pro forma basis. We reported GAAP net income of $76 million or $1.01 per share, an increase of $1.06 over prior year, primarily driven by a decrease in acquisition and integration costs related to Milacron, the gain on the sale of Red Valve and higher volume within Batesville. Adjusted net income of $72 million resulted in adjusted earnings per share of $0.96, an increase of 28%, mainly driven by strong Batesville and MTS performance. The adjusted effective tax rate for the quarter was 28.5%, an increase of 650 basis points from the prior year. The increase is primarily due to the prior year tax benefit recognized for the reduction in India's statutory tax rate. And, an increase in the deferred taxes associated with foreign un-remitted earnings this quarter. Hillenbrand generated cash flow from operations of $66 million, an increase of $48 million compared to the prior year. This increase was primarily due to lower acquisition and integration costs associated with Milacron and the strong cash generated by MTS from advanced payments on strong orders. Capital expenditures were approximately $6 million in the quarter, slightly lower than anticipated. We also paid down $157 million of debt and returned $16 million to our shareholders, in the form of cash dividends. We recognized $6 million of incremental synergies in the quarter. And we expect to deliver $20 million to $25 million of synergies this year. We remain on track to achieve the three-year $75 million total run rate synergies, related to the Milacron acquisition. Moving to segment performance Batesville's revenue of $165 million, increased 30% year-over-year, driven by higher volume, as a result of increased deaths associated with COVID-19 and higher average selling price, partially offset by an estimated increase in the rate at which families opted for cremation. With the commitment of our Batesville employees, our manufacturing capabilities and distribution footprint, we were able to respond to the elevated volume to meet our customers' needs. Batesville's first quarter execution was outstanding. And the benefits of the Hillenbrand operating model are evident in the results. Strong operating leverage and productivity initiatives, contributed to exceptional margin performance. Adjusted EBITDA margin of 31.7%, improved 1,360 basis points over the prior year and more than offset inflation in the quarter. Turning to Advanced Process Solutions, APS revenue of $291 million decreased 5%. On a pro forma basis, revenue of $283 million also decreased 5%. Excluding the impact of currency, revenue decreased to 9%. The revenue decline was primarily driven by a decrease in large polyolefin system sales, due to customer-driven delays on certain projects, and lower parts and service revenue driven by delays associated with the COVID-19 pandemic. We continue to see field service and aftermarket softness exacerbated, by COVID-19 travel restrictions. But the aftermarket business has begun to stabilize, and we've continued to innovate to provide service remotely. Longer term, we continue to see opportunity for growth in this area, as the installed base for our large systems, continues to grow. Adjusted EBITDA margin of 16.7% was down 10 basis points, and down 30 basis points on a pro forma basis. The decrease was due to lower volume and adverse mix from a couple of lower margin strategically important plastics projects, partly offset by cost containment actions and productivity improvements. Order backlog excluding Red Valve reached a new record high of $1.1 billion at the end of the first quarter, an increase of 21% year-over-year on a pro forma basis. Excluding the impact of foreign currency exchange, backlog increased to 12%. Sequentially backlog increased to 10% on a pro forma basis from the previous record high. We continue to see solid demand in the pipeline for new large plastics projects during the quarter primarily from Asia. These projects are expected to contribute to revenue over the next several quarters including about 28% of the backlog expected to convert to revenue beyond the next 12 months. MTS revenue of $237 million increased 78% and 7% on a pro forma basis in comparison to the prior year. Excluding the impact of foreign exchange, revenue increased 5%. Sales of hot runner systems increased double digits on continued solid demand in medical and packaging end markets and sales of injection molding and extrusion equipment were roughly flat year-over-year, but improved 20% on a sequential basis. India in particular continues to rebound on strong demand across all end markets particularly medical and consumer goods. Adjusted EBITDA of $48 million increased 84% and 47% on a pro forma basis with adjusted EBITDA margin of 20.4% increasing 560 basis points compared to the prior year on a pro forma basis. The improvement was driven by higher volume, productivity initiatives including cost synergies and favorable mix of higher margin hot runner systems. We're encouraged with these results and remain focused on leveraging the Hillenbrand operating model to drive sustainable operational improvements. Order backlog of $292 million increased 100% compared to the prior year on a pro forma basis and 20% sequentially, primarily driven by an increase in injection molding equipment orders. Activity was strongest in the medical, consumer goods, packaging and electronics end markets. We saw a slight uptick in automotive orders in the quarter and remain cautiously optimistic about future demand. Turning to the balance sheet; net debt at the end of the quarter was $1.1 billion and the net debt to adjusted EBITDA ratio fell by half a turn sequentially to 2.2 times. As of the quarter end, we had liquidity of approximately $1.1 billion including $266 million in cash on hand and the remainder available under our revolver. In the quarter, cash proceeds from the sale of Red Valve were $59 million. We paid down $157 million of debt including prepayment of our term loan due in 2022 with cash on hand and revolver borrowings. We have no near-term debt maturities and we'll continue to leverage the Hillenbrand operating model to drive greater efficiency across the business. We continue to focus our efforts on improving working capital efficiencies particularly in the MTS segment. Turning to capital deployment, we are pleased with our aggressive deleveraging progress, which gives the company greater flexibility to grow both organically and inorganically. While our focus will still be to pay down debt, we are now more comfortably within our leverage guardrails. We will continue to focus on reinvesting in the business with strategic investments and high-return opportunities. And as Joe mentioned earlier, we will reinstate our share repurchase program as well as begin to consider strategic bolt-on acquisitions. Amid continued uncertainty we are providing guidance only for the second quarter of fiscal 2021 under the assumption that we'll continue to see gradual stability in the global economy without any new broad-based COVID related disruptions. We expect Hillenbrand's total second quarter revenue to increase year-over-year in a range of 12% to 16%. We expect adjusted EBITDA in the range of $126 million to $137 million and adjusted earnings per share in the range of $0.85 to $0.95 for the second quarter, an increase of 29% on a year-over-year basis at the midpoint of the range. Starting with Batesville; in the second quarter, we expect revenue to increase 20% to 25% year-over-year based on a continued trend of elevated burial casket volumes due to the pandemic. We expect strong margin performance in the second quarter, driven by operating leverage and continued efforts to drive productivity. However, we are experiencing higher commodity inflation and transportation cost, including premiums paid to expedite shipments. We're targeting adjusted EBITDA margin of 29% to 30%, an increase of 590 to 690 basis points over the prior year. In Advanced Process Solutions, which includes mid and long-cycle capital systems equipment and aftermarket parts and service, we expect second quarter revenue in a range of flat to down 4% year-over-year, primarily due to customer-driven delays with the timing of long-cycle, large polyolefin projects. Partly offsetting that is the demand momentum we have seen in a couple of areas for our mid-cycle capital equipment within plastics and food end markets and stabilization in parts and service. We expect adjusted EBITDA margin of 17.5% to 18% to be modestly lower from a year-over-year perspective, down 60 to 110 basis points, as the headwind from lower volume, project mix and certain targeted investments is partially offset by our continued cost containment and productivity initiatives. Turning to Molding Technology Solutions, which includes mid-cycle injection molding equipment, short-cycle hot runner systems and aftermarket parts and service, we expect strong second quarter revenue growth in a range of 37% to 40% over prior year as demand continues to be strong in both hot runner and injection molding product lines. Last year, we had COVID-related shutdowns in China that we do not expect will repeat. We are targeting adjusted EBITDA margin of 18.8% to 19.2%, an improvement of about 320 to 360 basis points, as the benefit of higher volume and continued productivity improvements flow to the bottom line. On a sequential basis, margins will be lower than the first quarter due to a mix impact from higher injection molding sales, which typically carry a lower margin. Higher commodity inflation and transportation costs and targeted investments we are making to drive growth. Now turning to our expectations for the full year. In terms of the outlook for the Batesville segment in the second half, we are not providing specific guidance, given the uncertainty that remains due to the pandemic. The impact of the newly identified strains of the coronavirus and the speed and effectiveness of the vaccination rollout continue to make longer-term demand for Batesville hard to predict. In the second half of the year, we expect Batesville's revenue and margins to be lower on a year-over-year basis, due primarily to the impact of lower volume from fewer COVID-related deaths, along with higher commodity inflation. In the Advanced Process Solutions segment, we are expecting revenue to increase low single digits on a pro forma basis for the full year. We expect increased revenue in large plastics projects and stabilization of the aftermarket business during the second half of the fiscal year. We also expect EBITDA margins to be slightly down year-over-year on a pro forma basis, due to unfavorable project mix and investments in the business. Turning to the Molding Technologies segment. For the year, we expect revenue to increase in the mid-teens year-over-year on a pro forma basis, driven by continued strength in end markets, such as medical, packaging and consumer goods and gradual improvement of automotive. We expect moderate EBITDA margin improvement year-over-year on a full year basis, as additional volume leverage and productivity are partially offset by unfavorable mix and inflation. We expect pressure on margins in the second half of the fiscal year versus prior year, due to unfavorable injection molding mix and additional investments in the business. Overall for the portfolio, we recognize that there is still a high degree of volatility and uncertainty around the world. Having said that, our team has demonstrated the ability to execute through challenging circumstances, and I have confidence in our ability to achieve these results and continue our momentum. We executed well and delivered strong performance across the board in the quarter. In particular, we achieved robust growth at Batesville an exceptional EBITDA margin in Batesville and MTS. The acquired Milacron businesses are beginning to accelerate their performance and we remain bullish on the deal's long-term strategic and financial benefits. We're on track to deliver $20 million to $25 million in year two synergies, and we remain confident in achieving year three run rate synergies of $75 million. Continued strong free cash flow performance in the quarter has enabled us to delever at an accelerated pace despite the ongoing backdrop of the COVID-19 pandemic. We further focused our portfolio by divesting Red Valve and signing an agreement to divest ABEL. And finally, we ended the quarter with a record backlog and a robust project pipeline. We believe we will remain well positioned to overcome any near-term macro challenges and are confident in our strategy to drive profitable growth over the long-term.

compname reports q1 gaap earnings per share $1.01. q1 gaap earnings per share $1.01. sees q2 adjusted earnings per share $0.85 to $0.95. q1 adjusted earnings per share $0.96. q1 revenue rose 22 percent to $693 million. qtrly gaap earnings per share of $1.01. fiscal q2 2021 total quarterly revenue expected to increase 12% to 16% year over year on a pro forma basis". believe we are well positioned for remainder of fiscal year 2021 with a solid balance sheet and healthy backlog".

Today's call will also include non-GAAP financial measures. Non-GAAP financial measures should be viewed in addition to and not as an alternative for our reported results prepared in accordance with GAAP. The team and I are pleased with the quarter and we're enjoying playing some offense in our consumer lending businesses. Over the last several years, we've made significant investments in our digital capacity, our regional business model to spur growth, our fee businesses and a stronger consumer lending platform. The fruits of these investments are apparent in our third quarter results. With several recent efforts like Project Thrive, we have made these investments while maintaining positive operating leverage and improving our efficiency. Third quarter core earnings per share of $0.24 was consistent with last quarter, even as we further increased loan loss reserves. The core efficiency ratio improved to a record low of 54.45% and the core pre-tax pre-provision ROAA strengthened to 1.74%. Core pre-tax pre-provision net income was $41.1 million, up some 14% over the second quarter. The Company achieved record quarterly fee income of $26.7 million, an increase of $4.9 million from the previous quarter. This more than offset a $4.4 million increase in provision expense to $11.2 million. Several important themes continue to unfold, namely, first in the third quarter, credit was solid and we continue to build loan loss reserves to recognize the impact of the pandemic. Excluding PPP balances, the allowance for loan losses as a percentage of total loans increased 10 basis points to 1.38%. Including previously disclosed day one CECL adjustment, the coverage ratio excluding PPP loans would increase to 1.59%, as seen on Page 10 of the earnings supplement. The reserve build was driven by several qualitative factors in our incurred loss model, which Brian will cover during his remarks. Our non-performing loans fell from $56 million at the end of the second quarter to $49.7 million at the end of the third quarter. On Page 13 of the earnings supplement, COVID-19 deferrals totaled 2.68%, as of July 24th. Those deferrals fell to 17 basis points as of October 23rd or last Friday. Similarly, on Page 12 of the earnings supplement, deferrals on the commercial portfolios most impacted by COVID declined again from 3.4% on July 24th to 14 basis points as of last Friday. I believe we are well positioned at this stage of the pandemic with a strong balance sheet that can weather uncertainty. Next, third quarter fee income as a percentage of revenue was 28.8%. We are particularly proud of this number as it reflects years of focus and investment, as we've diversified our revenue stream. Our third quarter fee income was driven by strength across multiple business lines. First, interchange income was $6.4 million, up roughly $500,000 over the second quarter. The team's retention of households and execution through its five smaller acquisitions has really borne through here. Mortgage gain on sale income was $6.4 million with a record quarter of $240 million in production. As an aside, 40% of these loans were not sold and remain on our balance sheet. Again, we de novo-ed our way into this business, just over five years ago. Despite a lackluster industrywide small business demand, SBA gain on sale income was $1.4 million, which also contributed to fee income. Despite our smaller size in some of our larger metropolitan markets in which we compete, our 2020 SBA origination performance now ranks us number two in Western Pennsylvania and number four in Northern Ohio. Also on the fee income front, trust revenue totaled a record $2.6 million as well. The third theme is loans. Loans grew $33 million or 2% on a linked-quarter basis, as the consumer lending business led the way. In commercial lending, however, utilization of lines credit fell some $55 million from 38% at the end of June to 34% at the end of September, as business' investment and working capital utilization has stalled. Our mortgage branch based consumer and indirect lending businesses had been robust, even as underwriting standards have been tightened. Fourth, the net interest margin contracted about 18 basis points to 3.11% in the third quarter, despite respectable loan growth and resilient loan spreads, particularly on the consumer side. Net interest income, however, was virtually unchanged, falling only $300,000 to $66.7 million. Excess liquidity and negative replacement yields on loans were the primary drivers of the decrease in NIM. Jim will provide more color here. Fifth, core non-interest expenses were down $63,000 for the quarter to $52.3 million even -- $52.3 million, even as we continue to invest in our digital platform and tools for our client. Importantly, the team launched a new digital platform in mid-September called Banno, which replaced both our online banking and mobile banking platforms. The team also completed the conversion of our larger business customers to our new Treasury Management System. We also added the person-to-person payment option of Zelle. These launches impacted well over 200,000 consumers and small businesses and by all accounts went smoothly. This is a very solid quarter for us. Core earnings per share matched last quarter's results even with $6.9 million of reserve build. And we hit consensus estimates even without any PPP forgiveness. This is a significant point that's easy to overlook. While our provision expense of $11.2 million came remarkably close to the consensus expectation of $11.1 million, our spread income came in roughly $3.5 million lower than consensus expectations and yet we still hit consensus. To be completely fair, this differential in spread income is likely the result of our own previous guidance that PPP forgiveness would take place in the third and fourth quarter of this year, and as such, it would have been perfectly reasonable to expect third quarter net interest income to benefit from the acceleration of PPP premium amortization. In reality, we had no such PPP forgiveness income in the third quarter. Instead, strong fee income made up for the lack of PPP forgiveness income. At this point, we do not expect any significant PPP forgiveness until the first and second quarter of next year. Our core earnings figures excluded two non-recurring expense items from our results; $3.3 million of expense associated with a voluntary early retirement program and $2.5 million of expense associated with the branch consolidation effort, both of which have been previously disclosed. These efforts combined with other expense initiatives are expected to help keep non-interest expense flat in 2021, not only by allowing us to continue the reduction in total salary expense that we have benefited from in 2020, due to our hiring freeze, but also by absorbing increases in other expenses as we return to a more normal operating environment. Brian will provide commentary in a moment on credit, but I'd like to provide a little more color on a few things before turning it over to Brian. First, our stated NIM was 3.11%, but was affected by negative replacement yields; a shift in mix toward consumer loans; and most importantly, an average excess cash position during the quarter of approximately $343.3 million or about 4% of average earning assets. Consistent with prior disclosure, we calculate a core NIM, excluding the impact of PPP loans and excess liquidity of 3.28% in Q3. The NIM should benefit in the near term from time deposit and other deposit repricing as well as some balance sheet management efforts designed to move excess customer funds off balance sheet, thereby reducing excess cash. These efforts are expected to help offset negative replacement yields and keep the core NIM relatively stable in the near-term. Over the course of next year, however, we currently expect the core NIM, ex-PPP to continue a path of modest contraction in the 3.20% to 3.30% range. Second, Mike mentioned that our fee income of $26.9 million was very strong in Q3, up by nearly $5 million from last quarter. Because much of this was driven by mortgage, fee income is expected to seasonally adjust to approximately $24 million to $25 million in the fourth quarter. And finally, I know Mike already mentioned this, but if you look at Page 10 of the supplement, you will see graphically what we have verbally explained in prior quarters, that even though we delayed the adoption of CECL, the addition of our day one CECL number to our current incurred ALLL results in a reserve of $101.2 million and a reserve coverage ratio of 1.59%. I can add that reserve figure is not materially different from our internal parallel CECL runs as of September 30th. So even though facts and circumstances may change before we adopt CECL next quarter, not the least of which is the economic forecast, our cumulative reserve building in 2020 under the incurred model has left us in a very good position ahead of CECL adoption next quarter. It's good to be with you again. As outlined in our investor deck, credit quality was solid for the third quarter in spite of the uncertain economic environment. As expected, delinquencies ticked up modestly due to the run-off of stimulus and the reduction in payment release. We are cautiously optimistic by the improvement in unemployment and the reopening of the economies in Western Pennsylvania and Ohio. We continue to be watchful of our deferral roll off reports to evaluate our borrowers as they resume full payment status. Net charge-offs for Q3 were $4.3 million, which includes approximately $1.2 million in consumer charge-offs. Net charge-offs annualized were 0.27%. Our NPLs improved approximately $6.3 million to $49.7 million, improving to 0.78% from 0.88% of total loans excluding PPP loans. This is the second consecutive quarter for us to report an improvement in NPLs. Reserve coverage of NPLs rose to 177% from 145%, again excluding PPP loans. Similarly, our NPAs improved $6.7 million to 0.80% of total loan assets from 0.91%. We've conducted yet another loan-by-loan review of the higher risk portfolios and adjusted risk ratings as appropriate. Our proactive approach to risk ratings resulted in criticized loans increasing approximately $60 million, while classified loans increased modestly. These trends form the backdrop of our approach for loan loss reserve in the third quarter. As shown in the slide deck, the provision for the quarter totaled $11.2 million, which resulted in a reserve build of $6.9 million under our incurred loss model. The allowance for loan loss as of September 30th totaled $88.3 million as compared to $81.4 million at June 30th. The reserve balance grew to 1.38% excluding PPP loans from 1.28%. Let me offer some color related to the reserve build for the quarter. Net charge-offs were $4.3 million. We have a slight increase in specific reserves of approximately $500,000. Our standard qualitative reserves increased approximately $900,000 quarter-over-quarter, reflecting a mix of economic conditions. Our COVID qualitative overlying reserve increased by $4.7 million for Q3 to $14.6 million. We released approximately $1.9 million in consumer reserves due to improving deferral experience as well as improved economic conditions. We increased our high-risk portfolio reserves by approximately $6.6 million, largely due to increases in the overlay reserves for our hospitality and retail portfolios. And operator, we'll now take questions.

q3 revenue $41.1 million.

At this time, all participants are in a listen-only mode. Please note that this conference is being recorded and will be available for replay. For information on how to access the replay, please visit our website at mdcholdings.com. These and other factors that could impact the companys actual performance are set forth in the companys third quarter 2021 Form 10-Q, which is expected to be filed with the SEC today. It should also be noted that SEC Regulation G requires that certain information accompany the use of non-GAAP financial measures. MDC generated net income of $146 million or $1.99 per diluted share in the third quarter of 2021, driven by a combination of strong revenue growth, continued price increases and improving overhead leverage. Our home sales gross margin of 23.5% represented a 300 basis points improvement over the prior year period as our new home pricing stayed ahead of cost inflation. We also made further improvements to our fixed cost leverage as our SG&A expense fell 80 basis points year-over-year to 9.6%. We are extremely pleased with our financial results this quarter, particularly in light of the supply chain issues that continue to affect our industry. Order activity remained healthy during the quarter at 4.1 sales per community per month. This represents the second highest third quarter order pace for the company in the last 15 years. Buyers continue to be drawn to our more affordable price new home offerings, which allow for personalization through our build-to-order strategy. We believe this operating model is a more prudent and capital-efficient way to run the business and leads to better risk-adjusted returns over time. We also believe that results in fewer cancellations as homebuyers naturally become more invested in their purchase when they played an active role in designing and furnishing their home. This is an important differentiator for our company, particularly in light of the lengthening cyclical times. From a capital standpoint, MDC continues to be in great financial shape. We ended the quarter with a debt-to-capital ratio of 39.7% and a net debt-to-capital ratio of 23.7%. During the quarter, we issued $350 million of senior notes due in 2061 [phonetic] 0:05:40 at an interest rate of 3.966 and made a tender offer for over $120 million of our senior notes due 2024, which carry an interest rate of 5.5%. And while the early retirement of debt resulted in a $12.2 million charge this quarter, we now have a lower cost of capital and a debt maturity schedule that extends out 40 years. Our total liquidity position at the end of the quarter stood at just over $2 billion, giving us plenty of capital to scale our operations in the coming years. It will also allow us to continue paying our industry leading dividend, which currently stands at $2 per share on an annualized basis. As Larry mentioned, we continue to see robust demand for our homes across our geographic footprint. With the West region posting the best order pace during the quarter at 4.9 homes per community per month, followed by the East at 3.7 and our Mountain region at 3.0. Pricing remained firm within our communities, and we did not win this any widespread use of incentives or discounting in our markets as each of the segments posted home sales gross margins in excess of 20%. As our existing operations continue to thrive, we have started to move into new markets that exhibit similar strong housing fundamentals. Earlier this year, we announced our expansion to Boise and Nashville. And in this quarter, we are pleased to announce our entry into Austin, Texas and Albuquerque, New Mexico. We have land deals in place in both markets and look forward to establishing profitable operations in the years to come. As we head into the end of the year, MDC is focused on delivering homes and backlog while setting the stage for additional growth in 2022. Our lots owned and controlled at the end of the third quarter increased by 37% year-over-year, giving us a great opportunity to capitalize on the positive housing fundamentals in our markets. We have several new communities scheduled to open in the coming quarters, which Bob will give in more detail in a moment. While we expect the current supply chain issues to persist for the foreseeable future, we also expect the current demand drivers to remain in place as well, giving us a great opportunity to finish the year on a high note and build on our success in 2022. As a result, we are optimistic about the future of our company. During the third quarter, we generated net income of $146 million or $1.99 per diluted share, representing a 48% increase from the third quarter of 2020. Home sale revenues grew 26% year-over-year to $1.26 billion, while gross margin from home sales improved by 300 basis points. The growth in home sale revenues and margin expansion resulted in a 62% increase in pre-tax income from our homebuilding operations to $165.2 million. As Larry mentioned, we accelerated the retirement of $123.6 million of our unsecured notes due in January 2024 through a cash tender offer during the quarter. The retirement resulted in a loss of $12.2 million, which is included in homebuilding pre-tax income. Financial services pre-tax income increased 13% year-over-year to $27.5 million. All of our financial services companies benefited from the increased volume of our homebuilding operations during the quarter. Our mortgage company also benefited from a $3.5 million gain recognized on the sale of conventional mortgage servicing rights during the period. This increase was mostly offset by increased competition in the primary mortgage market, increased compensation-related costs and a temporary decrease in our capture rate. Our tax rate increased from 21.5% to 24.3% for the 2021 third quarter. The increase in rate was primarily due to a decrease in tax windfalls recognized upon the vesting and exercise of equity awards, which was partially offset by a year-over-year increase in home energy tax credits. For the remainder of the year, we currently estimate an effective tax rate of approximately 24.5%, excluding any discrete items and not accounting for any potential changes in tax rates or policy. Homes delivered increased 13% year-over-year to 2,419 during the third quarter, driven by an increase in the number of homes we had in backlog to start the quarter. Our ability to convert backlog and closings continues to be negatively impacted by increasing permitting times and labor and material shortages. As a result, we saw cycle times increase by approximately two weeks sequentially from the second to third quarter of 2021. The number of homes delivered during the quarter was below our previously estimated range of 2,500 to 2,700 units and was a direct result of the extended cycle times that we experienced. The average selling price of homes delivered during the quarter increased 12% to about $520,000. The increase was a result of price increases implemented across the majority of our communities over the past 12 months. For the fourth quarter, we are anticipating home deliveries to reach between 27,300 units, with an average selling price between $530,000 and $540,000. Gross margin from home sales improved by 300 basis points year-over-year to 23.5%. We experienced improved gross margin from home sales across each of our segments, with our West segment showing the largest increase year-over-year as well as having the highest absolute level overall. These improvements were driven by price increases implemented across nearly all of our communities over the past year, which have been partially offset by increased building material and labor costs. While we have seen lumber prices decrease in recent months, we continue to experience cost pressures on other building materials and labor costs. Gross margin from home sales for the 2021 of fourth quarter is expected to increase to between 23.5% and 24%, assuming no impairments or warranty adjustments. Our total dollar SG&A expense for the 2021 third quarter increased by $16.5 million from the 2020 third quarter, driven primarily by increased general and administrative expenses. Our SG&A expense as a percentage of home sale revenues decreased 80 basis points year-over-year to 9.6%. General and administrative expenses totaled $59.9 million during the third quarter due to increases in compensation related expenses, including increased bonus and stock-based compensation accruals. We currently estimate that our general and administrative expenses will grow to between $65 million and $70 million for the fourth quarter of 2021. Marketing expenses increased $900,000 as a result of increased master marketing fees relating to increased closings volume. However, marketing expenses as a percentage of home sale revenues were down 50 basis points year-over-year as we were able to continue limiting advertising expenses in this high demand environment. Our commission expense as a percentage of home sale revenues decreased 60 basis points year-over-year as we have taken steps to control these costs during this period of strong demand for new housing. The dollar value of our net orders decreased 21% year-over-year to $1.31 billion due to a 32% decrease in unit net orders. This decrease was driven by a 33% year-over-year reduction in our monthly sales absorption pace. Our sales absorption pace for the third quarter of 2021 was a healthy 4.1 orders per community per month. While this represented a year-over-year decrease from the third quarter of 2020, it was a 14% increase from the pre pandemic levels experienced in the third quarter of 2019. The year-over-year decrease in our sales absorption pace was due to the return of more normal seasonal patterns as well as our efforts to moderate sales activity, as we have mentioned on prior calls. Overall, we believe demand levels remained highly favorable during the third quarter. Were also pleased with the start of the fourth quarter from a demand standpoint based on the net orders weve seen to this point in October. The average selling price of our net orders increased 16% year-over-year as we have raised prices across most of our communities over the past 12 months. While price increases slowed during the third quarter, pricing remained firm and continues to more than offset the higher input costs related to building materials and labor. Looking at backlog metrics on slide 11. The dollar value of homes in backlog increased 38% year-over-year despite the decrease in third quarter activity. While cycle times remain the biggest challenge to our backlog conversion efforts, we believe we are well positioned entering the fourth quarter with construction started on 84% of our backlog and 42% at frame stage of construction or beyond. We approved 5,892 lots for acquisition during the quarter, representing a 54% increase year-over-year. This brings the total number of lots approved for acquisition during the year to 15,978 lots and marks the third time in the last four quarters, our approval activity exceeded to 5,000 lots. We closed on 3,214 lots during the third quarter, which included about a 100 finished lots within our first subdivision in Austin, Texas. Total land acquisition and development spend for the quarter was $420 million. As a result of our land acquisition and approval activity, our total lot supply to end the quarter was nearly 37,000 lots, representing a 37% increase from the prior year quarter. In addition, 34% of our lot supply was controlled via option as of period end. We believe that this lot supply, combined with the continued lot approval and acquisition activity, provides us with a solid platform for growth in 2022 and beyond. Our active subdivision count was at 203 to end the quarter, up 5% from 194 a year ago. We saw an increased number of active subdivisions in both the East and West segments with the East segment experiencing the largest increase. Active subdivisions in the Mountain segment were down 8% year-over-year. Were actively selling out of our first Boise subdivision as of quarter end. And with the acquisition of finished lots in Austin during the third quarter, we expect to be open for sales in this new market by the end of the year. New community openings remain challenging in the current environment due to delays in municipal approvals and the strain on the available resources to complete development work. Also, we have a number of legacy communities on the verge of closing out, as you can see from the number of soon to be inactive communities as of September 30, 2021. This indicates that our active subdivision account could decrease over the next few months as we work to open and begin selling out of our new communities. Due to this potential short-term volatility in our active subdivision count, we are not reiterating any year-end guidance for this metric. However, we do expect to see an increase from our 203 active communities at the end of the third quarter before we reached the end of the 2022 first quarter in time for the spring selling season. While we expect further active subdivision growth from that point through the end of 2022, we will wait to provide further guidance until we have more visibility as to the timing of these community openings. In summary, we are pleased with our financial results for the third quarter and believe the housing backdrop remains favorable. While we expect the current supply chain issues to continue in the near term, our current backlog and land position have us poised for continued growth into 2022. Our financial position remains strong with over $2 billion of total liquidity and a net debt-to-capital ratio of 23.7% as of quarter end, providing us with the ability to continue to grow our business and invest in our new markets. Without their efforts, we would not be in the position we are today, poised to deliver more than 10,000 new homes to our homebuyers for the 2021 full year.

compname reports qtrly operating earnings per share $0.78. quarterly operating earnings per share $0.78.

Both documents are available on the Investors section of our website. The release has further information about these adjustments and reconciliations to comparable GAAP financial measures. Before we get into the Q&A, I'd like to offer some additional perspective on our performance. Clearly our results did not turn out as we expected and we knew it was a tough comp given our strong growth and record profitability in the year ago quarter. Now while we expected volatility this year, the external environment has proven to be even more volatile than our expectation at the beginning of the year and versus our April update. Since we spoke in April, commodity inflation has spiked higher and our supply chain has been challenged. These dynamics are impacting us and more broadly the industry. We're also navigating historic levels of demand volatility in Consumer Tissue. Last year, we worked really hard to support our consumers and our customers as demand increased at a record pace. While we expect the category to retract this year that decline has meaningfully outpaced our expectation. This has been driven by reduced at-home consumption due to increased mobility and destocking of both consumer pantries and retailer inventory. Consumer Tissue has historically been very stable and we expect demand to normalize over time. We've taken decisive action to offset the impact of raw material inflation. We have announced pricing in key markets around the world. Our pricing actions are on track and we expect to fully offset the effects of input cost inflation over time, as we've done in previous cycles. We've also taken prudent steps to control and reduce discretionary spend across the business. We expect this to be reflected in our results as we continue to implement these actions. We view this level of input cost inflation and the COVID driven demand volatility to be discrete issue. We will continue to take appropriate action to reduce the impact of volatility over time. At the same time, we remain confident and committed to our approach to building brands. Despite near-term challenges, we have plenty of bright spots in our business. Our strategy to invest in our brands is working. You can see this in our second quarter results broadly across Personal Care and especially in D&E markets. Excluding North American Consumer Tissue, our organic sales were up 4%. Personal Care organic sales were up 6% globally, driven by a 4% volume increase. In D&E markets, personal care organic sales were up 8% with very strong market share performance, including in China, Brazil throughout Eastern Europe, India, Peru and South Africa. We have recently captured number one diaper share positions in China and Brazil, which reflects the strength of our brand fundamentals with consumers. Importantly, we're starting to see green shoots in KC Professional. The business grew year-over-year and sequentially as we saw strength in international markets and positive trends in washroom products. As more companies transition back to in-person environments, we expect KCP momentum to improve in the back half. We're encouraged by our underlying brand performance and have made significant progress in addressing the supply challenges we faced earlier this year in our North American Personal Care business. Looking forward to the second half, we are expecting better results across the business. We believe the major factors impacting this quarter do not reflect the fundamental health of our business. We remain committed to our strategy to deliver balanced and sustainable growth for the long term. We'll continue to execute KC Strategy 2022 and we'll invest in our business for the future. This includes investments in innovation, commercial capabilities and technology. Importantly, I also want to emphasize that we are acutely aware of the impact of this pandemic continues to have on our employees, our consumers and our partners and the world. We will continue to prioritize the health and safety of our people and all that interact with Kimberly Clark.

compname posts q4 ffo per share $0.31. q4 ffo per share $0.31. sees 2021 nareit ffo per diluted share of $1.18 to $1.24.

We appreciate you joining our call today. We have our Chairman and Chief Executive Officer, Kelly King; President and COO, Bill Rogers; and CFO, Daryl Bible, who will highlight a number of strategic priorities and discuss Truist's first quarter '21 results. Chris Henson, Head of Banking and Insurance; and Clarke Starnes, our Chief Risk Officer, will also participate in the Q&A portion of our call. We also want to note that Ryan Richards, the former Head of Investor Relations has left Truist to pursue an opportunity outside of the Company. If you have questions following today's call, please contact me or Aaron Reeves of Investor Relations. We had overall I consider a strong quarter with strong earnings and returns, very good expense control and strong fee income, especially in insurance and investment banking, excellent asset quality, which Clarke will talk about, really good progress on merger integration and excellent internal recognitions, including an outstanding CRA rating for our community development efforts. If you're following along on Slide 4, we always like to focus on the most important, which is our culture. As you've heard us say many times, we continue to reiterate culture is the primary determinant of our long-term success. Our purpose really connects with our teammates. We've been really excited about this. Our teammates are driven to really help our clients. We really enjoy serving our communities and our shareholders. Even with COVID, we've made great progress in activating our culture, created a cultural council, which works every day with our EL team causing our culture to really come alive. So we've made excellent progress in terms of culture, which is ultimately the driver. On Slide 5, just a couple of points and some things that I think are good with regard to how we are serving our communities. We were very excited to be the first issuer of a social bond of the US regional banks, a $1.25 billion bond that was well, well-received 120 investors, very favorable pricing. We're very excited about that in terms of our ability to focus on affordable housing and other community needs. We became the lead investor for Greenwood, which is very excited in innovative digital banking platform designed for Black and Latinx consumers and business owners. We signed the Hispanic Promise, a first-of-its-kind national pledge to prepare, hire, promote, retain, and celebrate Hispanics in the workplace. And we received 100% score on Human Rights Campaign's Corporate Equality Index, and we were named the Best Place to Work in '21. We also continue to make great progress in terms of executing on our $60 billion Community Benefits agreement and we are already at 114% of our annual target. We were very proudly recognized once again by Fortune as one of the world's most admired companies. On Slide 6, just a few indicators for you about how well the merger is going. I just want to point out to you that the risk of executing our merger has already been reduced substantially and is going down daily as we do conversion and we're getting a lot of the actual merger work done. A huge amount of work has already been done on the core bank conversion. And you will see in the bubble chart there that a number of conversion has already been done. For example, Truist Securities conversion, wealth brokerage conversion. We did huge amount of work in terms of grading all of the Truist jobs. And that is all being executed. We already in the process of testing protocols for our core bank conversion, our wealth trust conversion is well along -- occurring in just a few weeks. So you can see that we are making tremendous progress and I just want to emphasize the point that for those who think that the risk is going to remain high and won't subside until we do the final branch conversion that is not a good way to look at it. The risk is being mitigated daily as we do these various conversions and make progress in terms of preparing for the final conversion. We did close 226 branches in the first quarter, which was part of our strategy. We have been very, very happy with our teammates reaction to that. They're very, very engaged. Recall that we promised all of our client-facing performing teammates that they would not lose their jobs. And so, it's going very, very well. And our clients are very supportive because remember, most of these branches are very, very close to each other. And so, it's no inconvenience to our clients. We are very focused on meeting our expense targets, which Daryl will talk about and we believe we will be able to accomplish that. Just a few performance highlights on 7A. I think it was a very, very good quarter. We had strong adjusted net income of $1.6 billion, or $1.18 per share adjusted, both up 42% versus the first quarter of '20. We had adjusted ROTCE of 19.36%. Recall that we said our mid-term target was in the low-20s. So we are well on the way to achieving that already and we have huge cost saves yet to come. We recorded investment banking and trading income at a record level along with insurance. It was offset some by decreases in residential mortgage income and commercial real estate-related income. Strong expense discipline, as our adjusted non-interest expense decreased $57 million sequentially, and our merger-related and restructuring charges decreased $167 million. We significantly had lower provision for credit losses of $48 million versus $177 million in the fourth quarter. So we had a reserve release of $190 million. Clarke will talk about that more if we have questions. NPAs decreased $88 million, or 6.3%, which we were very happy about. We completed $506 million of the share repurchases. So we had a total payout for the quarter of about 83%. We did redeemed $950 million of preferred stock during the quarter at an after-tax cost of $26 million, or $0.02 per share, which was not excluded in terms of our adjustment to net income. So overall, if you look at Slide 8, you will see how the adjustments worked with the merger-related charges having a diluting impact of $0.08, incremental operating expenses related to the merger that are not in our ongoing recurring charges going forward was $0.10 and an acceleration for cash flow hedge unwind expense of $0.02. So overall, it was a very strong quarter across the wide array of performance areas. Importantly, we continue to execute on our T3 concept, which is the concept of seamlessly integrating technology and touch so that we yield a high level of trust, creasing a very high value proposition, which is providing excellent client focus, which is ultimately the most important factor in terms of judging our current and our future performance. Now, let me turn it to Bill for some additional detail. If you can see from Page 9, our clients continue to adopt digital at a rapid pace. Since last March, the population of active mobile app users has increased 11% to more than 4 million users, and that marks an important milestone along our digital journey of the Company. We're absolutely committed to meeting our clients where they are. And increasingly these interactions are happening in the digital space. Our digital commerce data bear this out as digital client needs have met -- digital client needs met have improved 44% since the first quarter of 2020 and represent more than one-third of total bank production of core bank products. This percentage is even higher when you include LightStream and Mortgage. As we accompany clients along their digital journey we also interact with them across multiple digital products and services, mobile check deposits and Zelle are two examples, both of which were up significantly from a year ago and this just creates additional opportunities to deepen those relationships. Importantly, the increase of digital transaction activity allows our teammates to spend less time on manual execution and more time assessing the meeting client needs enabled by our Integrated Relationship Management. We're also excited about the new Truist digital experience that's rolling out our clients later this year. In order to complete the digital migration ahead of the core bank conversion, we're utilizing an innovative proprietary approach known as the Digital Straddle. The Digital Straddle allows us to migrate clients to the new digital experience in waves, reducing migration risk, as Kelly discussed earlier, and avoiding a one-time migration early next year. We recently launched a successful internal pilot of our new digital experience and expect to migrate our clients on a series of waves during the third and fourth quarter. First quarter balance sheet dynamics reflected a combination of mild loan demand, ongoing government stimulus and elevated liquidity. Average loans decreased $8.2 billion, compared to the fourth quarter, primarily due to a $4.5 billion reduction in commercial balances and $3 billion of residential mortgage run off. The decrease in commercial loan balance was primarily attributable to lower revolver utilization and continued pay down of PPP loans, which outpaced new loan commitments. Approximately $3.3 billion of PPP loans were repaid during the quarter, impacting average commercial balances by $1.8 billion. Revolver utilization remained low as clients continue to hold elevated liquidity and access the capital markets. In addition, the dealer floor plan portfolio continues to experience headwinds related to supply chain disruptions. Average consumer loans decreased $3.6 billion as ongoing refinance activity impacted residential mortgage, home equity and direct loan balances. These declines though partially offset by higher indirect order balances, which benefited from strong production, especially in the prime segment. We made a conscious decision in support of our purpose to lean in on PPP loans and we've been the largest lender in many of our markets. We recognize these are headwinds, but we're also optimistic that given vaccination rates, government stimulus and our own view of productivity and pipelines, all supported economic recovery and corresponding core loan growth. Let me switch to the next page and talk about deposits. Average deposits increased $7.9 billion sequentially and are up more than $28 billion from the first quarter of 2020, reflecting government stimulus and pandemic-related client behaviors. Average balances increased across all deposit categories except time deposits. While the largest increases were in interest checking and money market and savings, the deposit mix remains favorable, as non-interest-bearing accounts represent one-third of total deposits. Truist continues to experience strong deposit growth while maximizing our value proposition to clients outside of rate paid as we continue to experience net new household growth. During the first quarter, average total deposits cost decreased 2 basis points to 5 basis points and average interest-bearing deposit cost declined 4 basis points to 7 basis points. Due to new stimulus, we are up double digits in total deposits since the quarter end. Continuing on Slide 12. Net interest income decreased $81 million linked quarter due to fewer days, lower purchase accounting accretion and lower earning asset yields. Reported net interest margin was down 7 basis points, reflecting a 4 basis point impact from lower purchase accounting accretion. Core net interest margin decreased 3 basis points as deposit inflows resulted in higher combined Fed balances and securities. Interest sensitivity decreased slightly as the investment portfolio grew in response to the elevated liquidity. Turning to Slide 13. Non-interest income decreased $88 million despite record income from insurance and investment banking and trading. Insurance income increased $81 million linked quarter, reflecting seasonality, $28 million from recent acquisitions, and $19 million due to a timing change related to certain employee benefit accounts. Organic revenue grew 6.4% due to strong new business, stable retention and higher property and casualty rates. Investment banking and trading rose $32 million, benefiting from strength in high-yield, investment-grade and equity originations, as well as a recovery in CVA. Residential mortgage income decreased $93 million due to lower production margins and volumes. Commercial real estate income decreased $80 million due to seasonality and strong fourth quarter transaction activity. Other income was down $18 million as lower partnership income was partially offset by gains from a divestiture. Continuing on Slide 14. Expense discipline remained strong in the first quarter. Non-interest expense was down $223 million linked quarter, reflecting a $167 million decrease in merger-related and restructuring charges. Adjusted non-interest expense decreased $57 million, primarily due to lower professional fees and non-service-related pension costs offset by personnel expense. Personnel expense increased $34 million, reflecting higher equity-based compensation, higher incentive compensation and payroll tax resets, partially offset by lower salaries and wages. Turning to Slide 15. We are taking full advantage of our unique opportunity to grow the best of both franchise. The best of both is harder to execute in a typical acquisition. But we are convinced that the client benefits and internal efficiencies justify the effort and expense. As we said in January, we continue to expect total combined merger costs of approximately $4 billion. This consists of merger-related and restructuring charges of approximately $2.1 billion and incremental operating expenses related to the merger of approximately $1.8 billion. These costs are not in the future run rate and will come out in 2022 after we complete the core bank conversion and decommission redundant systems. Since the merger was announced, we have incurred $1.3 billion of merger-related and restructuring charges and $900 million incremental operating expenses related to the merger. Continuing on Slide 16. Strong asset quality metrics remained relatively stable, reflecting diversification benefits from the merger and effective problem asset resolution. Non-performing assets were down $88 million, or 2 basis points as a percentage of total loans, largely driven by decreases in the commercial and industrial portfolio. Net charge-offs came in 33 basis points, which was at the lower end of the guidance range. Linked quarter increase was mostly driven by seasonality and indirect auto. The provision for credit losses was $48 million, including a reserve release of $190 million due to lower loan balances and improved economic outlook. The allowance for credit losses was relatively stable at 2.06% of loans and leases. Our exposure of COVID sensitive industries was essentially flat at $27 billion. Turning to Slide 17. Truist has strong capital and ended the first quarter with a CET1 ratio of 10.1%. With respect to capital return, we paid a common dividend of $0.45 per share and had $506 million of share buybacks. We also redeemed $950 million of preferred stock, resulting in an after-tax charge of $26 million, or $0.02 per share that was not excluded from the adjusted results. We have $1.5 billion in repurchase authorization remaining under the share repurchase program the Board approved in December. We intend to maintain approximate 10% CET1 ratio after taking into account strategic actions, stock repurchases and changes in risk-weighted assets. As a result, we anticipate second quarter repurchases of about $600 million. We continue to have strong liquidity and are ready to meet the needs of our clients and communities. Continuing on Slide 18. This slide shows excellent progress toward the net cost saves of $1.6 billion. Through fourth quarter, we reduced sourceable spend 9.3% and are closing in on our 10% target. In terms of retail banking, we closed 226 branches in the first quarter, bringing the cumulative closures to 374. We are on track to close approximately 800 branches by the first quarter of '22. We've reduced our non-branch facilities by approximately 3.5 million square feet and are making progress toward the overall target of approximately 5 million square feet. Average FTEs are down 9% since the merger announcement. We expect technology savings of $425 million by the end of 2022 compared to 2019. We continue to look at these expense buckets and are broadening to look at other across the board. We are highly committed to our $1.6 billion cost savings target. Continuing to Slide 19. The waterfall on the left shows that we measure core expenses and cost savings. Beginning with adjusted non-interest expense and then adjusting for the non-qualified plan and the insurance acquisition expenses, we arrive at a core expense of $3.65 billion. If you adjust for seasonality of high payroll taxes, equity compensation and variable commissions, core expenses would approach fourth quarter target of $2.94 billion. Our adjusted return on tangible common equity was 19.36% for the first quarter. We maintained our medium-term performance and cost saving targets for 2021 and 2022. Further moderation of the merger and economic risks may enable us to revisit our target CET1 ratio. Now, I will provide guidance for the second quarter, expressed in linked quarter changes. We expect taxable equivalent revenue excluding security gains to be relatively flat. We expect reported net interest margin to be down high-single-digit, driven by a mid-single-digit decrease in core margin and 3 basis points to 4 basis points of purchase accounting accretion run off. Net interest income should be relatively flat due to the growth of the balance sheet. Non-interest expense adjusted for merger costs and amortization expected to be relatively flat. We anticipate net charge-offs in the range of 30 basis points to 45 basis points and a tax rate between 19% to 20%. As you look out into 2021, our prudent economic conditions may allow for further reserve releases. Overall, we had a strong quarter, including excellent expense management and strong asset quality. Now, let me hand it back to Bill for an update on IRM. And I'm going to take us to Page 20. I'm going to take this opportunity to share our progress on Integrated Relationship Management and share two examples of what we call natural fit businesses working together to benefit our clients. When Truist was formed, we said, we create value by combining our distinctive client-focused banking experiences with greater investment in technology and a stronger mix of financial services offerings. As Kelly noted earlier, we call this approach T3, touch integrated with technology equals trust. We're confident in this strategy because it really builds on Truist strengths. Those strengths include industry-leading client service and loyalty, an advice-based business model, differentiated offerings included Truist Securities, Truist Insurance Holdings and the Truist Leadership Institute and leading technology like our mobile banking app. Integrated Relationship Management is a framework for putting T3 into practice across Truist through all of our lines of businesses and most importantly, for all of our clients. We start with the client, understand their needs and engage our business partners through a common technology-based referral and accountability process. As mentioned, we have natural synergies such as the relationship between Commercial Community Bank and Truist Securities. This business is by nature a little lumpy and episodic-driven by client needs, but we're very pleased with our momentum. Referrals are up by a factor of three- and one-year and have more than doubled since last quarter. We continue to train bankers and are increasing both the number and quality of referrals. As we share client wins, teammates gain confidence and motivation to fully leverage all the tools that we have for the benefit of their like clients. Moving to Slide 21, we'll discuss the effort of Truist Securities and Truist Insurance Holdings and the relationship with heritage SunTrust clients, in particular. Referrals to insurance have increased more than 2.3 times compared to the first quarter of 2020 and more than 50% sequentially. We've aligned systems and trained around the similar practice groups, which allows us to double down on industry expertise for our clients. I can really speak from experience if this was a real area of excitement from heritage SunTrust and this is really just in the early stages of growth. So Integrated Relationship Management is working. It's been embraced fully by our teammates. It's in support of our clients and a distinguishable benefit for our shareholders. Keep in mind, this is a long game, but you do see the beginning of this incremental opportunity in the overall insurance and investment banking results even in this quarter. So, Kelly, let me turn that back over to you. So, on Slide 22, I just want to point out and reemphasize our value proposition. We believe it is a very strong value proposition, driven by our purpose to inspire and build better lives and communities. We have an exceptional franchise with diverse products, services and markets, some of the best in the world. We are uniquely positioned to deliver best-in-class efficiency and returns while investing in the future and you're seeing that happening already. We've very strong capital and liquidity vision with very strong resilience in terms of our risk profile enhanced by the merger. So we have a growing earnings stream with less volatility relative to many of our peers over the long-term. So if you think about the quarter in all and overall and wrapping up, I'll just say, again, I think it was a very strong quarter in a very interesting and challenging times. But look, things are getting better. COVID is getting better. It's too soon to declare this over, but hospitalization rates are down and infection rates are down and vaccines are getting out really, really fast. So we're encouraged by that. The economy is clearly improving. We've said before and I'll reemphasize, we believe as we head into the second half, we will have a snap back economy. This economy was not wounded before we headed into this. We simply shut it down for appropriate reasons. Now we're beginning to see the opportunities that we believe could happen, which is turning it back on as easy than it might have been on the other types of economic crisis that we've seen. So Truist is positioned really, really well. We have a great culture. We have great markets. We have a great team. We have a great purpose to inspire and build better lives and communities and it's creating really engaged teammates. We have real benefits from the merger that are being realized every single day. You've heard some of those. A very strong performance in T3 and IRM as Bill described, and that's really powerful. The merger integration is on track. We are reducing risk every single day. It's all going really, really well. We believe we had the opportunity to accelerate and to what I consider to be a very positive snap back economy. We fully believe our best days are ahead. Katie, at this time, if you will come back on the line and explain how our listeners can participate in the Q&A session?

q1 adjusted earnings per share $1.18 excluding items.

I'm joined today by our CEO, Bill Crager; and CFO, Pete D'Arrigo. Such comments are not guarantees of future performance, and therefore, you should not put undue reliance on them. We also will be discussing certain non-GAAP information. As we look back on 2020, we recognize how hard a year it was for so many people. The pandemic impacting every single person's life, and for so many, in devastating in tragic ways. We honor the incredible work of healthcare workers and the frontline workers who have shown such brave resilience and dedication over these months. While the difficult and practical implications of the pandemic have played out, a digital rumble began to shake across the economic landscape. Cloud-based companies like Envestnet engaged from the first moment, leveraging our service and support infrastructure to help our clients navigate these disrupted times. We also spent the year paving the way toward an exciting and accelerated digital future. Last year, we took swift action to ensure the safety of our employees. We met the extraordinary demands of the year managing historic account and trade volumes as we grew the company and improved the way we served our clients. We added a net 1.5 million accounts last year, completed 15 million service tasks and executed an incredible 76 million individual trade orders. This was executed by our team as we worked remotely and while our clients worked remotely. We completed a significant and important initiative to streamline our organizational structure and add leadership talent, which positions us to operate more as one Envestnet, both internally and also for the marketplaces that we serve. And despite the headwinds created by March market values, we grew impressively, delivering very solid financial results. We reported just shy of $1 billion in revenue, which is 10% higher than a year ago, and adjusted EBITDA grew 26% compared to 2019. And importantly, we chartered the course for advancing a tremendous opportunity for our industry to better serve its customers, further expanding our strategic purpose, developing a bold investment plan to capture the sizable opportunity before us as we make financial wellness a reality for everyone. Over our history, Envestnet has been very successful in anticipating, investing in and driving the future. We began 20 years ago as a TAMP, a turnkey asset management platform, a category we invented, and we continue to lead by a substantial margin. Over time, our capabilities expanded. We unbundled our own investment solutions from the core technology, enabling advisors in powerful new ways, opening access to the industry's largest marketplace of investment solutions and strategies. We launched the first unified managed account, the UMA, bringing multiple investment strategies into one brokerage account, improving how advisors at optimize asset allocation and tax efficiency within client portfolios. This powerful integration of technology with investment product made it far easier for advisors to deliver portfolio strategies while to help drive down the costs for end investors. We forged an integrated future of data and planning-centric advice for advisors to deliver to their clients. Our acquisitions of Yodlee in 2015 and MoneyGuide in 2019 were critical as we evolved into an industry-leading integrated wealth platform. Impact investing, overlay solutions, direct indexing, integrated access to credit insurance, and just announced this week, trust services, the scope of what we are doing, the progress we are making in each of these areas and the growth potential they represent for us are very important to note. The scale, capabilities and how we utilize data are significant competitive differentiators for us, and we plan to build on it. Envestnet is proud to work with thousands of firms, including 17 of the 20 largest U.S. banks, 47 of the 50 largest wealth management and brokerage firms, over 500 of the largest RIAs and hundreds of fintech companies. We are the industry leader in wealthtech, supporting more than 106,000 financial advisors, 13 million investor accounts and more than $4.5 trillion in assets. We have the scale and infrastructure to grow from here. Our consumer financial data aggregation capabilities are unmatched: 17,000 data sources, 470 million connected accounts, which grew by over 62 million last year, 35 million users, and also in the past year, nearly three million households that benefited from a financial planning experience using our award-winning software. We and our customers, financial services firms and the advisors who work for them, are improving the financial lives of millions of people. This has enabled us to become the financial wellness ecosystem powering the industry into the future. We are using modern technology to create linkages and building out a network that becomes an evolving system, ever-adapting, ever-engaging, ever-improving connections that the consumer defines the batteries of and will call upon when, where and how they choose. This is a bigger vision, one that will provide our customers the super power to engage in intelligent, holistic servicing of the consumer's financial life. That's why we're accelerating our investments in the ecosystem. These investments, which I've been referencing for the past few earnings calls, are in three areas. First, we are making major enhancements to our already strong capabilities on behalf of our existing customers. We're making it easier for them to work with us, easier for them to leverage all that we offer, eliminating friction from the process. For instance, we're providing an integrated trading environment that will bring together the feature sets of investment, FolioDynamix and Tamarac into a singular tool. Advisers will have the entire universe of investment strategies and solutions just a click away. We're also digitizing and hyperpersonalizing more of the end consumer experience with more use of data, intelligence and insight. The second area is data. Data is embedded in all that we do. We've been redefining the way data is used to create better intelligence, insight and guidance for advisors to help their clients. Nobody else has a data engine quite like this. Envestnet can connect the data from a person's daily financial transactions with our market-leading financial planning capability, which we've broken down into powerful, focused financial apps that tie into a financial strategy, and with a click, advisors can then execute on it. We're using more and more of the intelligence in our data to drive recommended actions. For example, our recently launched recommendations engine addresses the individual's needs against the backdrop of an extraordinary data set. We are seeing promising evidence as firms use the data to grow faster and discover new opportunities within their existing customer base. Digital experience is the third area of investment for us. We are on the cusp of making this intelligent, connected financial life in reality with our innovative digital environment for end consumers, powerfully taking the parts of the financial life and bringing them together in an extraordinary and accessible experience. We will empower advisors to offer this as the financial center for their clients in a powerful way that they have not experienced before. This is just the start of the progress that we are making. With investment at the center of the financial wellness ecosystem, we can engage with future partners in incredibly value-creating ways. Our strategy opens a network of potential partnerships that expands far beyond our current marketplace beyond our walls, an existing network of investment managers, insurance companies, lenders, banks, custodians, broker-dealers and RIA firms. An example could be in healthcare or even in personal wellness. We'll also open our platform and inspire third-party developers who can create new apps, addressing emerging marketplace needs and/or utilizing our infrastructure to engage underserved parts of the financial services market. In doing so, we gain access to millions of consumers. We can improve their financial lives by deploying Envestnet solutions through a broader network of fintech companies and nontraditional outlets that are utilizing embedded finance as part of their strategy, while providing the essential bridge back to full-service advice within our advisor community. As the orchestrator of this large and growing ecosystem, the revenue potential for us is significant. While life changed over the course of the last year, in many ways, it also sped up. We sped up as well. Trends that have been emerging for years are accelerating at a faster pace, more digital, more intelligent, more consumer-driven. Consumer expectations have grown so quickly, whether it's a grocery delivery, mortgage approval or the ability to open and fund a new investment account. And we are leading our industry in helping our customers meet the expectations of consumers now and into the future. I wrote about this in a white paper that we published earlier this week called, The Intelligent Financial Life. Our supplemental deck includes a link. I encourage you to read it and watch the related video. In a nutshell, here's what it says. Today, most people have two distinct financial lives, how they interact with their money each day and then how they plan for their money into the future. Neither of these connects with each other, resulting in a complex challenge for the individual, oftentimes leading to extraordinary stress in their lives. The white paper was a call to action for our industry, a playbook for more deeply engaging and impacting the financial lives of consumers while unlocking tremendous opportunities for companies that enable this. What's required to empower this intelligent financial life is an interconnected ecosystem that brings it all together for the consumer. We, Envestnet, are uniquely positioned to deliver on the intelligent financial life by leaning into our ecosystem, expanding the ability for Envestnet and other participants in our vast and growing network to deliver what the consumer is demanding and to capitalize on this large and quickly growing opportunity. The outcome of this strategy is connecting people with their money and empowering more impactful decisions in ways financial consumers have not experienced before. For Envestnet, it means a broader reach into the market, faster revenue growth as the model is utilized and more operating leverage from our increasingly scaled infrastructure, yielding a higher profitability in the long run. The opportunity to create value for all participants in our ecosystem is massive and growing. With Envestnet at the center of it, we can curate, connect and orchestrate everything that can impact the consumer's financial life, empowering advisors and firms to reach deeper into relationships, doing more, adding value, creating growth. With our industry-leading footprint and capabilities, there is no better firm positioned to capitalize on this opportunity than Envestnet. And the time to do this is now. Today, I'm going to review our results for the fourth quarter and full year and provide context for our 2021 outlook and beyond. Consistent with earlier in the year, our fourth quarter results were strong. Adjusted revenue for the quarter was $264 million, above expectations, as we saw outperformance across all revenue lines. Asset-based revenue benefited from favorable net flows and continued adoption of higher value fiduciary solutions. Subscriptions-based revenue performed well, driven by higher-than-expected usage in the data and analytics segment. Operating expenses came in consistent with our expectations for the quarter with a relatively low level of spending already factored into our forecast. As a result, our adjusted EBITDA of $65 million was also ahead of expectations, as were our adjusted earnings per share of $0.69. For the full year, adjusted revenue was $999 million, 10% higher than in 2019 despite the significant market pullback in the first quarter of 2020. Adjusted EBITDA came in 26% higher than last year at $243 million. Our adjusted EBITDA margin for the year was 24.3%, three percentage points above the prior year. As we discussed in the November earnings call, this is not an appropriate starting point as we look forward into 2021 and beyond. Expense management and pandemic-related circumstances lowered our 2020 expenses significantly and unsustainably for the long term. Around $25 million to $30 million of operating expense favorability can be attributed solely to an operating environment that limited travel, caused delays in hiring and generally reduced spending activity. This is important context as we consider our outlook for 2021. As we built our spending plans for this year, we see three drivers of increase in our operating expenses compared to 2020. First is what I would call normal expense growth to support the needs of the business today, including supporting additional customer activity as the business grows. Normal expense growth typically is lower than our revenue growth as we've proven our ability to expand margin over time. The total increase in this category is around $10 million or a little more than 2% above last year. Second is what I would characterize as a partial restoration of normal spending levels that we experienced prior to the pandemic for certain items. In this category, we've assumed a broad resumption of business activity over the course of 2021, but still at levels below where they were prior to the pandemic. In the second category, we're expecting increases in our travel and entertainment expense and fully restoring our annual marketing spend. This category also represents around $10 million of year-over-year increase in operating expense. Depending on how circumstances unfold, some of this expense could be pushed further out if travel remains limited. Third is the acceleration of investment spending to capitalize on the sizable opportunity Bill described earlier. These investments will ramp up over the next couple of quarters as we add headcount and other resources in product engineering, marketing and go-to-market activities to accelerate revenue growth in the business longer term. In 2021, these investments account for around $30 million of increased operating expense The spend in these three categories, combined with an increase in our asset-based cost of revenue, will result in our operating expenses growing faster than revenue in 2021 as we noted in November, effectively reversing the temporary margin lift we saw in 2020. Specific guidance for the full year of 2021 includes the following: adjusted revenue growth of 10.5% to 12% compared to 2020. That's approximately $1.10 to $1.12 billion. By segment, this is driven by strong double-digit growth in our wealth business as we continue adding new firms, advisors and accounts to the platform and deploy additional solutions through our installed base. We expect revenue growth in data and analytics to be in line with last year as we see ongoing momentum with financial institutions and fintech firms, while continuing to address pricing pressure in the analytics space. By revenue line item, we expect asset-based revenue to be up nearly 20%, reflecting the strong fundamentals of the wealth business. As usual, our guidance is market neutral to the end of the prior quarter, in this case, December 31. Subscription revenue is expected to grow in the low to mid-single digits, and we're expecting a decline in professional services and other revenue as we continue to deemphasize such fees. Adjusted EBITDA should be between $225 million and $235 million, slightly below 2020, as the increase in operating expenses will more than offset the contribution from higher revenues. Adjusted earnings per share is expected to be between $1.95 and $2.08. This is down from the $2.57 we delivered in 2020 due to the modest decline in adjusted EBITDA and an increase in depreciation expense. Our guidance also includes the early adoption of a new accounting standard, impacting how we account for our convertible notes, which will lower earnings per share by $0.20. Some additional color on our 2021 guidance and trends we expect to see during the year. This is a big contributor to the EBITDA guidance for the quarter. As we expect to restore spending to more normal levels and ramp up our investment activity, operating expenses should increase somewhat more meaningfully in the second quarter and the second half of the year. Turning to the balance sheet. We ended the year with $385 million in cash and a net leverage ratio of two times EBITDA, down from 2.1 at the end of September. Similar to last quarter, our $500 million revolver remains entirely undrawn. So we remain comfortable that we have the liquidity and flexibility to invest in growth opportunities, both organically and through strategic activities without increased risk to our operations. As we support our customers' needs across the ecosystem and begin to benefit from the investments we're making now, we believe revenue growth can accelerate into the mid-teens within the next five years. Over time, EBITDA margins should reach the mid- to upper 20s as we continue to benefit from our increasing scale. The age of the intelligent connected financial life is coming, and our industry will need to deliver this to consumers: an interconnected experience that supports the consumer completely from today's spending to tomorrow's plans, fully linked, intelligent and accessible to help them make the best financial decisions when they need it, even when they aren't aware that they do need it. Connecting the financial lives of millions of consumers is a massive opportunity. It requires a financial wellness ecosystem, and that is what is emerging here at Envestnet. We are building upon the significant capabilities we offer in the marketplace today. We are positioned to become the core long-term essential provider that helps the industry connect people much more powerfully to their money. With our expertise, data-driven intelligence, leading financial planning tools, integrated capabilities to execute trades, insurance policies, loans, trust and more and a consumer-friendly technology to view everything in one single place, Envestnet is the company that is best positioned to connect consumers' financial lives and make financial wellness a reality for everyone. I could not be more excited about this future. With that, Pete and I are happy to take any questions.

q4 adjusted earnings per share $0.69. sees fy 2021 adjusted net income per diluted share $1.95 - $2.08.

Although we believe estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved. First and foremost, all of us at Brandywine sincerely hope that you and yours continue to be safe, healthy and engaged. The pandemic continues to disrupt all of our lives and has resulted in a new landscape for everyone and certainly every business and its duration unfortunately remains unclear. At the time of our Q2 earnings call in July, we did anticipate a return to the workplace commencing after Labor Day and into the fall. Given the recent headlines over that timeline for many of our tenants has been extended into 2021. And as we noted in our SIP our portfolio is about 15% occupied with variances between the different operations but we can certainly provide more color on that during the Q&A. Additional details on our approach to this crisis are outlined in our COVID-19 insert found on Pages 1 to 4 of the supplemental package. During these prepared comments we'll review third quarter results, an update to our 2020 business plan. Tom will then summarize our financial outlook and update you on our strong liquidity position. After that Dan, George and Tom and I are certainly available to answer any questions. So looking at the quarter, we continue to execute on every component of our business plan. We're certainly pleased that most of our 2020 objectives have been achieved. We are 100% complete on our speculative revenue target. And while the volume of executed leases was down a bit quarter-over-quarter, as you might expect, during the summer it -- regardless of the pandemic, our overall pipeline increased by over 330,000 square feet. For the third quarter, we also posted very strong rental rate mark-to-market of 17.1% on a GAAP basis and 9% on a cash basis. In addition, the core portfolio did generate positive absorption of 102,000 square feet, which includes 47,000 square feet of tenant expansions. Also included in those absorption numbers was the full building delivery of our 426 Lancaster Avenue redevelopment in Pennsylvania suburbs, that was 55,000 square feet and 112,000 square feet of the occupancy backfilling of the SHI space again in Austin, Texas. We did experience during the quarter 58,000 square feet of COVID-related terminations. The primary one of that was Philadelphia Sports Club in our Radnor complex of 42,000 square feet and a couple other small hospitality and medical offices. Our full year 2020 same store numbers are tracking in line with our revised business plan. For this quarter, the numbers were consistent with our business plan and were primarily driven, as you might expect, by the 9/30/2019 move out of KPMG in 183,000 square feet and the SHI move out on 3/31/20. Cash collection rates continue to be among the best in the sector. We've collected over 99% of our third quarter billings and our October collection rate continues to track very, very well with over 97% of office rents collected as of yesterday. Our capital costs were in line with our targeted range as we continue to experience very good success in generating short-term lease extensions that require minimal capital outlay. Retention was 60% and slightly above our full year range. And based on fourth quarter scheduled lease commencements we will be within our stated occupancy range. As Tom will articulate in more detail, we did post FFO of $0.35 per share, which is in line with consensus estimates. And taking a broader look at our '20 business plan, as we mentioned in the last call, any crisis embodies a level of danger and opportunity. So our first plan of attack was to fully assess risk to our business and we believe we have instituted plans to either mitigate or anticipate any adverse impacts. We do remain focused on growth, whether that's through our early lease renewal program or margin improving rebidding programs, we're continuing to work with institutional sources of equity to seek investments and opportunities where we can create earnings and value accretion. But just looking at the risk factors that we face as part of the pandemic, first, and consistent with all applicable state, local and CDC guidelines, we did maintain a doors open, lights on approach to our buildings during the entire breadth of the pandemic thus far. Now, certainly for a variety of factors primarily, public policy, employer liability concerns, mass transit, virtual schooling and other safety concerns most tenants in our portfolio, particularly the larger ones anticipate a phased return after the New Year. That certainly remains fluid and we're tracking, but it seems like the larger tenants won't be phasing back in until next year. Second, we focused on portfolio stability as a top priority with particular focus on these items, rent collections already talked about and I think we're doing fairly well. Rent deferrals, we did frame that on Page 1 of our SIP we had a total $4.5 million of deferrals with $4.1 million scheduled to repay those deferrals within the next 18 months. Now interestingly, to-date we've already collected 14% or $536,000 of those deferrals, including a $100,000 of early prepayments. So we certainly think that we're making some good progress there. Another key focus for us is strategic tenant outreach. Information, as you may expect is key right now, and we have an outstanding on-the-ground team of property and leasing professionals in all of our operations. Their top priority is being in close touch with our tenants, understanding their concerns, their transition plans and seeing where we can provide help. As such, we've reached out to our entire tenant base with a particular focus on those tenants whose spaces roll within the next two years. The results of those efforts are framed out on Page 2 of the SIP and have resulted in 82 active tenant renewal discussions totaling over 920,000 square feet, that to-date have resulted in 45 tenants totaling 300,000 square feet executing renewals. These leases had an average term of 24 months with about a 2.6% cash mark-to-market and a sub 5% capital ratio. We certainly hope that as we get more clarity on the pandemic that over the next couple of months we can convert some of those ongoing discussions to executed renewals. From a construction standpoint, nothing really more to update from last quarter. We continue to have construction activity in all of our markets. We have not programmed any further construction delays in our numbers and we are beginning to see with the exception of lumber and pressure-treated wood some downward pressure on construction costs as we're starting to see an overall shrinkage of forward construction pipelines. And speaking of pipelines, our leasing pipeline stands at 1.6 million square feet including approximately 400,000 square feet in advanced stages of lease negotiations. As I mentioned, the overall pipeline increased by 331,000 square feet. This -- the expansion of the pipeline was driven by over 444,000 square feet of tours during the quarter, which as we noted is up 115% from last quarter. So signs in the market reawakening a bit. From a liquidity and dividend standpoint, Tom will certainly talk about it some more detail, but the company is in excellent shape from a liquidity and capital availability standpoint as we've outlined on Page 3. After factoring in the full repayment of the Two Logan Square mortgage, we're still projecting to have about $530 million of our line of credit available by year end. We're also anticipating paying off the small mortgage during the fourth quarter of $9 million. We have no maturities in '21 and no unsecured bond maturities until '23 and have a very good 3.75% weighted average interest rate. Dividend remains incredibly well covered with a 56% FFO and a 76% cap ratio. And given those mortgage prepayments, we do anticipate that by the end of this year we will have a completely unencumbered portfolio with no wholly owned secured mortgages and no wholly owned mortgages going into '21. Now to quickly look at our development investment opportunities. First of all, on the development front, all four of our production assets that's Garza and Four Points in Austin, 650 Park Avenue and 155 in Pennsylvania are all fully improved, fully documented, fully ready to go subject to pre-leasing. We are still actively marketing those, we have a good pipeline on those production assets. As you might expect, that's moving a bit slow, but tenants continue to look at new construction and upgrading their stock as part of their workplace return strategy. 405 Colorado remains on track for completion in Q2 of next year at a very attractive 8.5% cash-on-cash yield. We have a pipeline of almost 200,000 square feet on that project, again moving slow, but again we're pleased with the breadth of that pipeline. But we really don't expect a lot of significant decision-making to occur until we get more clarity on what's happening with the pandemic. 3000 Market, that's the 64,000 square foot life science conversion that we're doing within Schuylkill Yards, construction is under way. That building will -- is fully leased to Spark Therapeutics on a 12-year lease commencing later in the second half of 2021 at a development yield of 8.5%. And looking at Broadmoor and Schuylkill Yards for just a moment. We are advancing Block A, which is a mixed-use block consisting of a 350,000 square foot office building and 340 apartment units that's going through final design and final approvals from the City of Austin. And we expect all those have to be accomplished by year-end. Within Schuylkill Yards, we continue a very strong push to the life science space. As mentioned last quarter and we've outlined in more detail in the supplemental package, the overall master plan for Schuylkill Yards is we can do at least 2.8 million square feet of life science space, so we have an excellent long-term opportunity to really create a scalable life science community. 3000 Market and the Bulletin Building were the first steps and their conversions to create a life science hub. We are also well into the design development and marketing process for a 500,000 square foot life science building located at 3151 Market Street. We have a leasing pipeline on that project totaling about 580,000 square feet and our goal is to be able to start that by Q2 '21 assuming of course market conditions permit. Our Schuylkill Yards West project, which is our life science, office and residential tower is fully approved and ready to go, subject to finalizing our debt and equity structure, that project consists of 326 apartments and a 100,000 square feet of life science and office space. We currently have an active pipeline of over 300,000 square feet for those in commercial uses and based on this level of interest, we are contemplating starting that projects without a pre-lease. Similar to our approach on 3000 where we looked at existing assets, we have commenced the construction and conversion of three -- floors three through nine within Cira Center to accommodate life science uses, that will be done in two phases. We have 34,000 square feet already pre-leased and we currently have a pipeline of 125,000 square feet. Another interesting point on both Schuylkill Yards and Broadmoor that we can't lose sight of is that based on current approvals and the master plans in place between those two sites, they can accommodate about 5,000 multi-family units. On the equity financing front, we have an active ongoing dialog with a broad cross section of institutional investors and private equity firms. We continue to explore other asset level joint ventures in sales to both improve our return on invested capital, generate additional liquidity and provide growth capital for our development pipeline and these discussions, as you might expect, encompass both Broadmoor and Schuylkill Yards but also some of our existing assets. Let me close on this one final point. As you know our normal practice for many, many years was to provide next year guidance during our third quarter earnings call. But these are not normal times, and as we discussed in our July call, we are not providing '21 guidance at this time. Although our Company's overall rent collections remained very strong, we have increasing visibility into our existing portfolio and even with the rent collections being the highest in the sector, we believe it's prudent to delay our '20 -- '21 earnings guidance and business plan until we have better visibility on the duration of the COVID-19 pandemic and its impact on the macro economy and in particular our markets. Tom will now provide an overview of our financial results. Our third quarter net income totaled $274.4 million or $1.60 per diluted share and FFO totaled $60 million or $0.35 per diluted share. Some general observations regarding the third quarter results. The results were generally in line with our second quarter guidance with the following highlights. Core -- property operating income we estimated $74 million, it came in slightly above that at $74.4 million, which was a good result. Termination and other income. We expected that -- it ended up at 1.3 below projections, primarily due to the timing of certain anticipated transactions that we believe will occur in the fourth quarter. And then interest expense was also lower by $1.7 million over forecast, primarily due to the interest expense reduction from the loan assumption recapitalization of Two Logan Square, which resulted in a one-time non-cash reduction in interest expense totaling $2 million. Our third quarter fixed charge and interest coverage ratios were 3.5 and 3.8 respectively. Most met -- both metrics improved sequentially as compared to the second quarter, primarily due to the Commerce Square joint venture. Both metrics exclude the one-time interest deduction -- reduction noted above. As expected, our third quarter annualized net debt-to-EBITDA started to decrease to 6.7, was primarily due to the sequential EBITDA remaining similar to the second quarter and the reduced debt levels from the Commerce Square joint venture. Two additional reporting items. As Jerry mentioned, cash collections were 99%. Additionally, if we included third quarter deferrals, our core portfolio would have been very strong 97%. Collections for October are currently 97% however, one vendor payment anticipated to be received in the next day or so will bring us up to 95% -- 99%. Write-offs in the quarter were approximately $0.005 and primarily due to retail-related tenants. Same store, as outlined on Page 1 of our supplemental, we have included $1.1 million and $3.8 million of rent deferrals in our third quarter and year-to-date results. Looking at the fourth quarter guidance. We have the following general assumptions. Property level operating income will total about $74 million and will be sequentially lower by about $500,000. The decrease is primarily due to the Commerce Square being in our numbers for part of the third quarter and they will not be in our numbers for the fourth quarter that totals about $1.5 million. Offsetting that decrease is a sequential increase in the portfolio, which will improve NOI by $1 million. FFO contribution from our unconsolidated joint ventures will total $7.5 million for the quarter, which is up $0.3 million from the third quarter, primarily due to the full quarter inclusion of Commerce Square, offset by reduced NOI at our MAP joint venture. For the full year 2020, the FFO contribution is estimated to be about $20 million. G&A will be about $7 million for the fourth quarter and full year will be about $31 million. Interest expense will be sequentially higher by $0.8 million compared to the third quarter and will total $17 million for the fourth quarter. Capitalized interest will be $1.1 million for the fourth quarter and full-year interest expense will approximately $74 million. Of note, we repaid our mortgage at Two Logan during October. The mortgage payoff was approximately $79.8 million. That loan had an interest coupon of 3.98%. We anticipate an early prepayment of a wholly owned mortgage at Four Tower Bridge with an effective interest coupon of 4.5%. With those payoffs, we now have no maturities scheduled on our wholly owned books until 2023 -- 2022 for the term loan, I'm sorry. Termination and other income, we anticipate that to be $4.5 million for the fourth quarter. That's up from $0.9 million in the third quarter. And net income leasing and development fees, quarterly NOI will be $2.6 million and will approximate $8.5 million for the year. There will be $0.5 million in the fourth quarter as it relates to land sales while we -- our $272 million gain represented 100% of the gain for reporting purposes, we only recognized 30% of that gain for tax purposes, and with some tax planning, we will not require a special dividend in 2020. We have no anticipated ATM, additional share buyback activity scheduled. For the investments' guidance, no more incremental sales activity. With the acquisition of the land parcel being anticipated fourth quarter, we only have the building acquisition located at 250 King of Prussia Road for $20 million. It is scheduled to be acquired in the fourth quarter and held for redevelopment. No NOI will be generated in 2020. Looking at our capital plan. As outlined, we have two development, redevelopment projects in our 2020 capital plan with no additional plans scheduled for the balance of the year. Based on the above, our 2020 CAD will remain in a ratio of 71% to 76% as lower capital will offset deferred rent that is repaid beyond 2020. Uses for the remainder of the year is $185,000, comprised of $25 million in development and redevelopment, $33 million of common dividends, $8 million in revenue maintaining capital, $10 million in revenue creating capital and the repayment of the mortgages at Two Logan and Four Tower Bridge as well as the acquisition of 250 King of Prussia Road. Primary sources will be cash flow after interest of $45 million, use of the line of $68 million, use of our current cash on hand at the end over the quarter of $62 million, and $10 million in land sales. Based on the capital plan outlined above, our line of credit balance will be about $68 million. We also project that our net debt-to-EBITDA will remain in a range of 6.3 to 6.5. In addition, our net debt-to-GAV will approximate 38%, which is down sequentially from the 43% in the prior quarter primarily due to the Commerce Square joint venture. In addition, we anticipate our fixed charge ratio will continue to approximate 3.9 on interest coverage and will be 4 -- 3.9 on debt service fixed charge and 4.1 on interest coverage. So these are really not normal times as we all know. So let us close with a couple of key takeaways. First, our portfolio and operations are in solid shape with really increasing visibility into our tenants, their thought process, and what they're thinking about in terms of their return to the workplace. Secondly, with -- our deal pipeline continues to increase as those tenants begin to really think about their workplace return and us staying in touch with those tenants is key. Us outreaching to a lot of existing or new prospects is also very much a key part of our business plan. So we're happy to see our pipeline really increase during a pandemic and during the slow months of the summer. In other observations, and we're hearing this directly from tenants both large and small, safety and health both in design and execution are rapidly becoming tenants' top priorities. And we believe that new development and our trophy-quality stock will benefit from that trend. And we're seeing the beginnings of that in the existing pipeline. Look, private equity and the debt markets have stabilized and are becoming increasingly competitive and strong operating platforms like Brandywine are really gaining significant traction for project-level investments. And then we'll end where we started, which is that we really do wish all of you and your families remain safe during these interesting times. And we ask that in the interest of time, you'll limit yourself to one question and a follow-up.

q3 ffo per share $0.35. q3 earnings per share $1.60.99.5% of total cash-based rent due received from tenants during q3. through oct 20, about 97% of total cash-based rent has been received. do not plan on providing 2021 guidance during q3 earnings cycle.

Joe will do a deeper dive on Q4. So I'll start with a couple of brief observations and then comment on 2020 as a whole. Fourth quarter earnings and operating performance were just fine, no surprises, it was about as we expected. Our operating earnings were up a few pennies over the last year's fourth quarter and $0.01 better than Q3, so modest forward progress. Loan growth was slightly negative in the quarter, in fact being typical but deposits just continued to grow, similar to others and were up $100 million for the quarter. Asset quality continues to be very good. We did report a spike in NPAs because of a policy judgment around deferrals that Joe will explain further. 2020 as a whole was certainly a challenging year, however, operating earnings were only up $0.05, or 1.5% in 2019, and hence like that much better than we were expecting earlier in the year. There are a lot of moving parts in the reconciliation between years during the pandemic, there was a significant negative impact from the decline in our core margin and our retail banking revenues, which we were able to offset in a number of other ways principally operating expense reductions and performance of our nonbanking businesses, all of which had a tremendous year. The pre-tax operating earnings of our benefits business was up 11%. Wealth was up 13%, and insurance was up 16%. The value with a diversified revenue model is readily apparent in 2020. From an operational perspective, it was an extremely productive year, despite the challenges of the pandemic. We developed and implemented several new digital products and platforms, we consolidated 13 branches and we closed on the acquisition of Steuben Trust in the second quarter. Though I'm relatively pleased with 2020 overall and our forward progress, the pandemic is notwithstanding. Looking ahead to 2021, our focus will be on effectively countering ongoing margin pressure, improving organic performance, continued growth and investment in our nonbanking businesses and a continuation of our investment in digital and rationalization of analog. I also expect the strength of our earnings, balance sheet and capital generation will serve us well going forward as we continue to evaluate high value strategic opportunities across our businesses for the benefit of our shareholders. As Mark noted, the earnings results for the fourth quarter of 2020 were very solid, especially in light of the economic challenges of the industry headwinds we faced throughout the year. The Company recorded $0.86 in fully diluted GAAP earnings per share for the fourth quarter. Excluding acquisition expenses, acquisition-related provision for credit losses, unrealized gain on equity securities and gain on debt extinguishment net of tax effect, fully diluted operating earnings per share were $0.85 for the quarter. These results matched third quarter 2020 results and were $0.02 per share higher than the fourth quarter of 2019 fully diluted operating earnings per share of $0.83. The Company recorded total revenues of $150.6 million in the fourth quarter of 2020, an increase of $0.8 million or 0.5% from the prior year's fourth quarter. The increase in total revenues between the periods was driven by an increase in net interest income, higher noninterest revenues in the Company's financial services businesses, and a gain on debt extinguishment, offset in part by a decrease in banking related noninterest revenues. Total revenues were down $2 million or 1.3% from the linked third quarter, driven largely by a $428 million decrease in mortgage banking revenues as the Company pivoted from selling its secondary market eligible residential mortgage loans in the third quarter to holding them for its loan portfolio in the fourth quarter. The Company recorded net interest income of $93.4 million in the fourth quarter, up $0.7 million or 0.7% over the fourth quarter of 2019. The increase was driven by a $2.28 billion or 22.7% increase in average earning assets between the periods offset in part by 66 basis point decrease in net interest margin. The Company's fully tax equivalent net interest margin was 3.05% in the fourth quarter of 2020 as compared to 3.71% in the fourth quarter of 2019. Net interest income increased $0.5 million or 0.5% over the linked third quarter while net interest margin was down 7 basis points. During the fourth quarter, the Company recorded $3.5 million of PPP related interest income as compared to $3 million of PPP related interest income in the third quarter of 2020. At December 31, 2020 remaining net deferred fees associated with the 2020 PPP originations were $9 million, the majority of which the Company expects to realize for interest income in 2021. Noninterest revenues were up $0.1 million or 0.1% between the fourth quarter of 2019 and the fourth quarter of 2020. Employee benefit services revenues were up $1.7 million or 7%, from $25 million in the fourth quarter of 2019 to $26.7 million in the fourth quarter of 2020, driven by increases in plan administration, record keeping revenues and employee benefit trust revenues. Wealth management and insurance services revenues were also up $1 million or 7.3% over the same periods. These increases were partially offset by a $2 million or 11.2% decrease in deposit service and other banking fees, due to lower deposit-related activities fees including overdraft occurrences. We reported $0.9 million loss on mortgage banking activities in the fourth quarter of 2020 as compared to a $0.2 million gain during the fourth quarter of 2019, resulting in a $1.1 million decrease between the periods due to the change in the Company's mortgage banking strategy as noted previously. Finally, during the fourth quarter of 2020, we redeemed $10 million of subordinated notes acquired in connection with the 2019 acquisition of Kinderhook Bank Corp. , and recorded $0.4 million gain on debt extinguishment. The Company reported a $3.1 million net benefit in the provision for credit losses during the fourth quarter of 2020. This compares to a $2.9 million provision for credit losses during the fourth quarter of 2019. The net benefit recorded the provision for credit losses was driven by several factors, including a $2 million reversal of a previously recorded allowance for credit losses on a purchase credit deteriorated loan, a significant improvement in the economic outlook and a substantial decrease in loans under COVID-19 related forbearance agreements, offset in part by anticipated increases in nonperforming assets and the related specific impairment reserves on those nonperforming assets. For comparative purposes, the Company recorded $1.9 million in the provision for credit losses during the third quarter of 2020, $9.8 million in the second quarter of 2020, including $3.2 million of acquisition related provision for credit losses due to the acquisition of Steuben and $5.6 million of provision for credit losses during the first quarter of 2020. During the first two quarters of 2020, financial conditions deteriorated rapidly as state and local governments shutdown a substantial portion of the business activities in the Company's markets and unemployment levels spiked. These conditions drove the Company to build its allowance for credit losses during the first quarter, first two quarters of 2020 to account for the expected life of loan losses in the loan portfolio. During the third quarter, the economic outlook remained unclear as markets were uncertain as to the efficacy, approval and rollout of COVID-19 vaccines. With a greater than anticipated decline in actual unemployment levels as well as the Federal government's approval of COVID-19 vaccine and Congress' recent approval of the additional Federal stimulus funding, the near term economic forecast improved driving a net release the allowance for credit losses during the fourth quarter. The Company reported loan net charge-offs of $1.3 million or 7 basis points annualized during the fourth quarter of 2020, comparatively low net charge-offs in the fourth quarter of 2019 of $2.4 million or 14 basis points annualized. On a full-year basis, the Company reported net charge-offs of $5 million or 7 basis points of average loans outstanding. This compares to $7.8 million or 12 basis points of net charge-offs for 2019. The Company recorded $94.6 million of total operating expenses in the fourth quarter of 2020 exclusive of $0.4 million of acquisition related expenses. This compares to total operating expenses of $94.4 million in the fourth quarter of 2019 exclusive of $0.8 million of acquisition related expenses. The year-over-year $0.2 million, or 0.2% increase in operating expenses, exclusive of acquisition related expenses was attributable to a $1.7 million or 2.9% increase in salaries and employee benefits, a $1.5 million or 13.5% increase in data processing and communications expenses, offset in part by a $2.5 million or 19.4% decrease in other expenses, and a $0.4 million or 11% decrease in the amortization of intangible assets. The increase in salaries and employee benefits was driven by merit-related increases in employee wages and a net increase in full-time equivalent employees between the periods, due to both the Steuben acquisition in the second quarter of 2020 and other factors, but were partially offset by lower employee benefit expenses primarily associated with the decrease in employee medical expenses due to reduced provider utilization. The increase in data processing and communication expenses were due to the Steuben acquisition and the implementation of new customer facing digital technologies and back office workflow systems. Other expenses were down through the general decrease in the level of business activities and the result of -- as a result of the COVID-19 pandemic, including travel and entertainment, marketing and business development expenses. Comparatively, the Company recorded $93.2 million of total operating expenses in the linked quarter -- linked third quarter of 2020, exclusive of $3 million of litigation accrual expenses and $0.8 million of acquisition related expenses. The Company closed the fourth quarter of 2020 with total assets of $13.93 billion. This was up $85.8 million, or 0.6% in the third quarter, up $2.52 billion or 22.1% from a year earlier. Similarly, average interest earning assets for the fourth quarter of $12.31 billion was up $356.8 million or 3% to the linked third quarter of 2020 up $2.28 billion or 22.7% to one year prior. A very large increase in total assets and average interest earning assets over the prior 12 months was driven by the second quarter 2020 acquisition of Steuben Trust Corporation, the large inflows of government stimulus-related funding of PPP originations. Ending loans at December 31, 2020 were $7.42 billion, up $525.4 million or 7.6% from one year prior, due to the Steuben acquisition and the origination of PPP loans. Ending loans, however, were down $42.7 million from 0.6% from the end of the linked third quarter to -- to a decline in business activity in the Company's markets due to seasonal factors with COVID-19 pandemic and PPP forgiveness. During the quarter, the Company's PPP loan balances decreased $36.5 million or 7.2%, or $507.2 million at September 30, 2020 to $470.7 million at December 31, 2020. During the fourth quarter, the Company's average investment securities book balances increased $636.9 million or 20.2% from $3.15 billion in the third quarter to $3.78 billion during the fourth quarter due to the purchase of Treasury and mortgage-backed securities during the quarter. Average cash equivalents decreased $227 million or 17%, or $1.3 billion during the third quarter to $1.08 billion during the fourth quarter. During the fourth quarter, the Company purchased $1.02 billion of Treasury and mortgage-backed securities at a weighted average market yield of 1.38%. The purchases were made to stabilize near term net interest income and hedge interest rate risk against a sustained low interest rate environment. The Company's average total deposits were up $275.9 million or 2.5% on a linked quarter basis and up $2.1 billion or 23.2% over the fourth quarter of 2019. Total average deposits in the fourth quarter were $11.21 billion as compared to $9.1 billion in the fourth quarter of 2019. The Company's capital reserves remain strong in the fourth quarter, the Company's net tangible equity to net tangible assets ratio was 9.92% at December 31, 2020. This was down from 10.01% at the end of 2019, but consistent with the end of the linked third quarter. The Company's Tier 1 leverage ratio was 10.16% at December 31, 2020 which remained over 2 times the well capitalized regulatory standard of 5%. The Company has an abundance of liquidity resources and extremely -- and is extremely well positioned to fund future loan growth, the combination of the Company's cash, cash equivalents and borrowing availability to the Federal Reserve Bank, borrowing capacity at the Federal Home Loan Bank and [indecipherable] available for sale of investment securities portfolio provides the Company with over $5.25 billion of immediately available sources of liquidity. From a credit risk and lending perspective, the Company continues to closely monitor the activities of its COVID-19 effective borrowers and loss mitigation strategies on a case by case basis, including but not limited to the extension of forbearance arrangements. At December 31, 2020, 74 borrowers representing $66.5 million and less than 1% of total loans outstanding remained in COVID related forbearance. This compares to 216 borrowers representing $192.7 million or 2.6% of loans outstanding were active under COVID related forbearance at September 30,2020 and 3,699 borrowers representing $704.1 million or 9.4% of loans outstanding at June 30, 2020. Although these trends are favorable, nonperforming loans increased in the fourth quarter to $76.9 million or 1.04% of loans outstanding, up $44.6 million from the linked third quarter and up $52.6 million from the fourth quarter of 2019. During the fourth quarter, the Company determined that borrowers that were granted loan payment deferrals under forbearance beyond 180 days would be classified as non-accrual loans unless they could demonstrate current repayment capacity or sufficient cash reserves to service their pre-forbearance payment obligation. The substantial majority of these borrowers operate in the hotel sector, including several that operate near the Canadian border, which have been additionally impacted by restrictions like cross border travel. This specifically identified reserves held against the Company's nonperforming loans of $3.9 million at December 31, 2020, $3 million of which was attributed to a single nonperforming hotel loan. As mentioned in prior earnings calls, the weighted average estimate of loans valued in the Company's hospitality loan portfolio prior to the onset of COVID was approximately 55%. We continue to believe that the ultimate losses recognized in the current nonperforming hotel loans will be well contained in the pre-COVID cash flow of these properties, the financial strength of the operators that we have historically planned and the low loan to values on these assets. At December 31, 2020, the level of loans 30 to 89 days delinquent were fairly consistent with pre-COVID levels, loans 30 to 89 days delinquent, totaled $34.8 million or 0.47% of loans outstanding at December 31, 2020. This compares to loans 30 to 89 days delinquent $40.9 million or 0.59% one year prior to $26.6 million, to 0.36% at the end of the linked third quarter. Net charge-offs on loans were low at $1.3 million or 7 basis points annualized in the fourth quarter, and $5 million or 7 basis points for the full year of 2020. The Company's allowance for credit losses decreased from $65 million, a 0.87% of total loans outstanding at September 30, 2020 to $60.9 million or 0.82% of total loans outstanding at December 31, 2020. The net $4.1 million of the lease of allowance for credit losses was driven by an improving economic outlook, a substantial decrease in loans forbearance, and a $2 million reversal of a previously recorded allowance for credit losses and the purchase credit deteriorated loan, which is paid off during the fourth quarter. At December 31, 2020, the allowance for credit losses of $60.9 million represent over 12 times the Company's trailing 12 months net charge-offs. Operationally, we will continue to adapt to changing market conditions. We remain very focused on asset quality and credit loss mitigation. We anticipate assisting the substantial majority of the Company's 2020 first draw of PPP borrowers' forgiveness requests throughout 2021, and granting new second draw of PPP loans and advances. Although, we began to redeploy portions of our cash equivalents, balances into investment securities during the fourth quarter to increase interest income on a going forward basis and providing hedge against the sustained low interest rate environment, we also expect net interest margin pressures to persist to remain well below historical levels. Furthermore, we anticipate the deposit levels to remain elevated for most of 2021 -- for 2021 especially with potentially more federal stimulus on the horizon. Accordingly, we will look to deploy additional overnight cash equivalents into higher yielding earning assets. Fortunately, the Company's diversified non-interest revenue stream to represent approximately 38% of the Company's total revenues in 2020 remains strong and anticipate to mitigate continued pressure on net interest margin. And in addition, the Company's managed -- management teams are actively implementing various earnings improvement initiatives including revenue enhancements and cost cutting -- cost cutting measures that favorably impact future earnings.

community bank system q3 revenue up 2.8% to $156.9 mln. q3 revenue rose 2.8 percent to $156.9 million. qtrly earnings per share $0.83 per share.

We appreciate you're joining us today for Gartner's first quarter 2021 earnings call, and hope you are well. With me on the call today are Gene Hall, Chief Executive Officer; and Craig Safian, Chief Financial Officer. All growth rates in Gene's comments are FX-neutral unless stated otherwise. Reconciliations for all non-GAAP numbers we use are available in the Investor Relations section of the gartner.com website. Finally, all contract values and associated growth rates we discuss are based on 2021 foreign exchange rates unless stated otherwise. I encourage all of you to review the risk factors listed in these documents. Gartner performance accelerated in the first quarter of 2021. We delivered strong results across contract value, revenue, EBITDA and free cash flow. Total revenues were up 6%, with each of our business segments, research, conferences, and consulting, exceeding our expectations. Research is our largest and most profitable segment. Our Research segment serves executives and their teams across all major enterprise functions in every industry around the world. Research has a vast market opportunity across all sectors, sizes and geographies. Global Technology Sales, or GTS, source leaders and their teams within IT. For Q1, GTS contract value grew 5%. First quarter new business was up 21% as a result of new logos and upsell with existing clients. Client engagement continue to be strong, with content and analyst interaction volumes up to 26% compared to Q 2020. We saw strong performances across several regions and industries, including tech and midsized enterprises. We expect GTS contract value growth to continue to accelerate in 2021 and return to double-digit growth in the future. Global Business Sales, or GBS, serves leaders and their teams beyond IT. This includes HR, supply chain, finance, marketing, sales, legal and more. GBS achieved contract value growth of 12%, its first quarter of double-digit growth. New business growth was a very strong 87% in the quarter. All practices, with the exception of marketing, ended Q1 with double-digit contract value growth rates, and all practices delivered positive quarterly NCVI. Across our entire research business, we practiced relentless execution of proven practices, and we're seeing the results of our efforts. Our Research business is well positioned to return to sustained double-digit growth over the medium term. Turning to Conferences, as many of you know, during 2020, our Conferences business pivoted from in-person destination conferences to virtual. Our value proposition for virtual conferences remains the same as for in-person conferences. We deliver extraordinarily valuable insights to an engaged and qualified audience. While Q1 is a small quarter for conferences, the business exceeded our expectations. Beyond virtual conferences, we continue to prepare to return to in-person conferences in the second half of 2021. Gartner Consulting is an extension of Gartner Research, and helps clients execute their most strategic initiatives through deeper extended project-based work. Our Consulting segment also exceeded our expectations, with bookings up 26% during Q1. Our Consulting business will continue to serve as an important complement to our IT Research business. One of our objectives is to generate strong cash flow. Free cash flow for the quarter was $145 million, up significantly versus the prior year. In addition, we used that cash flow plus cash balances to purchase more than $600 million in stock through April of this year. With these repurchases, our Board increased our share repurchase authorization by another $500 million. We recently launched our 2020 Corporate Responsibility Report. The report details the progress we made in accelerating positive social change and contributing to a more sustainable world. We want our associates, communities and clients to continue to thrive today and in the future. The report can be found on gartner.com, and I encourage you to take a look. Summarizing, Q1 was a strong quarter with all three business segments exceeding our expectations. Looking ahead, we are well positioned for sustained success. We have a vast addressable market which will allow us to achieve double-digit contract value and revenue growth over the next five years and beyond. We expect to deliver modest EBITDA margin expansion going forward from a normalized 2021. We generate significant free cash flow in excess of net income, which we'll continue to deploy through share repurchases and strategic tuck-in acquisitions. And with that, I'll hand the call over to Craig. I hope everyone remains safe and well. First quarter results were outstanding with very good momentum across the business. Revenue was well above our expectations. Despite the lower-than-planned expenses, we are well positioned to take advantage of the strong demand environment. We will continue to restore spending to support and drive long-term sustained double-digit growth. With stronger-than-expected results in contract value, nonsubscription research and consulting, we are increasing our revenue growth and normalized margin outlook, which results in a meaningful increase to our 2021 guidance. The improved outlook reflects the increased visibility we have following the stronger-than-expected first quarter. First quarter revenue was $1.1 billion, up 8% year-over-year as reported and 6% FX-neutral. In addition, total contribution margin was 70%, up more than 320 basis points versus the prior year. EBITDA was $320 million, up 50% year-over-year and up 44% FX-neutral. Adjusted earnings per share was $2, and free cash flow in the quarter was $145 million. Research revenue in the first quarter grew 8% year-over-year as reported and 6% on an FX-neutral basis, and we saw strong retention and new business throughout the quarter. First quarter research contribution margin was 74%, up about 200 basis points versus 2020. Higher contribution margins reflect both improved operational effectiveness and the avoidance of travel expenses. Some of the margin improvement compared to historical levels is temporary and will reverse as the world reopens, and we increase spending to support growth. We are seeing a benefit from increased scale and a mix shift to higher-margin products, including from the discontinuation of certain lower-margin marketing products. Total contract value grew 6% FX-neutral to $3.7 billion at March 31. Quarterly net contract value increase, or NCVI, was $59 million, significantly better than the pandemic affected first quarter last year. Quarterly NCVI is a helpful way to measure contract value performance in the quarter, even though there is notable seasonality in this metric. Global Technology Sales contract value at the end of the first quarter was $3 billion, up 5% versus the prior year. GTS CV increased $34 million from the fourth quarter. The selling environment continued to improve in the first quarter but while retention isn't yet fully back to normal. Moving forward, we expect win backs and a return to more expansion with existing clients to contribute to growth in 2021, consistent with our experience coming out of the last downturn. By industry, CV growth was led by technology, healthcare and services, while retention for GTS was 98% for the quarter, down about 560 basis points year-over-year. Sequentially, a majority of our industry groups saw retention improve from the fourth quarter. GTS new business was up 21% versus last year with strength in new logos and an improvement in upsell with existing clients. Our regular full set of metrics can be found in our earnings supplement. Global Business Sales contract value was $731 million at the end of the first quarter, up 12% year-over-year. GBS CV increased $25 million from the fourth quarter. This was the strongest first quarter performance we've seen from GBS. CV growth was led by the healthcare and technology industries. All practices recorded double-digit CV growth with the exception of marketing, which was impacted by discontinued products. However, our marketing practice saw improving retention rates and a return to year-over-year new business growth in the quarter. All of our practices, including marketing, showed sequential increases in CV from the fourth quarter. While retention for GBS was 104% for the quarter, up more than 330 basis points year-over-year, GBS new business was up 87% over last year, led by very strong growth across the full portfolio. As with GTS, our regular full set of GBS metrics can be found in our earnings supplement. Conferences revenue for the quarter was $25 million. We had about $10 million of onetime revenue in the quarter. This reflected contract entitlements, which we extended beyond the end of 2020 as a result of the pandemic. Contribution margin in the quarter was 56%. We held five virtual conferences in the quarter. We also held a number of virtual Avanta meetings. First quarter consulting revenues increased by 4% year-over-year to $100 million. On an FX-neutral basis, revenues were flat. Consulting contribution margin was 39% in the first quarter, up 860 basis points versus the prior year quarter. Labor-based revenues were $84 million, up 4% versus Q1 of last year and down 1% on an FX-neutral basis. Labor-based billable headcount of 744 was down 8% due to headcount actions taken in Q2 and Q3 of last year. Utilization was 68%, up about 550 basis points year-over-year. Backlog at March 31 was $116 million, up 3% year-over-year on an FX-neutral basis after a strong bookings quarter. Our backlog provides us with about four months of forward revenue coverage. Our Contract Optimization business was up 6% on a reported basis versus the prior year quarter and 3% FX-neutral. As we have detailed in the past, this part of the consulting segment is highly variable. Consolidated cost of services decreased 2% year-over-year and 4% FX-neutral in the first quarter. Cost of services declined due to lower travel and entertainment costs during the quarter, as well as the continuation of various cost avoidance initiatives. SG&A decreased 2% year-over-year and 4% FX-neutral in the first quarter as well. SG&A declined due to lower facilities, travel, entertainment, and conference-related expenses, as well as the continuation of various cost avoidance initiatives. As CV rebounds this year, our traditional sales productivity metrics will also improve. For 2021, we have ample sales capacity to drive increasing CV growth, a more tenured-than-usual sales force, several consecutive quarters of strong client engagement which should drive improving retention, and the insights to help our clients address their most critical priorities. Going forward, in addition to the initiatives to improve sales force productivity and cost effectiveness we've been discussing the past few years, this year, we are investing to upgrade many of our sales technology tools. We will be ramping up our sales force hiring later in the year to ensure we have the team in place to drive strong CV growth next year. We still anticipate high single-digit growth in both GTS and GBS headcount by the end of 2021. EBITDA for the first quarter was $320 million, up 50% year-over-year on a reported basis and up 44% FX-neutral. First quarter EBITDA reflected revenue above the high end and costs toward the low end of our expectations for the first quarter. Depreciation in the quarter was up about $3 million versus 2020, including real estate and software, which went into service since the first quarter of last year. Net interest expense, excluding deferred financing costs in the quarter, was $25 million, flat versus the first quarter of 2020. The Q1 adjusted tax rate, which we used for the calculation of adjusted net income, was 23.5% for the quarter. The tax rate for the items used to adjust net income was 22.4% in the quarter. Adjusted earnings per share in Q1 was $2. Recall that about $6 million of equity compensation expense, which we normally would have incurred in the fourth quarter of 2020, shifted into the first quarter of 2021. The weighted average fully diluted share count for the first quarter was 89.1 million shares. The ending fully diluted share count at March 31st was 87.7 million shares. Operating cash flow for the quarter was $157 million compared to $56 million last year. The increase in operating cash flow was primarily driven by EBITDA growth, improved collections and cost avoidance initiatives. capex for the quarter was $13 million, down 49% year-over-year. Lower capex is largely a function of lower real estate investments. Free cash flow for the quarter was $145 million, which was up about 360% versus the prior year. Free cash flow growth continues to be an important part of our business model, with modest capital expenditure needs and upfront client payments. Free cash flow as a percent of revenue or free cash flow margin was 22% on a rolling 4-quarter basis, continuing the improvement we've been making over the past few years. Free cash flow is well in excess of both GAAP and adjusted net income. At the end of the first quarter, we had $446 million of cash. Our March 31st debt balance was $2 billion. At the end of the first quarter, we had about $1 billion of revolver capacity. Our reported gross debt to trailing 12-month EBITDA was about 2.2 times. We remain very comfortable with our current gross debt level and the corresponding lower leverage multiple. The multiple has reduced predominantly from increased EBITDA. Our expected free cash flow generation and excess cash remaining on the balance sheet provide ample liquidity and cash to deliver on our capital allocation strategy of share repurchases and strategic tuck-in M&A. During the first quarter, we repurchased $398 million in stock at an average price of about $180 per share. In the month of April, we repurchased more than $200 million of our stock. At the end of April, the Board increased our share repurchase authorization for the second time this year, adding another $500 million. As of April 30, we have around $790 million available for open market repurchases. We expect the Board will continue to refresh the repurchased authorization as needed going forward. As we continue to repurchase shares, we expect our capital base to shrink going forward. This is accretive to earnings per share and combined with growing profits, also delivers increasing returns on invested capital over time as well. We are updating our full year guidance to reflect Q1 performance and an improved and increased outlook for the remainder of the year. For Research, the strong start to the year in CV performance and improvements to nonsubscription revenue are contributing to higher-than-previously expected research revenue. For Conferences, our guidance is still based on being virtual for the full year. Operationally, we are planning to relaunch in-person Avanta meetings in the third quarter and in-person destination conferences starting in September. Our guidance includes fixed costs, primarily people and marketing related to both a full year of virtual and a partial year of in-person conferences. We've excluded the variable costs, primarily venue-related associated with in-person conferences from our guidance. If we are able to run in-person conferences, we expect incremental upside to both our revenue and profitability for 2021. For Consulting revenues, demand started the year better than we expected and the backlog improved during the first quarter. For expenses, we have reinstated benefits, which were either canceled or deferred in 2020. This includes our annual merit increase, which took effect April 1. We also plan to increase quota-bearing head count in the high single digits for both GTS and GBS by the end of 2021. Additionally, we continue to invest in several other programs. The impact of most of these expense restorations or investments impact our P&L starting in the second quarter. As you know, travel expenses were close to 0 from April 2020 through March 2021. Our current plans continue to assume a modest ramp-up in travel-related expenses over the course of 2021. Most of this ramp is built into the second half of the year. If travel restrictions remain in place for longer than we've assumed, we'd see expense savings. For our revenue guidance, we now expect Research revenue of at least $3.935 billion, which is growth of at least 9.2%. We expect Conferences revenue of at least $170 million which is growth of at least 42%. We now expect consulting revenue of at least $400 million, which is growth of at least 6.4%. The result is an outlook for consolidated revenue of at least $4.5 billion, which is growth of 9.9%. Based on current foreign exchange rates and business mix, the consolidated growth includes an FX benefit of about 200 basis points. The year-over-year FX benefit is more pronounced in the first half of the year. With the ongoing business momentum we are seeing, we are planning to restore growth spending as we move through the year. We now expect full year adjusted EBITDA of at least $1 billion, which is an increase of about 22.3% versus 2020 and reported margins of at least 22%. This is based on conferences running virtual only. The 18% to 19% expected margins in the back half of the year should provide a reasonable run rate for thinking about the margins going forward as we will have more fully restored costs and resumed growth hiring. We expect our full year 2021 adjusted net interest expense to be $102 million. We expect an adjusted tax rate of around 22% for 2021. We now expect 2021 adjusted earnings per share of at least $6.25. For 2021, we now expect free cash flow of at least $850 million. This is before any insurance proceeds related to 2020 conference cancellations. All the details of our full year guidance are included on our Investor Relations site. Finally, we expect to deliver at least $270 million of EBITDA in Q2 of 2021. We expect the second quarter tax rate in the high 20s. Looking out over the medium term, our financial model and expectations are unchanged. With 12% to 16% research CV growth, we will deliver double-digit revenue growth. With gross margin expansion, sales cost growing in line with CV growth over time and G&A leverage, we can modestly expand margins from a normalized 2021 level of around 18% to 19%. We can grow free cash flow at least as fast as EBITDA because of our modest capex needs and the benefits of our clients paying us upfront. We will repurchase shares over time, which will lower the share count as well. We had a strong start to the year with momentum across the business. We have meaningfully updated our outlook for 2021 to reflect the stronger demand environment and our enhanced visibility. We are restoring certain expenses and investing to ensure we are well positioned to rebound as the economy recovers. We repurchased more than $600 million worth of stock this year through the end of April and remain committed to returning excess capital to our shareholders.

q4 gaap earnings per share $1.99. sees fy earnings per share $7.65 to $8.05. illinois tool works inc - plans to repurchase approximately $2 billion of its shares in 2020. illinois tool works inc qtrly organic revenue down 1.6%. illinois tool works inc - at current levels of demand, sees 2020 organic growth to be in range of 0% to 2%.

Today we will be reviewing our third quarter 2021 financial results and providing investors with an update on our full-year outlook. Further information can be found on our SEC filings. Actual future results may differ materially from those expressed in our statements today due to various uncertainties. Starting on slide three, I'm pleased to announce that we achieved constant currency net sales growth of 2.9% with increases in all key product categories despite continuing global supply chain challenges. Revenue growth was led by solid performance in Europe and Asia-Pacific and North America realized growth in mobility & seating and respiratory products appeared with strong new order intake, we continue to experience higher than typical backlog levels across all product categories compared to pre-pandemic levels, which is expected to drive sequential sales growth in the fourth quarter. As always, we're working diligently to maximize our throughput and improve our service levels to better support our customers' needs. Turning to gross profit, we've benefited from sales growth and favorable sales mix with higher gross profit on lower percentage of sales. Gross margin was impacted by previously disclosed changes to input costs ahead of offsetting price adjustments. We view these challenges as transitory and during the quarter we undertook actions to address them which I'll discuss more in detail in the next slide. To support existing levels of demand and expected sales growth, free cash flow usage increased as a result of greater investment in working capital, specifically inventory, which Kathy will discuss later. Overall, our third quarter sales results were in line with expectations with solid revenue growth year-over-year in all major product categories. Turning to slide four, we expect to finish the year on a strong note, while we anticipate global supply chain challenges to persist in the near-term, the disruptions are generally more predictable, and the actions we've taken should mitigate some of the remaining uncertainty. In addition, our customers continue to demonstrate strong demand for our products even though access to healthcare has not fully rebounded from pre-pandemic levels. As mentioned previously, we're taking action to mitigate the supply chain challenges which impacted sales and gross margins. For example, we expanded our network of freight providers for more timely shipments, we found ways to improve staffing levels to increase throughput, and we have further increased inventory to mitigate supply chain uncertainties. In addition, we continue to adjust price and freight charges were applicable to offset the substantially higher material and logistics costs we continue to experience. Well still early in the fourth quarter, we're seeing positive signs that our actions should be effective. As we work through these near-term challenges, we're also marching forward with the next phase of our IT modernization Initiative in North America. I'm pleased to share that the program took a big step forward following the launch of our new e-commerce platform, which has features to enhance the customers experience and to improve the ease of doing business with Invacare. In 2022, we expect to launch the next phase in North America, which will focus on driving operational efficiencies, lowering costs and improving working capital management. Turning to sales, demand remains strong and we continue to see solid order rates in all regions and product categories. As we grow revenue, our order backlog has also continued to increase. In the third quarter, product availability in our targeted inventory strategy were key factors in driving strong sales growth in both Europe and Asia-Pacific. Specific material shortages, limited some of lifestyle product availability in North America balancing overall results. All things taken together, we expect fourth quarter will improve in all key metrics with sequential constant currency net sales growth, driving substantially higher profitability and free cash flow. We believe the progress we have made sets us up for a strong finish to the year and continued improvement in 2022. Turning to slide six, reported net sales increased 5.8% and constant currency net sales increased 2.9% in line with our quarterly guidance, and driven by growth in all key product categories, sales growth was the result of continued strong order intake, and the conversion of a portion of the excess backlog from the second quarter of 2021. Gross profit increased $300,000 and benefited from net sales growth and favorable sales mix. However, gross profit as a percentage of sales declined 140 basis points. As previously discussed, gross margin continued to be impacted by global supply chain related challenges and labor shortages resulting in elevated manufacturing costs for the quarter. We expect many actions we have undertaken to mitigate these higher costs to become effective and benefit margins in the fourth quarter of '21. Constant currency SG&A expense decreased primarily related to lower employee related costs, including stock compensation expense. To drive profitability, we continue to align commercial expenses with net sales growth and monitor all discretionary spending. Operating loss excluding the goodwill impairment charge was $3.8 million, an improvement of $900,000 from the third quarter of 2020. This improvement was driven by sales growth and lower restructuring costs. In the third quarter of '21, the company recorded a one-time non-cash charge related to an impairment for Goodwill of $28.6 million. The company's reporting units for Goodwill assessment North America HMV, and the Institutional Products Group merged into one reporting unit as a result of changes to the operating structure of the North America business and the implementation of a new enterprise resource planning system at the end of the quarter. This change was considered a triggering event and required the company to perform an interim goodwill impairment test. Adjusted EBITDA was $18.1 million, an increase of $8.3 million primarily attributable to $10.1 million of CARES Act benefit, and net sales growth partially offset by higher supply chain costs. Excluding the CARES Act benefits, adjusted EBITDA for the third quarter was $8 million. Note that the CARES Act benefit was and is not considered in the company's full-year 2021 guidance for adjusted EBITDA. Free cash flow usage for the quarter reflects an investment in working capital, including $10.1 million of additional inventory as compared to the second quarter of '21. As previously disclosed, the company increased inventory levels to mitigate supply chain disruptions and to prepare for expected sequential sales growth in the fourth quarter. We anticipate that inventory levels and accounts receivable will remain elevated at year-end and convert to cash over the next few quarters. Turning to slide seven, reported net sales in all key product lines improved despite supply chain challenges, which continued to limit the conversion of orders to revenue. We continue to see strong demand in all product categories and in all regions, which resulted in excess order backlog that was higher than typical compared to pre-pandemic levels and similar to the end of the second quarter. We're working diligently to reduce the excess backlog and return our service levels back to more normal lead times. On a consolidated basis, constant currency net sales of Lifestyle products grew 5.2% driven by exceptionally strong sales of manual wheelchairs and hygiene products in Europe. Mobility & seating products also achieved constant currency net sales growth in North America and Asia Pacific. In addition, we continue to see elevated demand for respiratory products globally related to the pandemic. Turning to slide eight, Europe constant currency net sales increased 4.5% driven by more than 17% growth in lifestyle products as a result of heightened demand for products that were readily available, demonstrating the importance of our targeted inventory strategy. While respiratory demand remained strong, fulfilling that demand has been hindered by the availability of components to complete orders. Gross profit increased $3.2 million, and gross margin increased 20 basis points driven by net sales growth and favorable product mix partially offset by higher freight costs and supply chain disruptions. As Matt mentioned, we have taken actions to mitigate the impact of these additional costs and expect to see benefits starting in the fourth quarter. Operating income benefited from SG&A leverage and increased by $2 million, driven by higher gross profit from revenue growth. Turning to slide nine, North America constant currency net sales decreased slightly, a 7% increase in mobility & seating and an over 6% increase in respiratory products was more than offset by lower sales of lifestyle products. Higher sales of mobility & seating products was driven by power wheelchairs and power add-on products. The lifestyle product category was impacted by supply chain issues limiting the availability of materials and components in particular for bed. In addition, access to institutional and government customers' remains limited compared to pre-pandemic level. That said, overall, we continue to see increased customer interest in all products and strong order intake. Gross profits declined by $2.8 million and gross margin declined 80 basis points due to unfavorable operating variances as a result of supply chain challenges, partially offset by favorable product mix. Operating loss of $1.5 million was impacted by reduced gross profit and higher SG&A expense, the latter of which came primarily as a result of spending supporting revenue growth. As noted the goodwill impairment charge previously discussed is not included in the operating results for North America. Turning to slide 10, constant currency net sales in the Asia Pacific region increased 17%, driven by significantly higher sales of respiratory products, and an over 15% increase in mobility & seating products. Sales rebounded in the Asia Pacific region as a result of receiving products delayed from the second quarter, which had been impacted by global shipping issues. Operating loss improved by $2.2 million, driven primarily by lower corporate SG&A expense, including reduced stock compensation expense. This was partially offset by lower profitability in the Asia Pacific region impacted by higher material and freight costs as well as higher SG&A expense. Moving to slide 11, as of September 30, 2021, the company had total debt of $318 million, excluding financing and operating lease obligations, and $74 million of cash on the balance sheet. Lower cash balances are primarily related to higher levels of working capital, which we anticipate will remain elevated through the end of the year. As part of the company's strategy to mitigate supply chain challenges and to prepare for expected sales growth, the company added $10.1 million of incremental inventory in the quarter, which is expected to convert to cash over the next few quarters. In the third quarter of 2021, the company received forgiveness of its CARES Act that obligation of $10.1 million of principal and accrued interest. Turning to slide 12, we are reaffirming our full-year guidance for 2021 consisting of constant currency net sales growth in the range of minus 1% to positive 2%. Adjusted EBITDA in the range of $30 million to $37 million, and free cash flow usage in the range of $10 million to $20 million. As previously mentioned, full-year adjusted EBITDA guidance does not include the CARES Act benefit recognized in the third quarter. For the fourth quarter, the company anticipates sequential improvement and constant currency net sales growth driven by continued strong order intake and the conversion of a portion of its elevated backlog into revenues. We expect the actions we have taken to support sales growth and manage near-term supply chain challenges will drive sales growth, favorable sales mix and expand gross margin. As a result, adjusted EBITDA and free cash flow are expected to improve materially. Turning to slide 13. We're pleased that our third quarter results reflect constant currency net sales growth. We anticipate the actions we have taken will enable us to finish the year on a strong note and instill confidence that we will achieve our full-year guidance. Looking further ahead, I'm confident that the durable benefits from our recent actions and our capable team will allow us to drive sustainable profitable growth in 2022 and beyond. We'll now take questions.

increases full year 2020 guidance for net sales and adjusted ebitda. sees fy 2020 reported net sales of at least $840 million, up from previous range of $810 to $840 million. sees fy 2020 adjusted ebitda in the range of $28 to $32 million, up from previous range of $27 to $30 million. sees fy 2020 free cash flow usage in the range of $8 to $12 million, changed from previous range of $7 to $10 million.

My name is Larry Sills. I'm Chairman of the Board. Today, our agenda will be Eric will go over some of the first quarter highlights, and Jim will discuss operations and finally, Nathan will go into more detail on the numbers. Then we'll open it to Q&A. They are based on information currently available to us and certain assumptions made by us, and we cannot assure you that they will prove correct. The last year has been a roller coaster and while the challenges were undoubtedly significant, I believe we've navigated it quite well, and there is no doubt in my mind that we would not have managed it as successful if it were not for the dedication and skills of all of our people around the world. I couldn't be more proud of how they guided us through. The first quarter had many high notes. Our sales were very strong, up almost 9% as we saw the ongoing market strength continue from the second half of last year. Furthermore, we posted the highest earnings we've ever had in the first quarter, more than doubling last year's profitability due to a combination of sales leverage and cost control. It's important to note that the first quarter of 2020 was only modestly impacted by COVID for us with a minor downturn in the last two weeks of March. So while comparisons going forward will be muddy, the first quarter is a bit cleaner. Sales in our Engine Management division were up more than 5%. As previously discussed, we lost a large account and had a sizable reduction in sales to them in the quarter as they transitioned the business, but this loss was more than made up for by strong demand from our other customers. Off in the first quarter is March with some large pipeline orders, but that was not the case this year. Rather, we believe that our customer's strong purchases from us were the direct result of surging sell-through rather than inventory building. Their POS was extremely strong with many accounts showing gains well into the double digits. Obviously, March POS comparisons are not relevant due to last year's March COVID shutdowns, but our customers are also up double digits against their more normalized 2019 March POS. And we are pleased to see that this trend is continuing into the second quarter with no apparent sign of abating. Temperature Control also posted strong sales but as stated every year, the first quarter is largely related to preseason orders, which can vary in size year-to-year depending on various factors, and the full year will depend on demand in the summer months. We are encouraged, however, by very strong POS in the quarter, which suggests that some of the purchases intended this pre-season are actually being sold through already and similar to Engine Management, these trends have continued into the second quarter. Looking forward, we are quite bullish on the market in general. Overall, industry trends are very favorable. Cars are getting back on the road. Miles driven are increasing and the repair base are getting busy again. In all likelihood, this will continue as more Americans are vaccinated and more restrictions are lifted. We believe that this will favor the ongoing recovery of the DIFM market, which is where our product categories excel. Key economic indicators are also favorable. Unemployment is dropping, and consumer spending is soaring and we expect SMP to enjoy those tailwinds. As for our own initiatives, we are seeing very strong success in programs we have developed with our customers to pursue market share gains at the street level and while there are always some gains and losses, we are happy to report that we have been able to secure some new business, which annualized, will replace roughly a quarter to a third of the business that we lost. This new business will begin to phase in over the next few quarters. We're also very excited about our strategy to expand our original equipment business with a focus on heavy-duty commercial and off-road vehicles targeting sectors such as heavy truck, construction, agricultural, industrial, and power sports. Over the past many years, we have been quietly building up this part of our business, both organically and through acquisition. As previously announced, during the first quarter, we acquired the particulate matter sensor product line from Stoneridge. This sophisticated technology, often referred to as SIP sensors is utilized in heavy-duty trucks to reduce tailpipe emissions. We inherited $12 to $14 million business with blue chip customers but almost more importantly, we acquired the intellectual property and complex manufacturing capabilities to court more business in this fast-growing product category, and new opportunities are already presenting themselves. Overall, the OE channel accounted for over $150 million in sales last year and is the fastest-growing part of our business. We believe that we are now at a point of critical mass where we have the internal resources and competencies to support it as well as credibility with the customers to be an important supplier to them. We also strongly believe that this focus is complementary to our aftermarket business for several reasons. First off, it tends to be in similar product categories and technologies, which can be leveraged in the aftermarket. Secondly, all this holds us to extremely high-quality standards, which get universally adopted throughout all of our operations and finally, we believe that in time, it will help us shift away from an over-reliance on conventional powertrains. It does this in two ways. It gets us into products for alternative energy vehicles as with our successful compressed natural gas injection program or our joint venture in AC compressors for electric vehicles or moves us further into product categories that are not powertrain-related such as many of the product types that came with the Pollak acquisition. So overall, we are very pleased with the state of the market and of our position within it. Most trends are favorable and while the COVID crisis is not completely over, we are confident that the worst is behind us and that we have emerged from it stronger than we went in both operationally and from a financial standpoint. Our core business is doing very well. We have initiatives in place to take advantage of the momentum and we are very excited about our prospects in this adjacent commercial vehicle space. And as such, we look forward to the future. So, with that, I will hand it over to Jim to talk about our operations. I'll provide some color around our operations. To begin, as you have seen in our release, our first-quarter gross margins in both segments reflected some of our best results in the last 10 years. At a very high level, this is primarily the benefit of increased production to meet our strong customer demand and the associated efficiency gains generated in our factories. I'm very pleased with how our manufacturing and supply chain teams adapted to meet this higher demand. Our supply chain team also addressed headwinds. First material source of supply, we faced semiconductor chip and resin supply delays. Our teams worked with our suppliers, increasing lead times and working around allocation limitations. Fortunately, we were able to mitigate much of these supply issues with existing safety stocks and where necessary, alternate vendors. On the material inflation front, we experienced price increases on semiconductor chips, resins, and other general commodities such as copper and aluminum, but no single commodity has a significant impact on our overall cost structure. Lastly, Asia-sourced product face the same global inflation pressures, but also the compounded effect from higher container cost and vessel fees. Fortunately, our global manufacturing footprint has been of benefit as compared to our peers sourcing 100% from Asia, recall our low-cost manufacturing facilities are in Mexico and Poland with other highly skilled and less labor-intensive operations in the US and Canada. We believe our NAFTA footprint provides advantages for lower cost, improve supply chain logistics, and cost avoidance. To offset these inflationary pressures, we looked internally at our margin enhancement efforts. First, to expand in-house manufacturing versus buy initiatives. In this effort, we are targeting the tool products earlier in the product life cycle to better control our costs, quality, and supply. Next is our new vendor sourcing initiative. This effort is driven by our overseas sourcing office working with our engineering teams to validate new vendors capturing significant cost reductions. Another internal effort is referred to as value engineering where we evaluate existing processes for automation and other cost improvements. Externally recognized and we are in a competitive marketplace, we look for pricing to offset inflationary costs incurred. Overall, our intent is to alleviate any cost increases and strive for incremental margin improvements. Looking forward, we will continue to enjoy increased production levels to meet our strong customer demand as we go into Q2. Our goal is to be the number one full-line supplier for premium parts in our product categories. On this point, many of our customers recognize the SMP with their 2020 Vendor of the Year Award. Now turning to the numbers, I'll walk through the operating results for the first quarter and also cover some key balance sheet and cash flow metrics. Looking first at the P&L, consolidated net sales in the first quarter were $276.6 million, up $22.3 million or 8.7% versus Q1 last year with increases coming from both of our segments. Looking at it by segment,, Engine Management net sales in Q1, excluding wire and cable sales were $173.7 million, up $9.1 million versus the same quarter last year. This 5.6% increase is partly reflective of the softness we experienced in Q1 last year but also reflects continued growth in sales with the ongoing customers that they are noted for. Wire and cable net sales in Q1 were $38.4 million, up $1.8 million or 4.7%. Sales continued to be positively impacted by strong DIY sales as consumers work on their own vehicles, but we're helped too by strong sales to OE customers as business ramped up in that channel as well. While the sales in the wire and cable business continued to be steady, the product category remains in secular decline, and we believe sales will ultimately resume a trend line of declines in the range of 6% to 8% on an annual basis. Temperature Control net sales in Q1 2021 were $62.5 million, up 21.4% versus the first quarter last year and increased primarily as a result of stronger pre-season ordering by our customers. As we always point the first quarter is not indicative of how the year will turn out for the segment, as the year ultimately depends on summer weather. Turning to gross margins, our consolidated gross margin in the first quarter was 30.3% versus 27.7% last year, up 2.6 points with both of our segments reporting increases for the quarter. Looking at the segments, first-quarter gross margins for Engine Management was 30.7%, up 2.5 points from Q1 last year and for Temperature Control was 25.6%, an increase of 2.1 points from 23.5% last year. The higher margins in both segments remain with the result of three things. First, the higher sales volumes we experienced versus last year. Second, favorable plant absorption from inventory production in the quarter and third, the carryover impact of favorable manufacturing variances from the record sales and production levels last year. Looking ahead, the gross margin expectations for the year in Engine Management, we are seeing strong customer POS sales and new business wins, which should help offset the loss of the customer from a sales perspective. However, we're also facing headwinds from inflationary cost and labor, raw materials, and transportation as Jim touched on earlier. While we expect the impact of higher sales and higher costs will have somewhat offsetting effects, gross margins will vary across quarters, and we continue to forecast full-year 2021 gross margin of 29% plus for this segment. For our Temp Control segment, we continue to target a gross margin of 26% plus for the full year in 2021. Moving now to SG&A expenses, our consolidated SG&A expenses in Q1 declined by $1.4 million to $54.5 million ending at 19.7% of sales versus 22% last year. Expenses declined despite some higher distribution costs, mainly due to continued cost control around discretionary spending. And the improvement as a percentage of sales mainly reflects the improved expense leverage due to higher sales volumes. Looking at our SG&A cost for the full year in 2021, we expect expenses to be about $54 million to $58 million each quarter, a slightly higher range that noted on our last call as we'll see some higher expenses as a result of higher sales. Consolidated operating income before restructuring and integration expenses and other income net in Q1 2021 was $29.3 million or 10.6% of net sales up 4.9 points from Q1 2020. As we note on our GAAP to non-GAAP reconciliation of operating income, our performance resulted in first-quarter 2021 diluted earnings per share of $0.97 versus $0.43 last year. The increase in our operating profit for the quarter was mainly due to higher sales volumes, higher gross margin percent, and slightly lower SG&A expenses. Turning now to the balance sheet, accounts receivable at the end of the quarter were $174.1 million, up $21.9 million from March 2020, but down $23.9 million from December 2020. The increase over March last year was due to the increase in sales during the quarter, while the decrease from December mainly reflects the timing of collections and management of our supply chain factoring arrangements. Our inventory levels finished the quarter at $390.9 million, up $20 million from March 2020 reflecting the need to carry higher balances to support higher sales levels. As compared to December 2020, our inventory was up $45.4 million, mainly due to our effort to restock our shelves to normal levels. As a reminder, our inventories were depleted during 2020 due to strong sales in the last half of the year, and we expected to build back our inventories in the quarter. Looking at cash flows, our cash flow statement reflects cash used in operations in the first quarter of $11.4 million as compared to cash used of $32.8 million last year. The $21.4 million improvement was driven by an increase in our operating income as noted earlier and by changes in working capital. The changes in working capital in the first quarter of 2021 were mainly again a result of timing and were to be expected if sales returned to normal levels. Inventory balances finished higher as we replenished our shelves, the cash used for inventory was partly offset by an increase in accounts payable. Additionally, we generated cash from accounts receivable, again due to the timing of collections and management of our factoring programs while we used cash for customer rebates that were earned and accrued last year. Turning to investments, we used $5 million of cash for capital expenditures during the quarter, which was slightly more than the $4.4 million we used last year. We also used $2.1 million to purchase the SIP Sensor business from Stoneridge that was discussed earlier. Financing activities included $5.6 million of dividends paid and $11.1 million paid for repurchases of our common stock. Financing activities also included $31 million of borrowings on our revolving credit facilities, which were used to fund operations, investments in capital, and returns to shareholders through dividends and share buybacks. We finished the quarter with total outstanding borrowings of $42.5 million and available capacity under our revolving credit facility $206 million.

compname announces intent for share repurchases of $300 million in fiscal 2022. expect to continue pursuing acquisition opportunities throughout year. in addition to $113 million of share repurchases in fiscal '21, plan to repurchase as much as another $300 million in 2022. established guidance for fiscal 2022 based on expected company-wide sales growth of 0 to 3 percent. sees 2022 non-gaap adjusted earnings per share anticipated to be in a range of $8.50 to $8.90. scotts miracle-gro - at hawthorne, sees current over-supply of cannabis to put negative pressure on growth rate through calendar year and into q2.

Today's call will feature commentary from Chief Executive Officer, Ritch Allison and from the office of the CFO, Jessica Parrish. Both of these documents are available on our website. Actual results or trends could differ materially from our forecast. I'll request to our coverage analysts, we would like to accommodate as many of you as time permits. With that, I'd like to turn over the call to our CEO, Ritch Allison. Overall, I am very pleased with our results this quarter, which once again demonstrated the strength of the Domino's brand around the world. We are still navigating through the COVID pandemic across the globe. Throughout the last 18 months, our franchisees have continued to step up to the challenge in service to their customers, their communities and their team members. I continue to be extremely proud of our global franchisees and their extraordinary efforts to provide outstanding food through safe and reliable delivery and carryout experiences. You've heard me speak often about the importance of global retail sales growth and how that drives our business model. During the second quarter, we delivered 17.1% global retail sales growth, excluding foreign currency impact, driven by a powerful combination of growth in US same-store sales, international same-store sales and global store counts. The second quarter marked our 41st consecutive quarter of US same-store sales growth and our 110th consecutive quarter of international same-store sales growth. We also reinforced our leadership position in the pizza category with a very strong quarter of global store growth, highlighted by the opening of our 18,000th store. We celebrated this terrific milestone with the opening of a beautiful store in La Junta, Colorado. The pace of net store growth has accelerated significantly during the first half of this year. When you look at it on a trailing four-quarter basis, our pace of net store growth is increased from 624 in Q4 2020 to 884 in Q2 2021. During the quarter, we also completed our $1.85 billion refinancing transaction, lowering the cost of our debt and giving us the capacity to return $1 billion to our shareholders through our recently completed accelerated share repurchase transaction. Overall, the Domino's brand continues to deliver, as our strong same-store sales, store growth and resulting retail sales growth deliver great returns to our franchisees and our shareholders. She will take you through the details of the quarter and then after that, I'll come back and share some additional observations about the quarter and some thoughts around how we are approaching the business going forward. Jessica, over to you. We are excited to share our strong second quarter results with you today. Overall, Domino's team members and franchisees around the world generated impressive operating results, leading to a diluted earnings per share of $3.06 for Q2. Our diluted earnings per share as adjusted for certain items related to our recapitalization transaction completed during the quarter with $3.12. In Q2, we continued to see positive momentum in both the US and international businesses in both same-store sales performance and net unit growth, leading to strong global retail sales growth. Global retail sales grew 21.6% in Q2, as compared to Q2 2020. When excluding the positive impact of foreign currency, global retail sales grew 17.1%. Breaking down total global retail sales growth, US retail sales grew 7.4% and international retail sales grew 39.7%. When excluding the positive impact of foreign currency, international retail sales grew 29.5% rolling over a prior year decrease of 3.4%. The prior year decrease in international retail sales, excluding foreign currency resulted primarily from temporary store closures, changes in store hours and service method disruptions in certain international markets as a result of the COVID-19 pandemic. Turning to comps, during Q2, we continue to lead the broader restaurant industry with 41 straight quarters of positive US comparable sales and 110 consecutive quarters of positive international comps. Same-store sales in the US grew 3.5% in the quarter lapping a prior-year increase of 16.1%. Same-store sales for our international business grew 13.9% rolling over a prior year increase of 1.3%. Breaking down the US comp, our franchise business was up 3.9% in the quarter, while our company-owned stores were down 2.6%. As we noted on our Q1 call, we continue to observe a larger spread between the top line performance of our franchise stores and our company-owned stores than we have historically seen. We believe this is primarily a function of the heavily urban and higher income footprint of our company-owned store markets relative to the more diverse mix across our franchise space. The US comp this quarter was driven by ticket growth due to increases in items per order in our transparent delivery fee as well as the mix of products we sell. Order count on a same store basis were consistent with Q2 2020 levels, which were higher than Q2 2019 levels, as a result of customer ordering behavior during the pandemic. The international comp was driven by order growth due to the return of non-delivery service methods, the resumption of normal store hours and the reopening of stores that were temporarily closed in certain of our international markets in Q2 2020. Shifting to unit count, we and our franchisees added 35 net stores in the US during the second quarter, consisting of 39 store openings and foreclosures. Our international business added 203 net stores comprised of 217 store openings and 14 closures. Turning to revenues and operating margins. Total revenues for the second quarter were up approximately $112.4 million or 12.2% over the prior year quarter. The increase was driven by higher global retail sales, which generated higher revenues across all areas of our business. Changes in foreign currency exchange rates positively impacted our international royalty revenues by $4 million in Q2 2021 as compared to the prior year quarter. Our consolidated operating margin as a percentage of revenues increased to 39.5% in Q2 2021 from 38.8% in the prior year, due primarily to higher revenues from our US franchise business. Company-owned store margin as a percentage of revenues increased to 24.5% from 23.1% primarily as a result of lower labor costs, partially offset by higher food costs. Recall that we incurred additional bonus pay in the second quarter of last year for team members on the front lines during the COVID-19 pandemic. Supply chain operating margin as a percentage of revenues decreased to 11% from 11.9% in the prior year quarter, resulting primarily from higher insurance and food costs, as well as higher fixed operating costs driven by depreciation and our new supply chain facilities opened last year. These increases were partially offset by lower labor costs. G&A expenses increased approximately $12.3 million in Q2 as compared to Q2 2020, resulting from higher labor costs, including higher variable performance-based compensation and non-cash compensation expense, partially offset by lower professional fees. Additionally, as we discussed on our Q1 call, we completed our most recent recapitalization transaction during the second quarter in April. Net interest expense increased approximately $6.7 million in the quarter, driven by a higher average debt balance. Our weighted average borrowing rate for Q2 2021 was 3.8%, down from 3.9% in Q2 2020. Our effective tax rate was 19.6% for the quarter as compared to 4.7% in Q2 2020. The effective tax rate in Q2 2021 includes a 2.3 percentage point positive impact from tax benefits on equity-based compensation. This compares to an 18.5 percentage point positive impact in Q2 2020. This decrease was due to significantly fewer stock option exercises in Q2 of this year. We expect to see continued volatility in our effective tax rate related to these equity-based compensation tax benefits. Combining all of these elements, our second quarter net income was down $2 million or 1.7% versus Q2 2020. On a pre-tax basis, we were up $20.6 million or 16.5% over the prior year. Our diluted earnings per share in Q2 was $3.06 versus $2.99 in the prior year. Our diluted earnings per share as adjusted for the impact of the recapitalization transaction was $3.12, an increase of $0.13 or 4.3% over the prior year. Breaking down that $0.13 increase in our diluted earnings per share as adjusted, most notably, our improved operating results benefited us by $0.53, net interest expense adjusted for the impact of the items affecting comparability I discussed previously negatively impacted us by $0.08, a lower diluted share count driven by share repurchases over the trailing 12 months benefited us by $0.12, and finally our higher effective tax rate, resulting from a lower tax benefits on equity based compensation negatively impacted us by $0.44. Shifting to cash, our strong financial model continue to generate significant cash flow throughout the second quarter. During Q2, we generated net cash provided by operating activities of approximately $143 million. After deducting for capex, we generated free cash flow of approximately $126 million. Regarding our capital expenditures, we spent approximately $17 million on capex in Q2, primarily on our technology initiatives, including our next-generation point-of-sale system. As previously disclosed, during Q2, we also entered into an accelerated share repurchase transaction for $1 billion. We received and retired approximately 2 million shares at the beginning of the ASR. The ASR settled yesterday and we received a retired an additional 238,000 shares in connection with this transaction. In total, the average repurchase price throughout the ASR program was $444.29 per share. We also paid a $0.94 quarterly dividend on June 30. Subsequent to the end of the quarter, our Board of Directors declared a quarterly dividend of $0.94 per share to be paid on September 30. In closing, our business continued its strong performance during the second quarter and we are very pleased with the results our franchisees and team members around the world delivered. And I'll begin my comments with a look at our US business. For months now, many of you have been asking how we would lap the tough comparisons from Q2 of last year. My answer has always been that we're not focused on managing to a 12-week quarter. We are focused on building the business for the long term and that long-term focus on great product, service, image and technology is precisely why we were able to deliver a terrific quarter, highlighted by 7.4% US retail sales growth, lapping 19.9% from Q2 2020. Turning to same-store sales, perhaps the thing I'm most pleased about when I look at the 3.5% US comp is the fact that we were able to hold orders flat while overlapping the big gains from Q2 2020. I'm also pleased that our ticket growth was driven by a very healthy balance of more items per order and modest menu price and delivery fee increases. We achieved positive comps in both our delivery and carryout businesses, with delivery driven by ticket and carryout driven by a balance of order count and ticket growth. We continue to see strong growth across our business in the quarter. You've often asked, if our sales growth might be weaker in markets that had more fully reopened, but to the contrary, the opposite trend emerged through the second quarter where we saw higher levels of sales growth in the second quarter in the markets with fewer COVID-related restrictions. Similar to Q1, we saw the comp growth in rural areas outperformed urban areas, and less affluent areas outperformed more affluent areas. These differences, combined with the impact of more aggressive fortressing, accounted for much of the same-store sales gap between our corporate store and franchise store businesses. We saw sales benefits during the quarter from the federal government stimulus, particularly the checks that we delivered back in March. It's difficult to quantify the magnitude of the impact of the one-time distributions and the ongoing unemployment and other government payments to consumers, but we believe that they do continue to have some positive sales impact on our business. Due to the strong sales throughout the quarter, we once again elected not to run any of our aggressive boost week promotions, but instead remain focused on providing great service and offering great value to our customers every day. As we continue to experience COVID overlaps, we believe it will be instructive to continue to look at the cumulative stack of comparable US same-store sales anchored back to 2019 as a pre-COVID baseline. At 19.6% for Q2, we saw a material sequential improvement of the two-year stack when compared to the first quarter. Beyond the comps, when you look at the absolute dollars, our second quarter same store average weekly unit sales in the US exceeded $27,000, another sequential uptick from the levels seen in the first quarter. Now turning to the other critical component of our retail sales growth, new store openings, our addition of 35 net stores was softer than we expected. We have a very strong pipeline of future openings, but had a number of stores delayed due to store level staffing challenges and construction, permitting or equipment delays. We hope to accelerate the pace of openings during the second half of the year as some of the delays in unit growth may subside. I'll turn and speak now about the carryout and the delivery businesses. We saw the return of carryout order growth in Q2 and we continue to build awareness of Domino's car-side delivery. We ran a brief 49% off car-side delivery awareness campaign during the quarter and just recently launched a campaign highlighting our Car Side Delivery 2-Minute Guarantee. This campaign hits on two key elements of the Domino's brand, service and value. Our franchisees and operators have fully embraced car side delivery and we are consistently averaging below 2 minutes out the door and on our way to the customer's cars. This is a great technology enabled way to serve our customers and will remain an important part of our strategy as we continue to evolve the carryout experience, not only to enhance the loyalty of our current carryout customers, but also to reach a new different and largely untapped drive-through oriented customer going forward. For the delivery business, I was also very pleased to see positive delivery same-store sales growth during Q2, while facing very difficult overlaps. We brought back the noise to highlight our partnership with Nuro for autonomous delivery. This campaign hits on our technology and innovation leadership, while having a little bit of fun with our old nemesis, The Noid. We continue to learn as we pilot a true autonomous pizza delivery experience to select customers in the Houston market. Now turning to staffing, I'll reiterate something I said back in April. We continue to operate in a very difficult staffing environment for our stores and our supply chain centers. The combination of COVID, strong sales, the accelerating economic growth across the country and the ongoing government stimulus continue to result in one of the most difficult staffing environments that we've seen in a long time. And frankly, this led to higher margins in our corporate store business than we would like to see. The reality is that we were operating during the quarter with fewer team members than we would like to have in many of our stores. This puts pressure on our operators to meet demand, while continuing to deliver great service. In the back half of the year, we expect to implement additional wage increases across certain corporate store markets and positions. And as we look forward in the US business, we will continue to make the necessary investments to drive retail sales growth into the future. We recently announced our plans to build another supply chain center in Indiana, which we expect to complete by the end of 2022. We are making solid progress on the rewrite of our POS point-of-sale system and we'll continue that multiyear investment, along with additional investment in our enterprise systems to support the business. We will continue to invest in technology, operations and product innovation to support our carryout and our delivery businesses. We are continuing to raise wages and invest in our hourly team members and of course as always we will remain focused on value for our customers. So I'll close out our discussion of the US business by simply saying that the Domino's brand has never been stronger and I remain confident in our ability to drive sustainable long-term growth. Now let's move on to international. It was an outstanding quarter of performance for our international business. Our 29.5% international retail sales growth, excluding foreign currency impact was supported by an exceptional 13.9% comp, continuing the momentum we had in the first quarter. As I discussed earlier with our US business, we're also watching the two-year comp stacks for international, anchoring back to pre-COVID 2019 and we'll continue to do so throughout 2021. Q2 represented a 15.2% two-year stack, a sequential improvement over the first quarter. I'm particularly pleased with our strong momentum on store growth as international provides a significant push toward our two to three-year outlook of 6% to 8% global net unit growth. Our 203 net stores in Q2 increased our trailing four quarter pace of international store growth to 653 net stores. Our accelerated store growth continues to be driven by our outstanding unit level economics and the strong commitment of our international master franchise partners. During the quarter, COVID continue to have a significant impact on many of our international markets and we expect COVID to remain a challenge in many parts of the world for some time to come. At the end of the quarter, we had fewer than 175 temporary store closures, with many of those located in India, which has been hit particularly hard by COVID. The company mounted a series of initiatives to support their employees and families through this unprecedented crisis. This included a cross-functional team that provided employee assistance 24/7 as well as several COVID isolation centers with oxygen concentrator banks. Jubilant mounted a massive vaccination drive for all of their employees and dependent family members. Challenging times always bring out the best in Domino's franchisees and I could not be more proud of our leaders in India and how they have responded to this crisis. I'd also like to highlight a few international markets that drove terrific growth during the quarter. China passed the 400 store milestone during Q2 and once again Dash, our master franchise partner delivered outstanding retail sales growth for the brand. China is without question, one of the most exciting businesses in the Domino's system with significant long-term runway for growth. Japan reached the 800 store milestone in the weeks following the close of our second quarter and continued the outstanding performance under master franchisee Domino's Pizza Enterprises ownership. The UK, Germany, Mexico and Turkey were also large market highlights in a strong quarter of performance across our international business. I am proud of our master franchisees and their operators for their great work thus far in 2021, and I remain optimistic about our international retail sales growth opportunity over the long term. So in closing, I'm very happy with our Q2 results. Great franchisees and operators, combined with outstanding unit level economics place us in an enviable position within our industry and give us a strong foundation for future growth. There is absolutely no question that Domino's is the global leader in QSR pizza, but there is still so much opportunity ahead of us to drive global retail sales growth and to grow market share around the world in both our delivery and carryout businesses. As we look to the back half of the year and beyond, you can be confident that we will remain focused on winning the long game.

compname reports q2 earnings per share of $3.06. q2 adjusted earnings per share $3.12. q2 earnings per share $3.06. qtrly international same store sales growth of 13.9%. qtrly u.s. same store sales growth of 3.5%.completed $1.0 billion accelerated share repurchase transaction in july 2021. given our current operating environment, we are watching our two-year sales trends anchored to pre-covid fiscal 2019 results.

Before turning the call over to Hugh, there are a few housekeeping items I'd like to address. These non-GAAP financial measures are provided to facilitate meaningful year-over-year comparisons but should not be considered superior to or the substitute for our GAAP financial measures and should be read in conjunction with GAAP financial measures for the period. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in yesterday's release, which is available on our website at www. Our guiding principle at Regis is to generate long-term value for our shareholders and key stakeholders. In that regard, I was honored to be asked to chair our company's Board of Directors, in addition to my continuing role as President and Chief Executive Officer. I believe that assuming the Chairman's role will help ensure continuity of leadership in our multiphase transformational strategy, during a period of ongoing change. The second quarter does represent an important milestone where we gained greater clarity into the end date of our portfolio transformation. Based on our year-to-date results and a robust pipeline of potential transactions, we now believe that our transition to a fully franchised business will be substantially complete by the end of this calendar year. This improved visibility into the cadence of our portfolio transfer transition enabled us to begin meaningful reductions in our cost structure and to initiate other plans we have for the business including reengineering our capital structure, so that so that it will be appropriate for a fully franchised capital like growth platform. We are pleased to report this quarter that we continue to make meaningful progress in our ongoing strategic transformation to capital light high growth franchise company in August 2019 we estimated that it would take us 18 to 24 months to complete our conversion to a fully franchise portfolio. However, due to the success we've had in the first half of fiscal year 2020 are, we expect that we will substantially complete this conversion at a somewhat earlier date than we originally anticipated. In the first half of fiscal 2020, we have converted 988 salons to franchise owners, with line of sight to the sale of approximately 900 additional salons. This means that net of closing roughly 350 to 500 underperforming salons, which typically occurs at lease expiration. We have approximately 50% of the remaining company-owned salon portfolio in the pipeline at various stages of transition. As of December 31, nearly 70% of our portfolio is now franchised. And you may recall that when I began my tenure as CEO in April of 2017, our salon portfolio was roughly 28% franchised and 72% company-owned. So by any measure, very significant progress in our portfolio transformation. As I mentioned, our transition to a fully franchised model has been occurring at a rapid pace. And as a result, we have been thoughtful and intentional in our plans to begin more aggressive expense reductions. In January, we announced actions that will reduce G&A by approximately $19 million on an annualized basis. As we consider the magnitude of these planned G&A reductions, we decided to schedule our actions at the beginning of the third quarter, as we recognized by scheduling the execution of these G&A reductions in January would dilute our second quarter results, given the increased pace of our venditions. However, we wanted to ensure that our actions to reduce expense did not create an unacceptable level of risk to the stability of our company-owned salons and corporate operations. We expect to consider further G&A reductions as we draw closer to the end date of our transition and gain additional visibility into our path to sustainable growth. Further, we believe it is the right time to redesign our capital structure so that our debt facility is better suited for a company that is now 70% franchised. We recently engaged Guggenheim Securities to help us design the optimal capital structure for what is now a franchise business. Guggenheim has an outstanding track record of success in working with large franchisors and assuming continued favorable market conditions, we anticipate that this process will be successful and that we will complete our replacement financing no later than the fourth quarter. Once we have completed our financing, we anticipate that we will continue to make investments to prepare the company for the growth phase of our multi-phase transformation. This could include additional investments in the following franchisor capabilities: frictionless customer-facing technology; the company's new internally developed back office salon management system, which is now in beta; disruptive marketing and advertising; print driven merchandise, including investments we have made in a new private label brand, we've named Blossom, and the relaunch of our historically successful DESIGNLINE brand. Ongoing investments in stylists' recruiting and education and then stylists and franchise partner education will also be considered. We may also utilize our cash in the next 18 months to complete any remaining elements of our multiyear restructuring, including closing nonperforming company-owned salons, when it's justified by the economics, although our operational bias is typically to manage these salons to lease expiration; paying down some debt, we determined that it's wise to do so; supporting our ongoing G&A reductions through severance programs and if needed, capital investments in salon refurbishments and remodels as we consolidated our various brands into what we have called the Fab 5. And as you all know, we have utilized cash to repurchase our shares in circumstances where we believe that would be in the best interest of our shareholders. We decided to push the pause button on share repurchases during the second quarter in order to reduce our debt levels and continue investments in other growth initiatives. Upon completion of our refinancing, management and the board will continue to assess our capital allocation strategies on a periodic basis as we have done historically. Despite the inherent variability and near-term risks associated with our transformational strategy, we remain convinced that a fully franchised business has the potential to generate a higher return on its capital and will prove to be in the best long-term interest of our shareholders and franchise constituents. We do have a significant amount of work ahead of us in order to substantially complete the portfolio transformational phase of our strategy by calendar year-end. However, we are determined to bring this phase to a conclusion so that we can continue to shift our time and energy in our talent toward the organic growth phase of our strategy. Although conditions could change, we have growing confidence in our plan and our ability to successfully execute our multiphase transformation. Our restructuring and portfolio transformational phases are each moving rapidly toward their end dates. And we intend for Regis to be well positioned for its growth phase, a period we expect to generate sustainable revenue and earnings in the years ahead. With that, I'll ask Kersten Zupfer, our Chief Financial Officer, to take us through the numbers. As you mentioned, we are pleased to share significant progress in our transition to a fully franchised model. Yesterday, we reported on a consolidated basis, second quarter revenues of $208.8 million, which represented a decrease of $65.9 million or 24% versus the prior year. The year-over-year revenue decline was driven primarily by the conversion of a net 1,447 company-owned salons to the company's franchise portfolio over the past 12 months and the closure of 172 salons, of which the majority were cash-flow negative and not essential to our future plans. When targeting salons for closure, our bias is to exit the location at lease expiration, unless the economics justify a course of action to buy out of the lease early. The headwinds in the quarter were partially offset by a $5.8 million increase in franchise revenues and $33.6 million of rent revenue recorded in connection with the new lease accounting guidance adopted in the first quarter of fiscal 2020. Second quarter consolidated adjusted EBITDA of $17 million was $3.6 million or 17.5% unfavorable to the same period last year, and was driven primarily by the elimination of the EBITDA that had been generated in the prior period from the net 1447 company on salon that have been sold and converted to the franchise portfolio over the past 12 months. Second quarter adjusted Eva dial was also impacted by lower comp, minimum wage increases and strategic investments in technology. The decline in adjusted EBITDA was partially offset by a $5.6 million increase in the gain associated with the sale of company-owned salons. Excluding discrete items and the income from discontinued operations the company reported decreased second quarter 2020 adjusted net income of $4.6 million or $0.13 earnings per diluted share as compared to adjusted net income of $8 million or $0.18 earnings per diluted share for the same period last year. The year-over-year decrease in adjusted net income was driven primarily by the elimination of adjusted net income that had been generated in the prior year from salons that were sold and converted to the company's asset-light franchise portfolio over the past 12 months. On a year-to-date basis, consolidated adjusted EBITDA of $46.8 million was $1.1 million or 2.3% favorable versus the same period last year. The year-over-year favorability was driven primarily by a $24.7 million increase in the gain, excluding noncash goodwill derecognition related to the year-to-date sale and conversion of 988 company-owned salons to the franchise portfolio. Excluding the impact of the gains second quarter year-to-date adjusted EBITDA totaled $5.6 million, which was $23.7 million unfavorable year-over-year and like the second quarter results, this unfavorable variance is also driven largely by the elimination of EBITDA related to the sold and transferred salons over the past 12 months. As you noted, we disclosed at the close of fiscal year 2019 that our transition to a capital-light franchise model would initially have a dilutive impact on the company's adjusted EBITDA. So this decline in our reported adjusted EBITDA was not unexpected. Nevertheless, please note that as we continue our transition, we are certainly paying attention to cash from operations. As you know, we do not provide guidance. However, assuming no unexpected changes in market conditions and after adjusting for unusual and transition-related items. Our objective is for our run rate trajectory to be cash flow positive in the fourth quarter as we accelerate into the end state of our transition. Looking at the segment-specific performance and starting with our franchise segment second quarter franchise royalties and fees of $29.3 million increased $6.7 million or 29.8% versus the same quarter last year, driven primarily by increased franchise salon counts. Product sales to franchisees decreased to $1 million year-over-year, to $16.9 million, driven primarily by a $6.5 million decrease in products sold to TBG, partially offset by increased franchise salon counts. As a reminder, franchise same-store sales are calculated in a manner that is consistent with how we calculate our same-store sales in our company-owned salon portfolio and represents the total change in sales for salons that have been a franchise location for more than 12 months. As we are in this transition phase, salons are leading company-owned comps but not entering franchise comps for 12 months, which adds temporary noise to same-store sales comparisons. Second quarter franchise adjusted EBITDA of $13.1 million grew approximately $4.6 million year-over-year, driven by growth in the franchise salon portfolio and better leverage of our cost structure, partially offset by lower margins on franchise product sales. We believe that the franchise portfolio may have been temporarily challenged by the operational complexity of onboarding new owners and transitioning salons to a more -- to our more experienced owners, among other factors. With the revenue recognition and the lease accounting guidance we have adopted over the last two years as well as sales of merchandise to TBG at cost, our EBITDA margin percentage is not comparable year-over-year. After adjusting for the noncontributory revenue associated with ad fund revenue, franchisee rent revenue and TBG product sales EBITDA margin was approximately 37.5%, which is approximately 4.2% favorable year-over-year and is in line with where we would expect it to be. Year-to-date, franchise adjusted EBITDA of $24.9 million grew approximately $6.6 million or 36% year-over-year. Now looking at the company-owned salon segment, second quarter revenue decreased $105.3 million or 45% versus the prior year to $128.9 million. This year-over-year decline is driven and consistent with the decrease of approximately 1,598 company-owned salons over the past 12 months, which can be bucketed into two main categories. First, the conversion of 1,498 company-owned salons to our asset-light franchise platform over the course of the past 12 months. These net company-owned salon reductions were partially offset by 51 salons that were brought -- bought back from franchisees over the last year and 21 new company-owned organic salon openings during the last 12 months, which we expect to transition to our portfolio in the month's end. Second quarter company-owned salon segment adjusted EBITDA decreased $17 million year-over-year to $4.2 million. Consistent with the total company consolidated results, the year-over-year variance was driven primarily by the elimination of the adjusted EBITDA that had been generated in the prior year period from the company-owned salons that were sold and converted into the franchise platform over the past 12 months. The quarter was also impacted year-over-year by increases in stylist minimum wage and styles commissions and a decline in same-store sales in our company-owned salon. As you might expect, we are carefully monitoring our company-owned salons as we continue through our transition. Our objective is to maintain focus and stability in those salons until they are venditioned. On a year-to-date basis, company-owned salon consolidated adjusted EBITDA of $15.7 million was $33.2 million unfavorable versus the same period last year. The unfavorable year-over-year variance is driven by the elimination of the adjusted EBITDA related to the sold and transferred salons over the past 12 months, partially offset by management initiatives to rightsize the source structure in the field. Of course, it's important to note that our company-owned salon performance will continue to become less critical to the future trajectory of our business as we accelerate our conversion to franchise. Turning now to corporate overhead. Second quarter adjusted EBITDA of $0.3 million increased $8.8 million and is driven primarily by the $15 million of net gains excluding noncash goodwill derecognition from the sale and conversion of company owned salons, the net impact of management initiatives to eliminate noncore, nonessential G&A expense and lower year-over-year incentive and equity compensation. In January, based on the improved visibility into the speed of our transition, we began meaningful reductions in our expenses. By eliminating approximately 290 positions, including 15 contractors across the U.S. and Canada, which is expected to result in approximately $19 million of annualized G&A savings as the company accelerates into its multiyear transformation. We expect the removal of these G&A costs will also positively impact the company's cash from operations in the back half of fiscal 2020 and in future periods. Lastly, I wanted to point out that vendition cash proceeds during the second quarter were approximately $71,000 per salon compared to approximately $69,000 per salon in the first quarter of our fiscal 2020, which is consistent quarter-over-quarter. However, as we vendition more Signature Style salons this fiscal year, we may have lower net proceeds per salon due to the cost of converting some of these salons as part of our brand consolidation efforts, along with more SmartStyle venditions. Looking now at the balance sheet. At the end of the quarter, we made a decision to pay $30 million toward our outstanding debt, which decreased our cash balance to $49.8 million as of December 31, 2019. We paid down the debt to remain in compliance with the net leverage covenants that are part of our existing credit facility. Given our successful vendition process, we have known for some time that our existing credit facility would not be appropriate for our end state franchise business and that we would need to reengineer our credit facility to meet the opportunities inherent in our new business model. We believe we now have the visibility and facts that we need to move forward with our refinancing efforts. After careful consideration, we retained Guggenheim because they have a strong track record of establishing capital structures for growth-oriented franchise companies. We expect a successful outcome in our refinancing efforts and to complete the process, no later than the fourth quarter of this fiscal year. Turning now to cash flow. I thought it might be helpful to provide a high-level reconciliation of how we see adjusted EBITDA flow-through to cash from operations and our free cash flow. When looking at the cash flow statement, the single largest use of cash is approximately $17 million use of working capital. As we noted in the prior quarter, this net use of cash is significantly impacted by cash outlays associated with the wind down of company-owned salons as we convert to a fully franchised platform, including transaction-related payments and severance payments related to restructuring our field teams to better align with our future state. As you noted, we also invested in our new Blossom brand of our private label merchandise, which was received in December and will be in the salons in the spring. We have also invested in the repackaging and reformulation of our historically successful DESIGNLINE private label brands. In addition to change in working capital, when reconciling the adjusted EBITDA to operating capital, you will need to take into account the fact that the $41.2 million net gain from the conversion of our company-owned salons to the franchise platform are included in our net income and adjusted EBITDA but not included in cash from operations as the proceeds are reported as inflows in the investing section of the cash flow statement. I also wanted to provide a brief update on TBG. At the end of December, TBG transferred back to Regis 207 of its North American mall-based salons, a roughly 10% of the company's portfolio. When TBG approached Regis about their financial situation in late 2019, we just determined that acquiring the salons, where we just had continuing obligations under real estate leases, would provide greater control over the outcome and maximum optionality for these locations. This was always a previously considered strategy for these salons. The remaining lease liability associated with the TBG salons is approximately $30 million and Regis will operate the salons until lease end date or until a new franchise owner is identified. Essentially, we are now managing these salons in the normal course and will treat the former TBG salons as we would any other location in our company-owned salons portfolio. We continue to believe the overall transaction, which was always intended to mitigate the company's lease obligation on these salons, was a financial and strategic success. As a reminder, when we executed the original transaction with TBG back in October of 2017, the lease liability for the mall-based portfolio was approximately $140 million, and as noted, is less than $30 million today.

q2 revenue fell 24 percent to $208.8 million. q2 earnings per share $0.13 excluding items. dave williams to remain board's lead independent director. board elects hugh sawyer, president and chief executive officer, as chairman. company begins meaningful g&a reductions. about 900 co-owned salons,available for sale are in various stages of negotiations to be purchased.

I'm joined by Steve Rusckowski, our Chairman, CEO and President; and Mark Guinan, our Chief Financial Officer. Actual results may differ materially from those projected. Risks and uncertainties, including the impact of the COVID-19 pandemic that may affect Quest Diagnostics' future results include, but are not limited to, those described in our most recent Annual Report on Form 10-K and subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K. The company continues to believe that the impact of the COVID-19 pandemic on future operating results, cash flows and/or its financial condition will be primarily driven by the pandemic's severity and duration; healthcare insurer, government and client payer reimbursement rates for COVID-19 molecular tests; the pandemic's impact on the US healthcare system and the US economy; and the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic, including the impact of vaccination efforts, which are drivers beyond the company's knowledge and control. Any references to base business, testing, revenues or volumes refer to the performance of our business excluding COVID-19 testing. Growth rates associated with our long-term outlook projections, including total revenue growth, revenue growth from acquisitions, organic revenue growth and adjusted earnings growth are compound annual growth rates. Finally, revenue growth rates from acquisitions will be measured against our base business. Now, here is Steve Rusckowski. Well, we had a strong third quarter as COVID-19 molecular volumes increased throughout the summer. While our base business continued to deliver solid volume growth versus the prior year and 2019. In late summer, we experienced some softness in the base business across the country, but saw a rebound in September. Importantly, our base business continued to improve sequentially in the third quarter, which speaks to the ongoing recovery. We have raised our outlook for the remainder of the year based on higher than anticipated COVID-19 volumes as well as continued progress we expect to see in our base business despite rising labor costs and inflationary pressures. The momentum of our base business positions us to deliver the 2022 outlook we shared at our March Investor Day. But before turning to our results into the third quarter, I'd like to update you on our progress we've made in our Quest for Health Equity initiative, a more than $100 million initiative aimed at reducing healthcare disparities in underserved neighborhoods. Since we've established just over a year ago, we have launched 18 programs across the United States and Puerto Rico ranging from supporting COVID-19 testing of vaccination events, to educating young students on healthy nutritional choices, to providing funding support for a long-haul COVID-19 clinic in Puerto Rico. Recently, we announced a collaboration with the American Heart Association that will expand research and mentorship opportunities for Black and Hispanic scholars and drive hypertension management and COVID-19 relief. We're off to a good start and I look forward to updating you on our continued progress as Quest for Health Equity enters its second year. Now turning to our results for the third quarter. Total revenue of $2.77 billion, down 40 basis points versus the prior year; earnings per share were $4.02 on a reported basis, down approximately 3% versus the prior year; and $3.96 on an adjusted basis, down 8% versus the prior year. The revenue and earnings declines in the third quarter reflect lower COVID-19 testing in 2021 versus the prior year, partially offset by continued recovery in our base business. Cash provided by operations increased by nearly 20% year-to-date through September to approximately $1.75 billion. Now, starting with COVID-19 testing, our COVID-19 molecular volumes increased in the third quarter versus the second quarter due to the spread of the Delta variant over the course of the summer. Testing began to increase meaningfully in mid-July and peaked in early mid-September. Our observed positivity rate peaked in mid-August and has steadily been declining across much of the country in recent weeks. We performed an average of 83,000 COVID-19 molecular tests today in the third quarter and maintain strong average turnaround times of approximately one day for most specimens throughout the surge. As clinical COVID-19 volumes declined, we are expanding our non-clinical COVID-19 testing to support the return to school, office, travel and entertainment. We're making testing easy, fast and affordable for school systems and other group settings across the country. We are currently performing K through 12 school testing in approximately 20 states with five additional states ready to come online. We're testing passengers on Carnival Cruise Lines and Quest exclusively provided testing at the Boston Marathon earlier this month. In the base business, we continue to make progress on our two-point strategy to accelerate growth and drive operational excellence. Now, here are some highlights from the third quarter. Our M&A pipeline remained strong. In the third quarter, we completed a small tuck-in acquisition of an independent lab in Florida. We continue to build on our exceptional health plan access of approximately 90% of all commercially insured lives in the United States. At our Investor Day, we discussed how we have fundamentally changed our relationship with health plans and we continue to see the promise of value-based relationships come to life. So here is a couple of examples. We are working with National Health Plans to help their self-insured employers, employer customers improve quality outcomes and lower the cost of care for both the employers and their employees. Also, effective October 1, we gained access to 1 billion Managed Medicaid members in Florida as their coverage transitions to Centene's Sunshine Health Plan. We're getting good feedback from the provider community in our growing testing volumes through this expanded access opportunity. Our hospital health system revenue continues to track well above 2019 levels, driven largely by the strength of our professional laboratory services contracts. As we highlighted previously, 2021 performance is benefiting from two of our largest PLS contracts to-date, Hackensack Meridian Health and Memorial Hermann. Altogether, our PLS business is expected to exceed $500 million in annual revenue this year. Trends in our hospital reference business also remained steady with third quarter base testing volumes above 2019 levels. We also generated record consumer-initiated testing revenue through QuestDirect in the third quarter. While COVID testing has been the strong contributor to growth, we expect our base direct-to-consumer testing revenue to more than double this year. Recently, we soft-launched a comprehensive health profile on QuestDirect, similar to our Blueprint for Wellness offering for employers. This expanded health plan panel offers a deep dive into consumers' health profile with a battery of test and biometric measurements to provide a personalized Health Quotient Score that can be used to track health progress over time. And then finally, our MyQuest app and patient portal now has almost 20 million users. In advanced diagnostics, we continue to ramp investments and see strong momentum in key growth drivers. We're seeing strong growth in non-invasive prenatal testing significantly above 2019 levels and saw solid contribution in our specialty genetics portfolio from Blueprint Genetics. We continue to work closely with the CDC to sequence positive COVID specimens in an ongoing effort to track emerging variants, expanding the -- of the work that we performed in the quarter. And then finally, we plan to introduce a test service based on a new FDA-approved companion diagnostic from Agilent for a therapy from Eli Lilly for a certain type of high-risk early breast cancer. Quest will be the first laboratory to offer it to physicians nationally at the end of the month. Turning to our second strategy, driving operational excellence, we made progress and remain on track to deliver at our targeted 3% annual efficiencies across the business. Last week, we announced that we completed the integration and consolidation of our Northeast regional operations into our new 250,000 square foot next-generation lab in Clifton, New Jersey. This state-of-the art highly automated facility services more than 40 million people across seven states. In patient services, we are seeing all-time high numbers of patients making appointments to visit our patient service centers. Now, more than 50% of patient service center visits are now by appointment versus walk-ins and this enables patients to be very satisfied and also improves our ability to drive productivity of our phlebotomists. Similar to our immunoassay platform consolidation, we recently procured a highly automated urinalysis platform that is expected to generate millions in annual savings once these new systems are standardized across our laboratory network. As a demonstration of our gratitude, we're assisting our employees with a one-time payment of up to $500 designed to reimburse cost they incurred during the pandemic. Additionally, another year of pandemic pressures and travel restrictions have made it very difficult for many employees to take their hard-earned time off. Therefore, we are providing a payout of most unused paid time off for our hourly employees to ensure they don't forfeit their earned unused time at year-end. For the third quarter, consolidated revenues were $2.77 billion, down 0.4% versus the prior year. Revenues for Diagnostic Information Services were essentially flat compared to the prior year, which is reflected by lower revenue from COVID-19 testing services versus the third quarter of last year, largely offset by the strong ongoing recovery in our base testing revenues. Compared to 2019, our base DIS revenue grew approximately 6% in the third quarter and it was up nearly 2% excluding acquisitions. Volume, measured by the number of requisitions, increased 5.3% versus the prior year with acquisitions contributing approximately 2%. Compared to our third quarter 2019 baseline, total base testing volumes increased 9%. Excluding acquisitions, total base testing volumes grew approximately 4% and benefited from new PLS contracts that have ramped over the last year. We saw a rebound in our base business volumes in September following a modest softening in August that we believe was at least partially caused by the rise of the Delta variant and the timing of summer vacations. Importantly, our base business revenue and volume grew sequentially in the third quarter. This helps illustrate the ongoing recovery as historically total revenue and volumes typically step down in Q3 versus Q2 due to summer seasonality. As most of you know, COVID-19 testing volumes grew in the third quarter versus Q2, which was in line with broader COVID-19 testing trends across the country. We resulted approximately 7.6 million molecular tests and nearly 700,000 serology tests in the third quarter. So far in October, average COVID-19 molecular volumes have declined approximately 10% from where we exited Q3 but are still above the levels we expected prior to the surge of the Delta variant, while the base business continues to improve since September. Revenue per requisition declined 5.4% versus the prior year, driven primarily by lower COVID-19 molecular volume and, to a lesser extent, recent PLS wins. Unit price headwinds remained modest and in line with our expectations. Reported operating income in the third quarter was $652 million or 23.5% of revenues compared to $718 million or 25.8% of revenues last year. On an adjusted basis, operating income in Q3 was $694 million or 25% of revenues compared to $831 million or 29.8% of revenues last year. The year-over-year decline in operating margin was driven by lower COVID-19 testing revenue, partially offset by the recovery in our base business. Reported earnings per share was $4.02 in the quarter compared to $4.14 a year ago. Adjusted earnings per share was $3.96 compared to $4.31 last year. Cash provided by operations was $1.75 billion through September year-to-date versus $1.46 billion in the same period last year. Turning to guidance, we have raised our full-year 2021 outlook as follows. Revenue is expected to be between $10.45 billion and $10.6 billion, an increase of approximately 11% to 12% versus the prior year. Reported earnings per share is expected to be in the range of $14.69 [Phonetic] and $15.09 and adjusted earnings per share to be in the range of $13.50 and $13.90. Cash provided by operations is expected to be approximately $2.2 billion and capital expenditures are expected to be approximately $400 million. Before concluding, I'll touch on some assumptions embedded in our updated outlook. We expect COVID-19 molecular volumes to continue to decline from Q3 levels throughout the remainder of the year. At the low end of our outlook, we assume approximately 50,000 molecular tests per day in Q4 and serology volumes to hold relatively steady at approximately 5,000 tests per day. As you may know, late last week, the public health emergency was again extended another 90 days through late January. We expect reimbursement for clinical COVID-19 molecular testing to hold relatively steady through the remainder of the year. However, we continue to assume average reimbursements to trend lower in Q4 as our mix of COVID-19 molecular volumes potentially shift from clinical diagnostic testing to more return-to-life surveillance testing. Finally, we continue to assume low single-digit revenue growth in our base business in Q4 versus 2019. Getting to the midpoint or higher end of our outlook ranges assumes stronger COVID-19 molecular testing volumes and/or stronger growth in our base business. Well, to summarize, we had a strong third quarter. We have raised our outlook for the remainder of the year based on higher than anticipated COVID-19 volumes as well as our continued progress we expect to see in our base business. And finally, the momentum of our base business positions us to deliver the 2022 outlook we shared at our March Investor Day.

compname posts qtrly adjusted diluted earnings per share of $3.96. quest diagnostics inc - raises full year 2021 outlook to reflect higher than anticipated covid-19 testing volumes. quest diagnostics inc - q3 reported diluted earnings per share (eps) of $4.02. quest diagnostics inc - qtrly adjusted diluted earnings per share of $3.96. quest diagnostics inc - had a strong q3, as covid-19 molecular volumes increased throughout summer. quest diagnostics inc - in late summer we experienced some softness in base business across country, but saw an overall rebound in september. quest diagnostics inc - base business continued to improve sequentially in q3 which speaks to ongoing recovery. quest diagnostics inc - q3 revenues of $2.77 billion, down 0.4% from 2020. quest diagnostics inc - sees fy net revenues $10.45 billion to $10.60 billion. quest diagnostics inc - sees fy adjusted diluted earnings per share $13.50 - $13.90. quest diagnostics inc - sees fy reported diluted earnings per share $14.69 - $15.09.

Today's call will begin with Chris discussing business trends experienced during the second quarter of 2021, views of what's to come and context around our continued progress toward and unwavering commitment to achieving Vision 2025. Bob will discuss the financial details of Carlisle's second quarter performance and current financial position. Those considering investing in Carlisle should read these statements carefully and review the reports we file with the SEC before making an investment decision. With that, I introduce Chris Koch, Chairman, President and CEO of Carlisle. While we recognize that there are still many people suffering from the continued effects of the pandemic globally and an uneven recovery, we hope all of you, your families, coworkers and friends are healthy, and you're reengaging as global economy is open. I'm also pleased to report Carlisle's COVID-19 infection rates approach zero in the second quarter, which wouldn't have happened without our team's strict adherence to our safety protocols and commitment to each other across our global footprint. I'm also very pleased that Carlisle's performance continues to strengthen, as we further accelerate into the economic recovery. Vision 2025 has provided the clarity and consistency of direction that proved to be essential in guiding our efforts during the depths of the pandemic last year. It continues to guide us today, as we seek to leverage improving demand across our end markets in 2021 and beyond. Vision 2025 provides Carlisle and our stakeholders a clear and direct vision that unites us in a collective goal, which in turn drives our priorities and everyday actions. We are very much on track to exceed the $15 of earnings per share targeted in Vision 2025. Our performance in the second quarter of 2021 illustrates our continued solid execution toward our stated goals. Several highlights of this continued progress include: CCM's continued rebound in sales from the bottom of the pandemic in the second quarter of 2020. As a reminder, CCM sales were down approximately 20% in the second quarter of last year. As we entered the third quarter of last year, we had already begun to see improvement, sooner than many industries, and that has continued sequentially through today. That positive momentum drove 28% organic growth year-over-year at CCM in the second quarter of this year and added to a significant and growing backlog. The rapid recovery from the lows of 2020 reinforced our confidence in this business. As we commented on in the fourth quarter 2020 earnings call, we envision 2021 being a year of challenges as pent-up reroofing demand returned rapidly, and supply chains, distribution channels, contractors and labor markets came under increasing pressure to deliver their services and meet customer expectations. Our conviction in the late fall of last year that all of the fundamental drivers of growth we saw prior to the pandemic were still in place, led us to take significant action on securing raw materials, ensuring production facilities were fully capable and putting in place pricing actions to offset what we anticipated to be significant raw material headwinds in the year. Looking at the future, we continue to believe that the multi-decade trends in reroofing demand, increased emphasis on energy efficiency and tight labor markets will drive solid growth in our CCM business. As a result, we will continue to invest significant capital into our building products businesses. A few recently announced examples of our steadfast commitment to CCM's future include our plans to invest more than $60 million to build a state-of-the-art facility in Sikeston, Missouri where we will manufacture energy-efficient polyiso insulation; we're also constructing our sixth TPO manufacturing line in Carlisle, PA, which will produce the commercial roofing industry's first 16-foot wide TPO membranes. We're breaking ground on Phase two of the EUR8 million expansion of our CCM Waltershausen Germany facility, which as a reminder, produces our unique EPDM-based Restorix product. And lastly, a significant investment in our R&D capabilities and manufacturing capacity in our Cartersville, Georgia spray foam insulation business. Shifting gears to other parts of Carlisle. We continue to leverage the Carlisle Operating System to drive efficiencies across our platforms and geographies. And in the second quarter, COS delivered 1% savings as a percent of sales and continued to further its role as a culturally unifying continuous improvement foundation for Carlisle employees globally. In seeking to raise the return profile of Carlisle Companies, we continue to focus on optimizing our business portfolio. During the quarter, we announced the divestiture of CBF, and earlier this week, we announced an agreement to acquire Henry Company which we will talk about later. Both changes to our portfolio will enhance long-term value creation for our shareholders. We continue to be a consistent and meaningful return of capital to our shareholders. Since 2016, we have returned over $1.8 billion in share repurchases alone. Bob will provide more details later, but we continue to be active in the capital markets opportunistically repurchasing shares when appropriate. We also anticipate continuing our long history of consistently raising our dividend. And when completed in August will be our 45th consecutive year. We're very proud of this symbolic act in the nature of nearly half a century of stability of our business model, financial profile and commitment to our shareholders. Moving to slide four. Driven by the growing strength in our CCM business and momentum building at CFT, our revenue increased 22% year-over-year. CCM had outstanding performance, growing revenue 28% year-over-year. CFT continues to drive new product innovation and operational efficiencies to better leverage improving dynamics in its global end markets. Partially offsetting this growth was commercial aerospace, which continues to weigh on CIT with revenues declining 8% year-over-year in the quarter. That said, aerospace orders have stabilized, and we have line of sight to continued sequential revenue improvement in 2021. While aerospace markets have been depressed, our team at CIT has remained focused on innovation and continuing our long-term commitment to our customers, and most importantly, preparing for the inevitable recovery. Carlisle Construction Materials segment continues to demonstrate its extremely durable business model and to execute very well in the face of numerous challenges. CCM volumes in 2021 are benefiting from work postponed in 2020 due to the COVID-19 pandemic. And given both material and labor constraints, we believe even more deferrals experienced in the first half of this year will only add to the pipeline of roofing contractors workload in the second half of 2021. We maintain our strong conviction in the sustainability of reroofing demand in the U.S. where we continue to expect the market to grow from $6 billion to $8 billion in the next decade. We continue to be very proud of the CCM team's ability to keep the Carlisle experience intact, managing a record level of incoming orders, ensuring we keep our contractors working and maintaining our commitment to being the best partner in the industry. And as a reminder, by the Carlisle Experience, we mean ensuring delivery of the right product at the right place at the right time. We do this by deploying industry-leading investment in production and R&D capabilities. These investments have totaled over $300 million in the past five years. We also continue to invest in best-in-class education for our channel partners on the latest roofing products and installation best practices, including over 20,000 hours of virtual learning courses during the pandemic. I mentioned our world-class customer service team that processed over 65,000 orders in the second quarter, a remarkable feat at nearly 2 times the normal quarter's activity. We continue to innovate and provide value-added products that ensure quicker, more efficient and safer installation of our building envelope systems and solutions in an increasingly labor and material-constrained environment. Finally and importantly, we continue to focus on producing products that contribute to a better environment for all stakeholders. A few comments on our other businesses. CIT's second quarter results were in line with subdued expectations given the ongoing disruption in the commercial aerospace market. Despite a difficult past 18 months, the CIT team is taking significant actions to position CIT to be stronger when the market rebounds. We acted to create more -- a more rational footprint in 2020 and 2021, closing three of our facilities. And while these decisions are not taken lightly, they were necessary to position CIT to return to and exceed our legacy profitability levels when demand returns. Also during this time, we have continued to invest in R&D in order to build our new product pipeline and support our customers. We continue to see some light at the end of the tunnel evidenced by improving leading indicators for commercial aerospace, including the expanding vaccine rollout, numbers of TSA daily screenings increasing from a low of 20% of normal last year to over 80% in July; growing activity at our aircraft manufacturers; and corresponding improvements in CIT's order books. All of this gives us confidence that CIT is positioned for sequential improvement going forward. CFT delivered improved revenue and profitability performance in the second quarter, driven by its reenergized commitment to new product introductions, improved operational efficiencies, price realization from earning the value that comes with innovation and an improved customer experience. I'm very heartened by the progress the team has made over the last year in improving our sales and profitability, putting us back on track to achieve our expectations for this business. We expect the team to continue executing on its Vision 2025 growth strategy, and to deliver continued improvement moving into the second half of 2021. Turning to slide six. Hopefully, everyone had the opportunity to listen to our call on Monday during which we introduced our agreement to acquire Henry Company, a best-in-class provider of building envelope systems that control the flow of water, vapor, air and energy and a building to optimize building sustainability. Henry delivered revenues of $511 million and adjusted EBITDA of $119 million or 23% margin in the last 12 months ended May 31, 2021. Bob will review more of the financial details related to Henry later in the call, but we expect Henry to add more than $1.25 of adjusted earnings per share in 2022. All of us at Carlisle are very excited to work with the Henry team, which has a proven track record of growth, a very strong brand and a long history of new product innovation. The announced agreement to acquire Henry is another clear example of how we are executing on our Vision 2025 strategy to optimize our portfolio, which includes our efforts to expand further into the building envelope. For those of you new to Henry, let me give you a few examples of how, in practice Henry complements CCM. Henry's large direct sales force who have been focused on helping architect specify waterproofing and air and vapor barriers can now assist in specifying CCM single-ply roofing solutions on the same buildings. Additionally, Henry has a presence in the residential and big box marketplaces, markets not previously a substantial part of CCM's business. Moving to slide seven, our ESG efforts also continue to gain momentum. In April, we published our 2020 sustainability report, which built on the foundations of our first report in 2019. And for the first time, the 2020 report disclosed in detail how Carlisle was tracking on the global reporting initiative, or GRI standards. We're also in the process of establishing achievable water, energy and emission reduction targets based on detailed audits of our global facilities. During the course of April, Carlisle employees participated in the CEO Action for Diversity & Inclusion Day of Understanding. The Day of Understanding created a singular focal point in our year and is an opportunity for leaders to guide open dialogue about diversity in their workspace. Carlisle has been a member of the PwC-led CEO Action for Diversity & Inclusion since 2018 and an organization that now includes over 2,000 CEO signatories. In order for Carlisle employees to participate in our ongoing success, we issued a special stock option grant or equity equivalent of 100 shares to employees on May 2, 2018. Those shares vested in the second quarter of 2021 having appreciated almost 80%. For each participating employee, this meant a gain of over $8,000. I'm very pleased the share has performed so well for our employees, because Carlisle's success wouldn't be possible without their efforts. Finally, one area where we have made significant improvement is in our industry-leading safety record. Our incident rate of approximately one quarter of the industry average demonstrates the work that has been done by all employees to ensure a safe workplace. While staying ahead of the industry is important, in the past six years, our incident rate has fallen 52%. Of all of our tracked metrics, this is especially meaningful because reducing employee injuries by 50% has had a tangible benefit and meaningful impact on people's lives. To continue to drive the importance of safety in our operations in early 2020, we announced Path to Zero, which represents our commitment to creating the safest possible work environment and features the goal of zero accidents and zero industries. This program was launched globally in the second quarter of this year. And now Bob will provide operational and financial detail about the second quarter, review our balance sheet, and cash flow. As Chris mentioned earlier, we had a very solid second quarter. I'm especially pleased about the margin expansion at CCM, CIT coming off market lows and positioned to deliver sequential growth for the next few quarters; CFT's order book improving; our disciplined approach to capital deployment in the form of share repurchase and dividends; continued investment in our high ROIC businesses to drive organic growth; and our portfolio optimization actions, including divesting CBF and the announced agreement to acquire Henry Company. Revenue was up 22% in the second quarter driven by CCM and CFT, offset by the well documented commercial aerospace declines at CIT. Organic revenue was up 20.7%. CCM and CFT each delivered greater than 25% organic growth in the quarter. Acquisitions contributed 0.4% of sales growth for the quarter, and FX was a 90 basis point tailwind. On slide nine, we have provided an adjusted earnings per share bridge, where you can see second quarter adjusted earnings per share was $2.16, which compares to $1.95 last year. Volume, price and mix combined were $1.30 year-over-year increase. Raw material, freight, and labor costs were a $0.95 headwind. Interest and tax together were a $0.01 headwind. Share repurchases contributed $0.07, and COS contributed an additional $0.12. Higher OpEx was a $0.32 headwind year-over-year, half of which is related to the May vesting and cash settlement of stock appreciation rights granted to all Carlisle employees outside the US in 2018, with the remainder reflecting the resumption of more normalized expense level versus last year's cost containment measures taken in the depths of the pandemic. At CCM, the team again delivered outstanding results with revenues increasing 27.5% driven by volume and price, along with 70 basis points of foreign currency translation tailwind. All of CCM's product lines delivered 20% growth with particular strength in architectural metals and spray foam insulation. CCM effectively managed raw material inflation headwinds experienced in the quarter with disciplined pricing, proactive sourcing and allocating products to strategic customers. Adjusted EBITDA margin at CCM was 21.5% in the second quarter, a 60 basis point decline from last year driven by higher raw material prices, partially offset by volumes, price, and COS savings. Despite raw materials being a headwind in the second quarter, we continue to anticipate net neutral price raws for the full year. Adjusted EBITDA grew 24% to $201.2 million, again, demonstrating the earnings power of our CCM business. CIT revenue declined 8.2% in the second quarter. As has been well publicized, this decline was driven by the pandemic's continued impact on commercial aerospace markets. We still anticipate a prolonged recovery in aerospace, but are optimistic there will be resumption in growth as we enter the second half of the year. CIT's medical platform continues to build a robust pipeline of projects with an increasing backlog. We continue to expect sequential improvement from pent-up demand as the impacts of COVID hospital capex and postponed elective surgeries ease. CIT's adjusted EBITDA margins declined year-over-year to 8%, driven by commercial aerospace volumes, partially offset by price, COS and lower expenses. Given the positive indicators, we are optimistic that CIT will deliver sequentially improving financial performance into the second half of 2021. Turning now to slide 12. CFT's sales grew 54% year-over-year. Organic revenue improved 44.3% and acquisitions added 3.6% in the quarter. CFT is well positioned to accelerate through the recovery due to continued stabilization in key end markets driven by an improved industrial capital spending outlook in 2021, coupled with new product introductions, would have included $4.1 million of incremental new product sales in 2021 year-to-date, along with our continued pricing results. Adjusted EBITDA margins of 15.9% or over 100 basis point improvement from last year. This improvement primarily reflects volume, price and mix. On slide 13 and 14, we show selected balance sheet metrics. Our balance sheet remains strong. We ended the quarter with $713 million of cash on hand and $1 billion of availability under our revolving credit facility. We continue to approach capital deployment in a balanced and disciplined manner, investing in organic growth through capital expenditures and opportunistically repurchasing shares, while also actively seeking strategic and synergistic acquisitions. In the quarter, we repurchased 643,000 shares for $116 million bringing our 2021 year-to-date total to 1.6 million shares for $266 million. We paid $28 million of dividends in the second quarter, bringing our 221 total to $56 million. We invested $32 million of capex into our high-returning businesses to drive organic growth, bringing our 2021 total to $55 million. A few examples of these investments include our new Missouri Polyiso facility, expansion of our TPO line Carlisle, PA, and investment in our spray foam capabilities in Cartersville, Georgia. In addition, as has been noted, we announced an agreement to purchase Henry Company for $1.75 billion. Henry generated revenue of $511 million and adjusted EBITDA of $119 million, representing a 23% EBITDA. Additionally, Henry was expected to deliver $100 million of free cash flow in our first year of ownership. We also expect meaningful cost synergies of $30 million by 2025. Finally, we expect Henry to be immediately accretive to Carlisle's EBITDA margin, adding over $1.25 of adjusted earnings per share in 2022. Free cash flow for the quarter was $64.6 million, a 54% decline year-over-year due to increased working capital usage related to our high sales growth of 22%. Turning to slide 15, you can see the outlook for 2021 in corporate items. Corporate expense is now expected to be approximately $125 million, up from the previous estimate of $120 million. The increase is wholly related to the vesting and cash settlement of our stock appreciation rights discussed earlier. We expect depreciation and amortization expense to be approximately $210 million. We still expect free cash flow conversion of approximately 120%. For the full year, we continue to invest in our business and expect capital expenditures of approximately $150 million. Net interest expense is still expected to be approximately $75 million for the year, and we still expect our tax rate to be approximately 25%. Finally, restructuring is expected in 2021 to be approximately $20 million. Entering the third quarter, we continue to be very optimistic about the remainder of 2021 from record backlogs at CCM to supportive trends in CIT aerospace markets to growing strength at CFT, coupled with excellent sourcing and price discipline and significant traction on our ESG journey, we are confident in our ability to deliver solid results for all Carlisle stakeholders. For full year 2021, we anticipate the following: At CCM, as previously mentioned, the trends that began in Q3 2020 gain momentum as we moved into 2021. We anticipate this momentum to carry over in the third and fourth quarters of 2021. Considering this momentum, coupled with record backlogs stemming from project deferrals that occurred in 2020, positive momentum in our newer businesses of architectural metals and spray foam and expansion of our European business, we are increasing our anticipated revenue growth to high teens in 2021. At CIT, we are encouraged by leading indicators trending positive, but it remains difficult to gauge when a complete recovery in commercial aerospace will occur. Given a very difficult year-over-year comparison in the first and second quarters, we continue to expect CIT revenue will decline in the mid- to high single-digit range in full year 2021. At CFT, with end market strengthening and improvements in the team's execution of our key strategies, we now expect mid-teens revenue growth in 2021. And finally, for Carlisle as a whole, we are now increasing our expectations to mid-teens revenue growth in 2021. As we pass the midpoint of 2021, we are tracking to deliver our Vision 2025 goals of $8 billion in revenues, 20% operating income and 15% ROIC, all driving to exceed $15 of earnings per share by 2025. Despite lingering uncertainties around COVID, supply chain constraints, and what we perceive as near-term raw material inflation, Carlisle's employees across the globe remain focused on the execution of the strategies and key actions that support Vision 2025. Our team continues to embody a positive and entrepreneurial spirit, a commitment to continuous improvement and a focus on delivering results for the Carlisle shareholder. Given our 100-year-plus history and the resilience this company has shown in times of adversity and uncertainty, we remain confident in Carlisle's outlook, our strong financial foundation, cash-generating capabilities, unwavering commitment to our Vision 2025 strategic plan and to providing products and services essential to the world's needs. This concludes our formal comments.

q2 adjusted earnings per share $2.16. compname says q2 adj earnings per share $2.16.

During the call, we will discuss our results for the fourth quarter and fiscal 2021 as well as our outlook for fiscal 2022. In addition, a slide deck providing detailed financial results for the quarter is also posted on our website. Despite operating in what remains an incredibly volatile environment, we delivered on our previously provided 2021 outlook for net sales, synergies, adjusted earnings per share and adjusted EBITDA. 2021 was our sixth consecutive year of organic revenue growth behind elevated demand and distribution gains. This top line growth, combined with synergies we achieved from the Spectrum acquisition and interest expense savings translated into strong adjusted earnings per share and EBITDA growth. In a few moments John will provide details on the fourth quarter and full year. However, before he does some key headlines from our fiscal 2021 performance. For the first time our Company exceeded $3 billion in net sales. We also maintained top line momentum with organic sales growth of 7.3% including growth of nearly 17% in our auto care business. Our battery and auto care businesses benefited from elevated demand and distribution gains in North America. Auto care further benefited from the expansion in our international markets, reaching $100 million in sales in those markets for the full year. We also delivered synergies of $62 million for the year, resulting in total synergies from the Spectrum acquisition in excess of $130 million, 30% higher than our initial estimate. And we continue to invest in our brands, resulting in strong brand preference globally. With more consumers selecting our battery brand, we gained 2.2 share point in the last 12 months. This performance is a tribute to our team and their resiliency. Since the beginning of the pandemic, we have consistently adapted in real-time to ensure business continuity and repositioned Energizer for the future. The hard work of our global colleagues to produce and deliver products to our customers and consumers in a time of heightened demand and significant disruption has been impressive to witness on a daily basis. In a moment, I will provide headlines for our 2022 outlook. However, before I do I want to provide an update on a few key topics that will set the stage for the future. First, our categories remain healthy and are showing solid growth when compared to pre-pandemic levels and we expect the consumer behaviors supporting that demand will continue for the foreseeable future. Specifically in batteries, there are two drivers. Devices owned per household are up mid single digits in the US and an increase in the amount of time those devices are being used. Consequently, consumers are using more batteries, which has resulted in new buying patterns versus a year ago, including increased purchase frequency and spending per trip. As a result, on a two-year stack basis without e-commerce, the global battery category has grown by 2.9% in value and 3.7% in volume. In the near term, we will see the category decline as it did in the three months ending August 2021 where it was down 6.9% in value and 5.3% in volume due to comping elevated demand from a year ago. However, as we look to the long term, we anticipate the category to experience flat to low single-digit growth, albeit on a higher base as the category has increased in size due to consumers' behavior during the pandemic. Within the category, our iconic brands remain well positioned. Our brands outpaced the category, resulting in a 2.2 share point gain versus last year as we increased distribution in the US and internationally with share gains in those markets representing 70% of our total battery revenues. Turning to the auto care category. Over the last five years the auto care category has shown consistent growth, a trend that continued in the latest 13 weeks with category value up 3.5% versus year ago and 16.3% versus 2019. The growth is being driven by consumers continuing the do-it-yourself behaviors established during the pandemic, including higher levels of cleaning and renewed interest in car care as a hobby, a higher number of cars in the car park and an increase in the age of vehicles given the shortage of new vehicles and the recovery in miles driven given the increase in personal travel. All of this increased US household penetration to nearly 75% with the resulting buy rate that is up 20% as consumers are buying the category more frequently and spending more per trip. As we look ahead, we anticipate the auto care category will settle in at low single-digit growth once it has cycled through the COVID-related demand. In the US, we continue to be the market leader in this large and growing category driven by our Armor All brand, which continues to have positive momentum due to the strength of our innovation and brand-building activities. As I mentioned earlier, our efforts to leverage our geographic footprint and expand our auto care brands internationally are proving successful. While the categories are showing resilience, the macro environment in which we are operating is volatile, which leads me to the next important topic around operating costs. Costs related to commodities, transportation and labor, continue to rise. We saw a significant escalation in these costs during the fourth quarter and we expect these headwinds to continue throughout 2022, resulting in over $140 million of increased input costs versus 2021. In order to mitigate the impact of these costs, we have executed or planned pricing against roughly 85% of our business. In addition to raising prices to cover input cost inflation, we have also strategically redefined our battery pricing architecture to reestablish relative value across pack sizes, resulting in a progressive rate increase on larger pack sizes. Currently, we are exploring the opportunity for additional pricing opportunities across our business. We expect these pricing actions, improved mix management and cost reduction initiatives to partially offset the impact on our gross margin rate. As you all know, in addition to the challenges companies are experiencing related to increased costs, the global supply chain network is under pressure from increased demand and pandemic-related disruption. Earlier this year, we made the decision to proactively build inventory to ensure we have product for the peak battery selling season and upcoming auto care resets. The change is in response to both the potential for supply disruption we have seen in recent quarters and the higher level of in-transit inventory versus historical levels due to shipping delays and port congestion. As such, our inventory at the end of fiscal '21 was up 42% versus the prior year. This action has given us flexibility to avoid disruption and ensure we service our customers as reliably as possible in this environment. With that backdrop, I'll turn to a high-level overview of our 2022 outlook. The two headwinds I mentioned earlier, the decline in demand to more normalized level and inflationary cost trends have impacted our outlook. In fiscal 2022 organic sales will be roughly flat with auto care growth and pricing actions across our businesses, offset by volume declines in battery as we comp prior year elevated demand in the first half of the year. Despite our cost reduction initiatives and pricing actions, we expect to see gross margin rate erode, given the escalating costs resulting in year-over-year declines in EBITDA and EPS. Given the macro environment, we are proactively exploring additional options to reduce our costs, enhance our mix as well as evaluate additional pricing to further offset these cost headwinds. I will provide a more detailed summary of the quarterly financial results and then the highlights for fiscal 2021 before turning to our 2022 outlook. As a reminder, we have posted a slide deck highlighting our key financial metrics on our website. For the quarter reported revenue grew 40 basis points with organic revenue down less than 1% versus 6% organic growth in the prior-year quarter. Robust demand and distribution gains in auto care delivered a 11.5% growth in the quarter, which offset the expected decline in battery. We expect these difficult comparisons in batteries to continue for the first half of 2022. Adjusted gross margin decreased 70 basis points to 37.7%. The combination of $9 million in synergy benefits and the elimination of $19 million of COVID-related costs from the prior year did not fully offset inflationary cost pressures related to commodities, transportation and labor. In addition category mix impacted our gross margin as our lower margin auto care business achieved significant growth relative to battery in the quarter. Excluding acquisition and integration costs, SG&A as a percent of net sales was 14.3% versus 15.6% in the prior year. The absolute dollar decrease of $9.4 million was driven primarily by a reduction in compensation costs. In the quarter, we realized $9 million in synergies, bringing the total for 2021 to $62 million. We have delivered over $130 million of synergies related to our battery and auto care acquisitions, well exceeding our initial targets. Interest expense was $13.4 million lower than the prior-year quarter as we are benefiting from significant refinancing activity over the past 18 months. During the fourth quarter, we entered into a $75 million accelerated share repurchase program. Approximately 1.5 million shares were delivered in fiscal 2021 and we expect another 400,000 shares to be delivered in the first quarter of fiscal '22, bringing the total number of shares repurchased under the ASR program to approximately 1.9 million. Now turning to the highlights for fiscal 2021. As Mark mentioned, we delivered our full-year 2021 outlook for revenue, adjusted EBITDA and adjusted EPS. Net sales grew 10.1%, including organic sales up 7.3% as we experienced robust growth in both the Americas and International and across all three product categories, batteries, auto care and lighting products. Adjusted gross margin was down 100 basis points, as higher input costs were partially offset by synergies and the reduction of COVID-related costs incurred in 2020. Interest expense, benefiting from significant refinancing activity, decreased $33 million. Adjusted earnings per share increased 51% to $3.48 as higher sales, synergies and lower interest expense more than offset the higher input costs. And adjusted EBITDA increased 10%. At the end of 2021, our net debt was approximately $3.2 billion or 5.1 times net debt to credit defined EBITDA with nearly 85% at fixed interest rates, no near-term maturities and an all-in cost of debt below 4%. Our adjusted free cash flow for 2021 was $203.5 million. The decline versus the prior year primarily reflects working capital investments as we proactively invested in incremental inventory given the continued volatility in the global supply network and uncertainty around product sourcing, transportation and labor availability. Now turning to our fiscal 2022 outlook. As Mark discussed, our categories remain healthy and are showing solid growth when compared to pre-pandemic levels. As we enter fiscal 2022, we are benefiting from significant pricing actions. However, input costs continue to rise. The outlook we are providing for next year reflects pricing actions that we have executed or planned as well as the assumption that our input costs remain at current levels for the full year. Organic revenue is expected to be roughly flat with auto care growth and pricing actions across 85% of our businesses, offset by declines in battery as we comp prior year elevated demand in the first two fiscal quarters. We also expect reported revenue will be negatively impacted by foreign currency headwinds of $20 million to $25 million at current rates. As we have talked about for the last couple of quarters, input costs including raw materials, labor and transportation costs, are rising rapidly and supply chain networks continue to be stressed. Last quarter I highlighted the potential for an additional 100 basis points of gross margin headwinds in 2022 if input costs did not improve. And as of today, the trends have worsened. While we expect the absolute dollar amount of these rising costs to be offset by the pricing actions and cost reduction efforts that our team has undertaken, we now project gross margin headwinds of approximately 150 basis points, based on current rates and assumptions. These inflationary cost pressures, combined with the anticipated volume declines in battery in the first half of the year, are expected to result in adjusted earnings per share in the range of $3 to $3.30 and adjusted EBITDA in the range of $560 million to $590 million. As we look at our capital allocation priorities during this volatile macro environment, we will continue to invest in our businesses and brands for the long term while returning cash to shareholders and paying down debt. While 2021 was a solid year for Energizer and one that we are proud of, our focus today is on moving forward and working to further mitigate the cost headwinds we are facing while ensuring our products are available to consumers around the world.

sees fy adjusted earnings per share $3.30 to $3.50 including items. q2 adjusted earnings per share $0.77 from continuing operations. sees fy sales up 5 to 7 percent. increased full year outlook to 5% to 7% net sales growth. sees full year adjusted earnings per share $3.30 to $3.50.

If you do not yet have a copy, you can access them on our website. We are providing that information as a supplement to information prepared in accordance with generally accepted accounting principles. With us on the call today are John Arabia, President and Chief Executive Officer; Bryan Giglia, Chief Financial Officer; and Chris Ostapovicz, Chief Operating Officer. I'll start with a review of our second quarter operating results, which materially exceeded our expectations and pushed the company back into profitability sooner than expected. I will also provide an update on the current operating environment and forward booking trends, which continue to provide strong signal of continued growth in the third and fourth quarters despite the uncertainty surrounding COVID-19. Last, I'll provide an update on our most recent hotel investment, Montage Healdsburg, and the potential for additional acquisitions of long-term relevant real estate. Bryan will later provide more details on our liquidity, earnings and dividends as well as an update of our recent finance transactions, which have materially increased our near-term investment capacity. To begin, let's talk about our second quarter operating results. Building on the better-than-anticipated results of the first quarter, second quarter materially exceeded our expectations with comparable 17-hotel portfolio revenues of $104 million, and RevPAR of $96. RevPAR at all of our open hotels, including Montage Healdsburg, was $107, made up of an average daily rate of $235 and an occupancy of 45.6%. While the comparison to the second quarter of 2020 is of little value, the open hotel RevPAR of $107 in the second quarter was more than double the open hotel RevPAR of nearly $48 achieved in the first quarter of this year. Furthermore, our occupancy, ADR and RevPAR have each increased meaningfully on a sequential basis every month this year, and our June RevPAR of almost $130 was nearly 5 times that of the $27 comparable RevPAR achieved this past January. While we still have a ways to go, the trajectory of the recovery has been far steeper than expected. As a result of the better-than-expected second quarter results, hotel EBITDA was positive each month of the quarter, which is the first time we achieved this important milestone since the fourth quarter of 2019. This is a testament to the efficacy of zero basing expenses, the efficiencies in our operations, the diligence of our managers and the proactive investment and operating decisions made during the depths of the pandemic. When we last spoke on our first quarter earnings call, we shared that we expect to return to quarterly corporate profitability in the second half of the year. I'm happy to report we achieved this goal in the second quarter at least three months ahead of schedule. So let's dig into some of the details of our quarter. While occupancy in all segments grew quarter-over-quarter, transient demand continues to be the shining star and transient room nights more than doubled compared to the first quarter. Leisure demand continues to be incredibly strong, including in nontraditional leisure destinations, and commercial demand continues to demonstrate improvement as more people get back to business. While special corporate demand for the portfolio is still only around 20% of normal levels in the second quarter, several of our hotels, including Hilton San Diego Bayfront, Embassy Suites La Jolla, Hyatt Regency San Francisco and Hyatt Centric Chicago, witnessed a meaningful acceleration in special corporate room nights. Even more encouraging is the strength of transient pricing with our second quarter transient rate at $253. Even after adjusting for the acquisition of Montage Healdsburg, our second quarter transient rate still approach that of the same period in 2019. Despite several urban markets still lagging compared to pre pandemic levels, our resort hotels, specifically Wailea Beach resort and Oceans Edge, each achieved higher RevPAR than in the same time in 2019, up 4% and 79%, respectively. The performance of these hotels was driven by occupancy approaching pre-COVID levels with significantly higher room rates compared to '19, running 30% higher at Wailea Beach Resort and up a staggering 91% at Oceans Edge. The outsized rate growth at Oceans Edge is a direct result of our strategy to elevate the guest experience to match its superior physical offerings and then price the resort accordingly. Following our acquisition of the hotel in 2017 and the implementation of several asset management initiatives, the rate growth at Oceans Edge has been more than twice that of the Duval Street adjacent resorts. Additionally, our recent acquisition, Montage Healdsburg, has performed favorably to our initial estimates, running at an average rate of over $1,000 in the second quarter. We continue to believe that our outstanding hotel product in these sought after markets and a desire by travelers to spend time in special locations gives us a competitive advantage and further justifies our strategy of owning long-term relevant real estate. Now let's take a closer look at our quarterly group performance. Though presently a smaller percentage of occupancy than is normally the case, group business also experienced growth beyond our expectations. Group business contributed approximately 80,000 room nights in the second quarter, up from 51,000 room nights in the first quarter, and the outlook for the third and fourth quarters indicate significant sequential improvement. Not only has attendance in several recent group events across the portfolio exceeded projections, but short-term lead volumes and new group functions have increased significantly in recent months. For example, Hilton San Diego Bayfront, Boston Park Plaza and JW New Orleans each witnessed second quarter lead volumes approaching pre-pandemic levels. Similar to the last quarter, we saw corporate and association groups holding their meetings as planned and group pickup was better than anticipated. Several of our larger group of hotels, including Hyatt San Francisco, Boston Park Plaza and Renaissance Orlando, had several groups that picked up over 90% of the contracted blocks in the second quarter, which was substantially higher than we forecasted. With these dynamics in place, we expect to see a steady acceleration in group meetings, including citywide, corporate and association meetings for the remainder of the year holding out other variables constant. But rooms revenue was not alone and growing substantially on a sequential basis, Food and Beverage revenues increased by 2.5 times in the second quarter representing a 22% increase in food and beverage spend per occupied room and other revenues doubled as higher occupancy drove ancillary revenues such as parking. Catering revenue per group room night also increased by over 2.5 times as corporate group and associations returned. Not only are more guests staying in our hotels, but they are increasingly ready for the complete hotel experience and embracing our facilities and amenities as they reopen. As a result of these factors, our comparable total revenue per available room, or TREVPAR, increased from nearly $60 in the first quarter to over $138 in the second quarter. While we are pleased with our portfolio's financial improvement, we are equally pleased that our guest satisfaction scores remain very strong. For example, travelers on TripAdvisor recently ranked Oceans Edge as one of the top 10 hotels in Key West, up from 24 at the end of 2019, even with a massive increase in ADR. These factors give us confidence that the rate increase is sustainable, and additional growth is achievable. Again, we are seeing the benefits of the portfolio transformation completed in recent years as well as the operational investment decisions made during the depth of the pandemic. As we look forward, we are mindful that since early July, there has been a spike in COVID cases, particularly among the unvaccinated and areas such as Florida and Texas. The recent spike in cases may result in reinstituting travel restrictions, mask mandates and vaccine mandates in certain locations, which could postpone the eventual travel recovery. That said, we have not yet witnessed meaningful evidence that the spike in COVID cases has had a material impact on the trajectory of the lodging recovery. Rather booking trends for all segments continue to accelerate despite increased COVID cases in numerous parts of the country. This is evident in our continued sequential monthly RevPAR improvement in July. Through July 29, our 17 open hotels generated RevPAR of approximately $165, made up of a 62% occupancy and a $266 average daily rate. July's occupancy, ADR and RevPAR all increased meaningfully over the prior month, continuing the trend that started last year. Our July RevPAR represents a $35 increase from June and is $138 higher than that experienced this past January. As we evaluate expected group activity for the rest of the year, we anticipate increased demand for corporate and association meetings. The citywide calendar in many of our primary markets are very encouraging over the next several quarters and over 30% of our group room nights on the books for the fourth quarter are for citywide events. Citywide events are planned to resume in San Diego, Boston, New Orleans, DC and Orlando. That said, given the uncertainty around COVID, our operators have prudently assumed that the group room blocks will travel at significantly lower levels than historically been the case. This assumes that attendees continue to make attendance decisions in relatively short time frame and are influenced by evolving COVID data and trends. For example, in Orlando, a number of citywide groups relocated dates into the August to October time frame from prior periods, but the team is forecasting higher than normal slippage on these programs and is anticipating softer performance for the larger conventions in the fourth quarter. However, based on early trends, there may be upside potential in some markets from taking this conservative approach. As previously mentioned, several recent groups have picked up 90% to 100% of their room blocks, which was well in excess of our forecast. While this will not be the case for every group, it is a far cry from the muted group attendance we initially feared. These are just a few instances of the evolving citywide and group landscape that gives us confidence that the positive trends established in the second quarter are likely to continue this pent-up group demand gets back on the road. In-house group business has also witnessed positive trends. Increased vaccinations and the easing of travel and in-person meeting restrictions have given meeting planners a greater comfort level that their events will move forward. This has resulted in stronger group leads, more confirmed events and more participants planning to attend. In-house group demand has been broad-based and includes incentive trips from technology and pharmaceutical groups of Wailea; retail, medical and financial services groups at the Hilton Bayfront; state and regional associations at the Renaissance Orlando; and a medical company at the Hyatt San Francisco. With the number of vaccinated people growing every day, we are optimistic that group activity should continue on this trajectory. Based on these assumptions, we expect group to make up an increasingly larger part of our room mix and revenues in the second half of 2021 and specifically in the fourth quarter. On average, group rates on the books for the remainder of 2021 are higher than the rates on the books for the same period in 2019. Furthermore, given the anticipated increase in corporate and association group business, we also anticipate that banquet spend for occupied group room will increase substantially compared to the first half of the year when government and rooms-only group characterized most of the group room mix. Supplementing the return of corporate and association travel, local social business should be robust in the third and fourth quarters including a record numbers of weddings expected in the second half of the year. From corporate events, social gatherings, people are motivated to get together and celebrate. In addition to the more optimistic outlook for group business, transient trends have steadily improved. While our net transient reservations are still short of normal levels, bookings continue to accelerate. Our trailing six-week booking trends are now down only 10% to 15% compared to the same time in 2019, which marks a substantial improvement from the 80% to 90% declines we saw in the first of the year and the 40% to 50% declines we saw going into the second quarter. The booking window, though, still relatively short term, continues to expand. While leisure demand was the first to come out of the gates, business transient demand is expected to pick up in the third quarter and accelerate following Labor Day as companies continue to return to the office. Moving to our recent investment activity. We are excited to discuss the strong performance of Montage Healdsburg, which has exceeded our underwriting. While we are confident that this hotel would perform well, the ramp-up in rate and occupancy has surpassed our expectations in each month of ownership. During the quarter, the hotel ran an occupancy of 61% at an average rate over $1,000 and in July, the hotel ran at over 70% occupancy at a rate of nearly $1,250. We are seeing broad-based demand from the wine country and strong interest from transient and groups alike. In the second quarter, we experienced transient compression on weekends and stronger-than-anticipated group demand during the week. Profitability also outperformed with the hotel achieving positive EBITDA ahead of schedule in the second quarter. Looking forward, there's a lot to be excited about. The hotel has received extraordinary reviews, which has translated into strong group leads and is preparing for its second full property buyout since our acquisition. Layering in group with already strong transient will help drive additional success at this standout resort. Since our last earnings call, we executed upon a number of balance sheet enhancement transactions, including the issuance of two record-setting series of preferred equity and another favorable amendment to our unsecured debt agreements. Not only will these transactions provide us with an advantageous cost of capital that will result in greater FFO growth, but they unlock meaningful debt capacity that we can use to pursue additional acquisitions of long-term relevant real estate. We expect to be acquisitive and can do so without relying on the often fickle equity markets. This is a significant advantage that is not shared by many others, and one we plan to take advantage of to enhance the quality, scale and earnings power of our portfolio, while increasing NAV per share. To sum things up, performance in leisure and group segments in the second quarter set the stage for increased optimism in the second half of the year despite the ongoing threat of COVID-19. Based on forward booking information, we believe the portfolio is on track for continued improvement as the year goes on. Furthermore, we are in the enviable position to use our strong balance sheet and debt capacity to grow the company and to create value for our shareholders. As of the end of the quarter, we had approximately $210 million of total cash and cash equivalents, including $47 million of restricted cash. Adjusting for the issuance of our Series I preferred stock and the expected redemption of our Series F, our pro forma total cash balance at the end of the quarter would have been approximately $235 million. In addition to cash on hand, we also maintained full availability on our $500 million revolving credit facility. During the quarter, we executed another favorable amendment to our unsecured debt agreements, which removed the restrictions limiting the amount of unencumbered hotel acquisitions we could fund from existing liquidity during the covenant relief period. Even after deploying a portion of our excess liquidity in the second quarter, our balance sheet retains significant capacity, and this most recent amendment better positions us to use that capacity to grow the company through additional acquisition of long-term relevant real estate. We appreciate the continued partnership and support from our long-standing lender and noteholder relationships. As John mentioned, since our last earnings call, we also executed upon two additional balance sheet enhancing transactions through the issuance of both our 6.125% Series H preferred and our 5.7% Series I preferred. Proceeds from these two transactions, both of which were record-setting low coupons at the time of issuance, are being used to redeem higher cost existing preferred equity and will reduce our comparable preferred dividends by $1.5 million per year. Given the attractive pricing and strong demand for our most recent offering, we elected to upsize the Series I transaction to take incremental proceeds. Preferred equity is an increasingly important part of our long-term capital structure and as a result of the acquisition and financing activity in the quarter, we have increased our exposure, and we'll have three attractively priced series of preferred stock outstanding. Second quarter results reflect an improving operating environment driven by continued strong leisure demand and an increasing amount of commercial transient and group business. Second quarter adjusted EBITDAre was $15 million, and second quarter adjusted FFO per diluted share was a loss of $0.01. These results far surpassed our previous expectations and marks the return to positive corporate EBITDA, a full quarter sooner than we had previously projected. While total FFO was marginally negative in the second quarter, we expect it to also resume quarterly profitability going forward. Now turning to dividends. We have suspended our common dividend until we return to taxable income. Separately, our Board has approved the quarterly distributions for our Series H and I preferred securities. With that, we can now open the call to questions.

qtrly non gaap diluted earnings per share $1.70.

These statements include expectations and assumptions regarding the partnerships future operations and financial performance, including expectations and assumptions related to the impact of the COVID-19 pandemic. Actual results could differ materially, and the partnership undertakes no obligation to update these statements based on subsequent events. During todays call, we will also discuss certain non-GAAP financial measures, including adjusted EBITDA and distributable cash flow as adjusted. In the second quarter, Sunoco continued to showcase the strength of its business model with strong financial results in a period of increasing commodity prices. For the second quarter of 2021, the partnership recorded net income of $166 million. Adjusted EBITDA was $201 million compared to $182 million in the second quarter of 2020. Volumes were 1.93 billion gallons, a sequential increase of approximately 10% from the first quarter as the reopening trend in the U.S. took off Q2. Year-over-year volumes increased approximately 28%. Fuel margin was $0.113 per gallon versus $0.135 per gallon in the second quarter of 2020, which Karl will hit on further in his remarks. Total operating expenses in the second quarter were up slightly compared to the first quarter at $102 million versus $100 million and were up from $97 million in the second quarter of 2020. Second quarter distributable cash flow as adjusted was $145 million, yielding a current quarter coverage ratio of 1.67 times and a trailing 12-month coverage ratio of 1.41 times consistent with our long-term target of 1.4 times. On July 22, we declared an $0.8255 per unit distribution, the same as last quarter. We continue to maintain a stable and secure distribution for our unitholders, which remains the #1 pillar behind our capital allocation strategy. Leverage at the end of the quarter was 4.27 times, which we expect to continue to decline toward our 4.0 target as the year progresses. Our 2021 full year EBITDA guidance remains unchanged from the original guidance, which we provided in December 2020. For the full year 21, we expect adjusted EBITDA between $725 million and $765 million. Operating expense guidance is unchanged at $440 million to $450 million. And while we expect higher second half operating expenses, we are trending toward the low end of the full year range. We continue to expect maintenance capital of approximately $45 million and target growth capital expenditures of $150 million in 2021. Next, Id like to spend a few minutes on the meaningful expansion to our midstream business that we announced yesterday. To recap, we announced two terminal transactions that will not only help diversify and strengthen our core fuel distribution business, but will also provide a platform for growth in the markets served by these assets. The new store assets consist of eight largely refined product terminals, seven of which are on the East Coast and one is just south of Chicago. These assets have approximately 14.8 million barrels of storage and are accessed via pipeline, truck, rail and marine vessels. We expect the $250 million purchase price to result in a sub seven times multiple on expected EBITDA, including synergies in the second year of ownership. The Cato terminal is a gasoline and distillate terminal with 140,000 barrels of storage located in Salisbury, Maryland, and is accessed via truck and marine vessels. We expect the $5.5 million purchase price to result in a sub-6 times multiple on expected EBITDA, including synergies in the second year of ownership. Both of these transactions are expected to be immediately accretive to unitholder value. The second quarters strong results and the announced acquisitions demonstrate our commitment to maintaining Sunocos solid financial footing and increasing value to our stakeholders through our strategy of disciplined capital investment. I want to start today by giving you some more insight into our important expansion of the midstream business that we announced yesterday. As we shared in the past, our midstream growth strategy is to focus on opportunities that both diversify our operations and integrate effectively with our overall business. During the past nine months, weve added a marine terminal in the Albany, New York area. We are making great progress on our greenfield/brownfield terminal and are now adding nine more terminals to our portfolio. The Salisbury, Maryland terminal that we are purchasing from Cato oil is in a niche market that fits well with our fuel distribution business. The NuStar terminals will be fantastic additions. Linden is the core asset. Were very excited to have a highly profitable operation in the New York Harbor market with great flexibility and connectivity. The Baltimore and Jacksonville terminals will strengthen our business and facilitate additional growth in our fuel distribution business in these important markets. Andrews Air Force Base and Virginia Beach are key assets that support our military. The Blue Island facility just south of Chicago will be our first terminal in the midwest. Were looking forward to welcoming the employees from these acquisitions to our team. If you step back and look at the evolution of our business over the past few years, we have demonstrated that we are able to add terminal assets to our portfolio, operate them well, capture synergies and grow our fuel distribution business in the relevant markets. Bottom line is with our combined fuel distribution and midstream strategy, we have proven that we can add value. Next, I will share some thoughts on our second quarter results. At a high level, our strong results were underlined by better volume performance, margin returning to our guidance range even with a generally unfavorable and rising market and continued discipline on expenses. Starting with volumes, we were up about 28% from last year, but the more relevant comparison continues to be performance relative to 2019. Looking at it through that lens, we were down about 6% from 2019 volumes, meaningfully better than last quarter. Weve seen similar volume performance at the beginning of the third quarter. As we look at volumes through the back half of the year, it feels as though the pace of closing the gap to 2019 has slowed a bit, but we remain optimistic as overall economic strength in the U.S. continues. The second quarter showed improvement versus the challenging first quarter. Even though prices rose another $0.25 per gallon or so in the second quarter, the increased volatility, coupled with our continual margin optimization strategies, resulted in our margins rebounding and returning to our full year 2021 guidance range. As we look forward, I still feel confident that $0.11 to $0.12 per gallon fuel margin is appropriate for the full year 2021 as we expect similar volatility to persist in the commodity markets through the back half of the year. The final piece of our strong financial performance was continued expense control and discipline. As Dylan mentioned earlier, we expect second half expenses to be higher than the first half with full year expenses trending toward the lower end of our guidance range. Some of the higher spending in the second half of the year is due to timing, and some of it is related to our decisions to defer bringing costs back into the business with a challenging start to the year. As the margin environment has improved, we are more comfortable returning some of our expenses to a more sustainable level going forward. We delivered a very strong second quarter. Fuel volume grew roughly 10% versus the first quarter of this year, while our fuel margins remain very healthy. The combination of higher industry breakevens with our ability to control costs and optimize gross profit allows us to minimize the downside while still capturing the upside when the commodity market supports it. Quarter after quarter, we have proven the durability of our business. Looking forward, the third quarter is off to a good start. For the month of July, RBOB prices have been volatile. Within these volatile commodity environments, we have a proven history of delivering attractive margins. As for volume, the start of the third quarter has seen a moderation of volume growth as compared to the growth we experienced from the first to second quarter. We still believe that there is upside. But as of today, we foresee similar volume in the third quarter to what we realized in the second quarter. With the first half of the year in the books and early readings for the third quarter, we expect to deliver on our full year 2021 adjusted EBITDA guidance. Moving on to growth. Were very excited about the expansion of our midstream business through the two announced acquisitions. Strategically, these acquisitions help diversify and vertically integrate our business while providing a more enhanced platform for fuel distribution growth. Financially, we executed these transactions at very attractive valuations, especially after adding synergies. In addition, the Brownsville terminal project is on budget and on time. We expect the terminal to be up and running in early 2022. On the field distribution side, we continue to grow organically. However, well also look for acquisitions. For both organic growth and acquisitions, well continue to build on our history of maintaining financial discipline, which means protecting the security of our distributions while also protecting our balance sheet.

for full-year 2021, continues to expect maintenance capital expenditures of about $45 million and growth capital expenditures of $150 million.

I'm pleased to report another very strong quarter with record revenues at CooperVision and CooperSurgical, driving record earnings and robust free cash flow. CooperVision's growth was broad-based and led by our daily silicone hydrogel portfolio of lenses and a solid rebound in EMEA. While our myopia management products also performed really well, and of course, we received the exciting news about regulatory approvals for MiSight in China. CooperSurgical continued posting great results led by fertility and a nice bump in PARAGARD, helped by buying activity from a price increase. Moving forward, we expect core operational strength to continue driving strong performance even with challenges from COVID and currency. With this expectation and the opportunities we're seeing in myopia management, daily silicones, and fertility, we've increased our constant currency revenue guidance for both CooperVision and CooperSurgical and we'll maintain our investment activity to capitalize on the potential for incremental share gains as we move toward fiscal 2022. Moving to third-quarter results and reporting all percentages on a constant currency basis, Consolidated revenues were $763 million, with CooperVision at $558 million, up 20%, and CooperSurgical at $206 million, up 58%. Non-GAAP earnings per share were $3.41. For CooperVision, our daily silicone hydrogel portfolio led the way with all 3 regions posting strong growth. Particular strength was noted in our daily toric franchises, but daily spheres and multifocals also performed well. And in a great sign, we've seen a nice uptick in fit data for MyDay and clariti, which bodes well for share gains and future growth. Within the regions, the Americas grew 16%, led by MyDay and clariti and continued improvement in patient flow. EMEA grew a healthy 24% as consumer activity returned in the region, and we took share. 1 in EMEA, and we're seeing the benefits of increasing patient flow, So, we'll continue investing to support the reopening activity happening in many of the European markets. Asia Pac grew 18%, led by a slow but steady improvement in consumer activity. For us, a significant portion of Asia Pac is driven by Japan. And although consumer activity remains somewhat muted, we're performing well and taking share, and we're well-positioned to capitalize on future opportunities given our recent product launches. Moving to category details. Silicone hydrogel dailies grew 31% and with MyDay and clariti both performing well. MyDay, in particular, continues taking share, led by strength in MyDay toric in all regions. For our FRP portfolio, Biofinity continued its solid performance led by Biofinity Energys and Biofinity toric multifocal. Regarding product expansions and launches, we remain very active. We're finishing the launch of clariti, sphere, and the MyDay second base curve sphere in Japan. We're rolling out Biofinity toric multifocal in additional markets. We're rolling out an expanded toric range for MyDay, giving it the broadest range of any daily toric in the world. And we're also completing the rollout of extended toric ranges for clariti and Biofinity. We've also started prelaunching activity for MyDay multifocal with the launch -- with a full launch on target for the U.S. and other select markets in November. Feedback on this lens remains extremely positive, including from fitters commenting that our OptiExpert fitting app has the highest fit success rate of any multifocal on the market. Recent data shows that over 90% of contact lens wearers over the age of 40 expect to continue wearing lenses with the biggest challenge being finding a good multifocal. Given the feedback we've been receiving, we believe MyDay will be the best multifocal on the market and combined with the fact that it's joining an already highly successful MyDay sphere and toric, we're very optimistic about its success. Moving to myopia management. Our portfolio grew a robust 90% this quarter to $18 million, with MiSight up 187% to $5 million and ortho-k products up 68%. As a global leader in the myopia management space, our portfolio is the broadest in the industry, comprised of MiSight, the only FDA-approved myopia control product, our broad range of market-leading ortho-k lenses, and our innovative SightGlass Vision glasses. We continue targeting $65 million in myopia management sales this year, including MiSight reaching $20 million. Regarding MiSight, there was a lot of positive activity this quarter as we continue capitalizing on our first-mover advantage. We received regulatory approval in China, and we're extremely excited about that opportunity. The approval requires lenses to be manufactured post-approval. So, we've quickly initiated production and packaging, and plan to seed the market starting in early fiscal Q1 with a full launch in fiscal Q2 of next year. As part of this, we're immediately ramping up marketing efforts and working quickly to ensure the product is positioned for success. Myopia rates are very high in China, So, the market potential is significant. As an example, it's estimated that over 80% of high school kids are myopic, So, treating children at a younger age is of high importance in the country. Outside of China, we continue making great progress with our large retailers and buying groups. Our pilot programs are live and expanding, and we've finally been able to resume in-person training in many markets, including in the U.S. We now have over 40,000 children wearing MiSight worldwide, and that number is growing quickly. Additionally, the average age of a new MiSight wearer remains 11, So, this treatment is bringing children into contact lenses at a much younger age. Lastly, on MiSight, we did see momentum pick up even more in August, including here in the U.S., So, we're bullish for a strong Q4. Regarding our other myopia management products, we had a solid quarter for ortho-k driven by our broad product portfolio and from the halo effect we're seeing with MiSight. And we continue making progress with our SightGlass myopia management glasses, preparing for several upcoming launches later this calendar year. We've also submitted our application to the FDA for approval for MiSight as a myopia management treatment and expect to receive initial feedback within a couple of months. In the meantime, as the myopia management market continues developing, we're definitely seeing the value of offering multiple options to eye care professionals, So, we look forward to expanding our offerings and availability. To wrap up on myopia management, our innovation pipeline is very healthy with eight focused pipeline products. Our sales and marketing efforts are proving successful and our focus on leading with clinical data and providing the best and broadest portfolio in the market, has us in an excellent position for continued success. To conclude on vision, our business is doing really well. The back-to-school season is healthy, new fits are doing well, and we're excited about our existing products and upcoming launches. On a longer-term basis, the macro growth trends remained solid, with roughly 33% of the world being myopic today, and that number is expected to increase to 50% by 2050. Given our robust product portfolio, new product launches, myopia management momentum, and strong fit data, we're in great shape for long-term sustainable growth. This was an outstanding quarter with record revenues of $206 million. Fertility, in particular, continued to perform exceptionally well, growing 72% year over year to $83 million. Strike was seen around the world and throughout the product portfolio, including from consumables, capital equipment, and genetic testing. Some areas of strength included growth in media, for pets, needles, incubators, and embryo transfer catheters, along with another very strong quarter from RI Witness, our proprietary automated lab-based management system that clinics implement to maximize safety and security by optimizing their lab practices. We're also benefiting from increased utilization of our artificial intelligence-based genetic testing platform, which increases the doctor's ability to select the best embryos for transfer. Similar to last quarter, we're continuing to see COVID impact the market, but share gains and improving patient flow in most countries are driving our results. Regarding the broader fertility market, the global landscape remains fragmented with significant geographic diversity. And with an addressable market opportunity of well over $1 billion and mid- to upper-single-digit growth, this is a great market for us. It's estimated that one in eight couples in the U.S. has trouble getting pregnant due to a variety of factors, including increasing maternal age. And that more than 100 million individuals worldwide suffer from infertility. Given the improving access to fertility treatments, increasing patient awareness, greater comfort discussing IVF and increasing global disposable income, this industry should grow nicely for many years to come. So, overall, in fertility, our portfolio and market positioning are excellent. We remain in a great spot for future share gains with improving traction in key accounts. We're seeing continued reopening activity around the world, and the industry has great long-term macro growth drivers. For all these reasons, we remain very bullish on this part of our business. Within our office and surgical unit, we grew 50% with PARAGARD up 51% and office and surgical medical devices up 49%. For PARAGARD, we implemented a roughly 6% price increase toward the end of the quarter, which resulted in a buy-in of roughly $4 million. This will impact our Q4 performance, but the price increases are long-term positive noting with contracts and reimbursement timing, the price increase rolls in over the next couple of years. Within medical devices, several products performed well, including EndoSee Advance, our direct visualization system, for evaluation of the endometrium and our portfolio of uterine manipulators. To wrap up on CooperSurgical, this was another excellent quarter, and it was great to exceed $200 million in sales for the first time ever. Similar to CooperVision, we have powerful macro trends supporting our underlying growth and remain confident in our ability to continue delivering strong results. Third-quarter consolidated revenues increased 32% year over year or 28% in constant currency to $763 million. Consolidated gross margin increased year over year to 68.3%, up from 66.3% with CooperVision posting higher margins driven by product mix and currency, and CooperSurgical posting higher margins from product mix tied to the significant year-over-year growth in fertility and PARAGARD. Opex grew 28% as sales increased with a rebound in revenues, along with higher sales and marketing expenses associated with investments in areas such as myopia management. Consolidated operating margins were strong at 26.6%, up from 23.2% last year. Interest expense was $5.6 million and the effective tax rate was 13.5%. Non-GAAP earnings per share was $3.41 with roughly 49.8 million average shares outstanding. Free cash flow was very strong at $180 million, comprised of $224 million of operating cash flow, offset by $44 million of capex. Net debt decreased to $1.5 billion and our adjusted leverage ratio improved to one and a half times. Overall, this was a very strong quarter, and we exceeded our financial performance expectations. We continue monitoring and evaluating the scope, duration, and impact of COVID-19 and its variants. And while this remains a risk factor, our visibility is sufficient to provide the following update to our guidance. For the full fiscal year, we're increasing our constant currency guidance for both CooperVision and CooperSurgical and maintaining our non-GAAP earnings per share guidance. Specific to Q4, consolidated revenues are expected to range from $730 million to $760 million, up 7% to 11% in constant currency, with CooperVision revenues between $540 million and $560 million up 6% to 10% in constant currency, and CooperSurgical revenues between $190 million and $200 million, up 8.5% to 14% in constant currency. Non-GAAP earnings per share is expected to range from $3.24 to $3.44. To provide color on this guidance, currency moves since last quarter have reduced the benefit of the full-year FX tailwind from 3% to 2.5% for revenues, and 7% to 5% for EPS. With respect to Q4, this equates to reducing revenues by $10 million in CooperVision and $2 million at CooperSurgical, and reducing earnings per share by $0.14. CooperVision is offsetting some of the impact with expected strength in daily silicone and myopia management sales, while CooperSurgical is expecting continued strength, although incorporating the Q3 PARAGARD buy-in of $4 million and hopefully some conservatism regarding COVID's impact on elective procedures. Consolidated gross margins for the fiscal year are expected to be around 68%, with fiscal Q4 gross margins expected to be around 67.5%, driven primarily by currency. Operating expenses are expected to be slightly lower sequentially, but similar to fiscal Q3 on a percentage of sales basis, as we continue investing in multiple areas such as myopia management and fertility. Our Q4 tax rate is expected to be around 11%. And lastly, our free cash flow continues to improve, and we're now expecting roughly $550 million for the full year.

q3 non-gaap earnings per share $3.41. sees q4 2021 non-gaap earnings per share $3.24 to $3.44. sees fiscal 2021 total revenue $2,893- $2,923 million (16% to 18% constant currency). sees fiscal q4 2021 total revenue $730 - $760 million (7% to 11% constant currency).

I'm joined by John Plant, Executive Chairman and Chief Executive Officer; and Ken Giacobbe, Executive Vice President and Chief Financial Officer. After comments by John and Ken, we will have a question-and-answer session. In addition, we've included some non-GAAP financial measures in our discussion. First, let's summarize the headline numbers, starting on slide number four. Revenue was $1.28 billion, adjusted EBITDA $292 million and EBITDA margin was 22.8%. Each number was within the guidance range provided. More importantly, year-over-year revenues increased for the first time. The revenue was led by Commercial Aerospace, up 15% year-over-year, and contributing to a total increase of 13%. Of note, the Howmet segment leading the increase was Engine Products as previously forecasted. The company was also able to overcome the challenges once again of the Boeing 787 build rate declines and the supply chain issues limiting commercial truck production, the 787 affecting Fastening Systems and Engineering Structures in particular. Aluminum prices continued the upward surge with aluminum and regional premiums increasing by over $400 per metric ton sequentially and impacting the margin rate by 20 basis points. Adjusted earnings per share, excluding special items, was $0.27, and cash generated in the quarter was $115 million. AR securitization was unchanged at $250 million. On a sequential basis, Third quarter revenue and adjusted EBITDA were up 7% and adjusted earnings per share up 23%. Moving to the balance sheet and cash flow. Adjusted free cash flow for the quarter was strong at $115 million, which results in a Q3 year-to-date free cash flow at a record $275 million. Ken will provide further details of our debt actions in the quarter, which included a bond tender refi finance to fundamentally lower interest costs and thereby improve future free cash flow yield. The combination of debt actions in the third quarter, combined with our first half results and actions, will reduce annual interest expense by approximately $70 million. In the quarter, we also repurchased approximately 770,000 shares of common stock for $25 million, which increases share repurchases year-to-date to approximately seven million shares for $225 million. The net result of all these actions plus the reinstatement of the common stock dividend and the $115 million cash inflow resulted in a cash balance of $726 million, similar to that at the end of Q2. Lastly, we continue to focus on legacy liabilities and have reduced pension and OPEB liabilities by approximately $180 million year-to-date. Moreover, year-to-date pension and OPEB expenses have reduced by approximately 50% compared to last year. Please move to slide number five. Revenue for the quarter increased 13% year-over-year and 7% sequentially. As expected, Commercial Aerospace was up 15% year-over-year and 16% sequentially, driven by the Engine Products segment and narrow-body aircraft production. commercial transportation, namely Wheels, was up 38% year-over-year. Volume was impacted by supply chain constraints, limiting the Commercial Truck production. The volume reduction in the Wheels business was offset by metal recovery dollars. The industrial gas turbine business continues to grow and was up 26% year-over-year and 6% sequentially, driven by new builds and spares. Defense Aerospace was down 11% year-over-year, driven by reductions in the Joint Strike Fighter builds, but was up 3% sequentially from the second quarter. At the bottom of the slide, you can see the progress on price, cost reduction and cash management. Price increases are up year-over-year and continue to be in line with expectations. Structural cost reductions have exceeded our annual target of $100 million. Q3 structural cost reductions were $23 million year-over-year and $121 million year-to-date. Every segment achieved a strong year-on-year margin expansion as revenue increased for the first time in the year in aggregate. In the third quarter, Engine Products had an incremental operating margin of approximately 70%, and Forged Wheels had an incremental operating margin of approximately 45%. Fastening Systems and Engineering Structures both had a higher EBITDA on lower revenue. Fasteners had an operating margin expansion of some 630 basis points, while structures was up 210 basis points. As a result, Howmet's adjusted EBITDA margin expanded a full 800 basis points year-on-year, driven by volume, price and structural cost reductions. Adjusted free cash flow for the quarter was $115 million and year-to-date, $275 million. And as I said previously, AR securitization is unchanged from the start of the year. Lastly, we have lowered our annualized interest cost by $70 million through a combination of paying down debt and refinancing into low-cost debt. Please move to slide number six. Adjusted EBITDA margin for the quarter was 22.8%, representing an 800 basis point improvement compared to the third quarter of 2020. The margin for the third quarter was consistent with the last few quarters, despite the cost of adding employees to meet the increasing production demand and the effect on margins of the higher aluminum prices. In the quarter, Engine Products added approximately 500 employees net, which now brings the total to 800 net additional employees hired for that segment during the second and third quarters. We continue to review the headcount required in our other segments to adjust for future demand requirements. Please move to markets on slide seven. Third quarter total revenue was up 13% year-over-year and 7% sequentially. Commercial Aerospace increased to 42% of total revenue, which is an improvement sequentially, but far short of pre-COVID levels of 60%. The third quarter marked the start of the Commercial Aerospace recovery, with commercial aerospace revenue up 15% year-over-year and 16% sequentially. Defense Aerospace was down 11% year-over-year, driven by the Joint Strike Fighter and up 3% sequentially. Commercial Transportation, which impacts both the Forged Wheels and Fastening Systems segment was up 38% year-over-year, however, flat sequentially after we adjust for the increase in aluminum prices. Finally, the Industrial and Other Markets, which is composed of IGT, oil and gas and general industrial was up 14% year-over-year and down 2% sequentially. IGT, which makes up approximately 45% of this market continues to be strong and was up a healthy 26% year-over-year and 6% sequentially. Let's move to slide eight for the segment results. As expected, Engine Products year-over-year revenue was 24% higher in the third quarter. Commercial Aerospace was 50% higher, driven by the narrow-body recovery. IGT was 26% higher as demand for cleaner energy continues. Defense Aerospace was down 8% year-over-year, but up 7% sequentially. Incremental margins for Engine Products were approximately 70% for the quarter despite hiring back approximately 500 workers to prepare for future growth. Operating margin improved 1,200 basis points year-over-year. Please move to slide nine. Also as expected, Fastening Systems year-over-year revenue was 6% lower in the third quarter. Commercial Aerospace was 25% lower as we saw continued production declines for the Boeing 787 and customer inventory corrections. The commercial transportation and industrial markets within the Fastening Systems segments were approximately 55% and 19% year-over-year, respectively. Year-over-year Fastening Systems was able to generate $14 million more in operating profit, while revenue declined $17 million. As a result, operating margin improved 630 basis points. Please move to slide 10. Engineered Structures year-over-year revenue was 3% lower in the third quarter. Commercial Aerospace was 13% higher as the narrow-body recovery was partially offset by production declines for the Boeing 787. Defense Aerospace was down 21% year-over-year, but was flat sequentially. Year-over-year, Engineered Structures was able to generate $4 million more in operating profit on $7 million of lower revenue. As a result, operating margin improved 210 basis points. Finally, please move to slide 11. Forged Wheels year-over-year revenue was 34% higher in the third quarter. On a sequential basis, revenue and operating profit were essentially flat. The segment was able to overcome a 4% decrease in volume due to customer supply chain issues, limiting commercial truck production, and a 13% increase in aluminum prices to maintain a healthy operating margin of approximately 27%. Year-over-year incremental margins for Forged Wheels were approximately 45% for the quarter. Improved margins were driven by continued cost management and maximizing production in low-cost countries. Now let's move to slide 12. We continue to focus on improving our capital structure and liquidity. I would highlight three actions. First, in the first half of the year, we paid down approximately $835 million of debt by completing the early redemption of our 2021 and 2022 bonds with cash on hand. The annualized interest expense savings with this action is approximately $47 million. Second, in the third quarter we tendered $600 million of our 6.875% notes due in 2025 and issued $700 million of 3% notes due in 2029. The annualized interest expense savings with this action is approximately $20 million. Third, with cash on hand, we repurchased $100 million of our 2021 notes through an open market repurchase in Q3 and in October, which neutralized the gross debt impact of the tender and refinancing. The annualized interest expense saving with this action is approximately $5 million. As a result of these actions, we have lowered annualized interest costs by approximately $70 million and smoothed out our future debt maturities. At the end of Q3, gross debt was approximately $4.2 billion, which is similar to Q2. Net debt to EBITDA improved from 3.5 times in Q2 to 3.2 times despite the deployment of cash for debt refinancing, share buybacks and dividends. All debt is unsecured, and the next maturity is in October of 2024. Finally, our $1 billion revolving credit facility remains undrawn. Before turning it back to John to discuss guidance, I would like to point out that there's a slide in the appendix that covers special items for the quarter. Special items for the third quarter were a net charge of approximately $93 million, mainly driven by the costs associated with the bond tender and refinancing completed in the quarter. The leading indicators for air travel continue to show improvement, notably for domestic travel. But also we note the sort of revised requirements or these restrictions being lifted for, certainly, transatlantic travel starting this month. As expected, Howmet transitioned to revenue growth in the third quarter, and we expect year-over-year revenue growth will continue into the fourth quarter and to 2022, with a growth of approximately 12% in commercial aerospace and total revenue growth in the fourth quarter of approximately 6%. Growth is expected to continue in 2022. As expected, the Engine Products business began to grow notably in the third quarter. We expect modest sequential growth in Q4 for Engineered Structures despite continued delays with the 787. Fastening Systems is expected to show growth in the first half of 2022. In terms of specific numbers, we expect the following: In terms of guidance for Q4, I'll just call out the midpoints, as you can read the slide: Revenue, $1.315 billion; EBITDA, $300 million; EBITDA margin, 22.8%; earnings per share of $0.29. And for the year, we expect revenue to be $5 billion, plus or minus; EBITDA at $1.135 billion; EBITDA margin at 22.7%; earnings per share increased to $1 per share; and cash flow of $450 million. Moving to the right-hand side of the slide, we expect the following: Second half revenue to be up approximately 8% versus the first half driven by Commercial Aerospace, Commercial Transportation and IGTT; Q4 sequential segment incremental operating margins, we expect to be in the order of 28%. Price increases will continue to be greater than 2020, the cost-reduction carryover of $100 million, as already commented, is exceeded. Pension and OPEB contributions of approximately $120 million and capex should be in the range of $180 million to $200 million compared to depreciation of approximately $270 million. Adjusted free cash flow compared to net income continues to be approximately 100%. I'd now like to preview some initial thoughts regarding 2022. An early approximate total revenue guide would be for an increase in annual revenues of 12% to 15%, led by recovery in Commercial Aerospace. In aggregate, our current view is that we see an acceleration during the course of the year, following a fairly flat first quarter compared to the fourth quarter this year, except for increased revenues due to metal recovery. We'll refine this view and provide guidance at our earnings call in February 2022. Now let's move to slide 14 for the summary. We delivered strong performance in the third quarter, which was in line with guidance. Growth was very healthy, year-on-year and sequentially. Incrementals were truly exceptional, and the company's margin is in the top decile in aerospace. Q3 started -- or marked the start of the Commercial Aerospace recovery. Moreover, we delivered sequential improvements in both EBITDA and earnings per share. We'll continue to manage costs very carefully during this recovery phase. Liquidity is strong, and we have very healthy cash generation. The fourth quarter, for our -- revenue outlook is $30 million higher than the third quarter, with margins of approximately 23%, which sets a platform for a healthy 2022. Adjusted earnings per share guidance was increased, reflecting lower interest costs.

howmet aerospace q2 revenue $1.2 billion versus refinitiv ibes estimate of $1.22 billion. q2 earnings per share $0.22 from continuing operations excluding items. q2 revenue $1.2 billion versus refinitiv ibes estimate of $1.22 billion. sees fy earnings per share excluding special items $0.95-$1.02, versus prior $0.91-$1.02, with an increased outlook of $0.99. sees q3 earnings per share excluding special items $0.23-$0.27 with an outlook of $0.25.

These types of statements are subject to various known and unknown risks, uncertainties, assumptions and other factors, including those described in MFA's Annual Report on Form 10-K for the year ended December 31, 2020, and other reports that it may file from time to time with the Securities and Exchange Commission. The third quarter was a transformational quarter for MFA, and as we sit here today, we are excited about our company and enthusiastic about our future. We continue to execute on our strategy to grow our portfolio and reduce and term out liabilities. Our third quarter financial results featured strong earnings and book value growth. On the credit side, continued strong housing trends have bolstered the value of the underlying assets, securing the mortgages we own thus lowering LTVs. Robust housing prices have also created a strong tailwind for delinquent mortgages and REO properties as these trends lead to improved resolution and outcomes. MFA's tireless efforts to find new attractive investments were also rewarded in the third quarter as record asset acquisitions exceeded runoff and led the portfolio growth of $1.5 billion. Please turn to Page 4. We reported GAAP earnings of $0.28 per share for the third quarter, largely driven by gains of $43.9 million or $0.10 per share related to our acquisition of Lima One. These gains resulted from the difference between the fair value of our Lima One purchase relative to our basis in our previous investments, in both common equity and preferred equity of Lima One, both of which were impaired early on in the pandemic. Our net interest income from our loan portfolio increased by 15%, over the second quarter to $55 million from $48 million. GAAP book value was $4.82, up $0.17 or 3.7% from June 30 and economic book value was $5.27, up $0.15 or 2.9% from June 30. Economic return was also strong for the quarter. 5.8% GAAP and 4.9% economic book value. Our leverage picked up slightly over the core to 2.2 to 1 versus 1.8 to 1 at June 30. And we paid a $0.10 dividend to shareholders on October 29. Please turn to Page 5. We acquired $2 billion of loans in third quarter, the highest quarterly loan purchase volume in our history, and we grew our loan portfolio by $1.5 billion to $7 billion. These purchases included $820 million of agency eligible investor -- sorry about that. So these loan purchases included $820 million of agency eligible investor loans and $485 million of business purpose loans. In fairness, it's likely that purchases of agency eligible investor loans will taper somewhat in future quarters, given the recent removal of the cap on GSE investor loan purchases. The business purpose loan acquisitions included approximately $170 million of loans that were on Lima One's balance sheet at July 1. But as Gudmundur will discuss shortly, Lima One's origination volume continues to grow and their October production was their highest month ever. So while $1.5 billion of portfolio growth was an extraordinary quarter, we believe that we are well positioned with our originator partners to continue to grow our portfolio. Our net interest income increased versus Q2 by 5% to $61.8 million. We continue to make excellent progress in liquidating REO properties, as we capitalize on strong housing trends. And for borrowers still negatively impacted by COVID, we can offer modifications and/or repayment plans to allow them to stay in their homes, restore their payment status to current and retain their equity in their home. Please turn to Page 6. This slide illustrates the components of our investment portfolio and also the nature of our asset-based financings. The increase of approximately $1 billion in mark-to-market financing versus last quarter is primarily related to our agency eligible investor loans, which are financed with traditional repo as a bridge to securitization. Please turn to Page 7. Despite the normal challenges associated with the corporate acquisition, Lima One did not miss a beat in the third quarter as they originated over $400 million of loans during the quarter. We have an excellent relationship with Jeff Tennyson and his team at Lima One having worked closely with them for over four years now. As many of you probably know, there have been two recent announcements of acquisitions of similarly large business purpose lenders. We're confident that we can provide Lima with the resources to continue to grow and excel at their business. There are no doubt efficiencies that we can cultivate over time to lower costs. And to that point, we've already taken steps to reduce Lima's interest expenses. Steve Yarad will review some of the accounting aspects of this transaction shortly. Please turn to Page 8. We continued to execute on our securitization strategy in the third quarter, pricing our fifth non-QM deal in August. As luck would have it, we priced this deal when yields were at their lowest levels in the quarter. Subsequent to quarter end, we priced our first agency eligible investor securitization in October. We structured $312 million bonds and we retained a 5% vertical slice of the deal. Please turn to Page 9. Finally, you may have noticed that we've added a corporate responsibility section to our website. Environmental, social and governance issues have never been as prevalent as they are today. And the focus on ESG in investment decisions is real and growing. MFA has been committed to these principles for years, but we have been remiss in communicating our endeavors and policies to support these principles publicly. We will always continue to improve our efforts, but we are proud to finally communicate our substantial progress to date. Craig has already noted, MFA delivered strong results for the quarter that were driven by record quarterly loan portfolio growth and certain purchase accounting adjustments related to the Lima One acquisition, as well as the inclusion of Lima One earnings in MFA's consolidated results. Before discussing the core portfolio results in more detail, I'd like to take a minute to discuss the impact of Lima One purchase accounting on our income statement for the third quarter, as well as on their quarter end balance sheet. Firstly, earnings include gains totaling $43.9 million that relate to the Lima One purchase transaction. This includes the following: $38.9 million gain arising from revealing our previously held investment of approximately 43% of Lima One's common equity. GAAP purchase accounting requires at the previously held interest is adjusted at closing to the fair value implied by the current transaction. We impaired the value of our prior investment by $21 million back in March of 2020, when valuations of mortgage originators were highly uncertain. Consequently, the $38.9 million gain includes a reversal of its prior impairment charge, while the remaining $18 million represents the incremental adjustment to reflect the prior investment at the fair value implied by the current transaction. An additional gain was recorded as Lima repaid its outstanding preferred equity in full, of which MFA held roughly half. The gain recorded reflects $5 million impairment reversal. That impairment was also initially recorded in March of 2020. Secondly, under the required GAAP purchase accounting to consolidate Lima One onto MFA's balance sheet, we recorded $28 million of intangible assets and $61.6 million of residual goodwill. Intangible assets include the value allocated to customer relationships, the Lima One brand name and internally developed technology. These assets are amortized over their estimated useful lives with $3.3 million of amortization expense recorded this quarter. The residual goodwill asset represents the difference between the purchase price paid to acquire Lima One. And the fair value of the net assets acquired including the intangible assets. Goodwill is not amortized under current GAAP, but is subject to periodic impairment testing. Further detail on the purchase accounting for Lima One is provided in our 10-Q, which we expect to file later today. Turning now to the core components of our Q3 2021 results, the key items to highlight are as follows. Net interest income of $61.8 million was $2.8 million higher or 5% higher sequentially. As Craig noted residential whole loan net interest income again increased, this quarter by 15%, primarily due to impressive portfolio growth and the ongoing impact of securitizations to lower the cost of financing. Now, net interest spread was essentially flat to last quarter at 2.98%. The CECL allowance in our carrying value loans decreased for the six quarter in a row, and at September 30, this $44.1 million down from $54.3 million at June 30. The decrease reflects continued runoff of the carrying value loan portfolio and adjustments to macroeconomic and loan prepayment speed assumptions used in our credit loss modeling. This reversal to our CECL reserves positively impacted net income for the quarter by $9.7 million. Actual charge-off experience continues to remain very modest with approximately $2.1 million of net charge-offs taken in the nine-month period ended September 30, 2021. Pricing on loans held at fair value was higher than the end of the second quarter, particularly on purchased non-performing loans and business purpose loans. This primarily drove the net gains recorded of $21.8 million. Approximately $11.3 million of this amount relates to business purpose loans originated at par by Lima One during the third quarter, because we elect the fair value option on these loans. At quarter end, they're mark-to-market based on estimated third-party sale process. In addition to the fair value gains on originated loans, Lima One also contributed $9.6 million of origination, servicing and other fee income during the quarter, reflecting strong origination volumes. Gudmundur will discuss this in more detail shortly. Finally, our operating and other expense, excluding the amortization of Lima One intangible assets was $30.1 million for the quarter. This includes approximately $10.3 million of expenses, primarily compensation related at Lima One. MFA's G&A expenses this quarter were approximately $14.5 million, which is in line with our normal run rate. Moving forward, we would expect our consolidated G&A expense to run at around $25 million per quarter, up since significant changes in Lima One origination volumes. Other loan portfolio related costs meaning those not related to Lima One loan origination servicing are expected to run at around $5 million to $7 million a quarter, but will fluctuate based on the level of loan at acquisition activity, REO portfolio management expenses and costs incurred to the extent we continue to favor securitization over warehouse financing. Turning to Page 11, home prices showed continued strength over the quarter. We saw prices increased at year-over-year rate of 18%. We have however seen the pace of month-over-month increases moderate a bit, as of the dramatic increase in home prices have had a slight impact on affordability. All of the same fundamental factors remain at play, such as low inventory, demographic trends and historically low rates. The unemployment rate is now down below 5% as economic activity continues to increase. All of these factors combined with monetary and fiscal support, continue to keep mortgage credit performance strong and should bode well for continued credit performance in the near term. Turning to Page 12, non-QM origination volume remained elevated over the quarter and we were able to purchase almost $700 million of loans, which represents another significant quarter-over-quarter increase. Prepayment speeds remain elevated over the quarter as the three month average CPR for the portfolio was 39%. We executed on our fifth securitization in the third quarter, bringing the total amount of collateral securitized to over $2 billion. And we expect to bring another securitization of non-QM loans in the fourth quarter. These securitizations continue to lower our financing cost and at the same time, have provided additional stability to our borrowings. Securitizations combined with non-mark-to-market term facility have resulted in approximately 50% of our non-QM portfolio funded with non-mark-to-market leverage at the end of the quarter. We expect to continue to be a programmatic issuer of securitizations as it's currently the most efficient form of financing for our portfolio. Turning to Page 13. The non-QM portfolio has exhibited strong performance coming back from the uncertainty created by the onset of the pandemic. We've seen steady improvement and delinquency percentages as our loss mitigation tactics employed have been effective. We instituted a deferral program at the onset of the pandemic in an effort to help our borrowers manage through the crisis. Currently, have a very small handful of non-QM borrowers in forbearance or deferral plans. For borrowers that did receive forbearances, many of them are either current today or on a repayment plan to be current within one to two years' time. In the third quarter, we saw 60-plus-day delinquency rates improved by two anda half percent and 30 day delinquencies dropped by 0.3%. In addition, approximately 30% of those delinquent loans made a payment in the most recent months. As the economic recovery continues, we expect the portfolio's credit performance to improve. Our strategy of targeting lower LTV loans should mitigate losses under a scenario with elevated delinquencies, in many cases, borrowers, which no longer have the ability to afford their debt service will sell their home in order to get the return of their equity. Turning to Page 14. In September, the FHFA and treasury suspended the 7% cap on investor loan purchases for Fannie Mae and Freddie Mac for at least one year. We took advantage of the opportunity over the quarter acquiring over $2 billion or acquiring over $1 billion in loans since we started purchasing these loans in the second quarter, from our existing originator relationships at attractive prices. This new announcement limits the opportunity size for the time being, but could arise again in the future. We executed on our first securitization of this collateral subsequent to quarter end and expect to execute another before the end of the year. This is another example of our ability to adapt to an ever-changing environment and a testament to our strong originator relationships in a competitive environment. Turning to Page 15. Our RPL portfolio of approximately $700 million continues to perform well. 81% of our portfolio remains less than 60 days delinquent. And although the percentage of the portfolio of 60 days delinquent in status was 19%, almost 30% of those borrowers continue to make payments. Prepaid speeds in the third quarter continue to be elevated at a three month CPR of 17. More and more of our borrowers are gaining equity with the increase in home prices and are taking advantage of the low interest rate environment. We have a small amount of borrowers still receiving COVID assistance and believe the impact from COVID will be de minimis on our RPL portfolio going forward. Turning to Page 16. Our asset management team continues to push performance of our NPL portfolio. The team has worked in concert with our servicing partners to maximize outcomes on our portfolio. This slide shows the outcomes for loans that were purchased prior to the year ended 2020. 38% of loans that were delinquent at purchase are not either performing or have paid in full. 48% have either liquidated or REO to be liquidated. Our sales of REO properties have continued at an accelerated pace at advantageous prices. Over the quarter, we sold almost three times as many properties as a number of loans we converted to REO. 14% are still a non-performing status. Our modifications have been effective as almost three quarters are either performing or have paid in full. We are pleased with these results as they continue to outperform our assumptions at the time of purchase. Turning to Page 17. We closed our acquisition of Lima One, a leading nationwide business purpose originator at the beginning of the quarter. This acquisition solidifies MFA's position as a leading capital provider to the BPL space, which we believe offers some of the most attractive opportunities to deploy capital in the residential mortgage space. Our teams wasted no time utilizing our collective strengths to take the business to new heights. Lima One originated over $400 million of business purpose loans in the third quarter, a record quarter for the company and a 34% increase over second quarter origination levels. We saw strong demand for all of Lima's products and continue to experience the benefits of Lima's diversified product offerings, which offer financing solution to residential real estate investors with short and long-term investment strategies in the single family and small balance multi-family markets. September origination of over $150 million was a record month for the company, but that record was short-lived as the fourth quarters off to a strong start with October volume setting a new record with origination of over $170 million. One of the key benefits of this transaction is Lima's ability to provide MFA with a reliable flow of high quality, high yielding assets that are difficult to source in the marketplace. When we announce the transaction in May, we also mentioned that we believe that Lima had the potential to grow substantially beyond the run rate at the time of $1.2 billion annual origination. We are already seeing that play out as we now expect full 2021 origination volume of between $1.4 billion to $1.5 billion. And the third and fourth quarter volume suggests continued growth in 2022. In addition to the benefit of adding assets to our balance sheet Lima as profitable company. Lima generated $10.6 million of net income from origination servicing activities in the quarter, representing an annualized return on allocated equity of approximately 30%. We have been very impressed by Lima's operational efficiency as they've consistently closed over 450 loan units in the last few months, up from about 300 units per month in the first quarter. We believe the team's experience with closing large volume of loans and scaling up operational capacity quickly sets us up nicely for future growth. We added $600 million of BPL financing capacity in the quarter – in the third quarter, as we close on two new financing facilities. These facilities allow for financing of a broad range of BPL assets, it will support the continued growth of our BPL strategy. And finally, the increased rent to loan acquisition volume from the Lima One acquisition has accelerated our timeline for our next business purpose rent to loan securitization, which we now expect to close in the fourth quarter. Turning to Page 18. Here we will discuss the fix and flip portfolio. The portfolio grew by over $160 million or 37% in the quarter. Purchase activity picked up significantly as we closed on the Lima acquisition, including loans on their balance sheet and benefited from very strong origination activity. In total, we purchased approximately $230 million UPB with $350 million max loan amount in the quarter and have added over $95 million maximum loan amounts so far in the fourth quarter. As a reminder, flix and flip loans finance the acquisition, rehabilitation and construction of homes. Typically, a certain amount of the loan is held back in the form of a construction holdback, which explains the difference between UPB on day one and the max loan amount, which represents the fully funded loan at the completion of projects. The flix and flip portfolio delivered strong income in the third quarter with an average portfolio yield of 7.11% in the quarter, a 67-basis-point increase from the second quarter. The housing market remains extremely strong with record low mortgage rates and low levels of inventory supporting annual home price appreciation in excess of 15%. In addition, we continue to see unemployment declining and overall economic activity improving across the country. The combination of these positive economic fundamentals, low initial LTVs in our loans and the efforts of our experienced asset management team continues to lead to acceptable outcomes on our delinquent loans. 60-plus-day delinquent loans continue to decline and drop $13 million or about 10% to $107 million at the end of the third quarter. And we continue to see a solid amount of loans payoff in full out of 60 plus. When loans payoff in full from serious delinquency, we often collect default interest, extension fees and other fees of payoff. For loans where there's meaningful equity in the property, these can add up. Since inception, we have collected approximately $5.6 million and these types of fees across our fix and flip portfolio. 60-plus-day delinquency as a percentage of UPB declined 10% to 18% and remain somewhat elevated. One thing to note here is that Lima originated fix and flip loans held by MFA have approximately 5% 60 day delinquency, speaking to the quality of origination and servicing. Almost all of the 60-plus-day delinquent loans were originated prior to March of 2020 and are simply working the way through the appropriate loss mitigation activities. Due to the short term nature of fix and flip loans with expected payoff in about six to 12 months, delinquent loans can be outstanding for longer than performing loans due to the time it takes to complete foreclosure. Keep in mind that we acquired over $2.2 billion of fix and flip loans and have had over $1.6 billion payoff in full. As our purchase activity was limited last year and performing loans paid off, the delinquency percentage increased as one would naturally expect as our portfolio's rank. As we now grow our portfolio again and continue to have positive outcomes on seriously delinquent loans, we expect both dollar amount as well as percentage delinquency to continue to decline going forward. Turning to Page 19. Our single family rent to loan portfolio continues to deliver attractive yields and strong credit performance. The portfolio yield has remained steady in a mid-to-high 5% range post-COVID and was 5.76% in the second quarter. Underlying credit trends remain solid and 60-plus-day delinquency declined 140 basis points to 3.5% at the end of the third quarter. Purchase activity more than doubled from the second quarter, as we acquired over $250 million of single family rental loans in the quarter, a record quarterly acquisition volume. The SFR portfolio group by 39% to $717 million at the end of the third quarter. Acquisition activities have remained robust in the fourth quarter, as we've already added over $70 million in the month of October. The acquisition of Lima One has significantly boosted our ability to source single family rent to loans, and we believe, and we will be able to continue to grow our single family rental portfolio in the near future. Approximately, 50% of our single family rental portfolio is financed in non-mark-to-market financing and slightly over one-thirds of securitizations. We price our first single family rental securitization in the first quarter of 2021 and expect to close another one in the fourth quarter. We expect to programmatically execute single family rental securitizations to efficiently finance our portfolio. We are pleased with the results of the third quarter of 2021 and even more excited about the future at MFA. Our investment initiatives are picking up steam and contributing to portfolio growth. We're continuing to execute our strategic plan to securitize our assets and term out durable financing. Lima One is firing on all cylinders and the strength of the housing industry has obvious positive implications for our mortgage credit investments.

qtrly earnings of $0.28 per basic common share. qtrly net interest income increased on a sequential quarterly basis to $61.8 million.

It's been six months since the pandemic was officially declared and I think the world is at the beginning of an Ironman Triathlon. It's not just a marathon but a triathlon of endurance, agility, change. In fact, I think over the next two years, we're going to see more change than we've seen in the past 10. Change will circle humanity. And in business, different work will need to get done and work will need to get done differently. Almost every company on the planet is going to have to reimagine their business, whether that's rethinking their organizational atmosphere, their structure, roles, responsibilities, how they compensate, how they engage, how they develop their workforce. There is -- change is going to be all around us. They're going to need to hire learning, agile, diverse talent, and do so in a more inclusive ethos and in an increasingly digital world and that's the essence of Korn Ferry's business, to enable people and organizations to exceed their potential, to be more of them. In early March, we were announcing the best results in our history. Record fee revenue and the continued transformation from a monoline firm to an organizational consultancy. And then the world temporarily paused. Certainly that pause temporarily impacted our business. During the first quarter of our fiscal year, we generated about $344 million in fee revenue, which was down about 28% in constant currency. But I think the key word is temporary. As we alluded on our last call, we're continuing to see green shoots, with July new business better than June, June better than May, and May better than April. Trailing new business for the three months ended August was down about 13% year-over-year combined, which is obviously more positive than we saw in our first quarter in what we saw when the world stopped in April. In fact, August new business was only down about 6% year-over-year. So really good news. July new business was up 34% over June. So again, green shoots that we're seeing. And I think I'm -- more than anything I'm proud, proud of our organization and motivated by how we've positioned ourselves for the opportunity ahead, and we face this crisis from a position of strength, not only when you consider the breadth and depth of our solutions, but when you consider our balance sheet. And the foundation of the firm has been to ground it in [Phonetic] IT [Phonetic] and data. And that continues to be the backbone of Korn Ferry. We've got rewards data on over 20 million people, 25,000 companies, we've done almost 70 million assessments, we have thousands of organizational benchmark data, we've got thousands of success profiles, every year we train and develop 1 million professionals a year, and certainly last but not least is we place a candidate at each business hour, every three minutes. And so we're using this time of change not only to have an impact with our clients, but also to reimagine our own business. And that includes moving from analog to digital including in our assessment and learning business, which today it's almost 25% of the company and we're certainly shifting that business. We've done more virtual sessions in the last couple of months than we've done in the last many, many months. The pipeline is good. We pivoted very quickly. I can't be prouder of our team. And when you look at the uptick here month over month in both our Consulting and Digital new business, you can see that something is working. And on the recruiting side, that's another place where we are reimagining that business as well through AI technology and a lot of the platform that we use in RPO. We've taken this IP. We've taken it out to the marketplace. I'm very proud in terms of the stance we have taken. I think our biggest opportunity as a company is to recast the Korn Ferry brand. We recently launched Leadership U, a curriculum that helps leaders taking on today's challenges. And more importantly, amid all the calls for change, we're amplifying our voice, not only on diversity, but also in equity and inclusion, both within Korn Ferry and among our clients. And we know from our research that diversity is a fact, engagement is an emotion, but inclusion is a behavior. And so, our focus on D&I, it's about -- actually it's about eight years ago almost -- actually it was two days ago eight-year anniversary of us making an investment in a company at that time was called Global Novations. We've turned that into what I consider to believe the absolute best D&I consulting business in the world. And as I mentioned, our July Consulting new business was the fourth highest month in our history. And I think that was driven in part by the strong voice we've taken not only around the pandemic, but also around D&I. And I'm also proud and pleased to say that we're launching Leadership U for Humanity and that's a non-profit venture of the Korn Ferry charitable foundation, focused on developing the total mosaic inside communities and within corporations. One of our partners will be the Executive Leadership Council, an absolute preeminent organization. Their mission is to develop/increase the number of successful Black executives around the goals -- around the globe. And our goal is to develop 1 million new leaders from diverse backgrounds using our Korn Ferry Advance and Leadership U platforms. And so not only I think we demonstrated that we say what we mean, but we're not just talking about it, we're being about it and providing a systemic solution to a systemic issue. And so out of tomorrow's change, a new order is emerging, and Korn Ferry is going to help drive that change, helping people and organizations be more of them. With that, I am joined here by Bob Rozek and Gregg Kvochak. Before I jump into the first quarter results, I want to just elaborate on a couple of points that Gary talked about. I think he's absolutely right, concerning the amount of change that will take place in the next two, even three or four years. We're already seeing it in our clients. I truly believe that Korn Ferry is uniquely positioned to lead companies through this change. The data, IP and know-how that Gary talked about, really sits at the center of our organization and permeates all of our solutions. And that provides a common harmonized language for talent that's really core to our One Korn Ferry integrated approach to helping clients solve their thorniest business issues through the most valuable asset, which obviously is the people. Again, I believe we're uniquely positioned because we're the only firm that has the end-to-end data, IP and know-how to address every aspect of an employee's engagement with his or her employer. Not only do we have first-mover advantage, but in my opinion, our position and our collection of assets is virtually impossible to replicate. So as I sit here today in the midst of this wave of change with the collection of assets and solutions we've assembled, my optimism for Korn Ferry's future growth prospects have never been higher. Now let me turn my attention to the first quarter. I'll start with a few highlights before turning it over to Gregg, and then I'll come back on and address recent business trends. For the first quarter of fiscal year '21, our fee revenue was $344 million, down about 28% in constant currency. More importantly, our monthly fee revenue trends within the quarter showed signs of stabilization. Consolidated fee revenue in May was down about 34% year-over-year, while June and July were down 27% and 26%, respectively. For each of our service offerings, we saw fee revenue slowing at different rates, which really was in line with our expectation and reflects the diversification and mix shifts that we've been communicating. Specifically, fee revenue in the first quarter, measured at constant currency, was down 37% for Executive Search, 35% for Professional Search, our Consulting was down 26%, RPO was down 22%, and Digital was down 2%. Driven by the revenue contraction, our consolidated adjusted EBITDA for the first quarter was $10.6 million with an adjusted EBITDA margin of 3.1%, and our adjusted fully diluted loss per share was $0.19. Our balance sheet and liquidity remained strong. At the end of the first quarter, cash and marketable securities totaled $733 million. Excluding amounts reserved for deferred comp and for accrued bonuses and actually net of the funds used to rightsize the firms, our investable cash balance at the end of the first quarter was about $511 million, and that's up about $150 million year-over-year. We continue to have undrawn capacity of $645 million on our revolver. So altogether, we have close to $1.2 billion in liquidity to manage our way through the COVID-19 crisis and to invest back into the business through the recovery. Last, we had about $400 million in outstanding debt at the end of the quarter. Finally, during the quarter, we completed our restructuring actions to size the firm for the anticipated current levels of revenue. As you will recall, in April, just before the end of our fiscal fourth quarter of FY '20, we announced a number of cost actions targeted at both compensation expense, which included layoffs, furloughs and across the board salary cuts, as well as other actions focused on the reduction of G&A. Combined with the actions completed in the first quarter, we have initially reduced our cost base by about $321 million annually. Starting with our Digital segment. Global fee revenue for KF Digital was $56 million in the first quarter and down approximately $2 million or 2% year-over-year measured at constant currency. The subscription and licensing component of KF Digital fee revenue in the first quarter was approximately $21 million, which was up $6 million year-over-year and flat sequentially. New business in the first quarter for the Digital segment was down approximately 3% globally year-over-year at constant currency with the subscription and licensing component up approximately 40%. Adjusted EBITDA in the first quarter for KF Digital was $7.9 million with a 14.2% adjusted EBITDA margin. Now turning to Consulting. In the first quarter, Consulting generated $99 million of fee revenue, which was down approximately 26% year-over-year at constant currency. As clients have settled into their new work from home protocols and have become more familiar with our virtual delivery capabilities, new business for our Consulting services has begun to improve. Measured year-over-year at constant currency, new business in the first quarter for our Consulting segment was down approximately 4%, led by North America, where new business was up 11% year-over-year. Adjusted EBITDA for Consulting in the first quarter was $6.6 million with an adjusted EBITDA margin of 6.6%. RPO and Professional Search generated global fee revenue of $68 million in the first quarter, which was down 27% year-over-year at constant currency. RPO fee revenue was down approximately 22%, and Professional Search fee revenue was down approximately 35% year-over-year measured at constant currency. Adjusted EBITDA for RPO and Professional Search in the first quarter was $6 million with an adjusted EBITDA margin of 8.8%. Finally, for the Executive Search, global fee revenue in the first quarter of fiscal '21 was approximately $120 million, which compared year-over-year and measured at constant currency was down approximately 37%. At constant currency, North America was down 38%, while both EMEA and APAC were down 35%. The total number of dedicated Executive Search consultants worldwide at the end of the first quarter was 510, down 59 year-over-year and down 46 sequentially. Annualized fee revenue production per consultant in the first quarter was $900,000 and the number of new assignments opened worldwide in the first quarter was 1,115, which was down approximately 34% year-over-year, but up 9% sequentially. Adjusted EBITDA for Executive Search in the first quarter was approximately $8.1 million with an adjusted EBITDA margin of 6.7%. Globally, year-over-year declines in monthly new business exiting fiscal year '21 Q1 and entering the second quarter continued to stabilize. Excluding new business awards for RPO, global new business measured year-over-year was down approximately 31% in May, down 25% in June, rebounding to down 5% in July. Measured sequentially, June new business was up 17% over May and July new business was up 34% compared to June. With summer vacations, August is a seasonally slow month and normally is lower relative to July. Measured year-over-year, August new business was stable and down about 6%, which is in line with what we saw in July. Monthly new business trends have varied by segment and have, in some cases, been choppy month-to-month. Digital new business was up 3% year-over-year in June, down 5% year-over-year in July and up 10% in August. Likewise, Consulting new business was down 28% year-over-year in June, rebounding to up 34% in July and up 10% in August. For Executive Search, new business was down 34% year-over-year in June, improving to down 27% in July and was down 19% in August. And finally, Professional Search new business was down 15% year-over-year, falling to down 23% in July and August. With regards to RPO, a strong quarter of new business with $56 million of global awards and that was comprised of $32 million of new clients and $24 million of renewals and extensions. And we continue to have a strong pipeline of new business in the RPO world [Phonetic]. Approximately two months have passed since our last earnings call, yet there remains significant uncertainty about the ultimate impact of COVID-19 on society and global economies. Currently, governments are struggling to balance reopening and reengaging in an effective way against the maintenance of an environment that fosters the health and safety of everyone. There really is no playbook. This effort takes on many forms, and there's not a clear path to success. Further, it's unclear whether certain governmental a programs that were put in place to provide financial assistance to impact the businesses and individuals, whether they will remain in place or for how long. The unprecedented nature of the current environment, combined with many unanswered questions and rapidly changing data points, like the recent acceleration of corporate layoffs and the potential outcome of the US presidential election, that really continues to cloud the near-term predictability of our business. And consistent with our approach in the last two earnings calls, we will not issue any specific revenue or earnings guidance for the second quarter of fiscal year '21. We're glad to take any questions you may have.

compname reports fourth quarter 2021 net income of $601 million, or $0.64 per diluted common share. compname reports fourth quarter 2021 net income of $601 million, or $0.64 per diluted common share. average loans were $99.4 billion for q4 of 2021, a decrease of $2.3 billion compared to q4 of 2020. taxable-equivalent net interest income was $1.0 billion for q4 of 2021 and net interest margin was 2.44%. qtrly provision for credit losses was $4 million, compared to $20 million in q4 of 2020. net loan charge-offs for q4 of 2021 totaled $19 million.

I'm here with Arvind Krishna, IBM's chairman and chief executive officer; and Jim Kavanaugh, IBM's senior vice president and chief financial officer. I'll remind you the separation of our managed infrastructure services business, Kyndryl, was completed on November 3. As a result, our income statement is presented on a continuing operations basis. Our results also reflect the incremental revenue from the new commercial relationship with Kyndryl. Because this provides a one-time lift to our growth, we will provide the contribution to our revenue growth for the next year. For example, all of our references to revenue and signings growth are at constant currency. These statements involve factors that could cause our actual results to differ materially. Additional information about these factors is included in the company's SEC filings. Our fourth-quarter results reinforce our confidence in our strategy and model. With solid revenue growth, we are on track to the mid-single-digit trajectory we had laid out in our investor briefing last October. The trend we see is clear. Across industries, clients see technology has a major source of competitive advantage. They realize that powerful technologies embedded at the heart of their business can lead to seismic shifts in the way they create value. This reality of technology being about a lot more than cost will persist and explains why clients are eager to leverage hybrid cloud and artificial intelligence to move their business forward. Our fourth-quarter results illustrates the strong client demand we see in the marketplace for our technology and consulting. IBM Consulting again had double-digit revenue growth as our ecosystem play continues to gain momentum. Software revenue growth reflects strength in Red Hat and our automation offerings. Infrastructure had a good quarter, especially with regards to IBM Z and storage. Over the last year and a half, we have taken a series of actions to execute our hybrid cloud and AI strategy and improve our revenue profile, optimizing our portfolio, increasing investments, expanding our ecosystem, and simplifying our go-to market. As we start to yield benefits from these actions, our constant-currency performance improved through 2021. Our most significant portfolio action was the separation of Kyndryl. You will remember we had initially expected the spin by the end of the year, and we completed it in early November. As we discuss our results, we'll focus on the new basis and structure that encompasses today's IBM. As we look to 2022, we expect mid-single-digit revenue growth before Kyndryl and currency and $10 billion to $10.5 billion of free cash flow for the year. Both of these are consistent with our medium-term model. Let me now spend a few minutes on what we are seeing in the market, how we address it, and the progress we are making. We are seeing high demand for our capabilities in several areas. Clients are eager to automate as many business class as possible, especially given the new employee demographics. This dynamic is likely to play out over the long term. They are also using AI and predictive capabilities to mitigate friction in their supply chains. Cybersecurity remains a major area of concern as the cost of cybercrime, already in the billions of dollars, rises each year. As clients deal with these challenges and opportunities, they are looking for a partner they can trust and who has a proven track record in bringing about strategic transformation projects. This is why our strategy is focused on helping our clients leverage the power of hybrid cloud and AI. Hybrid cloud is about providing a platform that can straddle multiple public clouds, private cloud, and as-a-service properties that our clients typically have. Our approach is platform-centric, and the platform we have built is open, secure, and flexible and it provides a solid base of the multiplier effect across software and services for IBM and our ecosystem partners. It starts with Red Hat, which offers clients unique software capabilities based on open-source innovation. Our software, which has been optimized for that platform, helps our clients apply AI, automation, and security to transform and improve their business workflows. Our consultants deliver deep business expertise and they co-create with our clients to advance their digital transformation journeys. And our infrastructure allows clients to take full advantage of an extended hybrid cloud environment. This strategy, along with the differentiated capabilities we bring to bear to our clients, have led to an increase in platform adoption and new business opportunities across the stack. We now have more than 3,800 hybrid cloud platform clients, which is up 1,000 clients from this time last year. IBM Consulting continues to help drive platform adoption, with about 700 Red Hat engagements for the year. Clients like Dun & Bradstreet, National Grid, AIB, and Volkswagen have all recently chosen IBM's broad hybrid cloud and AI capabilities to transform their processes and move their business forward. As I look back on the year, we had good success in broadening our ecosystem to drive platform adoption and to better respond to client needs. During our investor briefing, we talked about strategic partnerships that will yield billion-dollar businesses within IBM Consulting. As we move toward that, we had more than 50% revenue growth this year in partnerships with AWS, Azure, and Salesforce. This adds to the strong strategic partnerships we have with others such as SAP, Oracle, and Adobe. We're continuing to broaden our ecosystem reach. In the fourth quarter, we announced an expansion of our strategic partnership with Salesforce to run MuleSoft integration software on Red Hat OpenShift. We also created a host of new consulting services with SAP to help clients accelerate their journey to S/4HANA. Together with Deloitte, we announced DAPPER, an AI-enabled, managed analytics solution. And we have expanded our partnership with EY to help organizations leverage hybrid cloud, AI, and automation capabilities to transform HR operations. We have also recently announced a host of new strategic partnerships with Cisco, Palo Alto Networks, and TELUS, all focused on the deployment of 5G, edge, and network automation capabilities. During 2021, we have been making changes to increase our focus and agility and build a stronger client-centric culture. This includes putting experiential selling, client engineering, and co-creation at the heart of our client engagement model. We have completed thousands of IBM Garage engagements. And today, we have nearly 3,000 active engagements. We've invested in hundreds of customer success managers to help clients capture more value from our solutions. And we have upgraded our skills with fewer generalists and more technical specialists. This is resonating well with our clients, and it's starting to contribute to our performance. The most important metric, of course, is revenue growth, but we are also pleased to see our client renewal rates increasing and our recurring revenue base growing. We are starting to see signs of sales productivity improvements, with average productivity per technology seller increasing from the first to the second half. At the same time, innovations that matter to our clients remain a constant focus, and our teams have worked hard to deliver a series of important innovations in the past quarter. Starting with AI, we added new natural language processing enhancements to Watson Discovery. We're also combining and integrating products such as Turbonomic, Instana, and Watson AIOps to offer a complete set of AI-powered automation software to address the significant demand. This quarter, Red Hat announced that the Ansible automation platform is now available on Microsoft Azure, bringing more flexibility to clients and how they adopt automation. In partnership with Samsung Electronics, IBM announced a breakthrough that reorients how transistors are built upon the surface of a chip to enable tremendous increases in energy density. In Quantum, we unveiled Eagle, 127-qubit quantum processor. This is the first quantum chip that breaks the 100-cubic barrier and represents a key milestone on our path toward building a 1,000-cubit processor in 2023. While organic innovations are important, we continue to acquire companies that complement and strengthen our portfolio. We made five acquisitions in the fourth quarter and a total of 15 acquisitions in 2021. Two weeks ago, we announced the acquisition of Envizi. Many consumers are willing to pay more for products that are made by companies that are more environmentally sustainable. As the world continues to move toward a more circular economy, our clients' need is the ability to manage and measure their progress. Envizi's capabilities complement our own and help us respond to that client demand. Sustainability is important across a number of stakeholder groups, including clients, employees, and investors. We are continuing to make good progress and are particularly proud of our diversity and inclusion scores, and our ability to attract and retain talent. Our efforts were recently recognized by JUST Capital who named IBM as one of America's most just companies. Let me now close by emphasizing once again our fourth-quarter results strengthen the conviction that we have in our ability to deliver our model of mid-single-digit revenue growth. Jim will take you through the fourth quarter and then provide more color on 2022. Jim, over to you. Let me start out with a few of the headline numbers. We delivered $16.7 billion in revenue, 58% operating gross margin, operating pre-tax income of $3.5 billion, and operating earnings per share of $3.35 for continuing operations. Last January, we said we expected performance to improve over the course of 2021 as we start to benefit from the actions we've taken. We have seen progress in our constant-currency revenue growth rate every quarter and now again in the fourth. This is the first view of IBM post-separation. We had solid revenue performance, up nearly 9%. I'll remind you, this includes the incremental revenue from the new commercial relationship with Kyndryl, and we said we would be transparent on the contribution to our revenue growth for the first year. This quarter, our revenue growth includes about 3.5 points from the new relationship. Excluding this, IBM's revenue was up 5%. We have aligned our operating model and segment structure to our platform-centric approach. In the fourth quarter, Software was up 10%, and Consulting was up 16%. These are our two growth vectors and together represent over 70% of our annual revenue. Infrastructure, more of a value vector, tends to follow product cycles and was up 2%. The Software and Infrastructure growth each include nearly 5 points from the new Kyndryl relationship while there is no contribution to Consulting's growth. Our platform-centric model has attractive economics. For every dollar of hybrid platform revenue, IBM and our ecosystem partners can generate $3 to $5 of software, $6 to $8 of services, and $1 to $2 of infrastructure revenue. This drives IBM's hybrid cloud revenue, which is up 19% for the year. Post-separation, revenue from our full-stack cloud capabilities from Infrastructure up through Consulting now represents $20 billion of revenue or 35% of our total. Looking at our P&L metrics. Our operating gross profit was up 3%, and the $3.5 billion of operating pre-tax profit was up over 100%. Operating net income and earnings per share also grew. Let me highlight a couple of items within our profit performance. First, the year-to-year pre-tax profit reflects $1.5 billion charge to SG&A last year for structural actions to simplify and optimize our operating model and improve our go-forward position. We're continuing to invest to drive growth. Throughout the year, we have been aggressively hiring, with about 60% of our hires in Consulting. We're scaling resources in Garages, sign engineering centers, and customer success managers, all to better serve our clients. We're increasing investments in R&D to deliver innovation in AI, hybrid cloud, and emerging areas like Quantum. We're ramping investment in our ecosystem, and we acquired 15 companies in 2021 to provide skills and technologies aligned to our strategy, including capabilities to help win client architecture decisions. Regarding tax, our fourth-quarter operating tax rate was 14%. This was up significantly from last year but roughly 2 to 3 points lower than what we estimated in October due to a number of factors, including the actual product and geographic mix of our income in the quarter. Let me spend a minute on our free cash flow and balance sheet position. Our full-year consolidated cash from operations was $12.8 billion, and free cash flow was $6.5 billion. These are all-in consolidated results and include 10 months of Kyndryl and the cash paid for the 2020 structural actions and spin charges. IBM's stand-alone or baseline free cash flow for the year was $7.9 billion, which is aligned to our go-forward business. This excludes Kyndryl charges and pre-separation activity but includes the IBM portion of the structural actions. Payments for these IBM-related structural actions and deferred cash tax paid in 2021 contributed to the year-to-year decline in the stand-alone results. In terms of uses of cash for the year, we invested over $3 billion in acquisitions. We continue to delever, with debt down nearly $10 billion for the year and over $21 billion since closing the Red Hat acquisition. And we returned nearly $6 billion to shareholders in the form of dividends. This results in a year-end cash position of $7.6 billion, including marketable securities and debt of just under $52 billion. Our balance sheet remains strong, and I'd say the same for our retirement-related plans. You'll remember that over the last years, we've shifted our asset base to a lower risk profile. In 2021, the combination of modest returns and higher discount rates improved the funded status of our plans. In aggregate, our worldwide tax-qualified plans are funded at 107%, with the U.S. at 112%. Now, I'll turn to the details by segment, and I'll remind you we have put in place a simplified management system and segment structure aligned to our platform-centric model. And within the segments, we're now providing new revenue categories and metrics that will provide greater transparency into business trends and drivers. IBM Software delivered double-digit revenue growth in the quarter. This was driven by good revenue performance in both hybrid platform and solutions and transaction processing, the latter benefiting significantly from the new Kyndryl content. Software is important to our hybrid cloud strategy and our financial model. Our hybrid cloud revenue in software is up 25% for the year to more than $8.5 billion. And subscription and support renewal rates continue to grow again this quarter, contributing to a $700 million increase in the software deferred income balance over the last year. Hybrid platform and solutions revenue was up 9%. This performance is an indication of the strength across the software growth areas focused on hybrid cloud and AI. It's worth mentioning this includes only a point of help from the new Kyndryl commercial relationship. Let me highlight some of the trends by business area. Red Hat revenue, all in, was up 21%. Both infrastructure and app dev and emerging tech grew double digits as RHEL and OpenShift address enterprise's critical hybrid cloud requirements. With this performance, we're continuing to take share with our Red Hat offerings. Automation delivered strong revenue growth, up 15%. As Arvind mentioned, there is strong market demand for automation. We had good performance in AIOps and management this quarter as we address resource management and observability. Clients are realizing rapid time to value from Instana and Turbonomic, two of our automation acquisitions. And integration grew with continued traction in Cloud Pak for Integration. Data and AI revenue grew 3%. We have particular strength in data fabric, which enables clients to connect siloed data distributed across the hybrid cloud landscape without moving it. You'll recall, we talked about the data fabric opportunity back in October. We also had strong performance in business analytics and weather. Within these solutions, clients are leveraging our AI to ensure AI models are governed to operate in a fair and transparent manner. Security revenue declined modestly in the quarter driven by lower performance in data security, while revenue grew 5% for the year. As we called out in our recent investor briefing, security innovation is an integral part of our strategy. In December, we launched a new data security solution, Guardium Insights, with further plans to modernize the broader portfolio throughout the year. This quarter, we also completed the acquisition of ReaQta, which leverages AI and machine learning to automatically identify and block threats at the endpoint. Putting this all together, our annual recurring revenue, or ARR, is now over $13 billion, which is up 8% this quarter. This demonstrates the momentum in our hybrid platform and AI strategy, including Red Hat and our suite of Cloud Paks. Moving to transaction processing. Revenue was up 14%. This is above our model driven by a few underlying dynamics. First, all of the growth in transaction processing came from the new Kyndryl commercial relationship, which contributed more than 16 points of growth. Second, I'll remind you that we're wrapping on a very weak performance in the fourth quarter of last year, which was down 26%. And lastly, we had some large perpetual license transactions given the good expansion in the IBM Z capacity we've seen this cycle. While the new capacity is important, what's just as important is the continued strong renewal rates this quarter. These are both good proof points of our clients' commitment to our infrastructure platform and these high-value software offerings. Looking at software profit. We expanded pre-tax margin by 12 points, including nearly 10 points of improvement from last year's structural actions. Revenue grew 16% with acceleration across all three revenue categories. Complementing this strong revenue performance, our book-to-bill was 1.2. Clients are accelerating their business transformations powered by hybrid cloud and AI to drive innovation, increase agility and productivity, and capture new growth opportunities. Enterprises are turning to IBM Consulting as their trusted partner on this journey. They are choosing us for our deep client, industry, and technical expertise, which drives adoption of our hybrid cloud platform and pulls through key technologies. Consulting's hybrid cloud revenue grew 34% in the quarter. For the year, cloud revenue is up 32% to $8 billion. Offerings and application modernization, which are centered on Red Hat, contributed to this growth. The Red Hat-related signings more than doubled this year and are now over $4 billion since inception. This quarter, we added over 150 client engagements, bringing the total since inception to over 1,000. Our strategic partnerships also drove our performance. Revenue from these partnerships accelerated as the year progressed and was up solid double digits in the fourth quarter led by Salesforce, SAP, AWS, and Azure. Turning to our business areas. Our Consulting's growth was led by business transformation, which was up 20%. Business transformation brings together technology and strategic consulting to transform critical workflows at scale. To enable this, we leverage skills and capabilities in IBM technologies and with strategic ecosystem partners such as SAP, Salesforce, and Adobe. Our practices are centered on areas such as finance and supply chain, talent, industry-specific solutions, and digital design. This quarter, we had broad-based growth, reflecting strong demand for these solutions. In technology consulting, revenue was up 19%. Technology consulting architects and implements cloud platforms and strategies. We leverage hybrid cloud with Red Hat OpenShift and work with providers, such as AWS and Azure, in addition to IBM Cloud. This quarter, we continue to see good performance in application modernization offerings that build cloud-native applications and that modernize existing applications for the cloud. Finally, application operations revenue grew 8%. This business line focuses on application and cloud platform services required to operationalize and run in both cloud and on-premise environments. Revenue growth was driven by offerings, which provide end-to-end management of custom applications in cloud environments. Moving to consulting profit. Our pre-tax income margin expanded about 8 points, including just over 9 points from last year's structural actions. We're in a competitive labor market, and we continue to have increased pressure on labor costs due to higher acquisition, retention, and wages. While we still expect to capture this value in our engagements, it will take a few quarters to appear in our profit profile. So, now, turning to the new Infrastructure segment. Revenue was up 2%. The Kyndryl commercial relationship contributed about 5 points of growth, which is higher than we expected in October. In this segment, we brought together hybrid infrastructure with infrastructure support, which was formerly technology support services. This allows us to better manage the life cycle of our hardware platforms and to provide end-to-end value for our clients. Hybrid infrastructure and infrastructure support revenue were up 2% and 1%, respectively, with pretty consistent contribution from the new Kyndryl relationship. Hybrid infrastructure includes IBM Z and distributed infrastructure. IBM Z revenue performance, now inclusive of both hardware and operating system, is down 4% this quarter. This is the 10th quarter of z15 availability and the combination of security, scalability, and reliability continues to resonate with clients. This program continues to outpace the strong z14 program, and we ship more MIPS in the z15 program than any program in our history. Our clients are leveraging IBM Z as an essential part of their hybrid cloud infrastructure. And then in distributed infrastructure, revenue was up 7% driven by pervasive strength across our storage portfolio. Looking at infrastructure profit. The pre-tax margin was up over 9 points but essentially flat, normalizing for last year's structural action. Now, I'll wrap up with a discussion of how our investments and actions position us for 2022 and the longer term. We've been laser-focused on our hybrid cloud and AI strategy. Our portfolio, our capital allocation, and the moves we've been making are all designed to create value through focus for our clients, our partners, our employees, and our shareholders. We took significant steps during 2021. The most impactful portfolio action was, of course, the separation of Kyndryl. We've also been allocating capital to higher-growth areas, investing in skills and innovation, and expanding our ecosystem. We've aligned our business to a more platform-centric business model. And we're simplifying and redesigning our go-to-market to better meet client needs and execute on our growth agenda. Bottom line, we're exiting 2021 a different company. We have a higher-growth, higher-value business mix, with over 70% of our revenue in software and services and a significant recurring revenue base dominated by software. This will result in improving revenue growth profile, higher operating margin, strong and growing free cash flow, and lower capital intensity, leading to a higher return on invested capital business. We also continue to have attractive shareholder returns through dividends. In October, we laid out a model for IBM's performance over the medium term defined as 2022 through 2024. The model is focused on our two most important measures of success: revenue growth and free cash flow. As we enter the new year, I'll talk about our expectations for 2022 performance along those dimensions. We expect to grow revenue at mid-single-digit rate at constant currency. That's consistent with the model. On top of that, in 2022, the new commercial relationship with Kyndryl will contribute an additional 3 points of growth spread across the first three quarters. Currency dynamics, unfortunately, will be a headwind. At current spot rates, currency is roughly a 2-point headwind to reported revenue growth for the year and 3 points in the first quarter. For free cash flow, we expect to generate $10 billion to $10.5 billion in 2022. To be clear, this is an all-in free cash flow definition. The adjusted free cash flow view we provided in 2021 was useful given the significant cash impact associated with the separation and structural actions. Now in 2022, despite the fact we still have nearly $0.5 billion of impact from the charges, we're focusing on a traditional free cash flow definition. The $10 billion to $10.5 billion reflects a year-to-year improvement driven by lower payments for the structural actions, a modest tailwind from cash taxes, working capital improvements, and profit growth resulting from our higher growth and higher value business mix. With this performance, we're on track to our model. So, now, let me provide some color on our expectations for segment performance. Because this is a new segment structure, I'm going to spend a little more time and provide perspective on constant-currency revenue growth and pre-tax margin in the context of our segment models. In Software, as we benefit from the investments in innovation and our go-to-market changes, we're seeing progress in our Software growth rate. In 2022, we expect growth at the low end of the mid-single-digit model and then another 5 to 6 points of revenue growth from our external sales to Kyndryl. We expect Software pre-tax margin in the mid-20s range for the year. We have solid momentum in IBM Consulting revenue and expect this to continue into 2022 as we help clients with their digital transformations. This momentum and our book-to-bill ratio support revenue at the high end of our high single-digit model for the year, with double-digit growth in the first half. We expect low double-digit pre-tax margin for the full year with improving performance through the year as we make progress on price realization. Infrastructure revenue performance will vary with product cycle. In 2022, with a new IBM Z introduction late in the first half, we expect performance above the model and a slight contribution to IBM's overall growth. On top of that, we're planning for about 2 to 3 points from the external sales to Kyndryl in 2022. This supports a high-teens pre-tax margin rate for the full year. These segment revenue and margin dynamics will yield about a 4-point year-to-year improvement in IBM's pre-tax operating margin for the full year and 2 to 3 points in the first quarter. In terms of tax, we expect a mid- to high-teens tax rate, which is a headwind to our profit growth. Bringing this all together, we expect mid-single-digit revenue growth before Kyndryl and currency and $10 billion to $10.5 billion of free cash flow for the year, both in line with our midterm model. Patricia, let's go to the Q&A. Before we begin the Q&A, I'd like to mention a couple of items. In addition to our regular materials, we've included a summary of our new segments for your reference and historical data on segment pre-tax income. And then, second, as always, I'd ask you to refrain from multi-part questions.

q2 loss per share $0.08. sees 2021 adjusted selling, general, and administrative expenses to be about $240 million. sees 2021 capital expenditures to be approximately $110 million. qtrly total revenue were $663 million versus $250 million. hyatt - received a u.s. tax refund of $254 million in july of 2021 related to 2020 net operating losses carried back to prior years under cares act.

The non-GAAP financial measures provided should not be utilized in isolation, or considered as a substitute measures of financial performance prepared in accordance with GAAP, and reconciliation between GAAP and non-GAAP financial measures are provided in our third quarter Redwood review available on our website at redwoodtrust.com. Also note that the content of this conference call contains time sensitive information that is accurate only as of today. The company does not intend and undertakes no obligation to update this information to reflect subsequent events or circumstances. Finally, today's call is being recorded and will be available on the company's website later today. After restored first half of the year, our team continued on our path toward transformative growth. After having communicated an ambitious second half of 2021 forecast, our third quarter results still managed to exceed our expectations. The entire organization has been energized to see the durability of our business model as we produce strong financial results and risk adjusted portfolio returns. Our GAAP earnings were $0.65 per diluted share for the third quarter, and our GAAP book value increased 4.7% in the quarter to $12 per share at September 30th. This contributes to an overall year-to-date increase in our GAAP book value of 21% despite having raised our dividend each quarter of the year thus far. When combined our GAAP book value growth in dividends paid resulted in a 27% economic return to shareholders year-to-date. Operationally speaking, you'll hear more from Dash and Brooke on our third quarter results. But suffice it to say it was a very strong quarter, several in-house records broken. I'm particularly proud of a series of strategic and innovative transactions across our firm that were both accretive to earnings and foundational for future operating progress. This included the first private label RMBS securitization to leverage blockchain technology, completed in collaboration with liquid mortgage and early horizons investment partner. We also completed our first ever bridge loan securitization through our BPL platform, which provides a meaningful new distribution alternative to us. Next, our investment portfolio team co-sponsored the first ever securitization backed entirely by residential home equity investments. Finally, these deals are rounded out by six new venture investments by RWT Horizons in the third quarter. I'm also pleased that after following strict health and safety protocols, we're able to successfully host our third Investor Day in September, the first since the onset of the pandemic. During the event, we affirmed our commitment to our corporate mission to make quality housing, whether rented or owned accessible to all American households. We also unveiled a much bolder strategic vision, become the leading operator and strategic capital provider driving sustainable innovation and housing finance. As we showed in New York, opportunities for transformative scale are clear and now attainable, based on the strategic progress we've made in recent years. Our vision is built upon an immense multi-trillion dollar addressable market that transcends the traditional mortgage lending space. We're already attacking antiquated processes in our markets with technology enabled solutions, and over time, we plan to completely reimagine how the non-agency housing finance market works. Across the Redwood enterprise, we've cultivated a talented and engaged workforce that as you might expect, believes in our mission, and is inspired to innovate and help us realize our strategic vision and goals. Our role is not a typical one for REIT, much less one, one of the longest tenured publicly traded REITs in the country. But that should not come as a surprise as we never defined our business by way of our Federal tax election. Those who do, risk missing the growth potential of our platform, particularly as we continue to analyze our optimal long-term corporate structure. Run into bend toward the end of the year, we remain very optimistic about our business, but we are proceeding cautiously. We see several macro and market risks ahead, COVID-19 variants, rising inflation, Central Bank tapering, and Federal debt ceiling stripe to name a few. More fundamentally, recent trends and unemployment claims suggest that we're still in a recovery phase, and the current economic situation is far from stable, notwithstanding the consistent upward pressure on home prices and rents that we've all observed in recent quarters. Our interest rate capital and broader risk management posture reflects this view. While we've generated strong earnings thus far this year, we've done so with record amounts of cash on hand, putting $557 million at September 30. Going forward, our stakeholders should expect that we will continue to work to fulfill our broadly conceived mission focused on the significant addressable market in front of us and run a business grounded in fundamentals and sound analysis. All while nurturing and diverse and talented bench team members were engaged and aligned with our values. As Chris describe, the third quarter was another prolific one across our platform with increases in purchase and origination volumes complemented by innovative work across technology and capital markets. Our teams are operating at a highly productive and sustainable level, as the foundation we have laid drives efficiency gains and demand for our products remains robust. Notwithstanding the recent uptick in benchmark rates, excess capital in the market is still in search of yield. We remain the partner of choice for whole loan and securities investors alike and continue to expand our distribution channels creatively to our capital efficiency and bottom line. Our third quarter results reflect continued execution of the strategic goals we laid out at the beginning of the year. As Chris referenced, we are seeing meaningful progress in a number of the initiatives that we presented at our recent Investor Day, both organically and through new investments and partnerships already bearing fruit. In this vein, we strive to innovate daily in addressing the issues facing the housing market, but also look to take advantage of our strategic positioning in the markets we serve, to continue to grow profitably and sustainably. Our progress also underscores important realities about housing affordability and accessibility, themes we focused on at Investor day. Housing finance needs more creative solutions, driven by technology, a common sense approach to underwriting and most importantly, leadership and bringing market constituents together in pursuit of common goals. During the third quarter, we took important steps in this direction. Our results reinforce this broader backdrop and the opportunity across our platforms to continue serving growing areas in housing. And the recent path of home prices, coupled with the evolution in consumer demand and important trends in industry regulation has created ample room for other creative solutions to help consumers monetize equity in their homes. Our third quarter results represent another step in the path toward transformative growth that we laid out at Investor Day, with our core operating businesses leading the way and notable strategic progress across the enterprise. The durability and diversification of our business model, coupled with our crisp execution and technological innovation, puts us in a unique position to drive change that benefits all stakeholders. With this in mind, it's important to unpack the key drivers of profitability across our platforms. Our residential business continued executing in the third quarter, and we believe is well positioned heading into year end, facing several market headwinds, including renewed inflation fears and meaningful rate volatility. The team drove margins and volumes higher and once again broke new ground in our Sequoia securitization program. We generated a record $4.7 billion of lock volume during the quarter, making quick work of our prior record of $4.6 million two quarters earlier. Overall, locks were up 22% versus the second quarter, 59% of which were on purchase money loans, an important statement about the quality of our pipeline and our sellers, given the benchmark rates during the quarter hit lows not seen since February. The volume of choice locks remained steady versus the second quarter. And now the current mortgage rates are approximately 30 basis points higher versus the lows of Q3. It is a helpful reminder that we have locked choice loans with over 100 different sellers thus far this year, important groundwork that we believe will bear fruit as we head into next year. The depth of our distribution channels was another highlight during the quarter, as we sold $2.4 billion of loans alongside our securitization activities. RMBS issuance remained elevated in the third quarter, with September a particularly crowded month. As expected during any substantial uptick in supply, we witnessed more noticeable price tearing from investors across transactions, differentiation that we once again benefited from during the quarter. Our third quarter issuance, Sequoia 2021-6 was $449 million in size and executed well inside competing transactions marketed during a similar period. At time of securitization, the loans underpinning the deal were on average just one month old, compared to three to four months for our competitors, a testament to our efficiency and turning inventory. A key hallmark of the transaction was the first of its kind use of blockchain based technology within private label RMBS for enhanced remittance reporting for bond investors. Liquid Mortgage, an early partner through Redwood Horizons, is acting as distributed ledger agent, or DLA, on the transaction, providing an added and more real time remittance reporting option for investors who choose to leverage it. Liquid Mortgage has integrated with Redwood subservicer to receive payment information that will be published on the blockchain daily. This is a significant first step toward applying technological advancements and transparency to an area of the mortgage industry that has historically been less advanced. We are excited to be leading the market in this effort and expect to implement this enhanced functionality going forward. In fact, liquid mortgages also acting as DLA on our most recent Sequoia securitization, which closed in October and is backed by $407 million of jumbo residential loans. Leveraging technology remains a major organizational focus and we continue to achieve milestones on our organic technology roadmap. Rapid funding through which we provide accelerated settlement timelines for sellers, recently eclipsed $1 billion in purchases since program inception one year ago. Our Redwood Live app has also gained significant traction recently, and we expect seller adoption to increase and allow us to continue growing wallet share with our seller base. The third quarter was also another high point for CoreVest our business purpose lending platform, the third quarter $639 million in fundings were the highest since late 2019 and reflected a consistent balance between single family rental and bridge SFR fundings totaled $394 million, up 26% from the second quarter. Production deposition does the price and SFR securitization in early October, backed by approximately $304 million in loans and CoreVests 19th securitization overall. CoreVest continues to deepen its operational moat. And during the third quarter we achieved a T capital markets milestone as well when completing our inaugural transaction backed by bridge loans. CoreVests has long been an industry leading bridge lender and we expect structures like this to further drive our competitive advantage. The transaction creates $300 million of financing capacity of which we sold liabilities representing 90% of the capital structure. Procuring additional leverage on a non-recourse, non-marginal basis at a cost of funds of less than 2.5% on the issued bonds. Importantly, the transaction was structured with a 30 month reinvestment period for loan payoffs. The longest of its kind to date for this type of transaction, making it another important liquidity management tool for the business as we expand originations. Operating momentum in the Bridge business means we will likely use these types of structures and others likely going forward. As third quarter fundings total $245 million, an increase of 14% from the second quarter. As competition ramps up across the BPL market, product development remains a key priority. We continue to expand our channels and BPL through a combination of direct lending and sourcing loans from third party originators. To that end, during the third quarter, we made key progress in our correspondent loan business and further capitalize on our strategic investment in Churchill. Our technology initiatives also continued to advance in the quarter furthering this expansion. We launched an initial release of our refresh client portal with strong initial feedback and remain focused on creating more efficiencies at the front end of the underwriting process. The fourth quarter has traditionally been our most prolific for BPL originations and we feel confident about our capacity to manage higher volumes entering 2022. Our investment portfolio remained in step with our operating progress and continue to generate strong returns with our securities book appreciating in value by approximately 15 % [Phonetic] during the third quarter, and our bridge portfolio helping to drive net interest income higher. As Brooke will discuss in more detail, we believe there remains significant value to be unlocked from our investments based on the remaining discount in the book, coupled with continued execution of our call ride strategy. As Chris noted, our portfolio team delivered its own first of its kind transaction during the third quarter cosponsoring a securitization backed entirely by residential home equity investments. Completed in partnership with Point Digital, a fintech originator. The hallmark transaction is backed by a product that enables consumers to monetize equity in their homes, without having to sell or incur additional debt. Of the $34 trillion in total estimated US home value that we mapped out and invest today, approximately $23 trillion is in home equity, either backing existing debt or held for cash by a growing cohort of zero LTV borrowers, while Point and others have made progress and unlocking a small portion of this value. The opportunity demands additional product creativity and flexible capital. In parallel with a securitization, we reupped our flow purchase arrangement with Point, providing us with a continued acquisition source and the opportunity to explore adjacent products. Point and Liquid Mortgage were too early Redwood Horizons investments and are now part of a growing suite of portfolio companies that we believe will be a driver of long-term value creation for Redwood. Horizons continued it's strong investment pace during the third quarter completing six investments in total. The go forward pipeline is highlighted by an array of technology solutions, including several opportunities and climate analytics, particularly busy areas, firms attempt to evolve traditional methods of predicting how climate change impacts property valuation, insurability and overall credit performance. With a direct nexus to our firmwide ESG work, we expect to continue dedicating focus to this area. Our efforts to drive scale in our current businesses while executing on initiatives to innovate and reimagine the industry, drove another strong quarter financial results. We report a GAAP earnings of $0.65 per diluted share, representing a 27% annualized return on equity for the quarter, which significantly outpaced our dividends. As a result, book value increased $0.54 or 4.7% to $12 per share on the quarter. We've had an outstanding 2021 today and are pleased to have built on the momentum from the first half of the year. We delivered our third consecutive dividend increase of 17% to $0.21 per share ahead of market expectations. We have consistently generated annualized economic returns in excess of 20% over the last five quarters. Our economic return spotlights not only the evolution of our dividends, but more importantly, the expansion in our book value. Our results reflect the operating leverage of the platform. In the first nine months of the year, transaction volumes and our mortgage banking businesses have already surpassed the average annual volumes of the past several years. On a combined basis, our operating businesses generated an annualized after-tax operating return of 31% in Q3. They utilized roughly 450 million of average capital or 30% of our total allocated capital that produced two-thirds of our adjusted revenue for the quarter. As a reminder, these earnings can be retained in the business, driving the differential between the nearly 5% increase in book value and 2% increase contributed from the investment portfolio. This underscores our ability to create organic capital, which we've been continuing to convey to the market. The residential mortgage banking team generated a 26% after tax operating return on capital during the quarter. Income from mortgage banking activities net was 12 million higher than the second quarter as loan purchase commitments of $3.3 billion increased 20% from the second quarter, and our gross margins improved approximately 25 basis points, which is above the high end of our historical range. Margin expansion was attributable to improved execution on securitization during the quarter and hedge outperformance into a rising rate environment. We saw continued strength from our business purpose mortgage banking operations, which delivered a 43% after-tax operating return on capital. Spreads continued to tighten in Q3, but the pace moderated, resulting in a lower increase in the price of loans and inventory at the beginning of the quarter relative to second quarters change. Aside from this, BPL mortgage banking results benefited from a 22% increase in funding volume, as well as strong execution on the securitizations completed in the quarter. Next, I'll turn to the investment portfolio, which has been a consistent source of value creation in 2021. Following the $95 million of investment fair value changes we booked through the second quarter. We had another $26 million in Q3 from further improvement in credit performance and spread tightening, particularly in our third-party reperforming loan and retain for best securities. Additional positive fair value changes were realized through the first ever securitization of home equity investments. Separately, during the quarter, we settled call rights on to Sequoia securitization, acquiring 66 million of season jumbo loans at par, which had a small benefit to book value. Portfolio net interest income increased by roughly nine million, driven by lower interest expense on bridge loan financing and increased discount accretion income on our available-for-sale securities. The increase in accretion was driven by expectations for certain of our retains Sequoia securities to be called over the next several quarters, benefiting our cash flow forecasts and effective yields for those investments. But it is important to note that there is no impact book value from these changes. Looking ahead, net of our third quarter gains, there remains potential upside of roughly $3 per share in our portfolio through a combination of accretable market discount and call REITs that we control. We estimate $1.2 billion of loans can become callable across capital and Sequoia through the end of 2022. Should current market conditions persist, these callable loans can generally be sold or resecuritized well above their par value. REIT taxable income increased to $0.14 per share from $0.11 in the second quarter due to higher net interest income. Our taxable REIT subsidiaries earned $0.32 per share in Q3 up from $0.27 in Q2. We recognized a lower income tax provision compared to the second quarter from the release of valuation allowance on a portion of our deferred tax assets, partially offset by an increase in state taxes. Our balance sheet and funding profile remain in excellent shape with unrestricted cash of $557 million, which equates to over 75% of our outstanding marginable debt. We also had investable capital of $350 million to deploy into new investments. During the quarter, we added $350 million of financing capacity to support growth of our operating platform. We also completed the bridge securitization and a new $100 million non-marketable term financing collateralized by retain capital securities in our investment portfolio, each of those which contributed roughly -- to a roughly 20 basis point reduction in the cost of funds of our business purpose lending segment. Our recourse leverage was unchanged at 2.2 times, as we incurred additional warehouse borrowings to finance higher loan inventories, while rotating certain financings into non-recourse debt and experiencing appreciation of our equity base. One central tenet of our strategic plan is to continue enhancing our capital and operating efficiencies. During the third quarter, we maintain cost per loan for our residential mortgage banking operations of 28 basis points, compared with our historical average of 35 basis points during 2013 to 2019. Our business purpose mortgage banking operations also delivered improved efficiencies, with a lower net cost to originate relative to the second quarter. Even with higher general and administrative expenses on the quarter, due to increased variable compensation tied to our strong year to date financial performance, various efficiency ratios, such as pre-tax margin or operating expense as a percentage of GAAP net income, demonstrate very positive trend lines and our efficiency gains. And finally, we are embedding sustainability across our operations and investment strategy. We are committed to transparency and further integrating ESG into our financial reporting going forward. We recently provided a comprehensive ESG review at our Investor Day event in September, including new disclosure of human capital metrics, and programs and an overview of our key priorities and top commitments over the near to intermediate term. As Dash mentioned, we are analyzing opportunities within horizon, which will aid our evaluation of various environmental and social impacts and risks within the portfolio. It has the potential to further evolve our risk management policies and build our upper regional resilience.

q1 gaap earnings per share $0.72.

On the call is Bob Schottenstein, our CEO and President; Tom Mason, EVP; Derek Klutch, President of our Mortgage Company; Ann Marie Hunker, VP, Corporate Controller; and Kevin Hake, Senior VP. We are extremely pleased with our fourth quarter and full year results, highlighted by significant growth and record-setting financial achievements across the board. By every measure, 2020 was an outstanding year for M/I Homes. We nearly doubled our net income, increasing our bottom line by 88% over 2019, resulting in a very strong return on equity of 22%. A number of factors contributed to our strong returns. We achieved record revenue of $3 billion, an increase of 22% over 2019. Record closings of 7,709 homes, 22% better than a year ago. Very strong gross margins that reached 23% in the fourth quarter and 22.2% for the full year, a 260 basis point improvement over 2019. And our full year pre-tax income percentage improved 360 basis points to 10.2%. These results continue the trend of strong growth in revenues and earnings that we've achieved, frankly, since coming out of the recession. Specifically, since 2012, our revenues have grown at a compounded annual rate of 19%, and our pre-tax income has grown at an even more impressive compound annual rate of 49%. In addition, the strong performance of our mortgage and title operations as well as improved SG&A operating leverage also contributed to our record earnings. We also had an outstanding sales year. New contracts for the year improved by 39% to a record 9,427 homes sold. Fourth quarter sales continued the strong pace of sales that began in late April. During the quarter, we sold 2,128 homes, a fourth quarter record and 27% better than a year ago. Overall, housing demand remains very strong, driven by a number of factors, including historically low mortgage rates, low inventory levels, and increasing number of millennials joining the ranks of homeownership and a shift in buyer preference away from renting in more densely populated areas, in favor of single-family homes. In addition, a number of other factors also helped drive our strong sales performance. Among them are the quality of our locations, our ability to execute on many fronts, including successfully managing a rapidly increasing number of online leads and the continued success and growth of our Smart Series line of homes. With respect to our Smart Series, let me remind you that this is our most affordably priced product offering. At the end of 2020, our Smart Series was being offered in all 15 of our housing markets, comprised 62 of our total communities or 31% of total and accounted for more than 35% of total company sales. Our Smart Series communities continue to provide a better monthly sales pace, better margins, faster cycle time and, as a result, better overall returns. We fully expect the sale of our Smart Series homes to grow further within our markets and likely approach 40%-plus of total M/I sales in the coming year. And in terms of demand and traffic as we begin 2021, housing conditions continue to be very robust throughout all 15 of our markets. Our year-end backlog increased 64% in units to 4,389 homes, and the dollar value increased by 74% to an all-time company record of $1.8 billion. Now I will provide some additional comments on our markets, which we divide into two regions. The Northern region, which consists of Columbus, Cincinnati, Indianapolis, Chicago, Minneapolis and Detroit. And the Southern region, which consists of the balance of our markets: Charlotte, Raleigh, Orlando, Tampa, Sarasota, Houston, Dallas, Austin and San Antonio. We experienced strong performance in the fourth quarter across both the Northern and Southern regions, with new contracts in the Southern region increasing by 31% for the quarter and 21% in the Northern region. Our closings or deliveries increased 16% over last year's fourth quarter in the Southern region and increased 19% over last year's fourth quarter in the Northern region. Our owned and controlled lot position in the Southern region increased by 23% compared to a year ago and increased by 12% in the Northern region compared to last year. While we are selling through communities somewhat faster than expected, it's important to underscore that we are very well positioned to open new communities in 2021 and well into 2022. 37% of our owned and controlled lots are in the Northern region with the balance, 63%, in the Southern region. We have a very strong land position. Companywide, we own and control approximately 40,000 lots, up 19% from last year, which equates to about a four to five year supply. Perhaps more important, over half of the lots that we own and control or about 57% are controlled under option contracts and not yet on our books. This gives us significant competitive flexibility to react to changes in demand or individual market conditions. We had 112 communities in the Southern region at the end of the quarter, down from 129 a year ago. And we had 90 communities in the Northern region at the end of the quarter, down from 96 a year ago. As I mentioned, the decline in community count is partially a result of our accelerated sale pace. But it's also important to recognize that nearly 1/3 of our communities are now offering our Smart Series homes. And that these communities not only often have more lots in total, but as noted earlier, generally produce a greater sales pace. Before turning the call over to Phil, let me just make a few concluding comments. First, our financial condition is very strong with $1.3 billion of equity at December 31 and a book value of $44 per share. We ended 2020 with a cash balance of $261 million and 0 borrowings under our $500 million unsecured revolving credit facility. This resulted in a 34% debt-to-cap ratio, down from 38% a year ago and a net debt-to-cap ratio of 23%. Second, 2020 was a year of unprecedented challenge and severe hardship caused by the global pandemic. As an industry, we have been very fortunate that our business and the business of our competitors has held up exceptionally well. As it relates to M/I Homes, I could not be more proud of our company as we came together to safely and carefully provide quality homes to so many. Finally, as we move forward into 2021, we are very optimistic about our business. Our backlog is strong. Our sales pace has been terrific. We have an excellent land position, and housing conditions, including both demand and traffic continue to be very good. We have a lot of operating momentum and are positioned for another strong year in 2021. As far as financial results, new contracts for 2020 increased 39% to 9,427, an all-time record compared to 6,773 for last year. Our new contracts were up 14% in October, up 36% in November and up 35% in December for a 27% improvement in the quarter compared to last year's fourth quarter. Our sales pace was 3.5 in the fourth quarter compared to 2.5 in last year's fourth quarter. And our cancellation rate for this year's fourth quarter was 10%. We are also pleased to say that our buyer demand continued to be very strong in January. As to our buyer profile, about 53% of our fourth quarter sales were to first-time buyers compared to 49% a year ago. In addition, 43% of our fourth quarter sales were inventory homes compared to 44% in last year's fourth quarter. Our community count was 202 at the end of the year compared to 225 at the end of 2019, and the breakdown by region is 90 in the Northern region and 112 in the Southern region. During the quarter, we opened 18 new communities while closing 23. And for the year, we opened 69 new communities and closed 92. We delivered a record 2,242 homes in the fourth quarter, delivering 50% of our backlog compared to 66% a year ago. There are a couple of factors that led to this decline in backlog conversion rates when compared to last year. First, our extremely strong sales and significantly higher backlog levels in the back half of 2020 led to longer times for getting homes started. Secondly, we have been selling spec homes nearly as fast as we can get them started, which leads to lower spec home inventories, especially those which are closer to completion and could contribute to closings within 90 days. Revenue increased 22% in the fourth quarter of this year, reaching a fourth quarter record $906 million. And our average closing price for the fourth quarter was $389,000, a 3% increase when compared to last year's fourth quarter average closing price of $377,000. Our backlog average sale price is $419,000, up 6% from a year ago, and our backlog average sale price of our Smart Series is $322,000. We recorded $8.4 million of impairment charges in the fourth quarter compared to $5 million in last year's fourth quarter. And our operating gross margins, excluding impairments for the fourth quarter, was $24.1 million, up 420 basis points year-over-year and up 120 basis points from 2020's third quarter. Our higher margins in our Texas operations were a big driver of our margin improvement. And for the full year of 2020, our operating gross margin was 22.5% versus last year's 19.8%. Our construction costs increased by about 3% in the fourth quarter, with the biggest impact from lumber. And our fourth quarter and full year SG&A expenses were 11.7% of revenue, a 40 basis points improvement compared to 2019. And 2020 is our third consecutive year of improved SG&A efficiency. Interest expense decreased $3.5 million for the quarter compared to the same period last year and decreased $11.7 million for the 12 months of this year. The decrease for the year is due to lower outstanding borrowings as well as a lower weighted average borrowing rate. And interest incurred for the quarter was $10 million compared to $12.5 million a year ago. And for the year, interest incurred was $40 million versus $49 million a year ago. We are pleased with our improved returns for the year. Our pre-tax income was 10.2% versus 6.6% last year, and our return on equity was 22% versus 14% a year ago. During the fourth quarter, we generated $127 million of EBITDA compared to $75 million in last year's fourth quarter. And for the full year 2020, we generated $383 million of EBITDA, up 60% over last year. Despite a significant amount of reinvestment into our business, we generated $168 million of positive cash flow from operations in 2020 compared to $66 million last year. We have $21 million in capitalized interest on our balance sheet. This is about 1% of our total assets. And our effective tax rate was 21% in this year's fourth quarter compared to 19% in last year's fourth quarter. Our annual effective rate this year was 22.6% compared to 23.2% for 2019. Our fourth quarter and annual tax rate benefited from energy tax credits from prior years. And we expect 2021's effective tax rate to be around 24%. Our earnings per diluted share for the quarter increased 88% to $2.71 per share from $1.44 per share in last year's fourth quarter and increased 83% for the year to $8.23 from $4.48 per share last year. Now Derek Klutch will address our mortgage company results. Our mortgage and title operations achieved record fourth quarter results in 2020, including record pre-tax income of $14.8 million, up $8.4 million or 131% over 2019. And record revenue of $25.6 million, which was up 62% over last year due to a higher volume of loans closed and sold along with significantly higher pricing margins. We also set a record for the number of loans originated. For the year, pre-tax income was $50.5 million and revenue was $87 million, both all-time records. The loan-to-value on our first mortgages for the fourth quarter was 83% in 2020, up from 2019's fourth quarter of 82%. 74% of the loans closed in the fourth quarter were conventional and 26% were FHA/VA compared to 76% and 24%, respectively, for 2019's same period. Our average mortgage amount increased to $319,000 in 2020's fourth quarter compared to $303,000 in 2019. The number of loans originated increased 25% from 1,398 to an all-time quarterly record of 1,746, and the volume of loans sold increased by 15%. Our borrower profile remains solid with an average down payment of over 15%. For the quarter, the average borrower credit score on mortgages originated was 745, a slight decline from 747 last quarter. Our mortgage operation captured over 85% of our business in the fourth quarter, an increase from 84% one year ago. We maintain two separate mortgage warehouse facilities that provide us with funding for our mortgage originations prior to sale to investors. At December 31, we had a total of $226 million outstanding under these facilities, which expire in May and October this year. Due to our typical high-volume of fourth quarter closings, we include a seasonal increase in our warehouse facilities, which provides temporary availability of $275 million through February 4, 2021. After which time, total availability returns to $215 million. Both facilities are typical 364-day mortgage warehouse lines that we extend annually. As far as the balance sheet, total homebuilding inventory at 12/31/20 was $1.9 billion, an increase of $147 million over December '19 levels. During 2020, we spent $415 million on land purchases and $318 million on land development for total land spending of $733 million, which was up from $600 million in 2019. In 2020, we purchased about 11,500 lots, of which 77% were raw with about 150 average lots per community. In 2019, we purchased about 7,500 lots, of which 63% were raw with about 100 average lots per community. In general, most of our Smart Series communities are raw land deals and have above-average company pace and margin. We have a strong land position at 12/31/20, controlling almost 40,000 lots, up 19% from a year ago. And of the lots controlled, 43% are owned. Based on 2020's record closings, this is about a five year supply of inventory with just over two years owned. And at the end of the year, we had 225 completed inventory homes, about one per community and 1,131 total inventory homes. At 12/31/19, we had 668 completed inventory homes and 1,459 total inventory homes. We'll now open the call for any questions or comments.

q4 earnings per share $2.71. homes delivered increased 17% to 2,242 in quarter. backlog units increased 64% to 4,389 in quarter.

In 2020, we had a terrific year despite an extremely challenging operating environment. We delivered extraordinary results through disciplined execution and resilience. I am extremely proud of our EMCOR team. I don't think any of us could have imagined this high level of performance when we started to understand the impact of COVID-19 on our operations in March of 2020. In 2020, we had $8.8 billion in revenues and set records on an adjusted basis for earnings per diluted share of $6.40, operating income of $490 million and operating income margin of 5.6%. We also had record operating cash flow of $806 million. Mark's going to cover all the financials in much more detail and especially the key components of our cash flow performance in his financial commentary, inclusive of the fourth quarter and full year 2020 performance. We delivered these stellar results because we have diversity and demand for our services. And we have end markets that have proved resilient and have provided us with opportunities to execute well for our customers. These results are a testament to our skilled employees and our subsidiary, segment and corporate leadership, who kept focused and resolute through the ever-changing environment in 2020. Across our company, we worked hard to keep our employees safe, and it was our number one priority throughout the year. We innovated and found ways to maintain and even improve our productivity. We became leaner and even more expeditious in our decision-making. And we're able to leverage technology to connect our leadership effectively to the front lines despite COVID-19 protocols. We did not let obstacles become excuses. Instead, we overcame obstacles, and we delivered exceptional results. I now want to highlight some of our segment performance. Our Electrical Construction segment performed well with 8.4% operating income margins. Despite the disruptions in some of our operations from COVID-19 and due to shutdowns, we still posted outstanding results. These results were driven by excellent execution in the commercial sector driven by data center and telecommunication and really excellent execution across all market sectors. We've performed the work well and really innovated on the means, the methods and the scheduling so that we can not only keep our employees safe, but enhance our productivity. Our Mechanical Construction segment had an exceptional year by any measure. We also had 8.4% operating income margins with exceptional performance across the commercial sector, again driven by telecommunications and data centers. And we also had strength in warehousing, manufacturing, water and wastewater and the healthcare end markets. We showed great innovation through increased use of BIM or building information modeling and prefabrication and worked hard to keep our employees safe and productive. We believe in both of our construction segments that we not only met, but we exceeded our customers' expectations. Our United States Building Services segment team showed grit and resilience as they faced the COVID-19 disruption in late March, April and May, with many of our customer sites not acceptable, bookings off as much as 40% in some of our subsidiary companies and in some of our product lines and a very cautious resumption of decision-making by our customers to allow us to resume service and projects. We did rebound robustly from mid-June forward, and we're well prepared to execute project work for our customers that optimize their equipment and control systems, improve the wellness of their facilities through indoor air quality or IAQ solutions and sought to help our customers return to work safely and productively. We also served as the boots on the ground for our customers to keep lightly occupied buildings, campuses and schools operational, functioning and safe over the past 10 months. We are well positioned to keep serving our customers as they reopen and seek to make their building safe, efficient and productive for their employees. Our U.K. Building Services segment mirrored the performance of our U.S. Building Services segment. We navigated the severe lockdown actions in the U.K. and continued to keep our customers productive, operational and able to conduct their businesses. We also made organizational changes that enhanced our leaders' responsiveness by making our organization even flatter, more aligned and leaner, which has led to crisper and more efficient decision-making. Our U.K. team continues to win in the market as we have a culture of innovation and execution. As you all know, our Industrial Services segment mostly serves the downstream oil and gas or refining and petrochemical markets. These end markets had a severe dislocation of demand as planes stop flying and people stop driving. And this segment was also impacted at the beginning of the year with a disruption in the global oil and gas markets. We cut costs aggressively and maintain profitability on an EBITDA basis. We are well positioned with demand for our services returns, which is not likely to happen until the fourth quarter of this year. We expect the larger, more sophisticated, well-capitalized service providers to emerge stronger. And yes, we are clearly one of them. We exit 2020 with our remaining performance obligations or RPOs at an all-time high of $4.6 billion, 13.8% higher than the year-ago period. We have very strong RPOs and are continuing to benefit from the very strong demand for data center construction, logistics and supply chain support, especially with our fire protection trade, healthcare, water and wastewater. And we expect manufacturing to be as strong also as 2021 progresses. We expect to benefit from increasing demand for IAQ, that's indoor air quality, and building efficiency projects and solutions. We depart 2020 with an exceptional balance sheet that allows us the room to grow and build for the future while continuing to return cash to our shareholders through dividends and share repurchases. 2020 was an extraordinary year, and we performed exceptionally well, which is a real testament to our people, our subsidiary leaders, our segment staff and leadership and our corporate staff and leadership. I will now turn the discussion over to Mark. Over the next several slides, I will provide a detailed discussion of our fourth quarter results before moving to our full year performance, some of which Tony outlined during his opening commentary. So let's discuss EMCOR's fourth quarter performance. Consolidated revenues of $2.3 billion in quarter four are down $122.4 million or 5.1% from 2019. Our fourth quarter results include $55.4 million of revenues attributable to businesses acquired pertaining to the period of time that such businesses were not owned by EMCOR in last year's fourth quarter. Acquisition revenues positively impacted both our United States Mechanical Construction and United States Building Services segments. Excluding the impact of businesses acquired, fourth quarter 2020 consolidated revenues decreased $177.9 million or 7.4% organically. Our segment performance was mixed within the quarter, with most of our reportable segments experiencing quarter-over-quarter organic revenue declines. In general, we have seen reductions in revenues in those geographies or market sectors which are continuing to be most significantly impacted by the COVID-19 pandemic. However, when we consider the incremental revenue generated from our acquisitions, we were successful in generating fourth quarter revenue growth from three of our five reportable segments. Specific segment revenue performance for the quarter is as follows: United States Electrical Construction segment revenues of $493.5 million decreased $71 million or 12.6% from quarter four 2019. Revenues declined across multiple market sectors due to the continuing impact of the COVID-19 pandemic, including the associated containment and mitigation measures as well as the curtailment of capital spending by some of our customers. Consistent with my third quarter commentary, this segment experienced a significant reduction in revenues from industrial project work within the manufacturing market sector, where certain of our electrical businesses perform services for both midstream and upstream oil and gas customers. Additionally, the segment's operations that serve the metropolitan New York and California markets continue to face revenue headwinds as these geographies remain some of the most restrictive with regards to COVID protocols. United States Mechanical Construction segment revenues of $969.4 million increased $73.8 million or 8.2% from quarter four 2019. Excluding acquisition revenues of $24.2 million, the segment's revenues increased $49.6 million or 5.5% organically. Revenue growth within the quarter was broad based across most market sectors, with commercial and healthcare representing the most significant period-over-period increases. These revenue gains were partially offset by a quarterly revenue decline in manufacturing market sector activity due to the completion or substantial completion of certain large projects during the early part of 2020. This revenue performance represents an all-time quarterly record for our United States Mechanical Construction segment and surpasses the previous record set in 2019's fourth quarter. EMCOR's total domestic construction business fourth quarter revenues of $1.46 billion increased $2.7 million or less than 0.25%. United States Building Services revenues of $568.1 million increased $29.1 million or 5.4%. However, when excluding acquisition revenues of $31.2 million, this segment's quarterly revenues decreased $2.1 million or 40 basis points. Revenue gains within their mobile mechanical services division resulting from incremental contribution from acquired companies and their commercial site-based services division due to new contract awards or scope expansion on certain existing contracts were partially offset by a quarter-over-quarter revenue decline within the segment's energy services division due to reduced large project activity when compared to 2019's fourth quarter. Consistent with our United States Mechanical Construction Services segment, revenue performance within our United States Building Services segment represents an all-time quarterly record. United States Industrial Services revenues of $135.5 million decreased by $163.7 million or 54.7% as this segment continues to be impacted by the negative macroeconomic conditions and uncertainty within the markets in which it operates. Cost control and cash preservation actions taken by customers of this segment have resulted in the suspension of capital spending programs and the curtailment of maintenance activity, which has severely impacted demand for our Industrial Service offerings. With the rise in telecommuting and the various restrictions on travel in response to COVID-19, there have been significant reductions in both vehicle miles driven and airline miles traveled, which is further prolonging the weakened demand this segment has been experiencing since late quarter one of 2020. United Kingdom Building Services segment revenues of $115 million increased $9.4 million or 8.9% from last year's quarter. Revenue gains for the quarter resulted from strong project activity as well as incremental revenue from new contract awards. Additionally, fourth quarter 2020 revenues were positively impacted by $2.9 million as a result of favorable foreign exchange rate movement in the period. Selling, general and administrative expenses of $244.6 million reflects an increase of $3.7 million from quarter four 2019. The current period includes approximately $4.4 million of incremental expenses from businesses acquired, inclusive of intangible asset amortization, resulting in an organic quarter-over-quarter decrease of approximately $700,000. A reduction in salaries expense due to a decrease in head count necessitated by lower organic revenue as well as reduced travel and entertainment expenses due to a combination of cost-avoidance measures as well as restricted company travel were the primary reasons for the organic decline in SG&A. These decreases were largely offset by an increase in quarterly incentive compensation expense due to EMCOR's actual operating performance exceeding its previously forecasted 2020 full year results. As a percentage of revenues, selling, general and administrative expenses totaled 10.7% in quarter four 2020 versus 10% in the year-ago period. The quarter-over-quarter increase can be attributed to the reduction in our consolidated quarterly revenues without a commensurate decrease in certain of our fixed overhead costs, including those of our Industrial Services segment as we do not deem the current operating environment to be permanent. Our assessment continues to be based on our evaluation of future market opportunities. And we expect to see some return to normalcy in industrial maintenance and capital spending when we ultimately move beyond the depressed demand caused by the COVID-19 pandemic. Reported operating income for the quarter of $137.6 million represents a $14.7 million or 12% increase when compared to operating income of $122.9 million in last year's fourth quarter. This operating income performance eclipses our previously established all-time quarterly record, which was achieved in 2020's third quarter. Our fourth quarter operating margin was 6%, which compares favorably to the 5.1% of operating margin reported in 2019's fourth quarter. We experienced the operating margin expansion within each of our reportable segments other than our U.S. Industrial Services segment, which is reporting an operating loss for the fourth quarter and our U.K. Building Services segment, which achieved a consistent margin in each year's quarterly period. Specific quarterly performance by reportable segment is as follows: our United States Electrical Construction segment had operating income of $43.4 million, which increased by $2.1 million from the comparable 2019 period. Reported quarterly operating margin is 8.8% and represents a 150 basis point improvement over 2019's fourth quarter. This increase in both operating income dollars and operating margin is largely attributable to increased gross profit contribution from commercial market sector activities, inclusive of numerous telecommunications construction projects. These gross profit gains were partially offset by reduced gross profit contribution from the transportation and manufacturing market sectors due to both the closeout of projects in prior periods as well as the continued headwinds attributable to the COVID-19 pandemic. Fourth quarter operating income of the United States Mechanical Construction Services segment of $100.4 million represents a $31.5 million increase from last year's quarter, while operating margin in the quarter of 10.4% represents a 270 basis point improvement over 2019. This segment has continued to experience strength in the majority of the market sectors we serve, most notably demonstrated by increased gross profit contribution from project activity in the commercial, healthcare and institutional market sectors. In addition, our Mechanical Construction segment experienced a more favorable mix of work than in the prior year and benefited from strong performance by our fire protection operations. Our combined U.S. construction business is reporting a 9.8% operating margin and $143.7 million of operating income, which has increased from 2019's fourth quarter by $33.5 million or 30.4%. Operating income for United States Building Services of $28 million represents a $3.8 million increase from last year's fourth quarter, and operating margin of 4.9% represents an improvement of 40 basis points when compared to the prior year. This segment experienced improved gross profit performance from its mobile mechanical services division, inclusive of incremental contribution from acquired companies. In addition, the segment continues to benefit from reduced levels of selling, general and administrative expenses due to cost-mitigation actions implemented in response to the COVID-19 pandemic. Our United States Industrial Services segment operating loss of $8.2 million represents a decline of $21.3 million, which compares to operating income of $13.1 million in last year's fourth quarter. These conditions have resulted in considerable reductions in capital spending by certain of our customers, which has led to a decrease in demand for this segment's service offerings. This environment was further exacerbated by an active hurricane season, which resulted in the suspension of planned maintenance activities that would have occurred during both quarters three and four of 2020. United Kingdom Building Services operating income of $4.2 million represents an increase of approximately $300,000 over quarter four of 2019. Operating margin was 3.7% for both quarter periods. We are now on slide nine. Additional financial items of significance for the quarter not previously addressed are as follows: quarter four gross profit of $383.9 million or 16.8% of revenues is improved over last year's quarter by $19.1 million and 160 basis points of gross margin. Restructuring expenses in 2020's fourth quarter pertain to the realignment of management resources within our combined U.S. construction operations. Diluted earnings per common share of $1.45 compares to $1.54 per diluted share in last year's fourth quarter. Adjusting our 2020 quarterly performance for the negative impact on our income tax rate resulting from the nondeductible portion of the noncash impairment charges recording -- recorded during the second quarter of 2020, non-GAAP diluted earnings per share for the quarter ended December 31, 2020, is $1.86, which favorably compares to last year's fourth quarter by $0.32 or nearly 21%. Our tax rate for quarter four of 2020 is 41.8%, which is significantly higher than the tax rate for the corresponding 2019 period due to the nondeductibility of the majority of the impairment charges just referenced. My last comment on slide nine is with respect to our $259.5 million of operating cash flow in the quarter, which favorably compares to $178.8 million of operating cash flow in the year-ago period and reflects the continued effective management of working capital by our subsidiary leadership teams. Our operating cash flow was aided by the organic decline in revenues, which resulted in a contraction in accounts receivable. Additionally, the deferral of the employer's portion of social security taxes in the United States benefited our cash flow by approximately $35.2 million during the fourth quarter of 2020. On a full year basis, the social security tax deferrals, coupled with the deferral of value-added tax in the United Kingdom, has favorably impacted our 12-month operating cash flow by approximately $117.3 million. These amounts will be repaid in 2021 and 2022. And obviously, we'll have the opposite effect on our operating cash flow in such future periods. With the fourth quarter commentary complete, I will now augment Tony's introductory remarks on EMCOR's annual performance. Consolidated revenues of $8.8 billion represent a decrease of $377.6 million or 4.1% when compared to our record annual revenues in 2019 of $9.17 billion. Our year-to-date results include $269.6 million of revenues attributable to businesses acquired pertaining to the period of time that such businesses were not owned by EMCOR in the 2019 period. Acquisitions positively impacted each of our United States Electrical Construction, United States Mechanical Construction and the United States Building Services segments. Excluding the impact of businesses acquired, year-to-date revenues decreased organically 7.1%, primarily as a result of the significant revenue contraction experienced during quarter two as the majority of our operations were most significantly impacted by the COVID-19 pandemic during such period. In addition, our annual revenues were negatively impacted by a decrease in demand for certain of our service offerings within our United States Electrical Construction services and United States Industrial Services segments as a result of the adverse conditions experienced within the oil and gas industry. Discrete segment revenue performance for full year 2020 is as follows: United States Electrical Construction segment revenues of $1.97 billion decreased $243.2 million or 11% from 2019's $2.22 billion of revenues; acquisitions contributed $25.4 million of incremental revenues, resulting in an organic decline of $268.5 million or 12.1%. Revenue contraction within the majority of the market sectors in which we operate. Most notably, the commercial and manufacturing market sectors were the primary drivers of this year's year-over-year decrease. As I mentioned in my commentary on our fourth quarter results, although this segment has a diverse geographic footprint, a number of its operating companies within both the metropolitan New York and California markets were severely impacted by COVID protocols, which resulted in a decrease in the number of short-duration project opportunities as well as various project delays. These impacts, coupled with the completion or substantial completion of certain large projects in 2019, contributed to the decline in organic annual revenues. In addition, and as previously referenced, certain of our operations in the segment which are exposed to the upstream and midstream oil and gas sector experienced a significant decline in demand in 2020. Partially offsetting these revenue reductions were increased revenues from project activities within the institutional and hospitality market sectors during the year. United States Mechanical Construction revenues of $3.49 billion increased $145.2 million or 4.3% compared to 2019. Acquisitions contributed $188.8 million of incremental revenues to the segment, which, when excluded, results in an organic revenue decline of $43.7 million or 1.3% from 2020. This organic decrease can be largely attributed to reduced project volume within the manufacturing market sector with a heavy concentration in the food processing submarket sector as a result of the completion or substantial completion of certain large projects in 2019. Similar to our United States Electrical Construction segment, this segment additionally experienced the negative effects of the COVID-19 pandemic, which resulted in a reduced number of short-duration project opportunities during calendar 2020. United States Building Services segment revenues of $2.11 billion increased $3.2 million or less than 0.5%. Acquisitions contributed $55.4 million of revenues, resulting in an organic revenue decline of 2.5% when compared to full year 2019. The decrease in project and building controls activities within the segment's mobile mechanical services division, largely as a result of the impact of the COVID-19 pandemic, which resulted in the temporary closure of certain customers' facilities, coupled with the decrease in large project activity within the segment's energy services division were the primary contributors to such organic revenue reduction. In addition, the segment experienced a decrease in revenues from its government services division as a result of the loss of certain contracts not renewed pursuant to rebid. These revenue contractions were partially offset by increased customer demand for certain services aimed at improving the indoor air quality within their facilities as well as an increase in revenues within the segment's commercial site-based services division as a result of new contract awards and scope expansion on certain existing contracts. United States Industrial Services segment revenues of $797.5 million decreased $290.1 million or 26.7% from 2019's $1.09 billion of revenues. At the risk of sounding repetitive, for most of 2020, the segment has been severely impacted by negative conditions and uncertainty within the markets in which it operates due to the dislocation between crude oil supply and demand resulting from COVID-19 and geopolitical tensions within OPEC. In addition, during the back half of 2020, the segment experienced suspension and deferral maintenance in capital projects by its customers as a result of hurricane and tropical storm activity in the United States Gulf Coast region. Revenues of our United Kingdom Building Services segment for 2020 increased 1.7% to $430.6 million, primarily as a result of new maintenance contract awards within the commercial and institutional market sectors. Revenues were also favorably impacted by $2.3 million as a result of exchange rate movement in the pound sterling year-over-year. Selling, general and administrative expenses of $903.6 million represent 10.3% of revenues as compared to $893.5 million or 9.7% of revenues in 2019. Full year 2020 SG&A includes $29.6 million of incremental expenses, inclusive of intangible asset amortization pertaining to businesses acquired. Excluding such incremental amounts, our SG&A has decreased $19.4 million on an organic basis, primarily as a result of certain cost reductions resulting from our actions taken in response to the COVID-19 pandemic. As referenced during my quarter commentary, the increase in SG&A as a percentage of revenues is a result of the organic decrease in our revenue without a commensurate decrease in certain of our fixed overhead costs as we do not deem the current operating environment to be permanent. 2020's year-to-date operating income is $256.8 million. Adjusting this amount to exclude the noncash impairment loss on goodwill, identifiable intangible assets and other long-lived assets recorded in the second quarter, our non-GAAP operating income for the year was $489.6 million. This compares to operating income of $460.9 million for full year 2019 and represents a $28.7 million or 6.2% improvement year-over-year. Despite the headwinds experienced in 2020, three of our five reportable segments achieved higher operating income and higher operating margins than that of the prior year. Of the two segments which did not, United States Building Services is reporting a modest decline of just over 1%, while our United States Industrial Services segment suffered a significant year-over-year reduction, resulting in an operating loss for 2020. With regard to each segment's discrete performance, I will start with our electrical -- United States Electrical Construction segment. Their 2020 operating income of $166.5 million represents an all-time segment record, and it is an increase of $4.8 million or 3% compared to the prior year. Operating margin for 2020 is 8.4%, which is 110 basis points higher than 2019. This year-over-year improvement in operating income dollars was due to a reduction in selling, general and administrative expenses due to cost-control measures enacted during the course of 2020. The increase in operating margin for the year was a result of an increase in gross profit margin given favorable project execution and a more profitable mix of work within this segment. These improvements in gross profit margin were partially offset by an increase in the ratio of selling, general and administrative expenses to revenues as a result of the year-over-year revenue contraction within the Electrical Construction segment. United States Mechanical Construction operating income of $292.5 million increased $67.5 million or 30% over 2019 levels, and operating margin reached 8.4% versus 6.7% in the prior year. Acquired companies contributed incremental operating income of $9.3 million, inclusive of $12.7 million of amortization expense associated with identifiable intangible assets. The increase in operating income for 2020 was primarily due to strong project performance throughout the year in the majority of the market sector served by this segment, resulting in an increase in annual gross profit. The 170 basis point improvement in operating margin was also a result of our solid project execution and improved gross profit margin, most notably within the manufacturing and commercial market sectors. These increases in gross profit and gross profit margin were partially offset by an increase in selling, general and administrative expenses, primarily as a result of an increase in incentive compensation expense due to the improved year-over-year operating performance for this segment. United States Building Services operating income for 2020 of $113.4 million declined by $1.3 million or 1.2% due to a reduction in year-over-year large project activity within the segment's energy services division as well as decreased project and building control opportunities within their mechanical services division due to both temporary closure and restricted access to certain customer facilities impacted by the COVID-19 pandemic. These reductions were partially offset by incremental operating income contribution from companies acquired, which totaled $4.5 million, inclusive of $3.2 million of amortization expense associated with identifiable intangible assets. In addition, this segment experienced increased gross profit resulting from greater demand for certain services aimed at improving indoor air quality as various customers made changes to their HVAC systems in advance of their employees returning to work as recommended by the Center for Disease Control. Operating margin of 5.4% was consistent with the prior year as a reduction in gross profit margin was offset by a decrease in the ratio of selling, general and administrative expenses to revenues due to certain cost-reduction measures taken during 2020. Our United States Industrial Services segment incurred an operating loss of $2.8 million for 2020 as compared to operating income of $44.3 million in 2019. This segment implemented significant cost reductions during the year in an effort to mute the year-over-year decline. However, as previously discussed, this segment's overhead structure includes a significant investment in fixed infrastructure, including plant and equipment. As we view current market conditions to be -- as to be temporary, that infrastructure is needed to respond to changes in demand patterns once they ultimately recover. Operating income of our United Kingdom Building Services segment of $20.7 million or 4.8% of revenues compares to operating income of $18.3 million or 4.3% of revenues in the prior year. The $2.3 million improvement is largely due to an increase in gross profit from new maintenance contract awards, while the 50 basis point expansion in operating margin is attributable to both the increase in gross profit margin as well as a reduction in the ratio of selling and general and administrative expenses to revenues. SG&A of this segment benefited from various cost-control initiatives implemented by our U.K. team. We are now on slide 12. Additional key financial data on slide 12 not addressed during my full year commentary is as follows: year-to-date gross profit of $1.4 billion is greater than 2019's gross profit by $39.5 million, while gross margin of 15.9% is higher than last year's 14.8% by 110 basis points. Total restructuring costs of $2.2 million are increased from 2019 due to actions taken during 2020 to both realign certain management functions as well as rightsize our cost structure in light of the revenue headwinds we faced. Diluted earnings per common share was $2.40 compared to $5.75 per diluted share a year ago. When adjusting this amount for the impact of the noncash impairment charges recorded in 2020 second quarter, non-GAAP diluted earnings per share of $6.40 as compared to the same $5.75 in last year's annual period. This represents a $0.65 or 11.3% improvement year-over-year. We are now on slide 13. As outlined on this slide, EMCOR's liquidity profile remains strong despite the headwinds we faced during the course of 2020. Our cash balance has increased from $358.8 million at December 31, 2019, to $902.9 million at the end of 2020. Operating cash flow of $806.4 million, aided by the FICA and VAT cash tax deferrals previously referenced, was the primary driver of this increase. Operating cash flow was partially offset by cash used in investing activities of nearly $95 million, predominantly representing payments for acquisitions of businesses and capital expenditures as well as cash used in financing activities, which totaled $172 million and consisted of the repurchase of our common stock, net repayments under our credit facility and dividends paid to our stockholders. Working capital has increased by over $236 million as a result of the increase in our cash balance, partially offset by a reduction in accounts receivable given the lower organic revenue during the period as well as an increase in contract liabilities due to advanced billing on certain long-term construction projects. Other changes in key balance sheet positions of note are as follows: goodwill has decreased since December 31, 2019, as a result of the noncash impairment charge recognized during the second quarter of 2020, partially offset by an increase in goodwill resulting from businesses acquired or purchase price adjustments made during the year. Our identifiable intangible asset balance has decreased since the end of last year largely due to $60 million of amortization expense recorded during 2020, which was partially offset by incremental intangible assets recognized as a result of the acquisition of three businesses during calendar 2020. Total debt has decreased by $35.7 million since the end of 2019, reflecting our net financing activity during the year. And course, debt-to-capitalization ratio has decreased to 11.9% from 13.2% in the year-ago period. Lastly, our stockholders' equity has decreased slightly since December 2019 as our net income was offset by share repurchases, dividend payments and postretirement plan liability adjustments made during 2020. Our balance sheet, in conjunction with the credit available to us, continues to put us in a position to invest in our business and achieve our strategic objectives as we look forward to 2021 and years beyond that. Hey, Mark, that's a well-deserved drink of water. And year-end was always the toughest and we've been doing it a long time together. Remaining performance obligation or RPO by segment and market sector. I'll go through the numbers briefly and then go deeper to the market trends we are seeing. As I stated in my remarks, total RPOs at the end of 2020 were a shade under $4.6 billion, up $559 million or 13.8% when compared to the year-ago level of $4.03 billion. The strength of our RPO and the associated bidding activities surprised us a bit given the uncertainty of the pandemic, economic dislocation and disruptions for the year. However, as we have said in the past, during uncertain and challenging times, we have often seen a flight to quality and fiscally strong construction and service providers prosper. It's still a little too early to tell by 2020 and now into 2021. It sure looked like one of those times. I should probably repeat. My mic wasn't on. So I'm going to go on to page 14, remaining performance obligations by segment and market sector. Look, they're up $559 million or 13.8% for those that didn't hear it. And really, there's a flight to quality a lot of times when you move from 2020 into 2021, and this certainly looks like one of those times. Our domestic construction segments experienced strong project growth in 2020 with RPOs increasing $495 million or 15.2% since the end of 2019 as we continue -- and continue to see demand for electrical mechanical systems, both in new construction and retrofit projects. Our United States Building Services segment RPOs increased in the quarter as this segment's small project repair service work continue to rebound from its abrupt, almost hard stop at the beginning and the height of COVID-19. Some of this resumption is a return of regularly scheduled maintenance on mechanical systems and then the return of small project work. And some is focused, as you'd imagine, around modifications and improvements in IAQ, indoor air quality, which I will discuss in detail in a few slides. It was quite a recovery from the March, April and May time frame when the segment was hit especially hard as described earlier, with bookings down 40% in many cases. Over on the right side of the page, we show RPOs by market sector. Throughout 2020, we experienced strong year-over-year growth in the commercial, healthcare and water and wastewater sectors. Commercial projects, which make up 41% of that total RPOs, increased $297 million or close to 19% for the year. As we stated last quarter and continued to experience in the fourth quarter of this year, demand for hyper data -- scale data center construction has high demand, as does high-tech manufacturing, and warehousing and logistics also remain strong. We are a nationwide leader in this section of the commercial market sector, and quite frankly, I don't see any letup in this activity anytime soon. We are also in Part one design discussion on several large design build through process opportunities. For the year, healthcare project RPOs increased $207 million or 56%. And water and wastewater project RPOs grew similar by 57% to $173 million. As one might surmise, given the impact of the pandemic, healthcare as a sector of the nonresidential construction market is expected to be slightly higher in 2021 and likely better than that for us as our customers build new facilities and retrofit existing facilities. By the way, RPOs in these three market sectors are at all-time highs for us since we transitioned to RPO reporting from backlog reporting in March of 2018. The nonresidential market, as measured by the U.S. Census Bureau for put-in-place activity, remains a very large market, and it was roughly $800 billion at the end of December 31, 2020. It's down 5% in 2020. However, it is not a uniform market, given its size and breadth and opportunities still exist. On the next page, I will discuss how well-thought and patient capital allocation strategy has allowed this growth in our RPO base and growth to occur despite choppy and uncertain overall markets. And on nonresidential market, they decreased 5%. I'm now on page 15, capital allocation. We have long had a major market presence in mechanical and electrical construction services and have continued to allocate capital to fill in the white space, either geographically or by adding capability in these important segments. Further, we have used our capital to build leading capabilities in HVAC service, building controls and mechanical system retrofit. We have built that capability and capacity through organic growth and acquisition in a sustained manner over many years. We are also one of the country's leading life safety contractors. And this activity mostly resides in our mechanical, and that is the sprinkler fitters and electrical, fire alarm and security installation and upgrades and low-voltage systems construction segments. Again, these capabilities were built over a long period of time through acquisition and organic investment. These are concrete examples where we have built successful platforms that allow us to have the capability to serve a broad spectrum of customers with the right products and specialty trade capabilities. Our investment decisions and patience have allowed us to build and maintain capability through cycles and serve a diverse set of customer opportunities. We have not only invested in over 20 acquisitions and we spent around $555 million on those acquisitions since 2017 until today, but we also have returned significant cash to our shareholders through share repurchases and dividends. I'm now on page 16, titled Resilient Markets. As we discussed on the previous two pages, we have shown that we have very good diversity of demand at EMCOR, and we have used that capital to grow organically and through acquisition to allow us to build upon such diversity of demand and resiliency in our business. This is not an accident, but it is a part of our long-term capital allocation strategy as discussed on the previous page. For example, EMCOR's data center capabilities were built enhanced over a very long period of time. We started building the largest data centers in the country for financial institutions and the original hosting providers almost 20 years ago. Today, we build data centers that are five times larger to seven times larger than these previous "large data centers". We have continued to grow that capability over the last five years and expanded through organic investment or acquisition or a combination of both. We are one of the leaders in the specialty contracting for these complex facilities. That's all the electrical trades, mechanical trades and sprinkler fitters. Data center construction is a good market for us, and we expect it to be for the foreseeable future. It is also a growing part of our maintenance activities. We have -- we are fortunate to have other markets that have shown resiliency. We continue to support our customers' e-commerce growth primarily through our life safety services and the construction of large cold storage and other warehouse facilities as our customers transform their warehouse networks to allow for more fast-paced growth. We continue to believe that we are very well positioned to support our customers as they build more resiliency into their supply chains by reshoring projects. We also continue to see significant opportunity for large and small design-build food processing clients. Health care is also a good market for us and has been for a very long period of time. These are complex facilities that are seeking to become more flexible in the delivery of their care in the long term. Water and wastewater is a market that we believe will have significant opportunity for us and has significant opportunity for us today and also in the next three to five years, especially in Florida. And finally, as I have discussed previously, is our position as a leading HVAC services contractor. We are in a compelling position to provide indoor air quality solutions and services. We see very strong demand currently and expect this to continue over many years. We have experienced and are continuing to experience strong demand for upgrading, enhancing HVAC and building control systems for both energy efficiency and flexibility of demand and use. This has always been a good market for EMCOR for many years, and it spans all market sectors. As discussed, serving these resilience markets is not by chance. We've built this capability over many years, and we have some of the best field leadership, trade supervision and skilled trades people in the industry to execute in these markets. I'm now going to wrap this up on page 17 and 18. As we enter 2021, we are still in the world of COVID-19 mitigation and restriction. The oil and gas markets are still depressed, and the nonresidential market is expected to decline by another 3% to 5%. Despite that less-than-cheery backdrop, we expect to continue to perform well in 2020. We expect revenues of $9.2 billion to $9.4 billion and expect to earn $6.20 to $6.70 in earnings per diluted share. 2021 should be another year of outstanding performance. We will have to execute very well to maintain the 2020 record levels of operating income margins of 8.4% in our Electrical and Mechanical Construction segments. We do expect to increase revenues, which may help us mitigate this challenge. Underlying this range are the following assumptions: our Industrial Services segment does not materially improve until the fourth quarter but gain strong momentum headed into 2020 as demand for refined products will continue to be challenged during 2021, especially through the end of the second quarter. The nonresidential construction market will decline modestly. We will continue to execute well in our more resilient rock market sectors to include manufacturing, commercial driven by data centers and logistics and warehousing, water and wastewater, energy retrofits and healthcare. Our end market diversity has been and continues to be a real strength of EMCOR. We do not expect a more restrictive COVID-19 environment than what we are operating in today. We do expect a more normal pre-COVID-19 operating environment to emerge as the year progresses. We are operating near 100% capability on our jobs with no meaningful COVID-19-induced issues. Our leadership and trades people have learned how to work and even prosper under the COVID precautions. We have learned to plan and execute, but always have the mindset that our employee safety comes first, which is nothing new or novel for us as it is one of our core values. We expect to continue to help our customers improve their facilities' air quality with indoor air quality solutions, improve energy efficiency through replacement projects and optimizing their systems. And we are going to help them bring back their employees back to work with an improved piece of mind through our efforts. Our ability to move to the upper range of our earnings guidance range will depend on the following: the nonresidential market, especially our more resilient markets, are stronger than projected because the bounce back is faster as the U.S. and the U.K. normalizes from COVID-19 restrictions. Our refining and petrochemical customers begin to gain more comfort with improved demand for rerefined products and increase their scope for this year's work performed by us. Our momentum in indoor air quality and efficiency projects continues to not only increase but accelerates further, and our productivity stays strong as we transition to more normal operating conditions. I'm going to talk a little bit about what happened in Texas last week as we have a significant business in Texas. Clearly, the power disruption in Texas last week affected not only EMCOR's business operations, customer sites, but also more importantly, our employees and their families. Many of our customers went to skeleton staff for three to five days, and many shut down operations almost completely. We have mostly resumed operations in our Industrial Services and also our construction services and Building Service customer sites. We will be there to help our customers complete their planned turnarounds, execute on planned maintenance and repairs related to the storm and to resume project work already under way or that was ready to start in the last few weeks. We have may -- we may have work that was planned for the first quarter that will now extend into the second quarter that -- and it may have had more activity in the first quarter than it will now have. We expect to continue to be balanced capital allocators as we have shown on the previous pages. We have more capital to allocate in balance, but we know how to do that. And however, our guidance contemplates that we will continue to be disciplined allocators between organic growth investments, acquisitions, share repurchases and dividends.

q4 earnings per share $1.45. q4 revenue $2.28 billion versus refinitiv ibes estimate of $2.2 billion. sees fy 2021 earnings per share $6.20 to $6.70. q4 non-gaap earnings per share $1.86. sees fy 2021 revenue $9.2 billion to $9.4 billion.

PSEG released first quarter 2021 earnings results earlier today. We also discuss non-GAAP operating earnings and non-GAAP adjusted EBITDA, which differ from net income as reported in accordance with generally accepted accounting principles in the United States. I'm pleased to report that PSEG has achieved several major milestones on our path to becoming a primarily regulated utility company with a complementary and significantly contracted carbon-free generating fleet. Our GAAP results for the first quarter were also $1.28 per share versus $0.88 per share in the first quarter of 2020. Results from ongoing regulated investments at PSE&G and the effect of cold weather on PSEG Power drove favorable comparisons at both businesses. We are well positioned to execute on our financial and strategic goals for the balance of the year given this eventful quarter. Beginning was out nearly $2 billion of Clean Energy Future programs, which have moved from approval to execution. PSE&G is helping to advance the decarbonization of New Jersey in a sizable and equitable way. Our Clean Energy Future investments are paired with a jobs training program that offers opportunities to low and middle-income New Jersey community. Last week, the New Jersey Board of Public Utilities voted unanimously to award a continuation of the full $10 per megawatt hour zero-emission certificates, I'll just call them ZECs from now on, for all three New Jersey nuclear units, that would be Hope Creek, Salem number one and Salem number two through May of 2025. This was the maximum amount that the BPU could have awarded, and we are appreciative of the support received from the many community, labor, business, environmental and employee organizations that participated in this enormously important process. Each of these groups recognizes the value of the reliable around the clock and carbon-free electricity supply our nuclear plants provide. Throughout this process, our nuclear team has approached operations at the units with the utmost professionalism and dedication to safety. I congratulate PSEG Nuclear for being recognized by as an industry leader in operational reliability, one of only two nuclear fleets across the industry with no scrams over the past 365 days. The BPU's decision to extend the ZEC program will advance climate action in New Jersey by helping to preserve the state's largest carbon-free generating resource and is consistent with the growing interest at the federal level in preserving existing nuclear as an essential part of a clean energy mix. We applaud the BPU for its decision, which is in the best interest of the state of New Jersey and its ability to achieve its long-term clean energy goals without compromising reliability or going backward on environmental gains made to date. Looking ahead, we will soon work with stakeholders to obtain alignment of state and federal climate goals in seeking ways to extend the duration of support for carbon-free nuclear power. During the quarter, the BPU also approved PSEG's 25% equity investment in Orsted's Ocean Wind project. In addition, Ocean Wind received a notice of intent to prepare an environmental impact statement from the Bureau of Ocean Energy Management, or BOEM, which we will also review -- which will also review the project's construction and operations plan. In April, PJM, closed cooperation with the BPU, opened a four month solicitation window to seek transmission solutions to support New Jersey's offshore wind generation target. This process is PGM's first public policy transmission solicitation, and we will participate in this proceeding. The recent Biden administration proposal focusing on climate action is clearly supportive of offshore wind, existing nuclear generation and electrification of transportation, all of which are aligned with PSEG's business plan and strategy for sustainability. PSEG eagerly encourages an advocate for a national approach to accelerate economy wide, net zero emissions even sooner than 2050 in a constructive manner that expands green jobs by investing in clean energy infrastructure. I am more optimistic than ever that the momentum for real climate action is taking hold, PSEG continues to press ahead with our powering, progress, vision, that incorporates energy efficiency and the electrification of transportation to help our customers use energy -- use less energy. We are pairing that with our move to make the energy our customers use cleaner, which aligns with our efforts to preserve our existing nuclear units and pursue strategic alternatives for our Fossil fleet. Then we strive to deliver with high reliability and resiliency, which ties to our investments in Energy Infrastructure and the Energy cloud. Today, we are also announcing progress on our strategic alternatives exploration with an agreement to sell our solar source portfolio to an affiliate of LS Power. The sale resulted from a robust marketing process, and we're pleased with the outcome of the sale, having determined that the transaction is modestly accretive on the sum of the parts and on an operating earnings basis going forward. We expect the solar source portfolio deals to close in the second or third quarter of 2021, subject to customary, regulatory and other closing conditions. PSEG Power is continuing the exploration of strategic alternatives for its Fossil generating fleet and currently anticipate reaching an agreement around midyear. These expected transactions, along with over a decade of capital allocation directed mainly toward PSE&G to position the remaining company as a primarily regulated electric and gas utility with a complementary carbon-free nuclear fleet and offshore wind investments that will be highly contracted. The COVID-19 pandemic and its economic impact continued to affect the New Jersey economy. The large contribution of the transmission and residential electric and gas components to our overall sales mix has had a stabilizing effect on the margins of our utility business as does a supportive regulatory order that authorizes deferral of certain COVID-19-related costs for future recovery. Governor Murphy recently announced that a significant easing of COVID-19 restrictions on the state's businesses, venues and gatherings would begin on May 19 following progress in vaccinating over half of the state's population and a sustained reduction in positivity and hospitalization rates. PSE&G has begun implementing the Clean Energy Future Energy Efficiency programs by initiating customer engagement and outreach as well as advancing the clean energy jobs training program I mentioned earlier and related IT system build-out activity. Following the BPU approval of our $700 million AMI proposal in January, we have begun implementation of the 4-year program. Our current focus is on planning the AMI communications network, customer outreach and developing the installation schedule of the new meters. On the regulatory and policy front, there are several upcoming developments at the FERC, the Federal Energy Regulatory Commission, the BPU and PJM that could influence future results. Last month, FERC promulgated a new proposed rule to limit the 50 basis point RTO return on equity incentive to a 3-year period. Given the Biden administration's interest in the significant transmission build out to expand the integration of Clean Energy into the nation's power grid, this development was disappointed. We have long supported the need for higher incentives for transmission investment over distribution returns based on the added complexity and risk of these projects. Coordination through the RTO has benefits, but -- risks and complications must be considered as well. Based on the short comment window provided, the proposed rule could be enacted as early as the third quarter. We will file comments to recognize the merits of continuing the RTO adder, but this looks to be an uphill battle, given the Chair's support for the supplemental rule. While we await the results of the first PJM capacity auction in three years, which PGM will announce on June 2, PSEG is continuing to advocate for a minimum offer price rule, I'll call it MOPR going forward, that will avoid double payment for resources such as offshore wind and nuclear or other supply need to achieve state goals. FERC Commissioner Danly has developed a state option to choose resources proposal, or SOCR, intended to achieve the major goals of establishing the rights of states to choose their preferred capacity resources to achieve their energy policy objectives and eliminate double payments by states for the capacity they choose. This proposal could have the added benefit of keeping much of FERC's capacity market reform rules intact while addressing state objections. New Jersey is expected to issue its consultants report and recommendation for resource adequacy this month. This report could determine whether a fixed resource requirement, or FRR, will be chosen to satisfy the state's future capacity obligations beyond the 2022 and 2023 energy year. We continue to believe that the state could pursue an FRR without legislation and will suggest options to minimize the cost impact of FERC's capacity ruling on New Jersey customers. Earlier in April, the BPU released its strong proposal to address the design of the solar successor program. Stakeholder meetings are being conducted to consider a solar financial incentive program that will permanently replace the Solar Renewable Energy Certificate, or SREC program, and the Temporary Transitional Renewable Energy Certificate, or TRAC program, which was instituted in 2020 upon the state attainment of 5.1% of kilowatt hours sold from solar generation fee. Given the substantial increase in New Jersey solar target, the high cost of solar and the solar cost caps in the Clean Energy Act of 2018, we believe it is critical to develop a cost-effective approach to incent future solar generation. By far, the most efficient and cost-effective way for New Jersey to optimize what solar can bring to the achievement of its clean energy goals is to maximize grid-connected utility-scale projects by involving the state's electric distribution company. So to wrap up my remarks, we are reaffirming non-GAAP operating earnings guidance for the full year of 2021 of $3.35 to $3.55 per share. Our guidance assumes normal weather and plant operations for the remainder of the year and incorporates the conservation incentive programs that begin in June for electric and in October for gas to cover variations in revenue due to energy efficiency and other impacts. In addition, as we mentioned on our year-end call, our 2021 guidance assumes a prospective settlement of our transmission return on equity at a lower rate and the inclusion of Fossil's results for the full year. We are on track to execute PSEG's 5-year $14 billion to $16 billion capital program through 2025 and had the financial strength to fund it without the need to issue new equity. Over 90% of the current capital program is directed to PSE&G, which is expected to produce 6.5% to 8% compound annual growth in rate base over the '21 to '25 period, starting from PSEG's year-end 2020 rate base of $22 billion. As we've noted previously, PSE&G's considerable cash-generating capabilities are supported by over 90% of its capital spending, continuing to receive either formula rate last based or current rate recovery of and on capital. From nuclear operations marking a second breaker-to-breaker uninterrupted run at Hope Creek to a cross-functional regulatory, legal, financing, government affairs group that multi cash on Clean Energy Future, ZECs and a host of other regulatory proceedings, to our field crews in New Jersey and Long Island who exemplify a safety conscious mindset, I could not be prouder of our entire PSEG team. As Ralph mentioned, PSEG reported non-GAAP operating earnings for the first quarter of 2021 of $1.28 per share versus $1.03 per share in last year's first quarter. We've provided you with information on Slide 12 regarding the contribution to non-GAAP operating earnings by business for the quarter. And Slide 13 contains a waterfall chart that takes you through the net changes quarter-over-quarter in non-GAAP operating earnings by major business. I'll now review each company in more detail. PSE&G, as shown on Slide 15, reported net income for the first quarter 2021 of $0.94 per share compared with $0.87 per share for the first quarter of 2020, up 8% versus last year. Results improved by $0.07 per share, driven by revenue growth from ongoing capital investment program and favorable pension OPEB results. Transmission capital spending added $0.02 per share of the first quarter net income compared to the first quarter of 2020. On the distribution side, gas margin improved by $0.03 per share over last year's first quarter, driven by the scheduled recovery of investments made under the second phase of the Gas System Modernization Program. Electric margin was $0.01 per share favorable compared to the first quarter of 2020 on a higher weather-normalized residential volume. O&M expense was $0.02 per share unfavorable compared to the first quarter of 2020, reflecting higher costs from several February snowstorms. Depreciation expense increased by $0.01 per share, reflecting higher plant in service, and pension expense was $0.02 per share favorable compared to the first quarter of 2020. Flow through taxes and other were $0.02 per share favorable compared to the first quarter of 2020. And this tax benefit is due to the use of an annual effective tax rate that will reverse over the remainder of the year and was partly offset by the timing of taxes related to bad debt expense. Winter weather, as measured by heating degree days, was 4% milder than normal, but was 18% colder than the mild winter experienced in the first quarter of 2020. For the trailing 12 months ended March 31, total weather-normalized sales reflected the higher expected residential and lower commercial and industrial sales observed in 2020 due to the economic impacts of COVID-19. Total electric sales declined by 2%, while gas sales increased by approximately 1%. Residential customer growth for electric and gas remained positive during the period. PSE&G invested approximately $600 million in the first quarter and is on track to fully execute on its planned 2021 capital investment program of $2.7 billion. The 2021 capital spending program will include infrastructure upgrades to transmission and distribution facilities as well as the rollout of the Clean Energy Future investments in Energy Efficiency, Energy Cloud, including smart meters and electric vehicle charging infrastructure. PSE&G is continuing to defer the impact of additional expenses incurred to protect its employees and customers as a result of the COVID-19 pandemic. PSE&G has experienced significantly higher accounts receivables and bad debts, and lower cash collections from customers due to the moratorium on shut offs for residential customers that began last March and has been extended through June of this year. We've launched an Expanded Customer Communications Program designed to inform all customers about payment assistance programs and bill management tools. As a reminder, PSE&G continues to make quarterly filings with the BPU, detailing the COVID-19 pandemic related deferrals. And as of March 31, PSE&G has recorded a regulatory asset of approximately $60 million for net incremental costs, which includes $35 million for incremental gas bad debt expense. Electric bad debt expenses recovered through the societal benefits charge and trued up periodically. With respect to subsidiary guidance for PSE&G, our forecast of net income for 2021 is unchanged at $1.410 billion to $1.470 billion. Now moving to Power. In the first quarter of 2021, PSEG Power reported net income of $161 million or $0.32 per share, non-GAAP operating earnings of $163 million or $0.32 per share, and non-GAAP adjusted EBITDA of $321 million. This compares to first quarter 2020 net income of $13 million, non-GAAP operating earnings of $85 million and non-GAAP adjusted EBITDA of $201 million. And we have also provided you with more detail on generation for the quarter on Slide 22. PSEG Power's first quarter results benefited from a scheduled improvement in capacity prices for the first half of 2021, a favorable weather comparison to the mild winter in the first quarter of 2020, and other items, some of which are expected to reverse in subsequent quarters. The expected increase in PJM's capacity revenue improved non-GAAP operating earnings comparisons by $0.03 per share compared with last year's first quarter. Higher generation in the 2021 first quarter added $0.01 per share due to the absence of the first quarter 2020 unplanned [on one average. ] And favorable market conditions influenced by February's cold weather benefited results by $0.03 per share compared to last year's first quarter. We continue to forecast a $2 per megawatt hour average decline in recontracting for the full year recognizing that the shape of the annual average change favors the winter months of the first quarter. The weather-related improvement in total gas send out to commercial and industrial customers increased results by $0.04 per share. We expect some of this increase to gas apps will reverse later in 2021, reflecting the absence of a onetime benefit recognized in the third quarter of 2020 related to a pipeline refund. O&M expense was $0.03 per share favorable in the quarter, benefiting from the absence of first quarter 2020 outages at Bergen two and Salem 1, and lower depreciation and lower interest expense combined to improve by $0.01 per share versus the quarter ago -- or the year ago quarter. Generation output increased by just under 1% to total 13.3-terawatt hours versus last year's first quarter when Salem Unit one experienced a month-long unplanned outage. PSEG Power's combined cycle fleet produced 4.7-terawatt hours, down 8%, reflecting lower market demand in the quarter. The Nuclear fleet produced 8.2-terawatt hours, up 3%, and operated at a capacity factor of 98.8% for the first quarter, representing 62% of total generation. As Ralph mentioned, Hope Creek posted an uninterrupted run between refueling outages and just began its 23rd refueling outage in April. PSEG Power is forecasting generation output of 36 to 38 terawatt hours for the remaining three quarters of 2021 and has hedged approximately 95% to 100% of this production at an average price of $30 per megawatt hour. Gross margin for the first quarter rose to approximately $34 per megawatt hour compared to $30 per megawatt hour in the first quarter of 2020, which contained one of the mildest winters in recent history. Power prices in the first quarter of 2021 were stronger across PJM New York and New England compared to the year earlier period. And this winter's temperatures were 12% cooler on average and resulted in better market conditions compared to the first quarter of 2020. Power's average capacity prices in PJM were higher in the first quarter of 2021 versus the first quarter of 2020 and will remain stable at $168 per megawatt hour -- per megawatt day through May of 2022. In New England, our average realized capacity price will decline slightly to $192 per megawatt day, beginning June 1. However, Power's cleared capacity will decline by 383 megawatts with the scheduled retirement of the Bridgeport Harbor Unit 3, achieving our goal of making Power's fleet completely coal free. Over 75% of PSEG Power's expected gross margin in 2021 is secured by our fully hedged position of energy output, capacity revenue set in previous auctions and the opportunity to earn a full year of ZEC revenues and certain ancillary service payments such as reactive power. The forecast of PSEG Power's non-GAAP operating earnings and non-GAAP adjusted EBITDA for 2021 remain unchanged at $280 million to $370 million and $850 million to $950 million, respectively. Now let me briefly address results from PSEG Enterprise and Other. For the first quarter of 2021, Enterprise and Other reported net income of $10 million or $0.02 per share for the first quarter of 2021 compared to a net loss of $5 million or $0.01 per share for the first quarter of 2020. The improvement in the quarter reflects higher tax benefits recorded in the first quarter of 2021 due to the use of an annual effective tax rate that will reverse over the remainder of the year as well as interest income associated with a prior IRS audit settlement. For 2021, the forecast for PSEG Enterprise and Other remains unchanged at a net loss of $15 million. With respect to financial position, PSG ended the quarter with $803 million of cash on the balance sheet. During the first quarter, PSE&G issued $450 million of 5-year secured medium-term notes at 95 basis points and $450 million of 30-year secured medium-term notes at 3%. In addition, we retired a $300 million, 1.9% medium-term note at PSE&G that matured in March. In March of 2021, PSEG closed on a $500 million, 364-day variable rate term loan agreement, following the January prepayment of a $300 million term loan initiated in March of 2020. For the balance of the year, we have approximately $950 million of debt at PSEG Power scheduled to mature in June and September. $300 million of debt scheduled to mature at the parent in November and $134 million of debt at PSE&G scheduled to mature in June. Our solid balance sheet and credit metrics keep us in a position to fund our 2021 to 2025 capital investment program without the need to issue new equity. As Ralph mentioned earlier, we are affirming our forecast of non-GAAP operating earnings for the full year of 2021 of $3.35 to $3.55 per share. That concludes my comments. And Christi, we are now ready to take questions.

pebblebrook hotel trust - unable to provide an outlook for 2021. pebblebrook hotel trust - for q4 2021, expects both same-property room revenues and total revenues to be down between 38% and 42% versus q4 2019.

I'm Jeff Kotkin, Eversource Energy's Vice President, Investor Relations. Speaking today will be Joe Nolan, our new President and Chief Executive Officer; and Phil Lembo, our Executive Vice President and CFO. Also joining us today are John Moreira, our Treasurer and Senior VP for Finance and Regulatory; and Jay Buth, our VP and Controller. We hope that all on the phone remain healthy and that your families are safe and well. I'm looking forward to meeting many more of you over the coming years and sharing my optimism and enthusiasm for Eversource's future and excellent investment thesis. I'm grateful to the Eversource Board of Trustees and to Jim for allowing me to lead an incredibly dedicated and high-performing organization. In approving these Executive level changes, the Eversource Board is signaling its confidence in our long-term strategy that focuses on our core regulated business with an exciting investment in offshore wind. We are in a world where customer service, safety, and reliability have never been more important. We will never forget that we would not be in the business without our 4.3 million customers; they are our top priority. Customers pay the bills and they deserve the reliable and safe utility service that we must provide. Over the coming decades the tens of billions of dollars we will invest in our energy and water delivery systems will be critical in helping New England prepare for a clean energy future, and we expect to be a central catalyst to that clean energy transition. But first, I need to address our Company's relationship with Connecticut. We have thousands of employees in Connecticut, who work hard each day to provide our 1.7 million natural gas, water, and electric customers with the most reliable and responsive service possible. During emergency situations, which we have had far too often over the past year, due to the historic storm levels, they are working up to 16 hours a day for as many days as it takes to ensure that our customers have their service restored promptly and safely, even in a pandemic. So I cannot tell you how painful it was for me to read certain elements of the Tropical Storm Isaias decision that was released on April 28th. It did not reflect the hard work of our dedicated employees in a company I've been chosen to lead. Our customers, PURA, and our company all want the same thing, great service each and every day of the year. And, when there is a strong event power restoration as safely and quickly as possible. The women and men of Eversource work hard each and every day to meet these expectations. The PURA auto [Phonetic] on storm response clearly identify the areas for improvement. We know we have to work to not only our response plan but also on our relationship with PURA. This was apparent from the April 28 decision in a subsequent notice of violation. I can assure you that we hear this loud and clear and already doing all we can to improve on both accounts. Turning to our clean energy initiatives. You are probably aware of the climate legislation that Massachusetts Governor Baker signed into law earlier this spring. Among many elements, the law will allow each of the state's utilities to build up to 200 -- 280 megawatts of solar generation, NSTAR Electric will be able to increase its level of solar generation in rate base from 70 megawatts to 350 megawatts. As Phil mentioned during our year-end earnings call, we have budgeted approximately $500 million for this initiative from 2022 to 2025. The other item with a direct impact on us is a 2,400 megawatts expansion of Massachusetts offshore wind authorization from 3,200 megawatts to 5,600 megawatts. This expansion will help me [Phonetic] to stay at the forefront of offshore wind development in the United States. As you can see on Slide 2, there are now more than 10,000 megawatts of unawarded offshore wind authorizations in Southern New England and New York, with Massachusetts set to award up to 1,600 megawatts later this year. In fact, Massachusetts RFP was just issued on Friday of last week. Our offshore wind partnership with Orsted is very near and dear to my heart. Since I'm always seeing that relationship and worked closely with our partner in recent years, it is an important element of our clean energy growth strategy. And we have had a number of positive offshore wind developments already this year. Starting with Slide 3 in early January, the Bureau of Ocean Management or BOEM released its draft environmental impact statement on South Fork project. Comments received by late February, and we expect to see a final EIS way this summer. BOEM is scheduled to rule on our final federal permits for that project in January of 2022. Assuming that the January data is met, we expect to begin construction early next year and complete the project in late 2023. Additionally, in late March, The New York Public Service Commission approved the necessary New York state sighting permit for the project, while the local town and trustees of East Hampton approved the local real estate rights required for the project. Turning to Revolution Wind. Late last month BOEM released a schedule for reviewing the 704 megawatt project. The schedule calls for a final environmental impact statement to be issued in March of 2023 and for a final decision on construction and operating plan by the end of July 2023. The release of that schedule represents a significant step forward with this project. Revolution Wind and South Fork are two of only three projects in the Northeast, that have achieved that milestone. Over the coming months, we and Orsted will be reviewing the BOEM and the state of Rhode Island permitting process to develop a projection for the Revolution Wind construction schedule. Finally, we expect to receive BOEM review schedule for our 924 megawatt Sunrise Wind project later this year. We continue to make significant progress in preparing for the commencement of construction. Over the past couple of months, we have announced agreements with two critical ports that will serve as staging grounds for construction. New London, Connecticut will serve as a hub for turbine construction and Providence, Rhode Island will be the center for foundation construction. Enormous economic benefits will accrue to these communities, as a result of their role in our construction activities, including hundreds of direct jobs. We are also very encouraged by the extremely positive signs we see from Washington. President Biden has underscored his support for offshore wind construction along the Atlantic seaboard and has marshaled multiple members of his cabinet to support it. The goal was to have about 30,000 megawatts of offshore wind turbines operating in the U.S. by 2030. We expect to be a significant contributor to that output through our partnership with Orsted. Already more than 1,750 megawatts are under contract to serve load in Connecticut, New York, and Rhode Islands. Again, I look forward to speaking with many of you at the AGA Virtual Conference later this month. Now, I will turn over the call to Phil. So I'll start with Slide number 4 and noting that earnings were $1.06 per share in the first quarter, compared with earnings of $1.01 per share in the first quarter of 2020. Results for both years included after-tax costs associated with our recent acquisition of the assets of Columbia Gas, Columbia Gas of Massachusetts and that's $0.02 per share this year and $0.01 per share in 2020. Results for our Electric Distribution and Natural Gas Distribution segment showed the most significant changes year-to-year. Electric Distribution earned $0.27 per share in the first quarter of this year, compared with earnings of $0.39 per share in the first quarter of 2020. Lower results were driven by a couple of principal factors. The first is that we recorded a charge of $30 million or $0.07 per share, primarily to reflect customer credits of $28.4 million and an additional penalty of $1.6 million to be paid to the state of Connecticut. These credits relate to a Notice of Violation that Connecticut regulators announced last week, as a result of our performance in restoring power following the catastrophic impact of Tropical Storm Isaias last August. The docket established by PURA to review the penalty is scheduled to run through mid-July of this year. Additionally, Electric Distribution results were negatively affected by approximately $20 million of higher storm-related expenses in the first quarter of 2021 and that's compared to a pretty quiet and warm first quarter in 2020. And in fact, in this quarter, we experienced 31 separate storm events across our three states versus fairly limited activity in Q1 of 2020. So, by contrast, our Natural Gas Distribution segment showed a sharp increase in earnings because it's now about 50% larger than it was a year ago. It earned $0.43 per share in the first quarter of 2021 compared with earnings of $0.26 per share in the first quarter of 2020. Improved results were due primarily to the addition of Eversource Gas of Massachusetts, which earned $0.14 per share in the quarter. In addition, we had higher revenues at NSTAR Gas and Yankee Gas and these were partially offset by higher O&M and depreciation expense. I should note that the transition process for Eversource Gas of Massachusetts continues to progress extremely well. As we continue to migrate off of NiSource business systems and onto Eversource platforms, reducing costs and improving service. To date, more than 80% of the business processes have been transferred to Eversource from NiSource's, great progress has been made. Eversource ownership of the distribution system is being well received by customers, communities, and employees, and we continue to meet or exceed the financial and operational targets we'd set for ourselves. On the Electric Transmission segment, we earned $0.39 per share in the first quarter of 2021, compared with $0.38 per share in the first quarter of 2020. Improved results were driven by a higher level of investment in transmission facilities and this was partially offset by dilution of additional shares issued. Our Water Distribution segment earned $3.6 million in the first quarter of 2021, compared with earnings of $2.1 million in the first quarter of last year. Improved results were due largely to lower interest expense and lower effective tax rate. As you may have noticed, last month Aquarion announced an agreement to purchase a small investor-owned water system that is based in Connecticut, but also serves portions of Massachusetts and New Hampshire. New England service company, as it's called, serves about 10,000 customers in the three states and has rate base of about $25 million. This acquisition is consistent with the growth strategy we've discussed for our water delivery business. And assuming timely regulatory approvals, we expect to close the transaction by the end of this year and for it to be accretive right away in 2022. As you probably noted in our news release and you can see on Slide 5, we are reaffirming our long-term earnings-per-share growth rate in the upper half of the 5% to 7% range. However, we modified our current year 2021 earnings guidance to reflect the customer credits I mentioned earlier. We now project earnings per share toward the lower end of the $3.81 to $3.93 range and this includes the $0.07 per share impact of the credits. On the regulatory side. While our primary operating companies don't have any base rate reviews pending, we have several regulatory dockets open in Connecticut and I'll summarize the status of a few of them. In addition to the penalty I described previously, PURA also identified a 90 basis point reduction in our authorized distribution ROE. This is likely to be addressed in the current CL&P interim rate decreased proceeding. Given the revised schedule the PURA released last week, we believe any ROE reduction would take -- would not take place or take effect until October 1st of this year. To help you size that impact currently, CL&P's authorized ROE is 9.25% and we have approximately $5 billion of rate base at CL&P. Also, on April 28th, PURA finalized an interim decision on the recovery of certain tracked cost by CL&P. This decision would result in a number of changes to those track cost that would be implemented on June 1st, with other modifications deferred until October 1st. The interim decision implemented a number of positive modifications to an early draft and we appreciate PURA making those decisions -- making those changes in its decision. PURA also continues to review several other dockets, including potential for grid modernization initiatives, including AMI electric vehicle programs and storage. And the status of the major open PURA docket is listed in an appendix to our slides. Turning from Connecticut to Washington. We were disappointed last month in the developments around the ongoing notice of proposed rate making concerning incentives that FERC is granted for many years to utilities that participate in regional transmission organizations or RTOs. FERC will be taking comments and replies on the proposed changes over the next several weeks before deciding on a final order. I would expect that the New England transmission owners and others will file comments opposing the change, which some see as being inconsistent with the Energy Policy Act of 2005 and with President Biden's focus on building out the nation's electrical infrastructure to bring more clean-energy resources to market. As a helpful rule from a 10 basis point reduction in our transmission ROE effects consolidated earnings by about $0.01 per share. In terms of financings, we completed $450 million of debt issuances so far this year, primarily to pay off maturities at Eversource parent and at the Aquarion in Connecticut -- Aquarion company in Connecticut. We've not issued any additional equity this year other than through our ongoing dividend reinvestment and employee incentive programs. However, as you know and we've stated in the past, we continue to expect to issue approximately $700 million of new equity through some sort of after market program and that would occur at various points in time over our forecast period. In terms of our operations, we've gotten off to a very strong start this year. Electric reliability continues to be in the top quartile of the industry versus our peers. Through March, our above-average safety record improved even further with fewer employee injuries than we experienced in the first quarter of 2020. All three of our natural gas utilities are outperforming on their emergency response requirements and Aquarion's water quality is solidly exceeding its target.

compname reports q1 earnings per share of $1.06. q1 earnings per share $1.06. reaffirmed projected long-term earnings per share growth rate in upper half of range of 5 to 7%. estimates it will earn toward lower end of 2021 recurring earnings per share guidance of $3.81 to $3.93 per share.

John and David will provide high-level commentary regarding the quarter. We appreciate you joining our call today. We're very pleased with our fourth quarter and full-year results. We achieved a great deal despite a challenging interest rate and operating environment. Despite continued economic uncertainty, we remain focused on what we can control, and our efforts are paying off. We grew consumer checking accounts by 3% and small business accounts by 5%. Notably, our 2021 net retail account growth exceeds the previous three years combined and represents an annual growth rate that is three times higher than pre-pandemic levels. We increased new corporate banking group loan production by approximately 30% and generated record capital markets revenue. Through our enhanced risk management framework, we delivered our lowest annual net charge-off ratio since 2006. We made investments in key talent and revenue-facing associates to support strategic growth initiatives. We continue to grow and diversify revenue through our acquisitions of EnerBank, Sabal Capital Partners, and Clearsight Advisors. We successfully executed our LIBOR transition program to ensure our clients are ready to move to alternative reference rates. We continue to focus on making banking easier through investments in target markets, technology, and digital capabilities. We surpassed our two-year $12 million commitment to advance programs and initiatives that promote racial equity and economic empowerment for communities of color. Before closing, we're extremely proud of our achievements in 2021 but none of these would have been possible without the hard work and dedication of our nearly 20,000 associates. The past year posed unique challenges as we continue to transition to our new normal, both on a personal and professional level. Despite continued uncertainty, our associates remain steadfast. They continue to bring their best to work every day, providing best-in-class customer service, successfully executing our strategic plan, and maintaining strong risk management practices, all of which contributed to our success. In 2022 and beyond, we'll continue to focus on growing our business by making investments in areas that allow us to make banking easier for our customers, all while continuing to provide our associates with the tools they need to be successful. We will make incremental adjustments to our business by leaning into our strengths and investing in areas where we believe we can consistently win over time. These changes represent a natural extension of our commitment to making banking easier for our customers and complement the enhanced alerts, time order posting process, as well as our Bank On certified checking product we launched last year. It's important to note that the financial impact of these enhancements have been fully incorporated in our total revenue expectation for 2022. Again, we're pleased with our results and have great momentum as we head into 2022. Now Dave will provide you with some select highlights regarding the quarter. Let's start with the balance sheet. Including the impact of acquired loans from the EnerBank transaction, adjusted average and ending loans grew 6% and 7%, respectively, during the quarter. Although business loans continue to be impacted by excess liquidity, pipelines have surpassed pre-pandemic levels. And encouragingly, we experienced a 240-basis-point increase in line utilization rates during the fourth quarter. In addition, production remained strong with line of credit commitments increasing $4.7 billion year over year. Consumer loans reflected the addition of $3 billion of acquired EnerBank loans, as well as another strong quarter of mortgage production accompanied by modest growth in credit card. Looking forward, we expect full-year 2022 reported average loan balances to grow 4% to 5% compared to 2021. Let's turn to deposits. Although the pace of deposit growth has slowed, balances continued to increase this quarter to new record levels. The increase includes the impact of EnerBank deposits acquired during the fourth quarter, as well as continued growth in new accounts and account balances. We are continuing to analyze our deposit base and pandemic-related deposit inflow characteristics in order to predict future deposit behavior. Based on this analysis, we currently believe approximately 35% or $12 billion to $14 billion of deposit increases can be used to support longer-term asset growth through the rate cycle. Additional portions of the deposit increases could persist on the balance sheet but are likely to be more rate sensitive, especially later in the Fed cycle. While we expect a portion of the surge deposits to be rate sensitive, you will recall that the granular nature and generally rate insensitive construct of our overall deposit base represents significant upside for us when rates do begin to increase. Let's shift to net interest income and margin. Net interest income increased 6% versus the prior quarter, driven primarily from our EnerBank acquisition, favorable PPP income, and organic balance sheet growth. Net interest income from PPP loans increased $8 million from the prior quarter but will be less of a contributor going forward. Approximately 89% of estimated PPP fees have been recognized. Cash averaged $26 billion during the quarter. And when combined with PPP reduced fourth quarter's reported margin by 51 basis points, our adjusted margin was 3.34%, modestly higher versus the third quarter. Excluding the impact of a large third-quarter loan interest recovery, core net interest income was mostly stable as loan growth offset impacts from the low interest rate environment. Similar to prior quarters, net interest income was reduced by lower reinvestment yields on fixed-rate loans and securities. These impacts are expected to be more neutral to positive going forward. The hedging program contributed meaningfully to net interest income in the fourth quarter. The cumulative value created from our hedging program is approximately $1.5 billion. Roughly 90% of that amount has either been recognized or is locked into future earnings from hedge terminations. Excluding, PPP Net interest income is expected to grow modestly in the first quarter, aided by strong fourth-quarter ending loan growth, as well as continued loan growth in the first quarter, partially offset by day count. Regions balance sheet is positioned to benefit meaningfully from higher interest rates. Over the first 100 basis points of rate tightening, each 25-basis-point increase in the federal funds rate is projected to add between $60 million and $80 million over a full 12-month period. This includes recent hedging changes and is supported by a large proportion of stable deposit funding and a significant amount of earning assets held in cash when compared to the industry. Importantly, we continue to shorten the maturity profile of our hedges in the fourth quarter. Hedging changes to date support increasing net interest income exposure to rising rates, positioning us well for higher rates in 2022 and beyond. In summary, net interest income is poised for growth in 2022 through balance sheet growth and a higher yield curve in an expanding economy. Now, let's take a look at fee revenue and expense. Adjusted noninterest income decreased 5% from the prior quarter, primarily due to elevated other noninterest income in the third quarter but did not repeat in the fourth quarter. Organic growth and the integration of Sabal Capital Partners and Clearsight Advisors will drive growth in capital markets revenue in 2022. Going forward, we expect capital markets to generate quarterly revenue of $90 million to $110 million, excluding the impact of CVA and DVA. Mortgage income remained relatively stable during the quarter. And while we don't anticipate replicating this year's performance in 2022, mortgage is expected to remain a key contributor to fee revenue, particularly as the purchase market and our footprint remains very strong. Wealth management income increased 5%, driven by stronger sales and market value impacts, and is expected to grow incrementally in 2022. Seasonality drove an increase in service charges compared to the prior quarter. Looking ahead, as announced yesterday, we are making changes to our NSF and overdraft practices, which along with previously implemented changes will further reduce these fees. NSF and overdraft fees make up approximately 50% of our service charge line item. These changes will be implemented throughout 2022. But once fully rolled out, together with our previous changes implemented last year, we expect the annual impact to result in 20% to 30% lower service charges revenue versus 2019. Based on our expectations around the implementation timeline, we estimate $50 million to $70 million will be reflected in 2022 results. NSF and overdraft revenue has declined substantially over the last decade. And once fully implemented, we expect the annual contribution from these fees will be approximately 50% lower than 2011 levels. Since 2011, NSF and overdraft revenue has decreased approximately $175 million and debit interchange legislation reduced card and ATM fees another $180 million. We have successfully offset these declines through expanded and diversified fee-based services. And as a result, total noninterest income increased approximately $400 million over this same time period. Through our ongoing investment in capabilities and services, we will continue to grow and diversify revenue to overcome the impact of these new policy changes. We expect 2022 adjusted total revenue to be up 3.5% to 4.5% compared to the prior year, driven primarily by growth in net interest income. This growth includes the impact of lower PPP-related revenue and the anticipated impact of NSF and overdraft changes. Let's move on to noninterest expense. Adjusted noninterest expenses increased 5% in the quarter. Salaries and benefits increased 4%, primarily due to higher incentive compensation. Base salaries also increased as we added approximately 660 new associates, primarily as a result of acquisitions that closed this quarter. The increased headcount also reflects key hires to support strategic initiatives within other revenue-producing businesses. We have experienced some inflationary pressures already and expect certain of those to persist in 2022. If you exclude variable-based and incentive compensation associated with better-than-expected fee income and credit performance, as well as expenses related to our fourth quarter acquisitions, our 2021 adjusted core expenses remained relatively stable compared to the prior year. We will continue to prudently manage expenses while investing in technology, products, and people to grow our business. As a result, our core expense base will grow. We expect 2022 adjusted noninterest expenses to be up 3% to 4% compared to 2021. Importantly, this includes the full-year impact of recent acquisitions, as well as anticipated inflationary impacts. Despite these impacts, we remain committed to generating positive adjusted operating leverage in 2022. Overall credit performance remained strong. Annualized net charge-offs increased 6 basis points from the third quarter's record low to 20 basis points driven in part by the addition of EnerBank in the fourth quarter. Full-year net charge-offs totaled 24 basis points, the lowest level on record since 2006. Nonperforming loans continued to improve during the quarter and are now below pre-pandemic levels at just 51 basis points of total loans. Our allowance for credit losses remained relatively stable at 1.79% of total loans, while the allowance as a percentage of nonperforming loans increased 66 percentage points to 349%. We expect credit losses to slowly begin to normalize in the back half of 2022 and currently expect full-year net charge-offs to be in the 25 to 35 basis point range. With respect to capital, our common equity Tier 1 ratio decreased approximately 130 basis points to an estimated 9.5% this quarter. During the fourth quarter, we closed on three acquisitions, which combined absorbed approximately $1.3 billion of capital. Additionally, we repurchased $300 million of common stock during the quarter. We expect to maintain our common equity Tier 1 ratio near the midpoint of our 9.25% to 9.75% operating range. So, wrapping up on the next slide are our 2022 expectations, which we've already addressed. In closing, the momentum we experienced in the fourth quarter positions us well for growth in 2022 as the economic recovery continues. Pretax pre-provision income remains strong. Expenses are well controlled. Credit risk is relatively benign. Capital and liquidity are solid, and we're optimistic about the pace of the economic recovery in our markets.

record performance, accelerating growth. qtrly average loans and leases increased 4 percent compared to prior quarter.

We will also discuss non-GAAP financial measures regarding our performance. Unless otherwise specified, all comparisons will be on a year-over-year basis versus the relevant period. When we refer to the base revenues, were referring to our total revenues less our COVID diagnostic testing revenues, which include COVID-related revenues from Veritor, BD MAX and swabs. When we refer to base margins, we are adjusting for estimated COVID diagnostic testing profitability and the related profit we have reinvested back into our business. When we refer to any given period referring to fiscal period, it must be noted as a calendar period. Finally, when we refer to NewCo during todays call, were referring to the planned spinout of our Diabetes Care business into an independently public traded company following the effective trade date of the spin, which was announced on the second quarter earnings call. RemainCo refers to BD post separation. As a reminder, this transaction is subject to market, regulatory and other conditions, including final approval by BDs Board of Directors and the effectiveness of a Form 10 registration statement that will be filed with the SEC. On todays call, I will provide highlights of the quarter and discuss the continued strong progress we have made on our BD 2025 strategy. On behalf of the Board of Directors, the leadership team and the company, I want to express my gratitude to Chris for his leadership and service to BD. Im confident the CFO transition ahead will be seamless, and his leadership and experience will make him an excellent director for NewCos Board. Now lets jump into our results. We were very pleased with our third quarter performance, powered by strong growth and momentum in our base business across all three segments. Revenues totaled $4.9 billion, and our adjusted earnings per share was $2.74, both ahead of our expectations. Total revenues were up 26.9% on a reported basis and up 22% on a currency-neutral basis. Results included COVID diagnostic testing revenues of $300 million, which contributed 4.8% to growth. Excluding COVID testing revenues, our base business revenues were up 17.6%, better than we expected across most business units. The strong growth reflected the anniversary of the initial COVID wave and the temporary halting of elective procedures and its impact on medical device utilization in the year ago quarter. But Q3s result also reflects the continued momentum driven by the successful execution of our BD 2025 strategy. Excluding COVID diagnostic revenues, base business revenues in Q3 fiscal 21 increased 3.9% relative to our pre-pandemic third quarter fiscal 2019 on a currency-neutral basis, which includes the impact of the Alaris ship hold. If you exclude the U.S. infusion systems business, our total revenues would have increased 6.6% relative to our prepandemic third quarter fiscal 2019. Our Pharmaceutical Systems and Urology and Critical Care franchises continue to be standout performers, where revenues are up 17% and 11%, respectively, over 2019 levels. Bioscience revenues were up 9%. Surgery and Peripheral Intervention revenues are both up 8%. Elsewhere, we see opportunities for improvement ahead in fiscal 22 and beyond. For example, our MDS revenues are up about 2% versus 2019 levels, reflecting the continued impact of COVID as well as the impact of China volume-based purchasing. As hospital utilization improves, we should see further improvements here. Also, as I mentioned, Medication Management Solutions revenues are impacted by the Alaris ship hold, and we expect our revenues to improve once we receive our 510(k) clearance for our BD Alaris system. While Im pleased with how we are accelerating our revenue performance and profile, Im equally pleased with the process were making in improving our working capital and cash flows. Cash flow performance has been a key focus for us since I became CEO, and that is evident in our working capital metrics. Year-to-date, cash flows from operations totaled $3.7 billion, an increase of 80% from the prior year period. This improvement in our cash flows allowed us to advance our more balanced capital allocation strategy this quarter, which included the repurchase of $1 billion in BD stock at an average price of approximately $242. This marks the first time we have repurchased shares since 2017 and the largest amount we have repurchased since 2012. Even with this repurchase activity, we ended the third quarter with nearly $3.2 billion in cash and an adjusted net leverage ratio of 2.4 times. Overall, Im really pleased with our performance in the quarter, particularly with the continued positive momentum in our base business. This gives us the confidence to raise our base revenue assumption. We now expect our base business to grow approximately 7.5% to 8% on an FX-neutral basis. This is higher than our previous expectation of mid-single-digit growth. We continue to expect COVID diagnostic testing revenues of $1.8 billion to $1.9 billion, with more revenues coming from international markets than we previously anticipated. We now expect currency-neutral revenue growth overall of approximately 14%. Our positive base business momentum and a lower tax rate allows us to raise our adjusted earnings per share guidance by $0.10 while continuing to reinvest in our business and overcome lower COVID testing profits, including a provision for excess and obsolete COVID testing inventory. We now expect our full year adjusted earnings per share range to be $12.85 to $12.95. Chris will provide you further details on our financial outlook later in the call. Next, I want to provide an update on our BD Alaris pump remediation, which remains my number one priority. Last week, we announced to our customers a positive step in our remediation efforts. Working with the FDA, we are now initiating remediation of existing Alaris system devices in the field by updating the software to version 12.1. 2 following submission of the 510(k), which includes this software version. This new software version is intended to remediate the issues identified in the February 4, 2020, recall notice and provide programming, operational and cybersecurity updates to affected devices. However, the software update has not been reviewed or cleared by the FDA. To address the question on Alaris clearance timing, we remain confident in our submission and the process we are undertaking, including working closely with the FDA. As Chris will later discuss, we believe it is responsible to not definitively predict the FDA clearance in our FY 22 outlook. We believe this is a prudent approach given the inherent difficulty in predicting FDA clearance time lines. Next, I want to update you on our BD 2025 strategy of grow, simplify and empower. First, Id like to focus on our growth pillar. We continue to strengthen our market leadership positions in our durable core business while purposely investing in new innovations that help accelerate and shape irreversible trends that we see transforming global health now and in the decade ahead. Ive spoken about these three innovation and growth focuses before. And weve been purposely shifting more of our R&D and tuck-in M&A investments into these spaces, which are growing over 6%. Through this, we aim to lift our weighted average market growth rate and performance over time. And this year, weve launched several innovative products and solutions across the continuum of care, across our business units and across the globe. And after completing our strategic portfolio review last month, I can share with you that our pipeline is very deep and wide across our businesses. Its been further enhanced by our acquisitions over the past 18 months. And youll hear much more about our innovation pipeline at our Investor Day on November 12. But let me highlight a few of our organic innovations that were advancing in the near term. In our Life Sciences business, Im pleased that we will start shipping our BD MAX and BD Veritor combination flu COVID assays this month, in time for the upcoming respiratory season. Our BD Veritor combination test can detect and distinguish between COVID, flu A and flu B in a single rapid test with a digital readout. We see the combination test becoming the standard of care moving forward, advancing our strategy to enable better outcomes in nonacute settings. Another innovation area Id like to highlight is our Biosciences business. Biosciences has been a strong performer this year, and we expect the unit to deliver high single-digit growth for the full year. In June, we launched our new e-commerce site, bdbiosciences.com, which is an entirely new and innovative digital marketplace designed to provide a best-in-class online purchasing experience for our flow cytometry customers. Early feedback has been outstanding, and were already seeing excellent traction and early adoption. We also have an exciting wave of new product introductions this summer, with the launch of our FACSymphony A5 SE, which is our first BD spectral analyzer, and provides an even higher cellular parameter analysis. Weve launched our FACSymphony A1 as well, which offers high-end technology and a cost-effective bench top design. In addition to these launches, we have a healthy innovation pipeline of modular, scalable new instruments and next-generation dyes that will allow our customers to fully leverage our complete and integrated solution suite of instruments, reagents, informatics, single-cell multiomics and scientific support services. Our products and solutions are being used to uncover new insights on the immune system and develop treatments for many related chronic diseases. You can hear more about our Life Sciences strategy from Dave Hickey, our Executive Vice President of BD Life Sciences; and Puneet Sarin, our Worldwide President of BD Biosciences, at the upcoming UBS Genomics 2.0 and MedTech Innovation Summit on Wednesday, August 11. Next, lets turn to our inorganic innovations that weve added to our portfolio. As you know, we continue to be focused on tuck-in M&A as a means of adding innovative products and solutions that leverage our core market leadership positions and advance us into higher-growth adjacencies. Year-to-date, weve completed seven tuck-in acquisitions. While at the same -- at the time of the acquisitions, these individual deals were not meaningful from a revenue perspective. As we integrate these transactions into our portfolio, we expect them to strengthen our growth profile. Our three most recent transactions, Velano Vascular, Tepha, Inc. and ZebraSci are good examples of our M&A strategy. Let me begin with Velano Vascular, which is being added to our MDS business. Velano has an innovative needle-free technology that enables high-quality blood draws from existing peripheral IV catheter lines, eliminating the need for multiple needle sticks. This technology will help customers transform the patient experience through the vision of a 1-stick hospital stay. Velanos PIVO device will be integrated into our sales teams bag of broader catheter solutions initially in the U.S. This is a great example of how were expanding and strengthening our base business. The second transaction is Tepha, Inc., a leading manufacturer of a proprietary resorbable biopolymer technology. Over the past several years, through our long-standing relationship, weve been commercializing this platform via our Phasix resorbable hernia mesh platform. The acquisition benefits are twofold. First, it provides us with a vertical integration strategy for our current Phasix platform. But more importantly, it provides us with exciting new opportunities to expand our horizon into new high-growth areas of tissue repair, reconstruction and regeneration. Lastly, we acquired ZebraSci, a pharmaceutical services company. This acquisition provides the opportunity to expand our Pharmaceutical Systems business beyond injectable device design and manufacturing to include best-in-class testing for drug device combination products. ZebraSci allows us to further engage and collaborate with biopharmaceutical companies and particularly smaller companies, where a large amount of the pipeline is, to support the transition of their molecules into prefilled combination devices. Next, I want to update you on our Simplify initiatives, which are advancing well. Through Project Recode, we are optimizing our portfolio, optimizing our plant network and simplifying our business processes. Project Recode remains on track to achieve $300 million of cumulative savings by the end of FY 24. We are also continuing the rollout of our BD production system, which is a standardized BD approach to driving the next level of lean processes and continuous improvements across our plants. The BD production system is already helping to drive improvements in quality and reductions in our inventory days. We also continue to advance Inspire Quality, our quality, regulatory and risk mitigation program. The last pillar of our BD 2025 strategy is empower, which represents the changes in our culture and capabilities that were driving to empower our strategy. In Q3, we completed our Voice of Associates survey with over 86% participation. And what stood out was that our associates said were making strong progress with improvements in 95% of the metrics since our last survey in 2018. And most notable were improvements in our focus areas of growth mindset, strong teams, quality and excitement about the future of BD. Were also advancing our 2030 sustainability strategy, which addresses a range of challenges in our industry while helping to make a difference on relevant issues that affect society and the planet. Our strategy will ensure we remain focused on shared value creation, meaning how we address unmet societal needs through business models and initiatives that also contribute to the commercial success of BD. Next, I want to provide a brief update on the progress of our proposed diabetes spin-off, which remains on track for the first half of calendar 2022. We are making steady progress with our separation activities. We recently announced that two directors from BDs Board will be appointed as future directors of the Diabetes NewCo. Retired Lieutenant General David Melcher will serve as the Non-Executive Chairman of the Board. And Dr. Claire Pomeroy will serve as a director. Their appointments will be effective upon the completion of the spin, at which point they will transition from the BD Board to the Board of NewCo. Lieutenant General Melcher brings extensive experience in spin-offs, having served as the CEO of Exelis following its spin-off from ITT. And under his leadership, Exelis spun off its mission systems business as a separate public company. Dr. Pomeroy brings broad experience in healthcare delivery, administration, medical research and public health. Im confident their combined experience, along with future planned board members, will help to set NewCo well on its path to becoming a successful independent publicly traded company focused on growth. While continuing to evaluate additional Board members, we are also continuing to build a new Diabetes Care leadership team through a combination of current BD leaders and new hires, including Dev Kurdikar, who will be NewCos CEO; Jake Elguicze, who will be CFO, and most recently, Jeff Mann. Jeff Mann joined our Diabetes Care organization and will be General Counsel and Head of Corporate Development for NewCo. Jeff brings more than two decades of experience in M&A and transactions, securities law and corporate governance. Most recently, he served as General Counsel and Secretary of Cantel Medical group. We are also progressing with the Form 10, which will have the carve-out financials, and we expect it to be publicly available around the end of the calendar year. Before turning it over to Chris, I will leave you with some key thoughts. First, our base business momentum and our recovery from COVID continues, and it is broad-based. We expect that momentum to carry into fiscal 22 and beyond. As Chris will share with you, todays results underscore our confidence in strong mid-single-digit top line growth for our base business next year. Second, we are executing well against our innovation-driven growth strategy, which includes our internal R&D as well as advancing our tuck-in M&A strategy. And third, Im proud of the substantial progress in advancing our BD 2025 strategy and how that will unleash our growth potential in the years to come. Well deliver innovations for our customers, empower our associates and create value for you, our shareholders. Ive been with BD for 20 years, and Ive never been more excited. We just completed our annual strategic review process, as I said, and the road ahead is looking more exciting than it did a year ago. We look forward to sharing our BD 2025 strategy in greater detail at our November 12 Investor Day. We hope you can join us. Im also very pleased with our overall performance in the quarter, particularly with the base business, which showed continued strong momentum. Third quarter revenues of $4.9 billion increased 26.9% on a reported basis and 22% on a currency-neutral basis and were ahead of our expectations. Our current quarter results also include $300 million in COVID diagnostic testing revenues, compared to $98 million in the prior year period. Excluding COVID diagnostic revenues in both periods, our base business revenues increased 17.6%. Our base business reflects continued strong performance as the market continues to recover from the COVID pandemic, the impact from which was most acute in Q3 of last year. The BD Medical segment revenues totaled $2.4 billion and were up 7.7% versus the prior year. MDS revenues increased 24%, reflecting a strong recovery in the U.S., led by strong growth in catheters and vascular care devices. Additionally, worldwide revenues included $18 million from COVID vaccination devices. In MMS, the double-digit increase in our dispensing revenues was more than offset by the expected declines in our infusion solutions. As you may recall, when the pandemic started, we saw a higher level of demand for infusion pumps and sets globally. Diabetes Care benefited from an easy comparison to the prior year, the timing of sales and slightly better-than-expected market demand. Pharm Systems continued to deliver strong growth with revenues up 12%, driven by demand for our prefilled devices. BD Life Sciences revenues totaled $1.4 billion and were up 43%. This included the $300 million in COVID diagnostic testing revenues, $212 million related to our BD Veritor system, with the remaining $88 million from BD MAX collection, transport and swabs. Year-to-date, COVID diagnostic testing revenues were over $1.6 billion. Despite lower average selling prices, driven in part by geographic mix, we are still on track to deliver on our target of total worldwide revenues of $1.8 billion to $1.9 billion for the fiscal year. Excluding COVID diagnostic testing revenues, our Life Sciences segment grew revenues 27%, driven by strong performances in both Integrated Diagnostic Solutions and Biosciences. IDS revenues increased 49%. Excluding COVID diagnostic testing, IDS revenues increased 27%, driven by strong double-digit performance across specimen management and microbiology. Biosciences increased 27%, driven by both research and clinical solutions. We continue to see strong demand for research reagents and instruments as lab activity is returning to normal levels. We also continue to see steady demand for research reagents globally, fueled by COVID research activities related to vaccines and variants, especially from academic research and biopharma companies. BD Interventional sales totaled nearly $1.1 billion and were up nearly 35%, reflecting the COVID anniversary impact on elective procedures. Surgery revenues increased 68%, and Peripheral Intervention increased 32%. Both businesses saw the greatest recovery in the U.S. and Western Europe, which experienced the greatest impact on elective procedure volumes in the prior year quarter. We saw sequential improvement in both surgery and peripheral intervention. However, in the last several weeks, we are seeing some impact from the COVID delta variant on elective surgeries in certain U.S. states. Urology and Critical Care revenues were up approximately 14%, driven by continued growth in our PureWick and Targeted Temperature Management franchises. Now turning to our P&L. As we expected and have communicated, our gross margins this year are being negatively impacted by COVID-related expenses, manufacturing variances and FX headwinds, which are more acute in the second half of the year. Also, as expected, our gross margin declined sequentially. Our gross margin was 51.5%. However, this included a net negative 90 basis point impact from COVID testing and reinvestments. The 90 basis point impact includes a negative 140 basis point impact from an inventory provision related to COVID testing. Adjusting for the net impact of COVID testing and reinvestments, our underlying base business gross margin was 52.4%. On a sequential basis, our base business gross margin declined from our second quarter rate of 53.7% due to three factors: 70 basis points of incremental FX headwinds; 40 basis points from inflationary pressures, including higher raw material costs and inbound freight as these costs roll through our inventory; and 20 basis points of other expenses, including Alaris quality remediation. Now turning to SSG&A. Our total SSG&A spending increased 21% on a currency-neutral basis to $1.2 billion or 25.2% of revenues. As a reminder, in the third quarter of fiscal 2020, we implemented several cost-containment measures in response to the COVID pandemic. In addition, we are continuing to see higher shipping costs. This quarter also included higher expenses related to our COVID profit reinvestment initiatives. As a reminder, the COVID testing reinvestments we made in FY 21 will not reoccur. Our R&D spending totaled $321 million, an increase of 31.1% on a currency-neutral basis. The higher R&D reflects the timing of project spending, including a higher spending related to the BD Innovation and Growth Fund. Our R&D spending was 6.6% of revenues, which is higher than our long-term target of 6%. On a currency-neutral basis, our operating income increased 26.5% as compared to our revenue growth of 22%. Our operating margin of 19.8% was slightly below our guidance of below 20%. The inventory provision related to COVID testing I referenced earlier negatively impacted operating margins by approximately 150 basis points. Interest and other expenses were essentially flat year-over-year at $98 million. The adjusted tax rate was 5.8%, lower than we previously expected due to discrete tax items that occurred this quarter. The lower tax rate essentially offsets the impact from the COVID diagnostic inventory provision in the quarter. The average diluted share count used to calculate our earnings per share in the quarter was 291.9 million. We repurchased a total of 4.1 million shares for a total of $1 billion at an average price of approximately $242. Our adjusted earnings per share increased 24.5% over the prior year to $2.74 on a reported basis and were up 25.9% on a currency-neutral basis. Now Id like to turn to guidance for the balance of the fiscal year. Our guidance continues to assume no major widespread hospital restrictions on elective procedures related to the COVID pandemic. However, we did start to see some impact on elective procedures from the COVID delta variant in the last one to two weeks in certain U.S. states and have assumed some continuation of this in our guidance. That said, given the continued positive momentum of the base business, we are pleased to be able to cover this and still raise our currency-neutral revenue growth to about 14%, up from our previous range of 10% to 12%. Our revised revenue range would incorporate a base business currency-neutral growth assumption of 7.5% to 8%. Further, we reaffirm our previously communicated COVID diagnostic test revenue range of $1.8 billion to $1.9 billion. We now expect a favorable 250 to 300 basis point impact from currency. This brings our total reported revenue growth to approximately 16.5% to 17.5%. For the full year, we now expect our fiscal 2021 adjusted earnings per share to be in the range of $12.85 to $12.95. This higher guidance reflects the positive base business momentum and a lower tax rate. These benefits allow us to continue to invest while offsetting the COVID testing inventory provision and lower COVID selling prices. Next, I want to share with you our expectations for gross operating margins for full year fiscal 21 and provide you with an estimate of the net impact of COVID testing and the related reinvestments of profits on our margins. We expect our full year adjusted gross margins to be in the range of 53.5% to 54%, and this range includes a net neutral to slight positive impact from COVID testing reinvestments. We expect our full year adjusted operating margin to be in the range of 23.5% to 24%. This range includes a 200 basis point contribution from the net impact of COVID testing and reinvestments. Finally, Id like to address FY 22. We plan to provide our specific fiscal 2022 guidance on our November earnings call, but we wanted to provide some directional color today. To give you a sense as to what a floor could look like in fiscal 22, we have taken the following approach: As you know, there is a great deal of uncertainty around the level of COVID testing. Therefore, we have not modeled any testing revenue beyond the typical flu season. With the continued momentum we are seeing, we have increased confidence in our ability to deliver strong mid-single-digit revenue growth in fiscal 22 over our fiscal 21 base revenues, which, as a reminder, adjusts for COVID diagnostic testing revenues. With respect to Alaris, our filing is comprehensive and more complex than most submissions. As we have previously stated, it is possible that the review could be in line with past pump time lines. However, as we have also mentioned, it was more likely to take longer for the FDA to review and ultimately grant clearance. It is inherently difficult to predict clearance timing. We are not assuming Alaris 510(k) clearance. It is difficult to predict how things will play out as shipments are only being made under the medical necessity process. At this time, we have incorporated the assumption that revenues associated with Alaris will be approximately similar to FY 21. We believe it is prudent and responsible not to definitively predict FDA clearance time lines. That said, we remain confident in our submission and the process we are undertaking, including working closely with the FDA to obtain comprehensive 510(k) clearance. We expect to drive base business gross and operating margin expansion. We expect the operating margins for our base business to expand more than our traditional annual target of at least 50 basis points and translate into double-digit operating income growth. For reference, we expect our base business operating margins to be between 21.5% to 22% in fiscal 2021. With these assumptions, we expect an adjusted earnings per share floor of at least $12. This represents approximately low teens growth over our expected base business earnings in fiscal 2021. Now before opening it up for Q&A, I want to take a moment to comment on todays announcement of my upcoming retirement. With our strong base business momentum, our strengthened balance sheet and improved cash flows, which is evident by the increased number of tuck-in acquisitions that weve been doing and the restart of our share buyback program for the first time since 2017, I feel that now is the right time for the transition as the company is well positioned to continue to drive shareholder value and impact the lives of patients around the world. I look forward to helping to ensure a seamless transition to the new CFO. And Im very excited about the value-creating opportunities ahead for NewCo and helping to ensure this success as a member of their Board. And Kristen, I think its -- we should open up the -- operator, open up the line to Q&A.

q3 adjusted earnings per share $2.74. q3 revenue $4.9 billion versus refinitiv ibes estimate of $4.51 billion. expects fy 2021 revenues to grow about 16.5% to 17.0% on a reported basis, an increase from the prior guidance of 12% to 14%. expects fiscal year 2021 currency-neutral revenue growth of about 14.0% versus its prior guidance of 10% to 12%. expects fy 2021 adjusted diluted earnings per share to be between $12.85 and $12.95, an increase from the prior guidance of between $12.75 and $12.85. bd- in recent weeks co saw impact on elective procedures from covid delta variant in some u.s. states & assumes some continuation of this in outlook.

Following our remarks, we will open the call for analyst questions. Please limit yourself to one question with one follow-up. We describe these risks and uncertainties in our risk factors and other disclosures in our Form 10-K and our Form 10-Q that we filed with the Securities and Exchange Commission. Our statements will also include non-GAAP financial metrics. I hope everyone is staying safe and healthy. While we are well over a year into this pandemic, the effects are still being felt. We are encouraged by the rollout of vaccines, but many areas around the globe, continue to experience a surge in cases. Through the efforts of our employees and the robust demand we continue to experience for our products, we delivered another outstanding quarter. We had a strong start to 2021 and our ability to effectively navigate this highly dynamic environment resulted in exceptional top and bottom line growth. For the quarter, sales increased 25%. Excluding acquisitions and currency, sales increased 19%. Operating profit increased 61% to $366 million, principally due to strong volume leverage and reduced spending in the form of lower travel, entertainment, and marketing expenses across our segments. Earnings per share increased an outstanding 89%. Turning to our plumbing segment, sales grew 27% excluding currency, driven by strong volume growth at Hansgrohe, Delta, and Watkins. Our two recent plumbing acquisitions performed well in the quarter and contributed 5% to Plumbing's growth. North American Plumbing grew 28% led by our wellness business which continue to experience strong demand and begin to comp their March shutdown of 2020. Delta faucet delivered another quarter of double-digit growth with strength across all channels, particularly e-commerce which showed exceptional strength as consumers continue to shift their buying patterns to online. International Plumbing grew 37% in the quarter as many of our markets returned to strong growth with particular strength in Central Europe and China. And our Decorative Architectural segment sales grew 15% against a healthy 9% comp from Q1 of 2020. Acquisitions contributed 2% to our Decorative growth. Our Lighting, Bath and Cabinet Hardware and Paint businesses, each posted double-digit growth during the quarter. DIY Paint grew high teens in the quarter, which is impressive considering it was facing a strong double-digit comp in Q1 of 2020. While PRO paint was down low-single digits for the quarter as it faced a tough comp in Q1 of 2020, we did see a return to positive growth in the back half of the quarter and we're encouraged by the momentum we are now seeing in this business as we move into Q2. Lastly, we actively continued our share repurchases during the quarter by repurchasing 5.5 million shares for $303 million. We anticipate deploying approximately $800 million toward share repurchases or acquisitions for the full year as we guided on our 4th quarter call. In addition, we anticipate receiving approximately $160 million for our preferred stock in Cabinetworks, resulting from their recently announced transaction, assuming it closes as expected. We intend to deploy these funds toward share repurchases or acquisitions, which would be in addition to the $800 million that I just mentioned. Now let me discuss two issues that are top of mind right now, inflation and supply chain tightness. We have seen significant inflation of raw materials, namely copper, zinc, and resin used in both our paint and plumbing businesses as well as increases in freight costs. All in, we expect our raw material and freight costs to be up in the mid single-digit range for the full year for both our Plumbing and Decorative segments with inflation likely reaching high single-digit levels in both segments in the 3rd and 4th quarters. To mitigate these impacts, we have secured price increases across both segments to begin offsetting these costs. We have further actions planned including additional price increases and productivity improvements while continuing to work with our customers and suppliers to offset [Technical Issues] full year margin expectations in both segments that we provided on our 4th quarter call. With respect to supply chain tightness in addition to the strain caused by robust demand, we have been impacted by significant disruption in the supply of resins and [Technical Issues] products in both our plumbing and paint businesses due to the severe weather that Texas experienced in February. Additionally, ocean container availability and timeliness continues to be a constraint. This has temporarily reduced output of certain spot products during the month of April and limited our ability to build certain -- to build inventory of certain architectural coatings and other products. However, the availability of resins is improving and our teams have done an outstanding job utilizing Masco's size, scale, and agility to countermeasure these issues by working with our key suppliers to increase availability of certain materials by leveraging our purchasing power to increase container availability for our products and by working around-the-clock to adjust production to meet the needs of our customers. This once again shows the competitive advantage that comes from being part of Masco's portfolio. With our strong [Technical Issues] performance, the actions we have taken and will take to offset persistent inflation, the interest savings from our recent bond transaction and the continued strong demand for our products and innovative -- and products brands, products and brands, excuse me, we are increasing our full year expectations of earnings per share to be in the range of $3.50 to $3.70 per share. This is up from our previous expectations of $3.25 to $3.45. As Dave mentioned, most of my comments will focus on adjusted performance excluding the impact of rationalization and other one-time items. Turning to slide 7, we delivered a very strong start to the year as first quarter sales increased 25%, currency increased sales by 2% in the quarter and the 3 recently completed acquisitions contributed an additional 4% to growth. In local currency, North American sales increased 21% or 17% excluding acquisitions. This outstanding performance was driven by strong volume growth in North American faucets, showers and spas as well as DIY paint. In local currency, international sales increased 27% or 23% excluding acquisitions. Gross margin was 35.6% in the quarter, up 80 basis points as we leveraged the increased volume. Our SG&A as a percentage of sales improved 340 basis points to 17% in the quarter. This was primarily due to operating leverage, decreases in certain costs such as travel and entertainment and trade shows and the deferral of certain marketing and other spend. We expect SG&A as a percent of sales to increase throughout the year to a more normalized 18%, a certain cost come back along with additional investments in our brands, service, and innovation to fuel future growth. We delivered outstanding first quarter operating profit of $366 million, up $138 million or 61% from last year with operating margins expanding 420 basis points to 18.6%. Our earnings per share was $0.89 in the quarter, an increase of 89% compared to the first quarter of 2020. Turning to slide 8, Plumbing grew 31% in the quarter. Currency contributed 4% to this growth and acquisitions contributed another 5%. North American sales increased 27% in local currency or 22% excluding acquisitions. This was led by Delta's double-digit growth in the quarter as they continue to drive strong consumer demand across all their product categories and channels. Watkins, our wellness business, was also a significant contributor to growth in the quarter, and both demand and our backlog remains strong. Watkins' performance also benefited from a softer comp in the first quarter of last year as government mandated COVID lockdowns resulted in two of their manufacturing plants being temporarily shut in 2020. International Plumbing sales increased 27% in local currency or 23% excluding acquisitions. Hansgrohe delivered year-over-year increases across most of their markets with continued double-digit growth in both Germany and China. Demand remain strong in Central Europe despite continued COVID restrictions and we are starting to see improvement in the UK. Operating profit was $253 million in the quarter, up $94 million or 59% with operating margins expanding 370 basis points to 28.3%. This performance was driven by incremental volume, cost productivity initiatives and lower spend on items such as travel and entertainment, trade shows, and marketing. This favorability was partially offset by an unfavorable price cost relationship. We expect raw material inflation in this segment to peak in the 3rd quarter. During the quarter, we entered into an agreement to divest our Huppe business, a small shower enclosure business based in Germany as we determined it did not align to our strategic direction. Huppe sales were approximately EUR70 million in 2020, net proceeds will not be material. Given our first quarter results and the current demand trends, we now expect plumbing segment sales growth for 2021 to be in the 15% to 18% range with 10% to 13% organic growth, another 3% net growth from the recent acquisitions and then divestiture of Huppe. And given current exchange rates, we anticipate foreign currency to favorably benefit plumbing revenue by approximately 2% or $70 million. We continue to anticipate full year margins will be approximately 18%. Turning to slide 9, Decorative Architectural grew 15% for the first quarter or 13% excluding acquisitions. This exceptional performance was driven by low-teens growth in our paint business. Our DIY paint business grew high teens against a strong double-digit comp in the first quarter of 2020. Our PRO business also faced strong comp decline to low single digits in the quarter. Despite this decline in our PRO paint business, delivered positive year-over-year PRO growth in the back half of the first quarter and anticipate high single-digit growth for the PRO paint business for the full year as consumers continue to become more comfortable with paint contractors in their homes. Our builders' hardware and lighting businesses each delivered double-digit growth as their new products and programs capitalized on increased consumer demand. Operating profit in the quarter was $142 million, up $46 million or 48%. This outstanding performance was driven by incremental volume, cost productivity initiatives, and lower spend partially offset by an unfavorable price cost relationship. For 2021, we are raising our outlook and now expect architectural segment sales growth will be in the range of 4% to 9% with 3% to 7% organic growth and another 1.5% from acquisitions. We continue to expect segment operating margins of approximately 19%. Turning to slide 10, our balance sheet remains strong with net debt to EBITDA at 1.3 times and we ended the quarter with approximately $1.8 billion of balance sheet liquidity which includes full availability of our $1 billion revolver. Working capital as a percent of sales including our recent acquisitions is 17.5%. During the first quarter, we continued our focus on shareholder value creation by deploying approximately $303 million to repurchase 5.5 million shares. In mid-February, we completed a significant bond refinancing. In this transaction, we called our 2022, our 2025 and our 2026 debt maturities which aggregated $1.3 billion and refinanced these with a combination of new 7 year, 10 year, and 30 year notes totaling $1.5 billion [Technical Issues]. From an interest perspective, the net effect is a $35 million annualized interest savings. Due to the timing of this transaction, interest expense will be approximately $110 million compared to our previous guidance of $135 million for 2021 and will be approximately $100 million in 2022. From a maturity perspective. This transaction also means we have taken out all our near-term maturities and our next debt maturity is not until 2027. And two reminders for everyone; first, we will be terminating and annuitizing our US defined benefit plans in the second quarter and we will have an approximate $140 million final cash contribution to these plans to complete this activity. And second, our Board previously announced its intention to increase our annual dividend by 68% to $0.94 per share starting in the second quarter of 2021. This will increase our targeted dividend payout ratio from 20% to 30%. We have summarized our updated expectations for 2021 on slide 13 in our earnings deck. Based on Q1 performance and current robust demand for our products, now anticipate overall sales growth of 10% to 14% up from 7% to 11% with operating margins of approximately 17%. Lastly, as Keith mentioned earlier, our updated 2021 earnings per share estimate of $3.50 to $3.70 represents 15% earnings per share growth at the midpoint of the range. This assumes a 254 million average diluted share count for the year. Additional modeling assumptions for 2021 can be found on slide 14 of our earnings deck. Our markets remain strong and housing fundamentals are supportive of continued long-term growth. Year-over-year home price appreciation increased over 17% in March and existing home sales were up over 12%. Both of these metrics have a strong correlation with our sales on a lag basis. Furthermore, the US consumer is healthy with estimated built up savings of nearly $2 trillion even before the new stimulus money and consumers continue to invest in their homes. We believe these factors along with the increased demand from the large millennial demographic will lead to continued growth in the repair and remodel markets. With our market leading brands, history of innovation, and strong management teams, we are well positioned to capitalize on these growth drivers, serve our customers and deliver value to the shareholders.

sees q1 earnings per share $0.64 to $0.72. q4 earnings per share $1.48 excluding items. q4 earnings per share $1.33. q4 revenue $5.1 billion versus refinitiv ibes estimate of $4.76 billion. ended quarter with $1.6 billion of cash and cash equivalents and $600 million of untapped revolving credit facility.

Participants on the call are Mr. Randall C. Stuewe, our Chairman and Chief Executive Officer; Mr. Brad Phillips, Chief Financial Officer; Mr. John Bullock, Chief Strategy Officer; and Ms. Sandra Dudley, Executive Vice President of Renewables and U.S. Specialty Operations. Now I'd like to hand the call over to Randy. Our core business continues to perform very well. For the third quarter, we reported combined adjusted EBITDA of approximately $290 million, of which $230 million was directly from our Global Ingredients business. Like many companies around the world, we continue to face the challenges others are facing when it comes to labor, transportation and higher cost of operations. Our team continues to execute our business strategy and operate our facilities with great efficiency while improving our gross margin year-over-year and sequentially from the second quarter this year. As it has been well stated, Hurricane Ida took a big bite out of DGD's performance in Q3. For the first time in eight-plus years of operating, DGD was shutdown to protect the employees and the assets of the facility from this significant storm. The great news is there was little damage to the facility, which it took a direct hit from Ida. With the days of shutdown and the restart process, we lost approximately 17 days of renewable diesel production. Also, on the great news front, the DGD Norco expansion is running well and is closing in on reaching its production capacity, putting DGD on track to sell 365 gallons or more in 2021. We also believe DGD could sell over 700 million gallons of renewable diesel in 2022 as the engineering team continues to fine tune the performance of this expansion. The achievement of Diamond Green Diesel is only possible because of the hard working employees, contractors and service providers at the facility. While many of these fine people suffered damage to their personal property and disruption to their daily lives from the hurricane, their resiliency to return to work and get the plant back into operation and finish the construction of DGD II was extremely important and exceptional. We truly appreciate their tenacity for getting the job done. Also, during the quarter, Darling repurchased approximately $22 million of common stock. And for year-to-date, we have purchased approximately $98 million worth of stock. On a year-to-date basis, our Global Ingredients business has earned approximately $628 million of EBITDA, putting us at an annualized run rate of approximately $850 million for 2021. With that, now I'd like to hand it over to Brad to take us through the financials, then I'll come back and discuss a little bit of our outlook and some -- how things are going to finish up for 2021. Net income for the third quarter of 2021 totaled $146.8 million or $0.88 per diluted share compared to net income of $101.1 million or $0.61 per diluted share for the 2020 third quarter. Net sales increased 39.4% to $1.2 billion for the third quarter of 2021 as compared to $850.6 million for the third quarter of 2020. Operating income increased 61.4% to $205.7 million for the third quarter of 2021 compared to $127.5 million for the third quarter of 2020. The increase in operating income was primarily due to the $114.1 million increase in gross margin which was a 53.8% increase in gross margin over the same quarter in 2020. Our operating income improvement was impacted by the lower contribution of our 50% share of Diamond Green Diesel's net income, which was $54 million in the third quarter of 2021 as compared to $91.1 million for the same quarter of 2020. As Randy mentioned earlier, Hurricane Ida impacted gallons sold in Q3, resulting in lower earnings for DGD during the quarter. Our gross margin percentage continues to improve year-over-year and sequentially. Q3 2021 gross margin was 27.5%, which is the best result we have had in the last 10 years. For the first nine months of this year, our gross margin percentage was 26.8% compared to 24.9% for the same period a year ago or a 7.6% improvement year-over-year. As you can see on Pages four and five of our IR deck, gross margins have continued on a positive trend for the last four years as our management team across the business has worked to increase the profitability of their operations. Depreciation and amortization declined $7.9 million in the third quarter of 2021 when compared to the third quarter of 2020. SG&A increased $7.3 million in the quarter as compared to the prior year and declined $1.9 million from the previous quarter. The main causes for the higher cost in the quarter compared to a year ago related to labor, travel and other. Interest expense declined $3.4 million for the third quarter 2021 as compared to the 2020 third quarter. Now turning to income taxes, the company recorded income tax expense of $42.6 million for the three months ended October 2, 2021. Our effective tax rate is 22.3%, which differs from the federal statutory rate of 21%, due primarily to biofuel tax incentives, the relative mix of earnings among jurisdictions with different tax rates and certain taxable income inclusion items in the U.S. based on foreign earnings. For the nine months ended October 2, 2021, the company recorded income tax expense of $126.3 million and an effective tax rate of 20.2%. The company also has paid $36.9 million of income taxes year-to-date as of the end of the third quarter. For 2021, we are projecting an effective tax rate of 22% and cash taxes of approximately $10 million for the remainder of the year. Our balance sheet remains strong with our total debt outstanding as of October two at $1.38 billion and the bank covenant leverage ratio ended the third quarter at 1.6 times. Capital expenditures were $65.6 million for Q3 2021 and totaled $191.7 million for the first nine months of 2021. As a reminder, this capex spend does not include our share of the capital spend at Diamond Green Diesel, which continues to be substantially funded by internal resources at DGD. There is strong momentum for our global platform as we finish out our best year in our history and look to build on that energy going into 2022. I want to spend a few minutes on capital allocation. Over the last couple of years, we have discussed our best use of cash at Darling through five points, and those really have not changed. Those five points are: Investing in DGD, growing our core business, reaching an investment-grade debt rating, meaningful share repurchases and potentially starting a dividend policy for our shareholders. And we continue to work on the execution of this plan as our free cash flow generation continues to grow. I do not need to point out that we did make the decision earlier to accelerate the construction of DGD Port Arthur, Texas, which puts a big capital spend on DGD in 2022. That does push out the potential size of distributions from the venture in 2022, but increases the potential for 2023. I do also want to add that our M&A funnel of opportunities to grow our low CI feedstock footprint around the world and grow our green bioenergy production capabilities is rising. This may adjust priorities in our capital allocation plan, but not limit our ability to execute on all of the points I already mentioned. So with that, Grant, let's go ahead and open it up to Q&A.

compname reports q3 sales of $1.2 billion. q3 sales $1.2 billion.

Today's call will be led by chairman and chief executive officer, Doug Dietrich; and chief financial officer, Matt Garth. And I'll also point out the safe harbor disclaimer on this slide. Statements related to future performance by members of our team are subject to these limitations, cautionary remarks, and conditions. I'll walk you through our results for the fourth quarter and the full year of 2021. I'll also give you my insights on the year, focusing on our key financial and strategic highlights, as well as the various dynamics we faced and successfully managed through. Matt will then discuss our financial results in more detail and outline our first-quarter outlook. Following that, I'll finish up by describing how we see 2022 shaping up as a strong year for us, touching on our key priorities, growth initiatives, and market conditions. Let me start by going through the takeaways for the fourth quarter, which concluded a very strong year for MTI. Market demand continued to remain robust, and we delivered sales of $477 million, 10% higher than last year, and earnings per share of $1.25, an increase of 16%. Despite the market conditions, this is, by far, the most difficult operating quarter of the year as we had to navigate through a variety of inflationary and logistics pressures, which became more pronounced late in the quarter. Cash flows remained solid through the fourth quarter, capping off a strong year. Operating cash flow was $69 million and free cash flow was $46 million, and we made progress to lower our debt levels by paying down $20 million of debt. Let me share how the quarter played out from an operational perspective and the actions we put in place to address the rapidly changing conditions. Heading into the fourth quarter, we anticipated that inflationary costs and logistics and supply chain challenges would persist, and we have positioned ourselves to recover these costs through implemented pricing actions. While much of this transpired as expected, we experienced significant additional cost escalations, notably due to rapid energy price spike in Europe. We also saw increase -- an increase in supply chain disruptions, mainly due to truck and rail availability for shipments. This was exacerbated by COVID-related labor challenges, primarily in the last month of the quarter. The combination of these dynamics led to higher plant operating costs and delayed shipments, resulting in about $5 million of reduced income in the quarter. Despite these circumstances, our global team did a great job executing, adjusting operating schedules, securing freight logistics, and taking further pricing measures. Our order books remain robust, and the actions we've taken should more than recover the additional cost pressures we faced, setting us up for a stronger first quarter. On the growth and business development front, we had several highlights during the quarter. The integration of Normerica is progressing well, and we executed on significant opportunities in the quarter to grow our Pet Care business further in 2022. We also made a small acquisition of a specialty PCC assets in the Midwest U.S., which strengthens our logistics and manufacturing capabilities. In addition, we signed two new satellite contracts in Asia, one for a PCC facility in India and another with a packaging customer in China. All in all, it was a productive quarter from a growth perspective, and the operating and pricing adjustments we've already made position us well for a stronger start to 2022. Before Matt gets into the financial details for the quarter, I'd like to review some highlights from 2021. It was a strong year for MTI, as our business recovered from the 2020 COVID demand lows to deliver record results. We accomplished this through a combination of operational execution and a focused commitment on advancing our key growth initiatives, which have meaningfully shifted our sales portfolio to be more balanced and stable. To demonstrate this transition over the past few years, revenue from our consumer-oriented businesses has doubled and today, they comprise 30% of our total sales portfolio. It is this portion of our portfolio that's positioned in higher growth noncyclical markets. First and foremost, we delivered record annual sales and earnings per share for our company. Sales increased 17% over last year to $1.9 billion. Operating income was up 13% to $241 million, and our earnings per share grew 26% to $5.02. Serving our customers and innovating to grow with them is what motivates our team. We continue to accomplish this while navigating through complex and rapidly changing conditions during the year. We operated in an environment with sharply rising input costs, which required frequent operational adjustments, strong supply chain management, and process improvements. Our teams work closely and transparently with our customers to manage through these dynamics, and we were successful in implementing a broad array of strategic pricing actions across our portfolio to offset the $50 million in extra costs we had to absorb. The past year required a significant amount of agility from our employees, and I'm proud how they engage to drive improvements, efficiently run our operations, and support our customers' evolving needs. Generating strong cash flow, further strengthening our balance sheet, and maintaining flexibility with how we deploy our capital are priorities. Our financial position gives us significant optionality to allocate capital to shareholders, while also investing in attractive growth opportunities. We demonstrated this in 2021 by deploying $86 million to fund high-return organic projects, as well as to maintain and improve the performance and safety of our facilities. We acquired Normerica and the Specialty PCC assets, while also returning $82 million to our shareholders through share repurchases and dividends. Our balance sheet remained strong, and we kept our net leverage ratio near our target level of two times EBITDA. Now, let me take you through how we advanced a broad range of initiatives, which sets us up nicely for continued growth in 2022. I'll start with our consumer-oriented products. Most of these businesses are in our household, personal care, and specialty product line, and they performed very well with sales growth of 21%. This growth is a result of our positions in the structurally growing and stable markets and has been bolstered by our investments in new technologies, capacity expansions, and through extending the geographical reach of these businesses. Normerica acquisition is one of those investments as it further expanded our Pet Care business in North America. We've also realized significant sales increases in other specialty applications, such as edible oil purification and personal care, which grew by 48% and 80%, respectively, last year. The next part of our growth strategy that we delivered on during the year was expanding our core product lines in faster-growing geographies. Our Metalcasting business continues to grow globally, leveraging our blended bond system value proposition with customers in large foundry markets. Metalcasting sales were up 21% in Asia as we expanded our customer base and further penetrated into China with sales of our pre-blended products increasing by 20%. We continue to demonstrate our value in other countries and specifically in India, where sales of our blended products were up nearly 40% in 2021. Our PCC business continues to grow geographically with a 22% sales increase in Asia. We benefited from 280,000 tons of new capacity that came online over the past year. In addition, we signed two new satellite contracts in 2021, totaling around 70,000 tons, which will be commissioned by the end of this year. And we're growing in our core markets. Our Refractory segment is a great example of this as we've captured significant new business in the electric arc furnace market. In 2021, we signed long-term contracts worth $100 million through the deployment of our new portfolio of differentiated refractory products and high-performance laser measurement solutions. Another area where we've successfully driven new profitable growth opportunities is by tapping into attractive adjacent markets through our broadened product offering. I'll highlight a couple of areas for you. We signed a long-term agreement in December to deploy ground calcium carbonate technology for a new coated paperboard mill in China with a premier packaging customer. And we're really excited about this one as it's MTI's first GCC satellite offering specifically tailored for packaging customers and represents a fundamental step in our ability to drive new growth opportunities in the white paperboard market. In addition, we have several trials underway with other technologies in both the white and brown packaging space. I've talked to you about our broad capabilities in water remediation and the traction we've made with FLUORO-SORB, our proprietary solution for remediating PFOS contamination in groundwater. 2021, we completed our first major commercialization for a large-scale project, and we generated interest in several other large drinking water and soil stabilization projects. Our growth this past year in wastewater remediation was 15%, and we see this trajectory continuing in 2022. New product development is an integral part of our growth strategy, and we've made significant strides to improve the speed of execution, increase the number of products commercialized and enhance the impact of our latest solutions. Over the past five years, we've cut the time from development to market in half. And during the same time frame, we've increased the sales generated from new products by more than 60%. In addition, half of our new products are geared toward a sustainability solution for either MTI or our customers. And lastly, we strengthened our company through the acquisition of Normerica, which met all of our M&A criteria. The addition has made us one of the largest vertically integrated private label pet litter providers globally. And as the commercial and operational integration progresses, we see a clear pathway to drive higher growth rates and profits in our Pet Care business. All told, this is a really productive year for us on all fronts. I'll come back to share my perspectives on the year ahead. But to sum up, our growth achievements in the past year puts us in an advantageous position for a strong 2022. I'll review our fourth-quarter results, the performance of our segments, as well as our outlook for the first quarter. Now, let's review the fourth-quarter results. Sales in the fourth quarter were 10% higher than the prior year and 1% higher sequentially. Organic growth for the company was 4% versus the prior year, and the acquisition of Normerica contributed the remainder of the growth. Operating income, excluding special items, was $54.7 million, and operating margin was 11.5%. The year-over-year operating income bridge on the top right of this slide shows that we experienced $27.4 million of inflationary cost increases versus the prior year, which we offset with $18.6 million of pricing. In addition, supply chain challenges, including trucking and labor availability, resulted in a delay of volumes from the fourth quarter, particularly in our Processed Minerals and SPCC product lines. The sequential bridge on the bottom right shows how inflation continued to accelerate from the third quarter to the fourth quarter. And heading into the quarter, we expected the pace of inflationary costs to moderate from the third quarter, and we expected to recapture some margin with our planned price increases. As we move through the fourth quarter, inflationary costs accelerated to nearly $10 million, including higher energy costs in Europe and Turkey. We were able to mitigate the unexpected increase with additional pricing in the quarter. However, a portion of the necessary price adjustments could not be passed through contractually until January 1. In addition, logistics and labor availability challenges resulted in shipment delays, lower productivity at our facilities, and ultimately, higher per-unit production costs in the period. These challenges, including the delayed sales volume and the unexpected spike in energy costs, resulted in approximately $5 million lower operating income than we originally expected for the quarter. We've already made additional price adjustments in January, and our pricing is expected to exceed inflationary pressures, expanding margins in the first quarter. We also expect to catch up on the operational challenges we faced in the fourth quarter. Meanwhile, we continue to control overhead expenses with SG&A as a percentage of sales at 10.8%, 80 basis points below the prior year. Earnings per share, excluding special items, was $1.25 and represented 16% growth versus the prior year. Earnings per share benefited from foreign exchange gains, driven by the depreciation of the Turkish lira, as well as lower interest expense and a lower share base versus the prior year as we continue to pay down debt and repurchase shares in the quarter. Full-year earnings per share was $5.02, a record for the company and represented 26% growth versus the prior year. Now, let's review the segments in more detail, starting with Performance Materials. Fourth-quarter sales for Performance Materials were $256.2 million, 17% higher than the prior year and 2% higher sequentially. The acquisition of Normerica contributed 13% growth versus the prior year, and organic sales contributed an additional 4%. Household, personal care, and specialty product sales were 24% above the prior year and 4% higher sequentially, driven by Normerica and continued strong demand for consumer-oriented products. Despite strong end-market demand and a full order book, our global Pet Care sales came in lighter than we expected due to logistics challenges in North America and Europe. Metalcasting sales were 9% higher than the prior year and 16% higher sequentially, driven by strong demand globally, continued penetration of green sand bond technologies in Asia, and the return of volumes from the third quarter seasonal foundry maintenance outages. Environmental product sales grew 13% versus the prior year on improved demand for environmental mining systems, remediation, and wastewater treatment. Building Materials sales grew 21% versus the prior year on higher levels of project activity. Sales in both of these product lines were lower sequentially due to typical seasonality. Operating income for the segment was $29.1 million and operating margin was 11.4% of sales. Margin was temporarily impacted this quarter by approximately $3 million of logistics challenges and inflationary cost increases that could not be passed through contractually until January 1 of this year, primarily in Pet Care and our Metalcasting business in China. The Normerica business has been navigating the same supply chain and inflationary cost challenges as the rest of our business, and we have deployed pricing and productivity actions to achieve accretion as planned in 2022. Now looking to the first quarter, we see a significant rebound in margins for this segment, driven by pricing actions that went into effect on January 1 and continued strong demand across the product lines. And overall, we expect the operating income for this segment to be approximately 20% higher sequentially. And now, let's move to Specialty Minerals. Specialty Minerals sales were $141.5 million in the fourth quarter, 2% higher than the prior year, and 4% lower sequentially. PCC and Process Mineral sales were both 2% above the prior year. This segment was the most impacted by the spike in energy in Europe, as well as logistics and labor challenges we saw in the fourth quarter. Segment operating income was $14.5 million and represented 10.2% of sales. In total, operating income was impacted by $4 million in the quarter, which came from approximately $2 million of unexpected energy inflation and additional $2 million due to the sales and productivity impact resulting from logistics and labor challenges, primarily in our Northeast U.S. plants. Pricing adjustments were made in January to cover these inflationary costs, and low logistics challenges continued into January. We do not foresee these challenges persisting through the quarter. Now moving to the first quarter. We expect higher PCC volumes sequentially on the ramp-up of our new satellite in India and the restart of the satellite in the U.S., and we expect continued strength in Specialty PCC and Processed Minerals. We see margins rebounding to more normal levels based on the pricing we have implemented. We should also see improved productivity in shipment volumes, depending on to the extent to which logistics and labor constraints ease. Overall, for the segment, we expect first-quarter operating income to be 20% to 25% higher than the fourth quarter. And now, let's move to the Refractory segment. Refractory segment sales were $79.2 million in the fourth quarter, 7% higher than the prior year, and 4% higher sequentially on new business volumes and continued strong steel market conditions in North America and Europe. Segment operating income remained strong at $12.4 million, 12% higher than the prior year, and operating margin was 15.7% of sales. Turning to the first quarter. We expect another strong operating performance from this segment with operating income up 20% on incremental volumes from new business. We did see a slight moderation in steel utilization rates in North America in the fourth quarter from the mid-80% range to the low 80s. However, the demand fundamentals for this segment remains strong. Now let's take a look at our cash flow and liquidity highlights. Full-year cash flow from operations was $232.4 million. Capital expenditures were $86 million as we invested in high-return growth and productivity projects, as well as sustaining our operations. Free cash flow was $146.4 million. The company used a portion of free cash flow to repurchase $75 million of shares, completing the prior-year share repurchase authorization and beginning the new $75 million 1-year share repurchase program that the board of directors authorized in October. As of the end of the fourth quarter, total liquidity was over $500 million, and our net leverage ratio was 2.1 times EBITDA. Our balance sheet remains in a very strong position, which provides us with the flexibility we need to continue to invest in high-value, high-return growth opportunities, both organically and inorganically. Looking ahead, we expect another strong year of cash flow generation with cash from operations increasing commensurately with higher income. Our capital spend will be in the range of $85 million to $95 million for 2022. We have a solid pipeline of high-return organic growth opportunities, and we plan to deploy capital spend toward these opportunities, as well as sustaining and improving our operations. And overall, we expect free cash flow increasing to the $150 million to $160 million range for the full year. So now, let me summarize our outlook for the first quarter. Overall, we see continued strong demand across our end markets and our order books reflect this. In the fourth quarter, we saw unusually high spikes in energy costs and increased challenges around logistics and labor availability. Our latest view for the first quarter is that the inflationary pressures and logistics challenges will continue. However, we have pricing actions and operational adjustments in place today to more than offset the known increases and significantly expand margins in the first quarter. Overall, for the company, we expect a strong performance in the first quarter, with operating income in the range of $63 million to $65 million, 15% to 20% higher than the fourth quarter, and with earnings per share around $1.25. As we look ahead, this is going to be another dynamic year with many of the same inflationary and logistics pressures continuing. But with the momentum across our businesses and the growth projects underway and our strong operating performance, 2022 is shaping up to be another record year for MTI. Overall, I'm very excited about where we are as a company and where we're going. We've transformed MTI into a higher-growth, higher-margin, and higher-value company. We have more opportunities in front of us beyond what I've shared with you today that will further enhance this trajectory. We're well-positioned to leverage our balanced portfolio, and we have a breadth of attractive projects across our businesses that will drive our sales and earnings momentum this year. We focused on accelerating our geographic penetration in our core product lines and building our growth opportunities in adjacent markets. In addition, we'll further strengthen our R&D pipeline with a focus on increasing the percentage of revenue from new products, as well as introducing solutions, which help us penetrate attractive markets. With our solid financial footing, we have the resources to execute on all of our growth initiatives. Our strong balance sheet and cash flow generation give us the flexibility to deploy capital to shareholders, while at the same time, accelerating our growth trajectory through acquisitions, similar to what we achieved this past year. We have a targeted list of inorganic opportunities that will continue to transform our company with a focus on profitable growth. Underpinning everything we do is our culture of continuous improvement. Operational excellence is embedded in our company with our employees at its center. It's our employees and their high level of engagement around problem-solving through kaizen events, utilizing standard work practices, and implementing suggestions to improve daily processes, which enables us to adapt to changing environments. It's this ingrained culture that is the foundation of MTI's unique operating capabilities. Sustainability is the core value at MTI. And over the past several years, we've made significant progress to embed our ESG priority deeper into our company, our operating mindset, and our growth strategies. In 2022, we'll be focused on promoting our safety culture of zero injuries, achieving -- or exceeding our six environmental reduction targets, increasing our product portfolio geared toward sustainable solutions, and making MTI a more diverse and inclusive place to work. We look forward to sharing more about these initiatives as we publish our 14th sustainability report in July. To sum it all up, we have a winning formula, an engaged team, and a leading portfolio of businesses. With sales growth of 10% to 15% expected this year, combined with our distinct operational capabilities, we have all the elements in place to deliver a very strong performance in 2022. I'll leave you with the final takeaway. Over the past two years, we've demonstrated two key attributes of our company. 2020 is financial resilience during very challenging conditions. In this past year, it's significant growth potential. It's our more balanced portfolio, which has enabled this performance and which will continue to deliver higher levels of profitable growth going forward.

compname reports fourth quarter 2021 earnings of $1.23 per share, or $1.25 per share, excluding special items. q4 earnings per share $1.25 excluding items. q4 revenue $477 million.

On behalf of U.S. Steel, I'd like to wish everyone a happy and healthy 2022. Steel President and CEO, Dave Burritt, who will begin on slide four. 2021 was an exceptional year. It puts us on a path for another strong year in 2022. We delivered for our stakeholders in 2021, achieving record performance across nearly every part of our business, record earnings, record EBITDA, record EBITDA margin, record free cash flow, and record safety, quality, and reliability performance. Collectively, we are pursuing best here at U.S. Steel, and 2021 is a great example of our progress. But this is just the beginning. Our progress will continue in 2021 beyond. While the market is certainly looking for every reason to be negative about the prospects for this year, we remain overwhelmingly positive. As expected, the first quarter will be seasonally weak, including the normal impacts of our mining operations, but we believe this is just temporary. While markets continue to self-correct, the macro backdrop is favorable. Supply chain issues will ease, inflationary pressures will abate, saving rates remain high, cash remains on the sidelines and demand remains pent up for the markets we serve. This is a recipe for success in steel, and we are optimistic that 2022 demand will accelerate. We have, after all, double through cycle prices. Clearly, a great place to be. We know about the risks, the Fed taking rates up too fast, unexpected changes to import restrictions, geopolitical risk, existential risks. The risks are many, but we've seen it all before. We know where we're headed, and we know how to get there. When you are in pursuit, constant pursuit of best, you were never satisfied, and challenges will always remain. We are taking the necessary steps to become less capital and carbon intensive. We are executing on strategic investments to expand our capabilities, capabilities that will make us a better, not bigger steel company. And we are going to move faster, not slower in 2022 because as we like to say, we can't get to the future fast enough. This isn't your great, great grand path for U.S. steel anymore. U.S. Steel's future is incredibly bright. The solution remains the same, execute our best for all strategy by constructing a second mini mill greenfield facility and expanding finishing lines through our investments in an electrical steel line and coating line at Big River while returning capital to stockholders. When we execute, we expect to unlock $850 million of additional through cycle EBITDA through state-of-the-art mini mill steelmaking and finishing line capabilities. And we will have further differentiated our sustainability advantages by customers as we continue to deliver against our responsible steel and 2050 decarbonization objectives while growing our offering of sustainable steel solutions, including verdeX. We know you know this. But we clearly know this is a show-me story. So we will keep our heads down, remain focused and disciplined and we will continue our progress toward our best for all path forward because after all, we have to keep showing our stakeholders what best for all means. It's about continuing to reimagine how steel gets made more sustainably like efforts earned by Big River facility Daimler's 2021 Sustainability recognition award. And it also means continuing to innovate to accelerate and further our best for all progress. Just this week, as an example, we announced a strategic investment and partnership in Carnegie foundry, a leading robotics and artificial intelligence studio in Pittsburgh, supported by Carnegie Mellon University. We look forward to beginning our partnership together as we work to accelerate and scale industrial automation to find new ways to serve our customers. Our customers are seeing and embracing the transformation that's taking place at U.S. Steel, and we are pleased to be a like-minded regional partner for them. We look forward to deepening our partnerships to create unique solutions that build on our long-term relationships, industry-leading innovation and constantly increasing focus on products our competitors haven't imagined. For our employees and communities, best for all means investments in their future in our recent announcement that we have selected Osceola, Arkansas as a home for our second mini mill, means jobs. It means a commitment to that community. It means a more secure future for the region, and it means a more responsive U.S. steel to meet the needs of our customers. Osceola is our newest home, and we continue to invest in regions that have supported U.S. Steel throughout our history, integrated mills and mini mills, our Best of Both enabling our best for all future. And for investors, best for all means increasing our future earnings power while returning capital to stockholders. We don't believe the market is rewarding us yet for continued strength in 2022, improve through-cycle earnings or for the long-term value, our best for all strategy. So we will continue to buy back our own stock and are pleased to announce an incremental $500 million authorization. We are generating excess cash, and we have an obligation to reward stockholders. As I said before, this isn't our great, great grand path with U.S. Steel, and we look forward to continuing to show all our stakeholders the power of best for all. Let's get into the agenda for today's call on slide five. First, we will spend some time recapping our 2021 performance and strategic milestones. Second, we will provide some additional context on why we are confident. And third, we will spend some time providing definition on our capital allocation framework and key priorities, priorities aligned with showing our stakeholders what best for all means for them. 2021's record performance has fundamentally changed our business. As you see on slide six, our record performance in safety and environmental, in customer and operational excellence and in our financial performance, is a direct result of executing our strategy over the past several years. Take safety and environmental as an example. Safety is and will always be first at U.S. Steel and is at the core of our steel principles. We delivered our best safety and environmental performance on record and continue our progress toward our ambitious 2030 and 2050 carbon reduction goals. We also demonstrated exceptional quality and reliability performance when it mattered most to deliver for our customers in 2021. We also delivered record financial performance in 2021. We acted boldly in 2020 to announce the acquisition of the remaining stake in Big River Steel, best as the market was gaining momentum. We moved quickly and our well-timed acquisition allowed us to capture the remarkable earnings power of Big River Steel in 2021, including nearly $1.4 billion of EBITDA and 39% EBITDA margin. Steel Europe segments also delivered record financial performance. Our integrated operations continue to run well to drive what is expected to be another impressive year in 2022. I'll begin on slide seven. As Dave mentioned, 2021 was a year of record financial performance. We ended the year with adjusted EBITDA of approximately $5.6 billion and an adjusted EBITDA margin of 28%. This translated into record free cash flow generation of approximately $3.2 billion, including over $1 billion in the fourth quarter alone. We expect to generate meaningful levels of free cash flow in 2022 as well. Adjusted earnings per share in the quarter was $3.64 per share and was significantly impacted by a noncash year-end true-up to our tax valuation allowance. Excluding this impact, we outperformed expectations on earnings per share just like we did on revenue and adjusted EBITDA. Our strong performance in 2021 allowed us to transform our balance sheet by repaying over $3 billion in debt in the year and ending the year with 0.7 times leverage. This type of financial performance allows us to enter 2022 from a position of strength. The remaining debt on the balance sheet is manageable with over 80% due until 2029 and beyond. Our pension and OPEB plans are overfunded. We have no mandatory cash contributions for the foreseeable future and have already derisked a component of the plan to further strengthen our balance sheet. And we're also ending the year with nearly $5 billion of liquidity, including over $2.5 billion of cash. Before I hand it back to Dave to expand on our 2022 opportunities, I'll spend a few minutes on our segment performance on slide eight. In our flat-rolled segment, we delivered record EBITDA and EBITDA margin in 2021 of over $3.1 billion and 25%, respectively. In the fourth quarter alone, we generated over $1 billion of EBITDA and an EBITDA margin of 30%. It was a similar scenario for our mini mill segment. 2021 delivered record EBITDA and EBITDA margin of nearly $1.4 billion and 39%, respectively. This included $406 million of EBITDA in the fourth quarter and an industry-leading 41% EBITDA margin. The fourth quarter marked the second consecutive quarter of $400 million plus of EBITDA and over 40% EBITDA margins. Our European operations also posted record EBITDA and EBITDA margin in 2021. EBITDA was nearly $1.1 billion for the year or 25% EBITDA margin. Lastly, our tubular segment reported nearly $50 million of EBITDA in 2021, including $42 million in the fourth quarter alone. We are leveraging new trade actions where we can and continue to expect the tubular segment to be a more meaningful contributor to our financial performance in 2022. We remain bullish for 2022 and slide nine highlights just a few items that support our point of view. At its core, consumer demand remains very good. As I mentioned in my earlier remarks, there is a lot of cash sitting on the sidelines with saving rates at elevated levels. But supply chain issues have prevented the full potential of consumer demand to shine through. In auto, pent-up demand continues into 2022 and easing supply chain pressures are driving increased auto production expectations. Auto builds in North America are expected to increase by 2 million units in 2022 and accelerate as the year progresses. This is a significant improvement for 2021 with room to run as broad supply chain issues are resolved. In appliances, production in 2022 is expected to be on pace with last year's record output. And these expectations are materializing in our order book. In the U.S., we're seeing the auto and appliance original equipment manufacturers or OEMs order book increased each month in the first quarter. Many of these OEM orders carry new, higher fixed-contract prices to begin the year. Also, the tin packaging business is expected to remain strong in 2022. This is a market we are uniquely positioned to serve and where pricing was also negotiated significantly higher for 2022. Make no mistake, the success we had on fixed-price contracts has generated significant year-over-year uplift on our fixed book of business. On steel market pricing, recent price movement still positions spot indices at two times historical averages. Demand is in line with normal seasonality, and auto and appliance activity keeps us bullish for consumer demand. Meanwhile, the import arbitrage is starting to fade and lead times are normalizing, which we believe are precursors to increase spot market activity and positive price momentum. In Europe, pricing has already stabilized close to $1,000 per ton and our order book has been steady. We expect order entries to accelerate into the similarly stronger second quarter and are on pace for another strong year from our European operations. In tubular, rig counts have increased, supported by higher oil and natural gas prices. This is driving increased demand and higher pricing for our OCTG products. Demand is expected to accelerate in 2022 and our EAF and proprietary connections will continue to support higher earnings in 2022. We are enhancing the customer experience and are seeing tangible results for 2022. The customer is core to everything we do. We recently partnered with Norfolk Southern and Greenbrier to develop a railcar that utilizes U.S. steel proprietary grades, resulting in a stronger, lighter and more capable railcar. Through collaboration with U.S. Steel, Norfolk Southern and Greenbrier are able to extend the useful life, improve their sustainability and increase the efficiency of each gondola railcar. This type of product innovation create sustainable solutions is just the latest example. We are focused on continuing these mutually beneficial partnerships in 2022. Our transformed balance sheet is another reason we're excited for 2022. Today's strong balance sheet fully funds the strategic projects we've already discussed, creates a clear path to strategy execution and is a foundation for our balanced and disciplined approach to capital allocation, including direct returns to stockholders. This is in addition to our existing $300 million authorization announced in October 2021, of which approximately $200 million has been repurchased to date under the existing authorization. We will continue to repurchase our own stock, especially when it is trading at what we believe is a significant discount. Before I detail our enhanced capital allocation priorities, Christie will provide an outlook on our first quarter performance. We are on pace to deliver another strong performance in the first quarter. Slide 10 outlines some key considerations for first quarter performance. Our flat-rolled segment is expected to report increased shipments and higher selling prices from reset annual contracts versus the fourth quarter. As you know, the seasonality of mine will impact the first quarter, along with higher coal and natural gas costs, which will more than offset the commercial steel tailwinds. Recall, each year, the lots on the Great Lakes closed from mid-January through the end of March. This not only limits our ability to ship pellets to our own operations but also to ship to third-party customers. Given our increasing presence as a merchant seller of iron ore, the seasonal impacts of our mining operations have increased from historical levels. In our mini mill segment, the shifting hot-rolled coil pricing dynamic in the U.S. will be more fully reflected in our average selling price. We expect temporarily lower volumes due to more hot-rolled coil product mix than our flat-rolled segment. imports of sheet steel increased over 70% to a six-year high. This quarter, we continued to monitor surges of low-priced imports and their impact on the market and on our operations. In Europe, steel prices and volumes are expected to be similar to the fourth quarter, while raw material and energy costs will be likely headwinds. In tubular, higher prices have increasingly been reflected in our performance, as well as lower scrap costs for our Fairfield EAF. As a result, we expect Tubular's EBITDA to improve again in the first quarter. Dave, back to you. Over the past year, we've talked a lot about our strategy and the continued progress toward our best for all future. With each passing quarter, we have transformed the balance sheet, announced an advanced critical capability and sustainability-related strategic projects to improve our through-cycle earnings power and reduce our capital and carbon intensity and enhance our direct returns to stockholders. Today, I want to reinforce some important messages and provide more definition around our business priorities and capital allocation framework on slide 11. A framework that we believe will create long-term stockholder value. The major theme should be familiar to you. We will maintain a strong balance sheet. We will invest in capabilities, not to become bigger, but to become better, and we will return capital to stockholders as the business continues to perform exceptionally well. Let's discuss each component of our capital allocation framework in more detail. First, we consider a strong balance sheet to be foundational to the success of our strategy. We are pleased with the significant progress we've made to reduce our debt, extend our maturity profile, lower our debt service costs and improve our credit ratings. As we continue to execute our strategy, we are targeting a through-cycle total debt-to-EBITDA leverage metric of 3 to 3.5 times. Based on the progress we've already made to delever the balance sheet and the improved through-cycle earnings power of our integrated and mini mill business model, we are confident that our mid-cycle performance capability more than support this target. We will continue to evaluate more modest near-term opportunities to repay debt and optimize our capital structure. Second, we believe the highest value-added use of our cash is to fund the announced investments that will transform our earnings profile and increase the consistency of our free cash flow. U.S. Steel is executing from a position of strength, a position that we've earned through operational and commercial excellence and record-setting EBITDA and free cash flow performance. It is a position that is tremendously valuable and is a catalyst to advancing our strategy, which our customers demand from us. As we accelerate our transition toward best for all, we will protect the successful execution of mini mill No. 2 and the strategic investments we are making in non-grain-oriented electrical steel and galvanizing capability at Big River Steel by maintaining a cash position no less than our next 12-month capex. This will ensure that our strategic investments will be fully funded by existing cash and free cash flow while preserving our ability to maintain a balanced and disciplined capital allocation strategy. Third, as you would expect, we will continue to evaluate investment opportunities to further our best for all strategic transition. As we seek to lower the sustaining capital requirements of the business, we are sharpening our focus on the types of projects we may pursue in the future. For us, best for all starts with enhancing our focus on expanding our competitive advantages: low-cost iron ore, mini mill steelmaking, and best-in-class fishing capabilities, and by returning and by delivering returns of at least 15%. There are no additional capability investments to announce at this time as our focus is on completing the announced projects ahead of schedule and under budget, something our Big River Steel team has demonstrated they are highly capable of doing. Lastly, an important component of our capital allocation framework is stockholder distributions. Last quarter, we were pleased to announce our restored $0.05 per share quarterly dividend, and our first priority for direct returns is to maintain that dividend policy. We plan to supplement commitment to a quarterly dividend by returning excess cash through measured and opportunistic stock buybacks. This allows for direct participation in capital returns for our investors as we successfully deliver our strategy. As mentioned earlier, I am pleased to say that our Board has authorized a new and incremental repurchase program of $500 million. Our best for all future has never been clear, and we believe the framework described today provides even more definition on how we will advance our disciplined approach to creating stockholder value. We believe our best for all strategy and capital allocation framework delivers a compelling investor proposition, a proposition that balances financial strength, investments that sustainably advance our competitive advantages and long-term through-cycle value creation by increasing our earnings power, improving our free cash flow and distributing capital to stockholders. I'm pretty pumped up about where we are today and what our future holds. With that, let's get to Q&A.

compname posts q4 adjusted earnings per share $0.81. q4 adjusted earnings per share $0.81. sees fy 2021 revenue up 6 to 8 percent. sees fy adjusted earnings per share $2.35 to $2.60.

This information is available on our website at piedmontreit.com under the Investor Relations section. At this time, our president and chief executive officer, Brent Smith will provide some opening comments and discuss our first-quarter results and accomplishments. First and foremost, I hope that everyone is and continues to be healthy and safe. This quarter, we reached a dubious milestone having been in the midst of the pandemic for over year now. While it has been highly disruptive to the office sector in general and Piedmont's leasing pipeline specifically, we are fortunate that the vast majority of our customers are current on rent and building utilization continues to improve, now approaching an average of 25% across the entire portfolio, primarily led by a return to the workplace by our small to medium size tenants. While overall daily utilization for the portfolio remains far below pre-COVID-19 levels, that percentage is improving and is expected to continue to ramp up in the second half of the year. But I will note the daily utilization still varies greatly based on tenant characteristics and geography. With vaccines becoming widely available for all, we continue to see incremental gains in local economic activity week by week, particularly in our Sunbelt markets as I noted on our last earnings call. However, this quarter, we track an increase in activity for our Northern markets as well, first since the pandemic began. In addition, we are beginning to see medium-size space request in the 15,000 to 25,000 square foot range and starting to conduct tours with these tenants. We're encouraged that our leasing pipeline has strengthened and we feel positive about our ability to generate some leasing momentum headed into the rest of the year. While we saw consistent upticks in tour activity across the portfolio as the first quarter progressed, a 30% increase actually from January to March, we still anticipate it will take two to three more quarters for Piedmont leasing volumes to approach pre-pandemic levels. With the USD GDP expected to grow 6.2% in 2021, per Bloomberg's April economist survey, U.S. feels like it's getting back to a new normal. And with this backdrop, we are encouraged for our tenants, our employees and our stockholders as corporations and large businesses begin to plan their return to the office with most targeting the early fall for the workforce to reenter in mass. Even more tangible evidence of this improving outlook is the fact that we experienced a sizable uptick in the number of executed leases for the first quarter of 2021. The company completed approximately 678,000 square feet of leasing, with new tenant leasing accounting for approximately one-quarter of that activity. Had it not been for one large tenant, new leasing would have actually outpaced renewals. I would also note that the weighted average term of leases introduce during the quarter was approximately seven years. Comparing the first quarter of this year to the first quarter of last year, both the number of leases and the overall square footage related to new tenants exceeded the first quarter of 2020s pre-pandemic levels. Through this leasing activity and customer dialogue, we continue to better understand tenant space needs and design requirements. I would characterize the majority of new leases is having a space plan matching pre-pandemic levels of square feet per employee, but with a greater focus on creating collaboration space and integration of technology to facilitate work from home and in-office employee communication. That said, we believe a vast number of firms are still trying to understand what work from home truly means for the organization. We are finding that medium-size enterprises are having the greatest difficulty in reaching a conclusion and as such, these customers typically requiring 15,000 to 25,000 square feet are those most often requesting shorter-term renewals of two to three years. One positive note is that these customers are requiring very little tenant incentive or capital to transact on these shorter renewals. As I noted in our last call, we continue to see the smaller user market, defined as those being less than 10,000 square feet remain rather resilient, almost approaching pre-pandemic levels of activity. And in a large user segment, to find as those needing more than 50,000 square feet, we continue to see the companies who know their business well, use this market disruption as an opportunity to negotiate more favorable terms from their landlords. While the large user segment has not recovered to the extent of small users, we are still experiencing elevated levels of activity from large tenants in Dallas, Atlanta, Orlando and Boston. I am pleased to share that one example of this phenomenon has resulted in an early seven-year renewal of Raytheon's approximately 440,000 square foot lease, comprising the entirety of our 225 and 235 Presidential Way assets in Boston. A more complete lifting of the larger leases executed during the first quarter of 2021 is included in the supplemental information that we published last night and is available on our website. Looking ahead, our only expiration of any significance over the next 18 months is the City of New York lease of approximately 313,000 square feet, that remains in holdover at 60 Broad Street. I am also excited to share that Piedmont has executed a five-year interim lease extension and the Department of Citywide Administrative Services has informed us that the public hearing and final approvals are in process. As a reminder, all government tenant transactions, the landlord's required to execute documentation prior to the tenant. Assuming things move forward as anticipated, we expect a conclusion to this interim renewal around the end of the quarter, very much in line with the economics in terms we've shared in the past. Finally, following our playbook, on the State of New York's lease in 2019, we continue to work with DCAS on a potential 20 year extension at the building beyond this extension. Taking a step back, I would like to share three trends which are benefiting almost all our operating markets. First, an accelerating population migration to the Sunbelt, along with other secondary cities which offer businesses and employees a lower cost, higher quality experience. We believe this great affordability migration will constitute a decade-long trend that, in conjunction with the second trend, which is millennial family formation and a movement to the suburbs, will play well amenitized offices in mixed use environments located along a cities primary Ring Road and higher demand. And finally, as we have dialogue with our tenants and track leasing activity, we're witnessing a third trend, a flight to quality with a focus on amenitize buildings with unique environments, owned and operated by responsive service oriented landlords. Piedmont's portfolio is well-positioned to be the beneficiary of all three of these themes, a concentration of well amenitized buildings located near strong housing communities and highly regarded education systems, with easy accessibility to major highway thoroughfares and airports and with more than half of our portfolio in the Sunbelt where population growth is expected to surpass national averages. But today's tenants are not only focused solely on location and neighboring amenities, the physical attributes of a building have never been more important. The buildings indoor air and light, HVAC, fresher intake, elevator capacity and outdoor collaboration space are all critical. In addition to a high quality building and a vibrant environment, customers are demanding a higher quality landlord as well and by that we mean a attentive operator, that focuses on ESG initiatives and which has the capital base and scale to provide tenant offerings and engagement. Office space is no longer just a real estate product. Our customers view our offering as a service, which excites us and gives us the opportunity to provide a differentiated product, when that we believe will allow us to achieve greater occupancy and real rates in the prevailing submarket. Touching briefly on transactional activity. Although we did not complete a capital transaction during the first quarter,, the Raytheon lease extension will likely provide a catalyst. This is the first time that that tenant has executed renewal that provides a total of 10 years of remaining lease term at the buildings. As the two assets represented by this renewal are now 100% leased to a single credit-worthy tenant with significant term, we believe that value has been maximizing the properties and we have a unique opportunity to realize that value which has been created. Therefore, we began marketing our 225 and 235 Presidential Way properties for sale late in the first quarter and we received a good deal of interest. We are therefore anticipate recycling the proceeds from the sale into high quality amenitized assets would fit strategically into one of our core markets. Finally, I want to highlight the recent progress that we made on several key ESG initiatives. ESG have gain more widespread investor and tenant attention here in the U.S. over the past few years and Piedmont's management team has made it a priority to establish a best-in-class ESG platform, getting involved to help to make our communities and planet a better place to live while ensuring our employees, tenants and vendors are treated with respect and given equal opportunities. I would like to take a moment and point out a few recent achievements. On the sustainability front, out of 1,000 of participants in the U.S. ENERGY STAR program, Piedmont was recently named one of 70 company's designated the 2021 ENERGY STAR Partner of the Year and Piedmont is the only office REIT headquartered in the Southeast U.S. to receive this designation. I'm also very pleased with ENERGY STAR's recognition of our ongoing commitment to reducing our portfolio's carbon footprint, including lower energy consumption, in addition to water conservation efforts and reduced landfill waste from our buildings. Approximately three-quarters of our portfolio is currently ENERGY STAR certified and we continue to make significant progress toward our goal of reducing the overall energy consumption by 20% at our properties over a 10-year period ending in 2026. Additionally, during the first quarter, our five Atlanta Galleria properties were awarded the WELL Health-Safety Rating by the International WELL Building Institute. The WELL Health Safety Rating is a new evidence based third-party verified rating for all new and existing buildings. It focuses on operational policies, maintenance protocols, stakeholder engagement and emergency plans to address the post COVID-19 environment now and into the future. Our Atlanta Galleria properties representing over 2.1 million square feet of rentable space, were the first properties in our portfolio, as well as the first for all office post the Atlanta to receive this new rating and we're actively working to expand this program across our portfolio. Additionally, Piedmont recently partnered with Morehouse College, Division of Business and Economics in Atlanta and with Harvard University School of Business in Washington D.C. to introduce the Piedmont Office Realty Trust Scholarship Program. The program provides scholastic support to rising sophomore students, taking degrees in economics, finance, accounting, engineering or real estate with a renewable scholarship for the Piedmont scholars sophomore, junior and senior years. Along with access to an executive shadowing program, the scholarship offers each recipient the opportunity to intern with Piedmont and acquire a first-hand experience in commercial real estate and participate in a board-level mentoring program. It is our hope that this program will provide need based aid to ambitious students and expose the more diverse African pool to a career in the commercial real estate industry. Our ESG efforts are overseen by our board-level ESG Committee which is chaired by Barbara Lang, the former president of Washington D.C.'s Chamber of Commerce. Ms. Lang joined our board six years ago and immediately began making a positive impact, helping to lead the company's environmental objectives and social involvement in our communities. For additional information on our overall ESG program, I encourage you to review our annual ESG report that's available on our website. For the first-quarter 2021, our reported net income increased to $9.3 million, up 7.3% from the same period a year ago. We also reported $0.48 per diluted share of core FFO up $0.01 over the first-quarter 2020. AFFO was almost $39 million for the first quarter, well in excess of our current quarterly dividend level. Rent roll ups, roll downs on executed leases during the first-quarter 2021 were largely influenced by the significant renewal with Raytheon, that Brent mentioned earlier. Accrual based rents increased on average approximately 7% while cash rents decreased approximately 2.8%. However, excluding the strategic Raytheon renewal, cash and accrual rents for the remainder of the leasing activity rolled up 8% and 10.1% respectively. Same-store net operating income increased almost 4% on a cash basis and was down slightly on an accrual basis. The increase in cash basis, same-store NOI was primarily attributable to the burn off of significant abatements at 11.55 Perimeter Center West in Atlanta and Arlington Gateway in Washington D.C., along with income associated with WeWork's termination in Orlando. These increases were partially offset by reductions and transient parking and retail revenues as a result of the lingering effects of the pandemic, and by 0.8% decrease in portfolio occupancy during the first quarter of this year. We continue to believe that same-store NOI on both the cash and accrual basis will end the year positively between 3% and 5% and economic occupancy is also expected to improve with the burn off of over 400,000 square feet of abatement during the second quarter. Our overall lease percentage is estimated to end the year around 87% to 88%, but this estimate is before any capital transactions. Turning to the balance sheet, our average net debt to core EBITDA ratio improved during the first quarter of 2021 to 5.6 times. And our debt to gross asset ratio at the end of the first quarter remained relatively flat, compared to 2020's year-end at approximately 34.9%. Our tenant rent collections have returned to near pre-COVID levels at over 99% collections and we now only have approximately $3 million of previously deferred 2020 rents remaining to be paid during 2021. We currently have approximately 90% of our $500 million line of credit available for strategic capital transactions, along with proceeds expected later this year from the sale of the two Presidential Way assets in Boston. We plan to repay the only secured debt remaining on our balance sheet, a small $27 million mortgage, once the loan allows for prepayment without yield maintenance later this quarter. We also plan to go to the public debt markets later this year to refinance a $300 million term loan that matures at the end of November. At this time, I'd like to reaffirm our 2021 guidance in the range of $1.86 to $1.96 per diluted share for core FFO for the year. Also as a reminder, this is annual guidance and results vary by a penny or two by quarter due to lease commencements and expirations as a result of seasonal expenses and other such items. Further, this guidance is before any significant capital transactions. We'll adjust our guidance range when such transactions occur. As Brent mentioned earlier, we are cautiously optimistic regarding our leasing pipeline, but please be reminded there is typically a six- to 12-month lag between the time a new tenant lease is executed and when occupancy physically occurs. With that, I'll now ask our operator provide our listeners with instructions on how they can submit their questions.

qtrly core ffo of $0.47 per diluted share. entered into a $300 million unsecured term loan and used proceeds to pay down its $500 million line of credit. withdrawing its 2020 guidance.

This is a particular note during the current ongoing COVID-19 pandemic when the length severity of the crisis and results of economic and business impacts are so difficult to predict. For information on some of the factors that can affect our estimates, I urge you to read our 10-K for the year ended March 31, 2021, and Form 10-Q for the most recently ended fiscal quarter. Such risks and uncertainties include, but are not limited to, the ongoing COVID-19 pandemic, customer-mandated timing of shipments, weather conditions, political and economic environment, government regulation and taxation, changes in exchange rates and interest rates, industry consolidation and evolution and changes in market structure or sources. Finally, some of the information I have for you today is based on unaudited allocations and is subject to reclassification. In an effort to provide useful information to investors, our comments today may include non-GAAP financial measures. We are off to a good start for fiscal year 2022. Results for our tobacco operations segment improved on higher African carryover tobacco shipments and a favorable tobacco product mix in the three months ended June 30, 2021 compared to the three months ended June 30, 2020. Our Ingredients Operations segment, which includes our October 2020 acquisition of Silva International delivered very strong performance in the three months ended June 30, 2021. It is exciting to begin to see the positive outcome from our capital allocation strategy, which we put in place in May 2018 with the goal of ensuring that we are well positioned for the future. investments in our tobacco business have enabled us to expand the supply chain services we provide our customers and to create footprint rationalization efficiencies, and we are seeing the returns from those investments in our results. Our plant-based ingredients platform is coming together nicely. We continue to believe we are on track for our ingredients businesses to meet our previously announced goal of representing 10% to 20% of our results in fiscal year 2022. We are excited about the performance of our investments thus far, and we'll continue to see prudent strategic opportunities to enhance our businesses and return value to our shareholders. Turning to our results. Net income for the quarter ended June 30, 2021, was $6.4 million or $0.26 per diluted share compared with $7.3 million or $0.29 per diluted share for the quarter ended June 30, 2020. Consolidated revenues of $350 million for the first quarter of fiscal 2022, increased by $34.2 million compared to the same period in fiscal year 2021. The increase was mainly due to the addition of the business acquired in October 2020 in the Ingredients Operations segment, partly offset by modestly lower comparative leaf tobacco sales volumes. Turning to the segments. The first fiscal quarter is historically a slow quarter for our tobacco businesses. Operating income for the Tobacco Operations segment increased by $3.8 million to $8.9 million for the quarter ended June 30, 2021, compared with the quarter ended June 30, 2020. Although tobacco sales volumes were down modestly, segment results improved on carryover shipments, product mix and increased supply chain services to customers in the quarter compared to the same quarter in the prior fiscal year. Carryover crop shipments were higher in Africa in the quarter ended June 30, 2021, compared to the same quarter in the prior fiscal year, in part due to some shipments that were delayed from fiscal year 2021. Brazil experienced an improved product mix on lower volumes in the quarter ended June 30, 2021, compared to the same period in the prior fiscal year when high volumes of lower-margin carryover crops shift. Carryover tobacco crop shipments were lower and product mix was less favorable in Asia in the first quarter of fiscal year 2022 compared to the same quarter in fiscal year 2021. And in the first quarter of fiscal year 2022, we also provided increased supply chain services to customers for wrapper tobacco compared to the same quarter in the prior fiscal year. Selling, general and administrative expenses for the tobacco operations segment were lower in the quarter ended June 30, 2021, compared to June 30, 2020, primarily on higher recoveries of value-added taxes and advances to suppliers. Operating income for the Ingredients Operations segment was $4.3 million for the quarter ended June 30, 2021, compared to an operating loss of $0.7 million for the comparable quarter in the prior fiscal year. Results for the segment improved year-over-year on the inclusion of the October 2020 Silva acquisition. For the first quarter of fiscal 2022, our Ingredients Operations saw strong volumes in both human and pet food categories as well as some rebound in demand from sectors that have been suffering during the ongoing COVID-19 pandemic. Selling, general and administrative expenses increased in the quarter ended June 30, 2021, compared to the same quarter in the prior fiscal year on the addition of the acquired business. Our tobacco and plant-based ingredients businesses are both currently performing according to our plans. Like other industries, we are seeing some logistical constraints around the world with regard to vessel and container availability stemming from the ongoing COVID-19 pandemic. However, at this time, we do not know what significant such constraints may have on shipment timing or our results. We are continuing to monitor these and other pandemic-related conditions, which affect our operations. And lastly, as part of our ongoing efforts to set high standards of social and environmental performance to support a sustainable supply chain, we have developed targets to reduce greenhouse gas emissions, which are consistent with the levels required to meet the goals of the Paris Agreement, limiting global warming to well below two degrees centigrade above preindustrial levels. Our targets were recently approved by the science-based targets initiative and reflect our commitment to reduce our global greenhouse gas emissions by 30% by 2030.

q1 earnings per share $0.26. q1 revenue $350 million.

Avner will review our financial performance and provide an outlook for the balance of 2021 with closing remarks from Steve. This will be followed by Q&A. A replay of today's call will be available for the next seven days. It will also be read in full at the end of today's call. Today, I would like to begin by sharing some opening comments and then provide a brief overview of the quarter. Before I do that, I want to take a moment to recognize the contributions of Walter Scott, Jr., who served on our Board for more than 40 years and passed away late last month. Walter was an incredible individual whose wisdom and leadership were critical to Valmont's success over the years. His loss is felt deeply by those who knew him and the entire Omaha community. Walter's counsel, kindness and mentorship will truly be missed by all of us at Valmont. Moving on to the business. Our strong performance this quarter, once again, demonstrated the solid demand across our businesses and the consistent execution of our growth strategies, even amid a challenging global environment. Like most others, we have safety impacts of broad-based inflation, the COVID-19 Delta variant, and labor and supply chain disruptions. Government mandated lockdowns in Australia and workforce quarantines in North America, including Mexico and the Southeast United States, impacted certain utility and coatings facilities. Supply chain disruptions affect the timing of some shipments in our Irrigation and Solar businesses. Despite this, we delivered a strong quarter of growth and profitability. Our commercial and operations teams are managing exceptionally well through these unique dynamics of focus and perseverance, while continuing to prioritize employee safety and serve our customers. I'm extremely proud of our team's execution throughout this year. Record third quarter sales of $868.8 million increased more than 18% compared to last year. Sales growth was realized in all segments led by higher pricing and strong broad-based market demand with particularly substantial sales growth in Irrigation. Moving to the segments and starting with Utility. Sales of $276.5 million grew slightly compared to last year. A significantly higher pricing and higher volumes were mostly offset by renewable energy projects that did not repeat or that were pushed into future quarters due to customers' supply chain disruptions. North American utilities have been increasing their planned investments in transmission and distribution projects, even exceeding recent years of higher capital spending. Further, proposed capacity additions in the renewable energy sector are favorable demand drivers across our Utility business. We see strong demand continuing, as both utilities and developers have been increasing their forecast of additional projects over the next several years to comply with mandates to increase renewable energy generation. Moving to Engineered Support Structures. Sales of $281.1 million increased 10% year-over-year, led by favorable pricing in all markets and sales growth of more than 25% in wireless communication products and components. Pricing improvements across all product lines continued this quarter, and international markets are benefiting from higher stimulus and infrastructure investments, especially in Australia. 5G build-outs and significant investments by the major carriers are driving demand in our wireless communications business, providing a good line of sight into 2022. Sales of $96.7 million grew 10% year-over-year, driven by higher pricing, improved general end market demand and sales from our greenfield facility in Pittsburgh. Global sales of $240.3 million grew more than 72% year-over-year, with sales growth in all regions and higher sales of technology solutions. In North America, sales grew nearly 55%, as strong market fundamentals and improved net farm income projections continue to positively impact farmer sentiment, generating very strong order flow. International sales doubled year-over-year, led by solid demand in the Middle East and Africa, including the ongoing deliveries of the Egypt project and another record quarter of sales in Brazil. Last quarter, we highlighted our acquisition of Prospera Technologies. Integration is going well, and we are making substantial progress building on our new strategy to grow recurring revenue services. We are on track to meet the financial targets that we shared last quarter and look forward to sharing progress toward these goals in the future. In Irrigation, we have a unique market advantage due to our global footprint and highly differentiated AI solutions, both are critical components of our growth strategy. Over the past year, we have been increasing opportunities for local manufacturing in the markets we serve, especially in light of the challenging supply chain environment, labor availability and higher freight costs. For example, we recently localized some of our electronics assembly in Dubai facility and are increasing the total capacity in our Brazil factory by 50%, positioning us for long-term international market growth, while we continue enhancing service to our dealers and customers. We are also very pleased that our Irrigation backlog at the end of the third quarter was $388 million, up 26% year-over-year. Turning to slide five we've said before, ESG is embedded into the core of our company's purpose, and there are many ways of products and services to serve resources and improve life. One recent example of this is using Solar solutions to transform the Sudan desert into a prosperous and sustainable region for agricultural production. Sudan is the third largest country in the African continent. Agriculture is quickly becoming its primary economic driver, accounting for 40% of the nation's GDP and employing close to 80% of the local workforce. But arid conditions and a lack of direct access to electricity in the region are hindering its expansion. To help overcome these challenges, our Valmont Solar team recently installed a PV plant to bring power to center pivots. Sunlight is captured and transformed immediately into electricity, eliminating the need for a battery or secondary energy source. We're proud to have initiated this project powering pivots by solar energy, 100% independent from the grid. Our innovative solutions are leading the way, precision agriculture in Sudan, opening doors to other solutions that will enhance productivity, empower local communities to solve food security issues, and help build a more sustainable world. Turning to slide seven, and third quarter results. Operating income of $80.4 million or 9.3% of sales grew 20% year-over-year, driven by higher volumes in Irrigation and favorable pricing, notably in Engineered Support Structures. Diluted earnings per share of $2.57 grew 30% compared to last year, primarily driven by higher operating income and a more favorable tax rate of 23.5%, which was realized through the execution of certain tax planning strategies. Turning to the segments. On slide eight, in Utility Support Structures, operating income of $24.6 million or 8.9% of sales decreased 170 basis points compared to last year. Raw material costs continued to increase during the quarter, impacting our ability to fully recover cost to our pricing mechanism, leading to lower-than-expected margin. Also the impact of workforce quarantine in a few North American facilities led to operational inefficiencies, which we do not expect to repeat. Moving to slide nine. In Engineered Support Structures, operating income increased to $34.4 million or 12.2% of sales, a third quarter record. The benefits of proactive pricing actions have more than offset the impact of continued rapid cost inflation, better fixed cost leverage, including SG&A, also contributed to positive results. Turning to slide 10. In the Coatings segment, operating income of $12.5 million or 12.9% of sales decreased 270 basis points year-over-year. Profitability was impacted by a lag in pricing to recover higher inflation costs, including raw material and labor and start-up costs at the Pittsburgh facility. Moving to slide 11. In the Irrigation segment, operating income of $32 million, more than doubled compared to last year, and operating margin of 13.3% of sales improved 270 basis points year-over-year. Significantly higher volumes and favorable pricing were partially offset by higher SG&A expenses from the recent Prospera acquisition. We're also extremely pleased with the profitability of our industrial tubing business and international margin improvement led by consistent and proactive pricing actions taken by our global team. Turning to cash flow on slide 12. Year-to-date, we have delivered operating cash flows of $62 million, with the use of cash this quarter of $8.4 million that reflects higher working capital levels to support strong sales growth. As we stated in our prior quarters, rapid raw material inflation creates short-term impact on cash flow. For the balance of the year, we expect inventory levels to remain elevated to help mitigate supply chain disruption and strategically secures raw material availability to support strong sales growth. Accounts receivable will also increase in line with sales growth. As our historical results have shown, we will see improvements in working capital as inflation subsides. Turning to slide 13 for a summary of capital deployment. Year-to-date capital spending of $81 million includes $33 million for strategic growth investments and $55 million of capital was returned to shareholders through dividends and share repurchases, ending the quarter with approximately $170 million of cash. Moving on to slide 14. Our balance sheet remains strong. Based on our recently amended revolving credit facility, our net debt-to-adjusted EBITDA of 1.85 times remains within our desired range of 1.5 to 2.5 times. We're increasing our earnings expectations for fiscal 2021 by narrowing the earnings per share guidance range to $10.60 to $11.10. This reflects strong market demand and our solid execution this year and our confidence in our ability to continue this performance. Turning to our segment outlook on slide 16. In Utility Support Structures, we expect operating margins to improve sequentially as pricing becomes more aligned with steel cost inflation. Moving to Engineered Support Structures. We expect continued stable market condition in North American transportation market and order rates are beginning to improve. Demand for wireless communication products and components remains very strong, and we are on track to grow sales 15% to 20%, in line with expected market growth. We remained focused on pricing actions and providing value to our customers. We now expect sales to grow 50% to 53% this year based on strength in global underlying ag fundamentals and a strong global backlog. Looking ahead to 2022, strong market demand across our businesses, the strength and flexibility of our global teams and our continued pricing strategies give us confidence in achieving sales growth of 7% to 12%, and earnings-per-share growth of 13% to 15% in line with the three- to five-year growth targets that we have communicated at our Investor Day in May. Turning to slide 17. The long-term drivers of our businesses remain solid as evidenced by our record global backlog of more than $1.5 billion, up 35% from year-end 2020. These demand drivers are in place to sustain this momentum into 2022, and our business portfolio is well positioned for growth. We also continue to take pricing actions across our businesses where needed. Like others, we are closely monitoring inflation, supply chain disruptions and COVID. We are ready to take additional appropriate actions to address these issues across all our businesses, as needed. Meanwhile, our focus on following state and local regulations to keep our employees and customers safe is not wavered. Turning to slide 18. In summary, I'm very pleased with our strong third quarter results and our team's ability to navigate through challenging market dynamics. We've demonstrated our ability to grow sales through innovation and execution, while being flexible and responding quickly to meet customer needs. We've improved operating margins by executing on our pricing strategies and advancing operational excellence across our footprint. And we have invested in our employees and technology to drive new products and services and build upon the strength of our operations. Throughout 2021, we have been disciplined in allocating capital to high-growth strategic investments, while also returning capital to shareholders through dividends and share repurchases. Looking ahead to 2022, we are confident in our plan to deliver the outlook that we have communicated and remain focused on execution and our ESG principles to build upon our success, while creating additional stakeholder value and improving a return on investor capital.

q3 adjusted earnings per share $2.57. sees fy adjusted earnings per share $10.60 to $11.10. sees fy gaap earnings per share $10.10 to $10.60. q3 revenue $868.8 million versus refinitiv ibes estimate of $862.3 million. in 2022 we expect sales growth of 7% to 12%. in 2022 we expect sales growth of 7% to 12% and earnings per share growth of 13% to 15%.

You can also access these slides on the website. Before we begin, I'd like to review the Safe Harbor statement. Actual outcomes and in results could differ materially from those forecasts due to the impact of many factors, beyond the control of the company. As Mortgage Credit Markets rallied in the third quarter, Valuations on Western Asset Mortgages residential and commercial credit assets benefited meaningfully. WMC's GAAP book value increased to 29.2% in the quarter to $4.07 per share. GAAP net income was $59.8 million or $0.98 per share and core earnings were $6.4 million or $0.10 per share in the quarter. Our net interest margin improved to 2.27%, which together with the underlying performance of the portfolio contributed to solid core earnings despite a significant reduction in recourse leverage from 3 times as of June 30 to 2.2 times as of September 30. Over the last two quarters, we fortified the Company's balance sheet, improved funding terms increased liquidity and equity, and reduced recourse leverage to ensure that our shareholders could benefit from the performance of the underlying assets of our portfolio. In light of our results this quarter including the strengthening of our balance sheet, improved liquidity and solid core earnings, the Company declared a cash dividend of $0.05 in the quarter. The payment of an attractive dividend is an important priority for our shareholders and the resumption of the dividend was a key milestone for the company. The recovery and asset prices across the portfolio and the redemption of our dividend contributed to an economic return on book value of 30.8% for shareholders this quarter. We remain highly focused on our long-term objectives of generating sustainable core earnings that support an attractive dividend with relative stability in our book value. We believe our portfolio's earnings power is likely to provide a solid underpinning for future dividends. And while we have seen substantial recovery in asset values across our portfolio this quarter, we believe there is the potential for additional improvement, particularly in our commercial mortgage investments. Much of this will be dependent on the path of the virus as well as the pace of recovery in economic activity. In our view, our diversified investment strategy focused on high-quality commercial and residential borrowers is well-positioned for the uncertainties of this environment. The third quarter of 2020 saw the equity and credit markets continued to rebound, driven by improved liquidity conditions across financial markets and the ongoing reopening of the economy, which translated into higher valuations for a number of our portfolio holdings. The recovery of our residential portfolio combined with improvement in our commercial holdings translated into a significant improvement in our GAAP book value. As the market and our portfolio have improved, so has our liquidity position, which contributed to our decision to reinstate our dividend for the third quarter. Over the course of the quarter, we saw continued improvement in the credit performance from both our residential and commercial holdings. Our non-QM residential loan portfolio is performing well and experienced a decline in the percentage of loans that were part of a forbearance plan dropping to 10% at September 30, from 16% at the end of the second quarter. We see this as a strong indication that borrowers with meaningful equity in their homes will prioritize their mortgage payment in order to remain current on that obligation. We believe that this trend will continue given the positive data coming out of the U.S. housing sector including robust purchase and refinance demand and ongoing home price appreciation in many major markets across the country. Our commercial loan and non-agency CMBS portfolios are performing in line with expectations even though those expectations have shifted as a result of the pandemic. The commercial whole loan portfolio carries an approximate 65% original LTV and all but one of the loans remains current. As we mentioned last quarter, the delinquent loan has a principal balance of $30 million which is secured by a hotel. We are currently exploring various workout strategies and believe that there is a reasonable likelihood that the majority of the principal and missed interest payments will be recovered. Although, there is no guarantee that will be the case. Our large low non-Agency CMBS portfolio has an original LTV of 60% and despite exposures to some retail and hotel assets over 82% of the loans by principal balance remain current compared with 70% at June 30. We are in forbearance and modification discussions with the delinquent borrowers in this portfolio. In fact, we have been active with many of our commercial real estate borrowers, monitoring their situations and working with them to help preserve the value of the underlying properties in order to protect our collateral and increase the probability of an eventual recovery in asset values. That being said, we believe that our focus on high quality properties with well-capitalized sponsors capable of withstanding short-term disruptions should enable our commercial real estate portfolio to emerge from the crisis without significant overall impairment. We have spent a significant amount of time and effort over the last two quarters to improve the terms of our financing arrangements and the company's risk profile. These ongoing efforts continued in the third quarter as we amended our existing residential home loan facility to convert it to a limited mark to market facility with more attractive terms. With respect to our outlook going forward. While the US economy rebounded during the quarter most economic measures remain well below where they started the year. We believe that the recovery will continue to be dependent on the future trajectory of COVID 19, the availability of improved therapeutics and vaccines and continued fiscal and monetary support. We also expect that the Federal Reserve will follow through on its commitment to keep interest rates at or near zero for an extended period of time. We continue to believe mortgages secured by real estate assets with meaningful equity in the properties and higher quality credit will continue to perform well over the long term. While many sectors of the mortgage market currently offer historically attractive valuations, our primary focus remains on maintaining sufficient liquidity, protecting the value of our assets and positioning the portfolio for continued future appreciation. So I'm only going to focus on the items that warrants' some additional explanation. During the quarter we continue to focus on optimizing our portfolio financing, increasing liquidity and improving shareholder's equity. In July, we retired $5 million of our convertible senior notes at a 25% discount to par value. In exchange for the issuance of $1.4 million shares of our common stock. We were once again active in improving the financing of our assets during the third quarter. We amended our existing residential home loan facility in October to converted to a limited mark to market facility with more attractive term. Among other terms the amended facility has a 12-month term and bears interest at one month LIBOR plus 2.75%. We reported core earnings of $6.4 million or $0.10 per share for the third quarter. Our core earnings came in higher than the $4.3 million generated in the second quarter, primarily driven by a higher net interest margin and a full quarter's benefit of the lower financing costs associated with last quarter's Arroyo securitization, which allowed us to reduce the income drag experience under the original Residential hold on facility. Economic book value for the quarter increased 2.2% to $4.11 per share. As mentioned last quarter, we believe that this non-GAAP financial metric provides investors with a useful supplemental measure to evaluate our financial position. It reflects our actual financial interest in all of our investments and eliminates the accounting mismatch that arises from our Arroyo securitizations where we fair value the loans, but not the debt. This quarter the difference between our GAAP book value and our economic book value narrowed only $0.04 due to the sharp rebound in asset values, mainly in the residential whole loan portfolio, which reduce this accounting mismatch. In summary, we believe these steps solidify our capital structure, increase our liquidity and will enable us to participate meaningfully in the economic recovery. Our Recourse leverage was 2.2 times at September 30, significantly lower than the 9.5 times level at the end of March and 5.4 times at the beginning of the year. Our net interest margin remains healthy and with a significant portion of our assets now finance with attractive longer-term financing. We believe that we are well positioned for another quarter of positive financial results in the fourth quarter.

q3 core earnings per share $0.10. q3 gaap earnings per share $0.98. resumed our quarterly dividend, declaring a $0.05 per share cash dividend.

We appreciate you joining us for MetLife's first quarter 2021 earnings call. Last night, we released a set of supplemental slides, which addressed the quarter. They are available on our website. John McCallion is under the weather today. We are going to let him rest his voice, and I will speak to the supplemental slides following Michel's remarks. An appendix to the supplemental slides features outlook sensitivities, disclosures, GAAP reconciliations and other information, all of which you should also review. In fairness to all participants, please limit yourself to one question and one follow-up. With that, over to Michel. As we reported last evening, MetLife delivered very strong financial results for the first quarter of 2021. Our diverse business mix, sound investment strategy and strong expense discipline combined to generate earnings well above consensus expectations. By the numbers, we reported first quarter 2021 adjusted earnings of $2 billion or $2.20 per share, up 39% from $1.58 a year ago. The primary driver was exceptionally strong variable investment income or VII, partially offset by elevated COVID-19 related claims. Net income for the quarter was $290 million, down from $4.4 billion a year ago, primarily due to losses on derivatives that protect our balance sheet from declines in equity markets and interest rates. Such gains and losses are the result of GAAP accounting rules that require us to mark certain of our derivative hedges to market through net income without similar treatment for the assets and liabilities being hedged. We believe the economics and the free cash flow of our business are captured than adjusted earnings. Regarding variable investment income, the key driver of gains in the first quarter was our private equity portfolio, which delivered returns of 13.3%. Recall that private equity returns are reported on a one quarter lag. The strong performance in the fourth quarter was driven primarily by three private equity sectors, domestic leveraged buyout funds, European LBOs, and venture capital. In the second half of 2020, IPOs from US-based LBOs and venture capital firms more than doubled over the prior year and the market rewarded many entrants with strong valuations. Venture capital was our best performer across the three sub sectors, largely due to the market's appetite for tech companies. We see deal volumes hit a record in 2020 and the increase in digital activity spurred by the pandemic drove attractive valuations for early stage tech firms positioned to capitalize on that trend. While our private equity portfolio return in the quarter was robust, it was in line with industry benchmarks, most notably, Cambridge Associates private equity index. We are confident this asset class will continue to be a significant source of alpha for MetLife in the future. Turning to the performance of our business segments, I'll begin with our US Group Benefits results. Adjusted earnings were down 70% year-over-year on elevated COVID-19 life claims. In the US, overall COVID-19-related deaths were 40% higher in the first quarter of 2021, than they were in the fourth quarter of 2020. For MetLife, our Group Life mortality ratio was 106.3%, well above the high end of our target range of 85% to 90% with approximately 17 percentage points attributable to COVID -19 claims. The top line performance of the Group Benefits business was strong with sales up 46% year-over-year. We are doing especially well with national accounts and if trends hold, we expect the group business to deliver a record sales year. Adjusted PFO growth was also solid at 16% with the addition of Versant Health being a large contributor. In retirement and Income Solutions or RIS, adjusted earnings were up 92% year-over-year, driven by higher VII. Beyond VII, adjusted earnings were still strong on favorable underwriting and volume growth. Looking ahead, we continued to see a robust pension risk transfer pipeline. Rising equity markets and interest rates have improved pension plan funding levels and lowered the cost for plan sponsors to transact with an insurer. Within Asia, we saw a similar earnings pattern to RIS. Adjusted earnings were up 70% year-over-year on a constant currency basis, driven by higher VII. However, even allowing for VII, adjusted earnings were strong, driven by favorable foreign exchange rates, volume growth, and underwriting. Sales in the region were up 12% on a constant currency basis, even with the COVID resurgence in certain markets. In Latin America, adjusted earnings were down 57% year-over-year on a constant currency basis, primarily due to the pandemic. COVID-related claims in the quarter totaled approximately $150 million, mainly in Mexico. In EMEA, adjusted earnings of $71 million were down 11% on a constant currency basis on higher COVID-related claims as well as higher expenses compared to the favorable prior-year quarter. Sales were up 4% on a constant currency basis with strong momentum in the UK employee benefits space. To finish my business segment discussion, I think a theme is clear. If you look past higher VII and mortality in the quarter, the underlying performance of the business was very solid. On the fundamentals, we continue to demonstrate consistent execution with strong earnings power across a range of different economic scenarios. Turning to cash and capital management, MetLife ended the first quarter with cash at the holding company of $3.8 billion near the top end of our $3 billion to $4 billion target buffer. Our two-year average free cash flow ratio remains within our guidance range of 65% to 75%. Currently, our cash balances are much higher following the receipt of $3.94 billion of proceeds on the sale of our US P&C business. During the quarter, we were pleased to return $1.4 billion of capital to shareholders, $1 billion in share repurchases, and approximately $400 million in common stock dividends. So far in Q2, we have bought back an additional $210 million of common shares, and we have roughly $1.6 billion remaining under our current repurchase authorization. Last week, our Board of Directors approved a second quarter 2021 common stock dividend of $0.48 per share, up 4.3% from the first quarter. Over the last decade, we have increased our common dividend at a 10% compound annual growth rate. Our consistent execution continues to generate strong free cash flow that allows us to invest in growth and return capital to our shareholders, all with the goal of driving long-term value creation. As we look ahead, we see a path to a brighter future from both an economic and health perspective. In the United States conditions look promising for a period of employment growth, which is always good for our group business. On the pandemic front, we believe the worst of the underwriting effects on our Company are behind us as the vaccine rollout continues to advance. The progress is not yet uniform across the world, and certain areas are still struggling, but the trend line is clear, a slow but steady return to something we can call normalcy. For our customers, we continue to accelerate our digital transformation to meet their evolving needs. In Japan, for example, 95% of our policy submissions are now done digitally. For our employees, we will be implementing a more flexible workplace model in Q3, which for most will be a hybrid approach. While our people have performed exceptionally well working from home during the pandemic, we believe the office will continue to play a critical role in fostering collaboration, innovation, and career development. We are equally confident that by incorporating more virtual work into our model, we will enhance productivity, gain access to a broader talent pool, and strengthen employee engagement. As I said in my annual letter to shareholders, consistent execution is our new baseline. Continuous improvement is our new aspiration and expectation. I will start with the 1Q 2021 supplemental slides, which provide highlights of our financial performance and an update on our cash and capital positions. Starting on page 3, we provide a comparison of net income to adjusted earnings in the first quarter. Net income in the quarter was $290 million or approximately $1.7 billion lower than adjusted earnings. This variance was primarily due to net derivative losses as a result of the significant rise in long-term interest rates as well as stronger equity markets in 1Q 2021. Our investment portfolio and our hedging program continued to perform as expected. On page 4, you can see the year-over-year comparison of adjusted earnings by segment. There were no notable items for either period. Adjusted earnings per share benefited from exceptionally strong returns in our private equity portfolio and were up 39% and 38% on a constant currency basis. Moving to the businesses, starting with the US group benefits, adjusted earnings were down 70% year-over-year, largely driven by unfavorable group life mortality due to elevated COVID-19-related life claims. Favorable non-medical health underwriting and volume growth were partial offsets. Overall, results for Group Benefits were mixed. Adjusted earnings were down, but underlying fundamentals including top line growth and persistency were strong. Group Benefits sales were up 45% year-over-year primarily due to higher jumbo case activity. We believe that we are on track to deliver a record sales year in 2021. Adjusted PFOs were $5.6 billion, up 16% year-over-year due to solid volume growth across most products, the addition of Versant Health and roughly five percentage points related to higher premiums from participating contracts, which can fluctuate with claims experience. I will discuss Group Benefits underwriting in more detail shortly. Retirement and Income Solutions or RIS adjusted earnings were up 92% year-over-year. The primary driver was higher variable investment income, largely due to strong private equity returns. In addition, elevated COVID-19 mortality and volume growth were positive contributors. RIS investment spreads were 234 basis points up 120 basis points year-over-year primarily due to higher variable investment income. Spreads excluding VII were 88 basis points, up 5 basis points year-over-year primarily due to the decline in LIBOR rates. RIS liability exposures including UK longevity reinsurance grew 12% year-over-year due to strong volume growth across the product portfolio, as well as separate account investment performance. With regard to UK longevity reinsurance, we have continued to see strong growth since completing our initial transaction in 2Q 2020. The notional balance stands at $8.8 billion at March 31, up nearly $5 billion from year end 2020. As previously announced, first quarter results for property and casualty are reflected as a divested business in our quarterly financial statements. The sale of the Auto and Home Business to Farmers Insurance closed on April 7, and we expect to record an after-tax gain of approximately $1 billion in 2Q 2021. Moving to Asia, adjusted earnings were up 78% and 70% on a constant currency basis, primarily due to higher variable investment income as well as volume growth and favorable underwriting margins. Asia's solid volume growth was driven by higher general account assets under management on an amortized cost basis, which were up 6% and 4% on a constant currency basis. Asia sales were up 12% year-over-year on a constant currency basis with growth across most markets. Latin America, adjusted earnings were down 58% and 57% on a constant currency basis, primarily driven by unfavorable underwriting, partially offset by the improvement in equity markets. Elevated COVID-19-related claims primarily in Mexico impacted Latin America's adjusted earnings by approximately $150 million after tax. Looking ahead, we expect COVID-19 claims to decrease throughout the year more significantly in the second half and adjusted earnings to return to 2019 levels in 2022, which is consistent with our outlook. Latin America adjusted PFOs were down 6% year-over-year on a constant currency basis due to lower single premium immediate annuity sales in Chile. EMEA adjusted earnings were down 9% and 11% on a constant currency basis, primarily driven by higher COVID-19-related claims as well as higher expenses compared to the favorable prior-year quarter. EMEA adjusted PFOs were down 5% on a constant currency basis, but sales were up 4% on a constant currency basis due to strong growth in UK employee benefits. MetLife Holdings adjusted earnings were up 123%. This increase was primarily driven by higher variable investment income, largely due to private equity returns. Also favorable equity markets and long-term care underwriting were positive drivers. Long-term care benefited from higher policy and claim terminations as well as lower claim incidences. The life interest adjusted benefit ratio was 54.8%, higher than the prior year quarter of 51% and at the top end of our annual target range of 50% to 55% due to elevated COVID-19 mortality. Corporate and other adjusted loss was $171 million. This result is consistent with our 2021 adjusted loss guidance range of $650 million to $750 million. The Company's effective tax rate on adjusted earnings in the quarter was 20.8% and within our 2021 guidance range of 20% to 22%. Now, I will provide more detail on Group Benefits 1Q 2021 underwriting performance on page 5. There were approximately 200,000 COVID-19-related deaths in the US in the first quarter, the highest single quarter since the pandemic began and up nearly 40% versus the fourth quarter of 2020. In addition to the higher number of claims, there were more deaths at younger ages below 65, which resulted in increased claims severity. Apart from COVID-19, the number of life insurance claims of greater than $2 million nearly doubled versus a typical quarter. The Group Life mortality ratio was 106.3% in the first quarter, which included roughly 17 percentage points related to COVID-19 life claims. This reduced Group Benefits adjusted earnings by approximately $280 million after tax. For group non-medical health, the interest adjusted benefit ratio was 71.1% in the first quarter with favorable experience across most products. The 1Q 2021 ratio was below the prior year quarter of 71.7% and at the low end of our annual target range of 70% to 75%. Now let's turn to VII in the quarter on page 6. This chart reflects our pre-tax variable investment income over the last five quarters, including approximately $1.4 billion in the first quarter of 2021. This very strong result was mostly attributable to the private equity portfolio, which had a 13.3% return in the quarter. As we have previously discussed, private equities are generally accounted for on a one-quarter lag. Our first quarter results were essentially in line with private equity industry benchmarks. While all private equity classes performed well in the quarter, our venture capital funds, which account for roughly 20% of our PE account balance of $10.3 billion were the strongest performer across subsectors with roughly 25% quarterly return due to a broad increase in tech company valuations. On page 7, first quarter VII of $1.1 billion post-tax is shown by segment. The attribution of VII by business is based on the quarterly returns for each segment's individual portfolio. As noted previously, RIS, MetLife Holdings and Asia generally accounted for approximately 90% or more of the total VII and are split roughly one-third each, although it can vary from quarter to quarter. VII results in 1Q 2021, were more heavily weighted toward RIS, and MetLife Holdings as Asia's portfolio has a smaller proportion of the venture capital funds that I referenced earlier. Turning to page 8, this chart shows our direct expense ratio over the prior five quarters and full year 2020 including 11% in the first quarter of 2021. As we have highlighted previously, we believe our full year direct expense ratio is the best way to measure performance due to fluctuations in quarterly results. In 1Q 2021, our favorable direct expense ratio benefited from solid top line growth and ongoing expense discipline as well as delayed investment spending in the quarter. We expect the direct expense ratio for the remainder of 2021 to be consistent with our full year outlook. Now, I will discuss our cash and capital position on page 9. Cash and liquid assets at the holding companies were approximately $3.8 billion at March 31, which is down from $4.5 billion at December 31, but well within our target cash buffer of $3 billion to $4 billion. The sequential decrease in cash at the holding companies was primarily due to the net effects of subsidiary dividends, payment of our common stock dividend, share repurchases of approximately $1 billion in the first quarter as well as holding company expenses and other cash flows. Looking ahead, we expect HoldCo cash will be significantly higher in the second quarter as a result of the sale of our Auto and Home Business to Farmers Insurance. Next, I would like to provide you with an update on our capital position. For our US companies, our combined NAIC RBC ratio was 392% at year end 2020 and comfortably above our 360% target. For our US companies. excluding our property and casualty business, preliminary first quarter 2021 statutory operating earnings were approximately $1.5 billion while statutory net income was approximately $570 million. Statutory operating earnings increased by roughly $2.3 billion year-over-year driven by lower VA rider reserves and increase in interest margins, higher net investment income, and lower operating expenses. Statutory net income excluding our P&C business increased by roughly $430 million year-over-year, driven by higher operating earnings, partially offset by an increase in after tax derivative losses. We estimate that our total US statutory adjusted capital excluding P&C was approximately $16.7 billion as of March 31, down 2% compared to December 31. Favorable operating earnings were more than offset by after tax derivative losses and dividends paid to the holding company. Finally, the Japan solvency margin ratio was 967% as of December 31, which is the latest public data. In summary, MetLife delivered another strong quarter, which benefited from exceptional private equity returns, solid business fundamentals and ongoing expense discipline. While higher mortality in the US and Mexico dampened adjusted earnings in Group Benefits and Latin America, our financial performance demonstrates the benefits of our diverse set of market-leading businesses and capabilities. In addition, our capital, liquidity, and investment portfolio are strong, resilient, and position us for success. We are confident that the actions we are taking to be a simpler, more focused company will continue to create long-term sustainable value for our customers and our shareholders.

quarterly adjusted earnings per share $2.20. quarter-end book value of $70.08 per share, down 3% from $72.62 per share at march 31, 2020.

Our exceptional performance this quarter, among the broader market recovery, demonstrates the strengths of our global platform, resilient business model and continued operational and strategic execution of our long-term plan. Further, we continue to advance our sustainability agenda and development of our related market-leading product capability. Our most recent responsible real estate survey reaffirm that reducing the environmental impact is a key priority across the industry for both real estate occupiers and investors. We take pride in our 2020 JLL Global Sustainability Report, which highlights our latest initiatives including our commitment to net 0 carbon emissions by 2040 across all areas of operation, including client sites management globally as well as our need to be fully equipped to help clients in their own journey. We changed the name of our Corporate Solutions Group to Work Dynamics to more clearly reflect that our technology-enabled and wide-ranging services help our clients enhance the productivity of their people as employees are increasingly empowered to make the decisions on how and where they work. Our suite of solutions also benefits the performance of their portfolios and help them realize their sustainability and broader ESG goals. I'd like to express my gratitude for our employees who continue to work diligently and provide outstanding service to our clients and community. The pace of activity increased sharply throughout the first half of the year, leaving many of our teams over extended. The tireless efforts and its ongoing challenges and uncertainties embody the strong culture of teamwork and collaboration at JLL. Let me briefly touch on the future of office, subject being closely analyzed by our best-in-class research team. While the actual long-lasting effects of the pandemic remain unclear, there are a couple of key points I would like to highlight. The first is that the office will remain the center of the work ecosystem. We believe that the pandemic has reinforced the important role that the office can play in fostering and cultivating each company's unique culture and innovation. The second point is that employees are increasingly expecting, if not demanding, additional flexibility and the ability to choose where and how they work, leading to the doable presence of hybrid work. These demands have also been coupled with health, wellness and safety becoming top of mind for employees. As a result, employers are now increasingly evaluating holistic approaches to address these demands, which often require considerable investment into existing and new office space. We imagine workspaces which serve to not only attract and retain employees but also enhance their sense of safety and well-being are becoming a new currency in the war for talent. This leads me to conclude that the initial net impact on future space demand and footprints for investment-grade office buildings will be relatively minor. We believe that the combination of growth from job creation, dedensification and the addition of collaboration space will broadly offset any anticipated reductions in workspace as companies continue to embrace hybrid work models. Furthermore, we believe that given the world-class capabilities of our project management business, we are well positioned to benefit from accelerated demand for these services as we assist our clients as they embark upon these transformations. The increasing complexity required to create these global integrated workplace transformation will in turn demand more technology across not only the operations of the building but the entire ecosystem. We are encouraged that our significant investment in technology and our desire to provide client access to leading-edge technology results in a significant competitive advantage. The power of data leading to better decision-making will allow JLL to be in the center of this ecosystem. We continue to work diligently with our clients as a strategic advisor as they transition to the new post-pandemic normal and assist in the development of hybrid work models centered around employee satisfaction and productivity. Turning to the market environment. Transaction activity saw sharp recoveries across the world. JLL's research reports that the tentative signs of improvement in global office leasing activity witnessed in the first quarter have solidified and continued throughout the second quarter. Quarterly global leasing volumes were 44% higher than a year ago. However, they are still 36% below Q2 2019. Across all the three regions, quarterly leasing volumes are below where they were in 2019 with the U.S., the hardest hit at a 44% decline, while Europe and Asia Pacific recorded declines of 32% and 21%, respectively. Our tenant pricing conditions persist in most markets. We are seeing a noticeable stabilization and headline rates. The recovery across capital markets broadened in the second quarter with global transaction volumes marking a 103% increase on the trough a year ago and a 2% increase from Q2 2019. Each region posted significant year-on-year gains in transaction volumes with activity is particularly robust in markets with sectorial diversity and opportunities of scale. Allocations to the real estate sector are strengthening as lender diversity and risk appetite trend toward pre-pandemic normalcy. Assuming no major setback in the global fight against COVID-19, the positive trends recorded in the second quarter are anticipated to carry on in the second half, fueling continued recovery across the commercial real estate industry and global macro economy. For that backdrop, I'm pleased to turn the attention toward our second quarter performance. Our exceptional results reflect the continued momentum across our business that we have witnessed since the depths of the pandemic. We delivered excellent second quarter top and bottom-line performance, standard operating margins and continue to execute on our long-term strategy. Consolidated revenue rose 18% to $4.5 billion and fee revenue increased 41% to $1.8 billion in local currency. Adjusted EBITDA of $332 million represented an increase of over 200% from the prior year, with adjusted EBITDA margin increasing to 18.5% from 8.3% in local currency, driven by the significant recovery of our transaction-based service lines, cost mitigation actions taken in 2020, realization of growth initiatives and select discrete items. Adjusted net income totaled $220.1 million for the quarter and adjusted diluted earnings per share totaled $4.20. Our transaction-based service lines recorded significant growth across all three regions. Leasing benefited from strong demand in the industrial and life sciences sector while industrial and multifamily debt origination were key drivers for Capital Markets outperformance. We recently passed the two-year anniversary of our acquisition of HFF and are pleased that the acquisition has delivered on both our strategic and financial ambitions despite the pandemic. All of the key secular trends driving growth in our industry is increasing capital flows to real estate. The addition of the HFF platform with its market-leading position in the U.S. allows us to not only become a top two player in the U.S. capital markets business but also cements the strengths of our global platform to forge greater ties with the world's largest investors. I also would like to provide an update on the financial synergies we projected when the HFF acquisition transaction was announced in 2019. A year ago, we achieved our first 12-month synergy target of $28 million despite unforeseen pandemic headwinds. Having just passed the two-year anniversary of the acquisition, I'm pleased to say that we have achieved our target $50 million of synergies on a run rate basis, which we had originally predicted within a two- to three-year time frame. The strong recovery in our transaction-based service lines were complemented by solid growth in our property and facility management and advisory consulting and other businesses. The resilience of these service lines continues to benefit JLL throughout the course of this pandemic, and we are encouraged by the overall trends supporting their growth. Over the course of the quarter, we continue to invest to drive future growth, focusing on investments that strengthen and differentiate our market leadership, positioning JLL for long-term growth. For example, we announced the launch of sustainable operations for now the real estate industry's only end-to-end sustainability product offering developed to help companies configure, launch and manage portfoliowide sustainability programs. During the quarter, we invested approximately $84 million in JLL Technologies investments, bringing the year-to-date amount to $109 million. The continued investment through our JLL Technologies business furthers our strategic objectives to be an industry leader in technology innovation. We also have resumed share repurchases returning approximately $100 million to shareholders through July. Looking ahead, given the strong momentum in the business, successful integration of HFF and increased visibility into a post-COVID future, we're increasing our 2021 adjusted EBITDA margin target to 16% to 19%, up from 14% to 16% previously. Our strong results reflect continued disciplined execution as well as the impact of our investments in strategic initiatives over the past several years. We are encouraged by the broad recovery in our industry and business, particularly Capital Markets and Leasing, and the fact that fee revenue and profitability surpassed 2019 levels in certain service lines by region. The recovery had exceeded our expectations to date, and we are optimistic about the second half of the year though significant uncertainty remains around the evolution of the pandemic and global economy. Our balance sheet provides a strong footing to confidently execute our path forward and build upon our operating momentum. Our overall real estate services fee revenue increased 43% in the second quarter with all regions generating double-digit growth, due in part to lapping COVID-impacted results from the prior year. Of note, Capital Markets fee revenue increased 110%, inclusive of investment sales advisory up 105%; debt advisory up 157% and loan servicing revenue up 26%, reflecting the market recovery as well as the strength and breadth of our global platform. Our leasing fee revenue grew 69% and was only down 3% from second quarter 2019. The Real Estate Services adjusted EBITDA margin of 17.2% compares with 6.6% a year earlier. The benefits from our cost reduction actions taken in 2020 and the strong execution and recovery within our transaction-based revenue streams were key drivers of our strong margin performance. Approximately $16 million of noncash valuation increases to investments by JLL Technologies in early stage proptech companies and a $6 million multifamily loan loss reserve release contributed approximately 130 basis points to the Real Estate Services adjusted EBITDA margin. It is important to note that second quarter margins clearly benefited from an expense base that is not yet fully normalized, particularly the variable components, such as T&E, but also fixed compensation costs. In the near term, we intend to accelerate hiring for critical positions to execute on growth opportunities that we see ahead. Turning to the Americas. Fee revenue grew year-over-year across all service lines, most markedly in Capital Markets and Leasing. Within Americas Capital Markets, fee revenue from U.S. investment advisory sales grew 146% and U.S. debt advisory increased 153%. The U.S. Capital Markets service line witnessed a pronounced rebound with optimism broadening from high-growth areas such as Industrial to other segments of the market, including Retail, Office and Hotels. Our multifamily debt origination and loan servicing businesses continue to demonstrate strong momentum, highlighted by 26% growth in our loan servicing fee revenue. Our Americas Capital Markets pipeline has increased from the prior quarter. Now to Americas Leasing. Our growth meaningfully outperformed the market, driven by continued gains in the industrial sector as well as strength in Retail, Office and Life Sciences. Transaction velocity has increased meaningfully, though average deal size has declined. Our full year 2021 Americas leasing growth pipeline is up 38% from 2020 and 7% from 2019, supporting our optimism for continued strong growth in the second half of 2021, though the evolution of the pandemic will continue to be the critical factor in the recovery rate. The Americas office sector remains below pre-pandemic levels, but we are encouraged by a multitude of factors indicating an improving market environment. According to JLL Research, there was a 5% increase from the first quarter in net effective rents in Class A offices across major U.S. cities, bringing the rents to approximately 15% below pre-pandemic levels. Also, average lease terms increased for the second consecutive quarter to 7.4 years from the fourth quarter 2020 trough of 6.7 years, though it remains below the full year 2019 average of 8.6 years. Renewals as a percent of the transaction mix, however, remain about two times the historical average mix, at about 56% in the second quarter. From a profitability standpoint for the quarter, the Americas adjusted EBITDA margin increased to 22.2% from 10.8%, driven primarily by strong growth in transactional businesses as well as the benefit from cost mitigation actions taken in 2020 and an unsustainably low headcount and cost base. Noncash evaluation increases within our JLL Technologies investments and release of a portion of the multifamily loan loss reserve contributed approximately 180 basis points to the expansion. In EMEA, fee revenues grew year-over-year across all service lines in much of the region, in part due to reducing pandemic headwinds. Fee revenue within each of the EMEA capital markets Leasing and Valuation Advisory within the Advisory, Consulting and Other service line was ahead of 2019 levels as vaccinations and a return to the office trend has led to improved market sentiment. EMEA leasing growth was broad-based across sectors, but most pronounced in Office and Industrial. EMEA's second quarter profitability was the highest it has been in several years, driven by the higher fee revenue, particularly in the transactional businesses as well as the cost savings, especially in fixed compensation from actions taken over the past year. Asia Pacific fee revenue growth accelerated to 26% from 12% in the first quarter as activity picked up across most service lines, most notably in Capital Markets and Leasing. However, our performance was mixed across the region due to varying pandemic recoveries. Asia Pacific Capital Markets fee revenue exceeded the 2019 level, and its particularly strong year-over-year growth was driven largely by several large transactions in Australia. Asia Pacific leasing activity continues to pick up across most countries, but the pandemic resurgence is weighing on momentum across the region. Asia Pacific Advisory and Consulting fee revenue materially exceeded the second quarter 2019 level, with strong growth driven largely by our Valuation Advisory service. On a global basis, Property & Facility Management service line fee revenue growth was steady, much like it has been throughout the pandemic. Growth of more annuity-like business is more than offsetting nonrecurring revenues from quick response tasks like supporting pop-up medical sites we saw in 2020. Additionally, our U.K. mobile engineering business has benefited from some easing and lockdowns compared to the prior year quarter. Corporate occupiers and investors seek our services not only for higher building management standards but also JLL's broad views regarding best practices in reopening the workplace. Our global Work Dynamics business fee revenue growth improved to 8%, driven by sustained good growth in the Americas and EMEA starting to recover from the pandemic impact. We are encouraged by the number of new client wins and contract expansions that are fueling the growth, which is further buoyed by the secular outsourcing trend. Corporations are increasingly seeking our extensive knowledge and the breadth of our services, including sustainability, delivered seamlessly under our One JLL philosophy. Fee revenue increased 10%, driven largely by advisory fee growth within its core open-end funds. Incentive fees of $15 million were driven by strong performance in our public securities mandates. We now anticipate full year 2021 incentive fees of approximately $45 million, with approximately $10 million coming in the third quarter. LaSalle's assets under management grew approximately 6% from the prior quarter to $73 billion, driven by valuations and continued capital raising and investment. LaSalle's $23 million of equity earnings primarily reflects noncash fair value increases across our co-investment portfolio, including our J-REIT. Shifting now to an update on our balance sheet and capital allocation. Our balance sheet remains strong, with reported leverage of 0.6 times and liquidity of $2.9 billion inclusive of cash on hand and undrawn credit facility capacity, providing us a solid foundation to execute on our strategic priorities. We are continuously evaluating growth opportunities, both organic and inorganic, and plan to continue to invest in both LaSalle co-investments and in our JLL Technologies initiatives, which comprise two buckets: one, investments in early stage prop-tech companies that are transforming the real estate industry; and two, investments in technology companies that accompany strategic partnerships to drive revenue growth, such as our investment in rootstock earlier this year. Overall, we have not completed any significant M&A year-to-date, but are constantly reviewing potential opportunities, holding to our underwriting standards and return thresholds comfortably above our cost of capital. Importantly, we are committed to returning capital to shareholders while also investing in our business. Through the end of July, we repurchased $100 million of stock year-to-date and have $500 million remaining on our authorization. The repurchases to date are roughly equivalent to full year 2020 and more than double the annual dividends distributed in the years preceding 2020. The level of capital return to shareholders in any particular year will be dependent on a variety of factors, including debt levels, investment opportunities and return expectations, among others. As we move through the balance of 2021 and next year, we will evaluate the use of capital in the context of the current and anticipated opportunities and the broader economic environment. We will continue to focus on maintaining flexibility to invest for growth, both organic and inorganic, while maintaining our investment-grade balance sheet and returning cash to shareholders. Looking ahead to the second half of 2021, the market environment is quite dynamic, and we are mindful of tightening labor markets globally and an uneven recovery across markets and business lines. Our improving underlying business fundamentals, strengthening pipelines, global diversified platform and added visibility on the macroeconomic recovery give us confidence that the momentum in the first half of the year is likely to continue. As Christian mentioned, we are now targeting to operate within an adjusted EBITDA margin range of 16% to 19% for the full year 2021. This is due to the strong momentum in the business and increased visibility into a post-COVID operating environment as well as the number of steps we've taken to strengthen our business and operate more efficiently over the past several years, including the successful integration of HFF and the cost reduction actions in 2020. We do expect our cost base to increase in the second half of this year as we continue to invest in our strategic priorities and growth initiatives across business lines, such as our technology capabilities and people, which will drive long-term value. While we maintain strong cost discipline, we continue to expect certain variable costs, such as T&E to gradually return. I also reiterate the first half of 2021 included $89 million of equity earnings and $14 million of loan loss reserve releases. Considering these factors, our earnings mix between the first half and the second half of the year will be different versus prior years, and that we will still expect the majority of our earnings to be generated in the second half of the year, but not to the same extent as in prior years. We will target to run the company in the near term within the adjusted EBITDA margin range of 16% to 19%, and we will be undertaking a holistic analysis of our long-term financial targets, and we'll have more to share with you next year on this topic. Christian, back to you. While we continue to remain confident in our expectations of continued recovery as vaccine availability provides a line of sight to a post-pandemic future, we are mindful of the hurdles that could hamper a complete macroeconomic recovery. Consumer and business confidence have seen a sharp recovery though uncertainty lingers regarding a return to pre-pandemic norms for behavior patterns. Further, while inflation continues to be considered transitory for 2021, concerns about an extended inflationary environment, makes the earlier monetary policy tightening cycle. In closing, the recovering growth outlook, the global scale of our platform, the increased value of our technology investments and continued assets from our outstanding colleagues around the world fuel our confidence in JLL's ongoing strong performance. Operator, please explain the Q&A process.

johnson controls international q3 adjusted earnings per share $0.83 from continuing operations excluding items. q3 adjusted earnings per share $0.83 from continuing operations excluding items. sees q4 adjusted earnings per share $0.86 to $0.88. sees fy adjusted earnings per share $2.64 to $2.66 excluding items. sees 2021 organic revenue growth up mid-single digits year-over-year.

We had a very strong start to the year with first quarter consolidated net income of $64.4 million and earnings per share of $0.59. These results were 93% and 90%, respectively, above the same quarter last year and were driven by stronger earnings at both the utility and the bank. In the first quarter, Hawaiian Electric benefited from continued savings from the robust cost management program we started last year. The savings will be delivered to customers in rates beginning in June, and, along with other timing elements, we expect the utility to remain within the full year guidance range we announced in February. American's first quarter results reflect good execution in an environment that remains challenging for bank profitability. Our results benefited from a release of provision as we continue to conservatively manage credit in the improving Hawaii economy. As Greg will cover in more detail, we're increasing our bank guidance and consolidated HEI guidance for the year to reflect this improvement. We're seeing strengthening in the local economy as Hawaii continues to manage the virus well and the vaccine rollout continues. Unemployment declined to 9% in March. While still above the national average, it's headed in the right direction, having declined from a peak of nearly 24% a year ago. We've seen significant growth in tourism arrivals this year. And lately, we've experienced multiple days where arrivals have approached prepandemic averages. At this point, almost all our arrivals are from the U.S. mainland as the COVID situation and vaccinations abroad have been more challenging than domestically. Hawaii real estate fundamentals are strong and continue to support the conservative portfolio mix at the bank. Year-to-date March, Oahu's sales volumes are up 19% for single-family homes and 53% for condos. Median prices are also up 17% to $950,000 for single-family homes and 4% to $450,000 for condos. In its March outlook, the University of Hawaii Economic Research Organization accelerated its forecast for the state's economic recovery by 18 months with the GDP now expected to rise 3.7% in 2021 and 3.1% in 2020. COVID-19 cases in Hawaii have remained far below the mainland. The seven-day rolling average was 94 for the state and is the fifth lowest per capita among U.S. states as of May six. 40% of our residents are now fully vaccinated and more than half have had at least one dose. While this is encouraging, we're mindful that we're still in the early stages of Hawaii's economic recovery, and there is still some uncertainty about the pandemic's course. At the utility, cost efficiency, our transition to the new PBR framework and our clean energy future have been and continue to be our major focus. We and our stakeholders are all learning the new PBR framework, which is designed to align our interests as we work together to increase renewable energy and decarbonize our economy in a way that is affordable, reliable, resilient and equitable. Our commitment to cost efficiency positions us well as we transition into PBR. The utility has been successful in implementing efficiencies and achieving savings to deliver on our management audit savings commitment and the customer dividend. We'll start returning these savings to customers through the Annual Revenue Adjustment, or ARA, when PBR goes into effect June one. Cost management will continue to be a focus as we operate under PBR. We've been working with stakeholders to finalize the new PBR performance incentive mechanisms, or PIMs, as well as the scorecards and metrics we'll report on going forward. We are expecting the PUC to issue an order setting forth the parameters of the new PIMs in the near future. As we've said before, reaching our collective clean energy and decarbonization goals must be done in a way that is kakou, a Hawaiian word that means it takes everyone working together. We're working to bring projects from Hawaii's largest ever renewable energy and storage procurement online as soon as possible. We are fully committed to this effort, which is no easy task given the number of projects, the scale of this procurement relative to our small system, community considerations, land constraints and the need to ensure reliability on isolated island grids. We're actively working with independent power producers, government agencies and other stakeholders to overcome obstacles to bring projects online faster. Last week, the PUC directed us to establish regulatory liabilities to track costs to customers resulting from delays in commercial operations of approved Stage one, Stage two and CBRE Phase one projects. While we do not believe we are liable for any amount, we believe the PUC's intention may be to track rather than record costs before determination is made. So we will be seeking reconsideration or clarification. Last week, the PUC also approved, with conditions, our agreement for the Kapolei Energy Storage project, a stand-alone battery project that will help ensure reliability when the Oahu coal plant retires and enable integration of more renewable energy. While technically an approval, the order imposes conditions that may prevent us and the developer from moving forward with this project. The regulatory process allows us to raise our concerns to the PUC, and we will be filing a motion for reconsideration on Monday. Another key focus is accelerating the addition of more distributed energy resources, or DERs, and demand response. On May 3, we filed our recommendations to achieve this acceleration while underscoring the importance of equity and fairness in how the programs are designed. We're advancing programs to benefit all customers, including expanding our community solar program, proposing a rooftop rental program and procuring aggregated grid services from DERs. Grid modernization is key to facilitating faster deployment and effective use of demand response and DERs. In March, the PUC approved our proposal to shift from an opt-in to an opt-out approach for advanced meters in targeted areas, allowing us to deploy advanced meters more quickly and thus enabling operational efficiencies and more advanced rate programs. Turning to the bank. American continues to perform well in a challenging environment. In the first quarter, we continued to have strong mortgage production and deployed an additional $150 million of ASB CARES or Paycheck Protection Program loans to support small businesses in round two of that program. Year-to-date, that amount has increased to over $170 million. Record deposit growth, in large part driven by federal stimulus, continues to outpace lending opportunities in this early stage of Hawaii's economic recovery. We're taking a balanced approach to managing our portfolio, optimizing fee income and loan portfolio growth in a low interest rate environment. While net interest margin is still pressured, record-low funding costs and balance sheet growth are helping grow net interest income consistent with our expectations. Our first quarter release of reserves for credit losses reflects the resilience of our customers as well as the moderating credit risk environment as Hawaii's economy begins to recover. We continue to manage our reserves for credit losses conservatively. American has also continued its cost control efforts, leading to lower noninterest expense in the first quarter even as we invest in our anytime, anywhere banking transition. Improved profitability is also allowing the bank's dividend to HEI to increase. We're accelerating our digital transformation to enable customers to bank with us anytime and anywhere. Today, 44% of deposits are made through self-service channels such as ATMs and mobile, more than double prepandemic levels. And we've seen increased customer satisfaction across all channels over that time. We're enhancing our digital offerings to make banking even easier for our customers. This includes providing new online financial wellness tools, upgrading our ATM fleet, strengthening our mobile app, expanding online capabilities and opening new digital centers where our teammates will help customers with digital banking solutions. Now Greg will discuss our financial results and our outlook. Over to you, Greg. Turning to our first quarter results. Consolidated earnings per share were $0.59 versus $0.31 in the same quarter last year. Both the utility and the bank reported strong performance, reflecting the resilience of our company's and the Hawaii economy that has showed signs of a strengthening recovery. At the utility, earnings reflect lower O&M expenses from cost reduction efforts and delays on timing of generation overhauls, coupled with higher revenues from our annual rate adjustment mechanism, including timing-related charges for target revenue recognition to eliminate seasonality impacts. The bank benefited from the release of provision for credit losses as certain credits earned upgrades, and we saw stable credit trends in an improving economic outlook. While the holding company loss is well in line with plan, we increased charitable giving during the quarter, including a $2 million contribution to support our community through challenging times. Compared to the same time last year, consolidated trailing 12-month ROE improved 80 basis points to 10%. Utility ROE increased 160 basis points to 9%; and bank ROE, which we look at on an annualized basis, was 16%. The utility outlook remains unchanged, however, and the ROE expectations will be impacted by the management audit savings and customer dividend as O&M cost reductions that have improved earnings for the quarter are used to fund customer bill reductions under PBR. Regarding the utility's results, net income for the quarter was $43.4 million compared to $23.9 million in the first quarter of 2020. The most significant variance drivers were $10 million lower O&M expenses compared to the first quarter last year. There were three main factors that drove O&M lower: lower staffing and efficiency improvements from the ongoing cost management program; timing-related items, including higher bad debt expense in the first quarter of 2020 related to COVID-19, which has since been deferred; and fewer generating facility overhauls, some of which will be performed later in the year. There were also higher costs in 2020 related to an increased environmental reserve and higher outside service costs to support the PBR docket and other customer service projects. In addition to lower O&M, we benefited from a $5 million revenue increase from higher rate adjustment mechanism revenues; a $4 million revenue increase related to timing of the recognition of target revenues during the year, which we -- will have no net impact on 2021 and which is due to a change in methodology that eliminates seasonality for recognizing target revenues within the year; a $1 million lower enterprise resource planning system implementation benefits to be passed on to customers; and $1 million lower nonservice pension costs due to a reset of pension costs included in rates as part of a final rate case decision. These items were partially offset by $1 million higher depreciation. Regarding the drivers of utility performance for the rest of the year, we expect no meaningful contribution from the performance incentive mechanisms during 2021. We currently have approximately $22 million of COVID-related cost, primarily bad debt expense accrued in a deferred regulatory asset account. We will continue deferring COVID-related costs through June 30. The moratorium on customer disconnections is in place through May 31 2021, and we will -- and we continue to work with customers on extended payment plans and assisting with other bill assistance alternatives. We plan to file a separate application to seek recovery of costs once actual costs are known. We will also be filing a request for approval to continue deferring COVID-related costs beyond June 30. As mentioned, our O&M expense was positively impacted by the timing of overhauls. We do expect some of these overhauls to occur later in the year, in line with our annual guidance. The utility's ability to achieve accelerated management audit savings commitment is an important driver of O&M expenses. The utility is on track to achieve the savings necessary to meet the annual $6.6 million commitment, which will be returned to customers starting June one. Utility capital investments for the quarter of approximately $60 million were lower than planned due to unexpected delays. Some of the delays were due to extended repairs being made at one of our substations, limiting work that can be done on other parts of the electric system. We also experienced additional design work required for T&D projects, COVID travel limitations and meter deployment delays that impacted our grid modernization work. Despite the delays, we still expect to achieve our utility capital investment plan for 2021. And we are maintaining the capex and rate base growth guidance we issued during our previous earnings call and still expect 2021 capex of approximately $335 million to $355 million, reflecting rate base growth of 4% to 5%. Turning to the bank. ASB's net income for the quarter was $29.6 million compared to $15.7 million last quarter and $15.8 million in the first quarter of 2020. The increase primarily reflected moderation of the elevated credit risk environment as Hawaii's economy begins to recover, and the results benefited from a release of reserves for credit losses, which I'll discuss further. Net interest income reflects the impact of strong deposit growth, lower loan demand and increased growth of our investment portfolio. Noninterest income benefited from strong mortgage origination and sales in line with plan despite being below the prior year's quarter. Noninterest expense remained in line with the plan as ASB continues to focus on strategic investments to drive efficiency and productivity. ASB's net interest margin compressed 17 basis points during the quarter. NIM was 2.95% compared to 3.12% in the fourth quarter of 2020. The low interest rate environment and record deposit growth each contributed to NIM compression. $3.1 million in fees from PPP lending and a record low cost of funds helped soften the pressure on asset yields. The average cost of funds was 0.08%, down one basis point from the linked quarter and 16 basis points from the prior year. We expect continued pressure from low interest rates and from excess liquidity due to strong deposit growth and lower reinvestment yields. Consequently, we're updating our NIM guidance range to 2.80% to 3%. We anticipate that balance sheet growth should still lead to net interest income in line with expectations for the year. In the first quarter, the bank released $8.4 million in provision for credit losses compared to provisions of $11.3 million in the fourth quarter and $10.4 million in the first quarter last year. This reflects credit upgrades in the commercial loan portfolio, reduced exposure to riskier but profitable consumer unsecured loans and lower net charge-offs as Hawaii's economy begins to recover and credit -- the credit risk environment moderates. ASB's net charge-off ratio for the quarter was 0.18% compared to 0.36% in the fourth quarter and 0.44% in the first quarter 2020. Nonaccrual loans were up slightly to 1% compared to 0.89% in the fourth quarter and 0.90% in the prior year. We remain conservative as we take a wait-and-see approach to Hawaii's economic recovery. And at 1.73% as of quarter end, our allowance for credit losses was the highest among Hawaii peers. We're seeing positive loan deferral trends across ASB's portfolio. Nearly all deferred loans have returned to scheduled payments. Active deferrals are just 0.2% of the total loan portfolio. We're -- we've experienced declining delinquencies in the higher-risk commercial and consumer portfolios. While realizing a slight uptick in delinquencies in the residential portfolio, that portfolio is a low-risk -- is low risk and secured by rising value in the Hawaii real estate market. These two factors have contributed to a decreasing profile of our overall -- risk profile of our overall loan portfolio. ASP continues to manage liquidity and capital conservatively, maintaining ample liquidity and healthy core capital ratios. The bank has approximately $4 billion in available liquidity from a combination of reliable resources. ASB's Tier one leverage ratio of 8.33% was comfortably above well-capitalized levels. Prospectively, given the lower risk profile of our portfolio, we're anticipating managing closer to an 8%-or-above Tier one leverage ratio and drive competitive profitability metrics, growth of the ASB dividend while maintaining a strong capital position. We expect higher bank dividends to HEI this year than reflected in our February guidance given ASB's strong performance and outlook and efficient capital structure. We now expect dividends of approximately $50 million to $60 million versus the previously estimated $40 million. For the quarter, the ASB Board has declared a $23 million dividend to HEI. We still do not anticipate the need to issue any external equity in 2021 at HEI unless we identify significant additional accretive investment opportunities. We are committed to maintaining an investment-grade profile. At the utility, we're pleased to have had recent utility credit rating upgrades by S&P to BBB flat and Moody's to Baaone, both with stable outlooks. Turning to our guidance. We're reaffirming our previously issued utility guidance. While the utility had a strong first quarter, we'll be returning cost savings to customers beginning June one and expect additional overhauls later in the year. In addition, while the first quarter benefited from higher revenues due to a methodology change to remove seasonality in recognizing target revenues, a portion of that will reverse later in the year. However, we are revising our banking consolidated guidance. Our revised guidance is $0.67 to $0.74 per share, up from our prior guidance of $0.52 to $0.62. We're revising our NIM expectations at the bank to 2.8% to 3%, down from 2.90% to 3.15%. The impact on net interest income should be muted by balance sheet growth. Given strengthening credit dynamics and outlook for the Hawaii economy, we now expect provision to range from $0 to $10 million, which we believe remains appropriately conservative given continued uncertainty for the economy until we see increased vaccination levels and the eventual return of international travel. We expect that, that stronger bank profitability will translate into consolidated earnings growth as well as increase bank dividends to the holding company. And we're increasing HEI guidance -- earnings per share guidance to $1.90 to $2.05 per share. I'm proud of the dedication of our employees and the resilience of our companies as we continue to provide essential electricity and banking services and deliver solid financial results while helping Hawaii reach its aggressive climate goals and build back better. Last month, we issued our second consolidated ESG report, which includes our ESG priorities and our first Task Force on Climate-related Financial Disclosures-aligned reporting. We're considering the implications for our companies of the Biden administration's goal to cut carbon emissions 50% from a 2005 baseline by 2030. We believe our goals and plans here in Hawaii and the work we've been doing for some time place us on a strong path to achieve a net-zero future. We're updating our planning and analysis, and we'll report further on that in the future. And finally, we say aloha to Rich today as he is leaving American to pursue other interests. Rich accomplished a great deal during his more than 10 years at the helm of American. Rich leaves American in great shape, as evidenced by ASB's strong first quarter earnings and Greg's comments earlier. Under Rich's leadership, ASB has grown its assets, expanded its customer base, products and services and improved operational efficiency. He and his team have provided great customer service and made banking easy for customers. Ann Teranishi, currently the bank's Executive Vice President of Operations, will succeed Rich as President and CEO later today. Ann is a strong, collaborative leader with deep banking industry knowledge and a 14-year track record of success at American. We look forward to Ann's leadership.

q1 earnings per share $0.59.

Joining us on the call are Rod Larson, President and Chief Executive Officer, who will be providing our prepared comments; Alan Curtis, Chief Financial Officer; and Marvin Migura, our Senior Vice President. Our comments today also include non-GAAP financial measures. What a difference a quarter makes? We began 2020 with the expectation of marginal growth and improving business fundamentals across all of our segments and then the COVID-19 pandemic erupted and fueled the further deterioration of the crude oil market fundamentals, as well as the theme park business. This deterioration has brought about swift changes to our customer spending plans that will negatively affect our businesses as long as these conditions persist. As a result, we're taking decisive action to reduce costs in order to drive financial performance in this environment. With the continuing threat and uncertainty around COVID-19, Oceaneering is actively taking steps to support the safety and well-being of our employees and their families, our customers, and the communities where we live and work. We've implemented preventative measures and developed corporate and regional response plans based on guidance received from the World Health Organization, Centers for Disease Control and Prevention, International SOS, and our corporate medical advisor. Our goal is to minimize exposure and prevent infection, while ensuring the continued support of our customers' operations. Now for our results. For the first quarter, we reported a net loss of $368 million or negative $3.71 per share on revenue of $537 million. These results included the impact of $393 million of pre-tax adjustments, including $303 million associated with goodwill impairments, $76.1 million of asset impairments and write-offs, $13.7 million in restructuring costs and foreign exchange losses recognized during the quarter. Adjusted net income was $3.5 million or $0.04 per share. Despite significant global challenges, we are pleased that our first quarter adjusted results exceeded expectations. The key factor in achieving these results was better-than-anticipated performance within our energy-focused businesses, which included the benefit from cost reduction measures implemented during the fourth quarter of 2019 and the first quarter of 2020. Each of our operating segments generated positive adjusted operating results and positive adjusted earnings before interest, taxes, depreciation and amortization or adjusted EBITDA. And our consolidated adjusted EBITDA of $51.6 million surpassed both our forecast and published consensus estimates. Now let's look at our business operations by segment for the first quarter of 2020. Compared to the fourth quarter of 2019, ROV average revenue per day on hire decreased 4% on flat days on hire. As expected, ongoing cost control measures and efficiencies, along with fewer installations and mobilizations, resulted in improved adjusted operating performance and adjusted EBITDA. Adjusted EBITDA margin increased to 32% and ROV utilization improved slightly to 65%. Keep in mind that although reported fourth quarter 2019 utilization was 58%, it did not include the impact of the 30 ROVs that were retired at the end of the fourth quarter. For comparison, pro forma fourth quarter utilization, reflecting these vehicles as if they had been retired at the end of -- at the beginning of the quarter, was 64%. During the first quarter, our fleet size remained at 250 vehicles, the same as year-end 2019. Our fleet use during the first quarter was 68% in drill support and 30% in vessel-based activity compared to 64% and 36% respectively for the fourth quarter of 2019. At the end of March, we had ROV contracts on 95 of the 153 floating rigs under contract, resulting in a drill support market share of 62%. Turning to Subsea Products, first quarter 2020 adjusted operating results exceeded expectations and were comparable to the results of the fourth quarter of 2019. Manufactured products revenue and operating results met expectations. Service and rental results outperformed largely due to higher activity in Norway and West Africa. Our Subsea Products revenue mix for the quarter was 74% in manufactured products and 26% in service and rental compared to a 72-28 split, respectively in the fourth quarter. Our Subsea Products backlog at March 31, 2020 was $528 million compared to $630 million at December 31, 2019. Reflecting the higher level of throughput and lower level of market activity, our book-to-bill ratio for the first quarter was 0.5. Subsea Projects sequential adjusted operating results declined on lower revenue as a result of seasonally lower vessel and survey activity. Asset Integrity adjusted operating results improved, benefiting from cost reduction activities undertaken in the fourth quarter of 2019 and the first quarter of 2020. For our non-energy segment, Advanced Technologies, our first quarter 2020 adjusted operating result was sequentially flat. Adverse impacts of COVID-19 to our entertainment theme park business results offset gains from our government service businesses. As compared to the fourth quarter of 2019, unallocated expenses declined during the first quarter of 2020 as a result of lower accruals for incentive-based compensation. During the first quarter, we used $32.2 million of net cash in our operating activities and $27.2 million of cash for maintenance and growth capital expenditures. These two items represented the largest contributors to a $66.2 million cash decrease during the quarter. As anticipated, our cash balance decreased during the quarter, primarily as a result of a difference in timing associated with customer progress, milestone cash collections, and payments to vendors on several large contracts. Additionally, during the quarter, we disbursed accrued employee incentive payments related to attainment of specific performance goals in prior periods. At the end of the quarter, we had $307 million in cash and cash equivalents, no borrowings under our $500 million revolving credit facility, and no loan maturities until November 2024. As a clarification, our revolver debt-to-cap covenant is based on adjusted cap, not equity on the balance sheet. To determine adjusted cap, we get to add back all previously recognized impairments. Based on our determination, as of March 31, we could draw down the entire $500 million and still be in compliance. Moving on to our second quarter and full-year outlook. We are not providing operating or EBITDA guidance for the second quarter and full year of 2020 due to the lack of visibility in the majority of our businesses. Many of the markets we serve are being profoundly affected by the effects of and the associated responses to COVID-19, as well as the significant reductions in our oil and gas customer spending as a result of the lower crude oil price environment. We maintain our guidance that unallocated expenses are forecasted to be in the mid -- excuse me, in the high-$20 million range per quarter. We are further revising our capital expenditure guidance by lowering the range to $45 million to $65 million and 2020 cash tax payments guidance by lowering range to $30 million to $35 million. Directionally, we expect decreased demand for our services and products within our energy businesses. We anticipate further COVID-19-related impacts to our entertainment business. Theme park operators are dealing with significant challenges, including the reduction in revenue as a result of closed facilities and the uncertain timing of their reopenings. Our government-supported businesses, which represented approximately 16% of our consolidated 2019 revenue, are not closely tied to the crude oil or public entertainment markets, so contracting activities should be relatively unaffected, absent any COVID-19-related delays. Now turning to our liquidity and balance sheet. In any environment and especially during this complex time, the top priority is to preserve our liquidity and balance sheet. We are taking decisive action to reduce costs by resizing and restructuring our businesses and leaning our operations in this evolving energy environment. We are currently targeting a reduction of annualized expenses in the range of $125 million to $160 million by the end of 2020, inclusive of $35 million to $40 million of reduced depreciation expense. Cost reduction actions being taken include efficiency-enabling projects are for some process improvements and rationalizing facilities, which include increasing focus on remote operations to reduce the number of people working offshore, the consolidation, reduction, or elimination of facilities to reduce lease and operating expenses, and driving our quality tenants throughout the organization to eliminate non-value-added cost. Simplification of our operating structure. We've recently and will continue to take actions to simplify the way in which Oceaneering does business by better aligning like-for-like activities to leverage people, assets, and facilities to perform services and provide products in a more efficient way. Actions taken to-date include permanent headcount reductions and elimination of management layers and [Phonetic] compensation reductions. The base salaries for our senior leadership have been reduced by 15% for myself, 10% for all of our Senior Vice President positions, and 7.5% for our Vice President positions. In addition, we have reduced the Company match on our 401(k) plan by 50% and reduced the expected payouts under our short-term and long-term incentive plans. Other cost reduction activities being undertaken include implementing supply chain savings, where we can bundle purchases across business lines to achieve lower pricing and renegotiate contracts with vendors in light of current market conditions. We're also taking steps to eliminate non-productive assets, which will benefit us with lower inventories and lower carrying costs. In addition to these categories, we also expect to see a benefit from an estimated $35 million to $40 million reduction in depreciation cost as compared to 2019. Although this is a non-cash expense, it is worthy of highlighting because it will benefit our operating performance and position us to return to profitability sooner. Since launching this effort, approximately $70 million of annualized cost reductions have been initiated, and that's net of depreciation expense. Additional savings are expected to be achieved throughout the remainder of the year, with the majority occurring in the second and third quarters. We expect the cash costs associated with these actions to be around $15 million. Over the past 25 years, Marvin has served as our Chief Financial Officer, Executive Vice President overseeing all of Oceaneering support functions, and over the past several years as a strategic advisor to me and our executive management team. And did you know that Marvin has not missed one quarterly earnings call during his 25 years? Marvin's extensive knowledge of the Company, his ability to focus on the critical issues at hand, [Technical Issues], common sense, business guidance, and sense of humor have made him an invaluable asset to Oceaneering. Best wishes for your retirement, Marvin. So in summary, I'm pleased with our first quarter results. I believe these results show that Oceaneering had successfully adapted to the market realities in place at the beginning of the quarter. Clearly, significant changes have occurred since then that have drastically changed the anticipated activity and pricing for our services and products moving forward. While there will undoubtedly be many challenges presented as a result of these new realities, I'm confident that with the actions already under way, the quality of our services and products and the health of our balance sheet, we will be successful in adapting and succeeding in this changing market environment. We appreciate everyone's continued interest in Oceaneering and we'll now be happy to take any questions you may have.

compname reports q4 adjusted ffo per share of $0.81. q4 adjusted ffo per share $0.81. q4 ffo per share $0.73.

Let's dive right into a discussion about the quarter. There were a number of puts and takes impacting our results in Q2, and Garth and I will spend time walking through them. However, the fundamentals of our business remain solid, and consumer demand for our brands, particularly our core beer portfolio, remains strong. In addition, we repurchased a significant number of shares in Q2 at prices that are favorable as we believe Constellation stock is undervalued at current levels. We've received some feedback from investors on this topic in recent weeks, and we'll address key themes that emerge from these discussions in our remarks. As we walk through our Q2 performance and outlook for the remainder of the year, there are several key takeaways we'd ask you to keep in mind. Number one, the momentum of our core imported beer brands provides a point of competitive strength versus industry peers as we're the leading share gainer in the high end of the U.S. beer market. The majority of our growth continues to be driven by Modelo Especial, supported by strong consumer demand for Corona Extra and Pacifico, and we expect this to continue for the foreseeable future. We continue to believe that Modelo Especial in particular, has a long runway for growth, given the steadily increasing household penetration for this brand among non-Hispanic consumers and continued strong velocity. Now we've admittedly had some supply challenges this fiscal year driven by several external factors, the most relevant being the ongoing robust demand for our beer brands. We expect to return to more normal inventory levels by the end of Q4. Despite these challenges, we continue to be on track to deliver a better-than-expected year for our beer business. In fact, our strong performance to date gives us the confidence to increase guidance for our beer business as we now expect to achieve 9 to 11% net sales growth and 4 to 6% operating income growth for fiscal '22. Our view is reinforced by recent 12-week IRI trends showing the Constellation's beer business is significantly outpacing the high end and total U.S. beer industry. As it relates to our hard seltzer business and building off our last point, we're unique in our position versus our competitors in this space as our primary growth is coming from our core beer portfolio, and we're not reliant on the growth of hard seltzers and AVAs to achieve the medium-term growth goals for our beer business. The hard seltzer landscape has shifted considerably in recent months. Therefore, we've lowered our growth expectations for Corona Hard Seltzer resulting in a sizable obsolescence charge taken for Q2, which includes our view of the total impact for the fiscal year. Going forward, we plan to focus on competing in this space in where we offer meaningful points of differentiation and unique value to consumers. I'll have more to say on this topic in a moment. Number three, while our wine and spirits business was challenged in the quarter by underperformance of several mainstream brands due to tough COVID comparisons, our recent route-to-market transition, and supply chain challenges for our imported wine brands, we continue to see the benefits of our premiumization strategy take hold. We're performing well in the high end of the wine segment, which represents the vast majority of expected industry growth over the next several years, and we continue to strengthen our capabilities in emerging growth channels key to long-term success such as e-commerce and DTC. Number four, we continue to enhance our approach to innovation with a more consistent, strategic, disciplined, and consumer-led approach with a focus on high-growth segments aligned with consumer trends. Our innovation agenda is designed to complement our organic growth, and we're developing sustainable products that are incremental to our business while further premiumizing our portfolio into margin-accretive price points. Over the years, we've been able to extend some of our brands into new spaces, recruiting new drinkers and expanding occasions, and we've achieved a healthy balance between growth from the core and from innovation. Number five, our capital allocation strategy remains unchanged since I assumed the role of CEO almost three years ago. Since then, we've made significant progress in reducing debt and achieving our goal of returning 5 billion in value to shareholders by the end of fiscal year '23 through a combination of dividends and share repurchases. In fact, to date, this fiscal year, we have repurchased 1.4 billion of our shares. And when combined with our dividend, we have achieved nearly 60% of our 5 billion goal. To be clear, our shareholder value equation is based on outsized growth combined with return of dollars to shareholders. One of the most important capital allocation priorities is to continue reinvesting in our beer business to keep up with robust demand for our products. Despite initial challenges associated with the build-out of a third brewery in Mexico, we have moved on to other capacity alternatives in the country. Our expansions in Nava and Obregon helped ensure we have adequate production capacity for the medium term and will create much needed redundant capacity that better enables us to manage through unexpected events like we've experienced these past two years. We continue to work with the Mexican government to solidify plans for a new brewery in Southeastern Mexico with adequate water supply and an available talented workforce. Now let's move on to a more fulsome discussion about our performance within the quarter. During the quarter, the Modelo brand family posted depletion growth of 17% for the quarter and single-handedly drove total import share gains in IRI channels on a dollar basis. 2 beer brand in dollar sales in the entire U.S. beer category, Modelo Especial is the only major beer brand growing household penetration and is leading the way as the No. 1 share gainer among high-end brands. Modelo Chelada has become the No. 2 brand family in the Chelada space, posting depletion growth of more than 50% and for the second quarter. Corona Extra continues its growth trajectory as the second fastest share gainer and the No. 1 loved brand in the import category, driven by a return to growth in the on-premise, which currently represents approximately 11% of our beer business volume. In addition to the comments I made earlier about our hard seltzers, I'd like to discuss industry trends and our refreshed approach to this sector of the beer market going forward. In the short to medium term, we believe that there will be consolidation within the hard seltzer/ABA space primarily due to the chaos of SKU and brand proliferation with too many new entrants that don't have the velocity or consumer demand to warrant shelf space. We also believe this subcategory will evolve beyond low-calorie, low-carb offerings, and open up to more distinctive consumer value propositions that include things like more flavor, different alcohol bases, and functional benefits. We've already started to innovate in this way with distinct products like Refresca and Lemonada. We've also discovered that consumers are looking for more robust taste and flavor in their seltzers. As a result, we will be altering the flavor and taste profile of our seltzer portfolio to better align with the changing consumer preferences while also introducing single-serve packages to better serve the growing convenience channel, our largest trade channel. And we have a solid lineup of innovation that we have yet to introduce. We have several great examples of our innovation strategy at work within our wine and spirits portfolio. This business continues to drive growth from recently launched innovations, including Meiomi cabernet sauvignon, Kim Crawford Illuminate, the Prisoner cabernet, and chardonnay, all of which are among the top 10 innovations across high-end wine in IRI channels during the quarter. And our wine and spirits innovation pipeline is ready to go with further consumer-led new products as we head into our peak-selling period, including the expansion of our SVEDKA ready-to-drink platform and the introduction of Woodbridge wine seltzers and box wines. In addition to driving growth through innovation, we're making progress with our core wine and spirits portfolio despite the previously mentioned challenges. We continue to take price to further premiumize our mainstream portfolio as these steps are critical to maintain brand equity and to improve profitability, which will serve our brands well over the long term. Our high-end super premium plus portfolio grew net sales double digits during the quarter. In on-premise channels, our investments are paying off with enhanced wine offerings at major restaurant chains. We're driving in critical emerging channels like three-tier e-commerce and direct-to-consumer, which continued to drive high-end growth, where we're outpacing category performance at key accounts, such as Instacart, Amazon, and Albertsons with the resurgence of online shopping due to the COVID pandemic. For example, Constellation's fine wine share has expanded significantly in the latest 12 weeks due to the robust growth of the Prisoner on Instacart and Robert Mondavi Winery on wine.com. In fact, e-commerce and DTC sales are up nearly three to four times versus 2019, and they comprise roughly 3 to 5% of our business versus 1% pre pandemic. Going forward, we will continue to focus on becoming a category leader in e-commerce and DTC as we believe these channels will make up a significant portion of our mix over time and will continue to be an opportunity for high-end growth. harvest, which is about 70% complete at this point, while our production facilities, wineries, and tasting rooms remain untouched by recent wildfire activity. This quarter, our ventures activities included investments in adaptogen-infused hot water and Aaron Paul and Bryan Cranston's artesanal Dos Hombres mezcal. Hop water is a nonalcoholic calorie-free sparkling water, infused with adaptedgens and new tropics to provide the perfect balance of function and flavor for health-conscious consumers. The nonalcoholic segment of total beverage alcohol grew almost 40% in 2020 in dollar sales through IRI channels. And according to IWSR research, 60% of consumers are switching between nonalcoholic or low alcoholic and full-strength drinks within the same occasion. Dos Hombres is an award-winning handcrafted mezcal brand created by Breaking Bad co-stars who have developed an exceptional liquid that receives frequent praise from both the industry and consumers. The overall U.S. mezcal category grew 14% in 2020 according to IWSR, and super premium mezcal priced above $30 per barrel is projected to be the largest and fastest-growing segment within the category. Moving on to Canopy Growth. We're encouraged by the recent introduction of the cannabis opportunity in Administration Act draft bill, which was introduced by Senators Booker, Wyden, and Schumer in July. More than 90% of Americans are in favor of cannabis legislation for medical purposes and two-thirds of those are in favor of legalizing for recreational use as well. In fact, nearly two out of three Americans already have legal cannabis access as 37 states have legalized for medical use and 18 states for adult use. While we're optimistic about federal legislation within this congress, Canopy is not waiting for this reality to materialize. Canopy's U.S. business grew 91% year over year in their most recent quarter, driven by robust consumer demand for their CBD and CPG products, including Martha Stewart-branded products, quatro beverages, stores and vape products, and BioSteel's new RTDs. business is expected to grow significantly as it benefits from increasing distribution and new product introductions. Once THC permissibility becomes a reality in the U.S., Canopy expects their U.S. business to make a substantially greater contribution to their results. non-THC business with more opportunities in a world post federal permissibility. Overall, we're comfortable with Canopy's progress, and we're looking forward to the growth and legalization prospects for the business. In closing, I'd like to reiterate our main takeaways for this quarter. First, continued strong demand for our core imported beer brands provides a point of competitive strength versus industry peers led by the No. 1 share gainer in the beer category, Modelo Especial, which we feel has ample runway for growth well into the future, given the steadily increasing household penetration rates among non-Hispanic consumers and continued strong velocity. The short-term supply disruption to our imported beer business does nothing to dampen our long-term prospects as we expect to return to more normal inventory levels by the end of Q4, and we're on track to deliver a better-than-expected year for our beer business. Second, we continue to see the hard seltzer and broader ABA space as a meaningful sector within the beer market. Going forward, we plan to focus on competing in this space in ways where we can offer meaningful points of differentiation and unique value to consumers, and we have some upcoming innovation in this space that we're optimistic about. Number three, we continue to see benefits of our wine and spirits premiumization strategy take hold. We're performing well in the higher end of the wine segment, and we continue to strengthen our capabilities in emerging growth channels key to long-term success, such as e-commerce and DTC. Fourth, we continue to enhance our approach to innovation with a more consistent, disciplined, and consumer-led approach focused on high-growth segments aligned with consumer trends to complement our organic growth while developing sustainable products that are incremental to our business at margin-accretive price points. And fifth, and certainly not least, our shareholder value equation continues to be based on outsized growth combined with the return of dollars to shareholders. And let me reiterate, our capital allocation strategy remains unchanged. We remain committed to our goal of returning 5 billion in value to shareholders by the end of fiscal year '23 through a combination of dividends and share repurchases. Our strong operational performance and cash flow generation allowed us to make significant share repurchases in Q2 aligned with our commitment, which contributed to the increase in our earnings per share guidance for the year. At the same time, we remain committed to continuing to reinvest in our business with an emphasis on our beer business to keep up with the robust demand for our products. Q2 certainly reflected yet another strong quarter of marketplace performance for our beer business. Due to continued robust consumer demand for our core beer portfolio, we now expect to exceed our initial, top line, and operating income targets for our beer business. Additionally, our strong cash flow generation enabled us to continue to repurchase shares during the quarter. And through September, we've repurchased 6.2 million shares of common stock for $1.4 billion. As a result, we've increased our full-year fiscal 2022 comparable basis diluted earnings per share target, and we now expect to be in the range of $10.15 to $10.45. This range excludes Canopy equity and earnings impact and reflects the increase in beer operating income guidance and decrease in the average -- in the weighted average diluted shares outstanding based on shares repurchased through September partially offset by an increase in the tax rate for fiscal year 2022. Now let's review Q2 performance and our full-year outlook in more detail, where I'll generally focus on comparable basis financial results. Net sales increased 14%, driven by shipment volume growth of nearly 12% and favorable price partially offset by unfavorable mix. Depletion volume growth for the quarter came in above 7%, driven by the continued strength of Modelo Especial and Corona Extra, as well as the continued return to growth in the on-premise channel. Depletion trends tempered in Q2 versus Q1, driven by out-of-stocks due to ongoing robust consumer demand, as well as lost shipping days for some of our distributors due to severe weather events, including hurricanes and wildfires. We estimate that these factors hampered Q2 growth by approximately two to three points. As Bill mentioned, on-premise volume accounted for approximately 11% of the total beer depletions during the quarter and grew strong double digits versus last year. As a reminder, the on-premise accounted for approximately 15% of our beer depletion volume pre COVID and accounted for only 6% of our depletion volume in Q2 fiscal 2021 as a result of the on-premise shutdowns and restrictions due to COVID-19. Selling days in the quarter were flat year over year and will also be flat in Q3. Wholesaler depletions continued to outpace cases shipped during Q2, resulting in a lower-than-normal distributor inventory on hand at the end of the quarter. To rectify this gap, shipment case volume is expected to exceed depletion case volume throughout the second half of the fiscal year, resulting in a gradual improvement of distributor inventories during Q3 and Q4 as inventories are expected to return to normal levels by the end of the fiscal year. Moving on to beer margins. Beer operating margin decreased 530 basis points versus prior year to 37.2%. Benefits from favorable pricing, mix, and foreign currency were more than offset by unfavorable COGS, increased marketing investments, and higher SG&A. The increase in COGS was driven by several headwinds that include the following: First, a Q2 obsolescence charge of $66 million. As a result of our production constraints earlier in the year, we prebuilt hard seltzer inventory in advance of the key summer selling season based on our best estimates for fiscal year 2022. Due to the overall slowdown in the hard seltzer category in the U.S., some of that growth is not going to materialize in the fiscal year, resulting in excess inventory. Second, increased brewery costs, driven by labor inflation in Mexico, increased headcount, and incremental spend related to capacity expansion. Third, a step-up in depreciation expense, largely due to the incremental 5 million hectoliters at Obregon. And finally, as expected, increased material costs predominantly driven by increased commodity prices and inflationary headwinds on pallets, cartons, and aluminum. These COGS headwinds were partially offset by favorable fixed cost absorption. Marketing as a percent of net sales increased 150 basis points to 9.9 versus prior year as we returned to our typical spending cadence, which is weighted more heavily toward the first half of the fiscal year. As a reminder, marketing spend in the first half of the prior year was significantly muted resulting from COVID-19-related sporting and sponsorship event cancellations and or postponements. Lastly, the increase in SG&A was primarily driven by an increase of approximately $12 million in legal expenses, as well as higher compensation and benefits. As mentioned earlier, we are increasing full-year fiscal 2022 net sales and operating income guidance for our beer business. We are now targeting net sales growth of 9 to 11%, reflecting the strength of our core beer portfolio and pricing actions that are higher than initially planned. Furthermore, we are now targeting operating income growth of 4 to 6%, which implies operating margin in the low to midpoint of our stated 39 to 40% range. Please note that the updated guidance includes all obsolescence charges and legal expenses incurred in the first half of the fiscal year. We continue to expect our gross margin to be negatively impacted for the fiscal year as benefits from price and our cost savings agenda are expected to be more than offset by several cost headwinds. However, the mix and magnitude of these headwinds have changed from our original assumptions presented at the beginning of our fiscal year. First, we're still estimating a significant step-up in depreciation expense, which began to accelerate in Q2. However, some of this depreciation started later in the year versus planned. As such, we are now estimating total beer depreciation expense to approximately $250 million, an increase of approximately $55 million versus last year, or a $10 million decrease versus our original planned estimate. Second, we still expect expect substantial inflationary headwinds across numerous cost components to continue during the second half of our fiscal year as commodity prices continue to rise, specifically across aluminum, diesel, and pallets resulting from a rather volatile inflationary market. And third, due to the growth moderation within the hard seltzer market, as well as lower ACV levels across the category on new items, we do not expect our hard seltzer SKUs to meet originally planned volume expectations, which results in a positive mix benefit versus our original estimate. Conversely, due to the slowdown in the hard seltzer sector, excess inventory resulted in a fiscal year-to-date obsolescence charge of approximately $80 million. Please note that these losses cover our hard seltzer obsolescence exposure and as such, we do not expect to take any additional obsolete charges in the back half of the fiscal year for hard seltzers. From a marketing perspective, we continue to expect full-year spend as a percentage of net sales to land in the 9 to 10% range, which is in line with fiscal 2021 spend of 9.7% of net sales. Looking ahead to Q3. I'd like to remind everyone of the difficult buying overlaps we will encounter as we're facing a 28% and 12% growth comparison for shipment volume and depletion volume, respectively. Additionally, we expect to perform our normal annual brewery maintenance during Q3, which will result in less throughput versus Q2 as we have to shut down production for a few days. As such, we are estimating low single-digit shipment volume growth for Q3. Moving to wine and spirits. Q2 fiscal 2022 net sales declined 18% on shipment volume down 36%. Excluding the impact of the wine and spirits divestitures, organic net sales increased 15%, driven by organic shipment volume growth of nearly 6%, favorable mix and price and smoke-tainted bulk wine sales. Robust mix driven by the Prisoner brand family, Meiomi, and Kim Crawford accounted for approximately nine points of the year-over-year organic net sales growth. Shipments were negatively impacted by port delays for our international brands and route-to-market changes, which also impacted depletions. Depletion volume declined 2% during the quarter and was additionally impacted by the challenging overlap the consumer pantry loading behavior especially for our mainstream brands that experienced robust growth during the beginning of the COVID-19 pandemic. However, as we head into the second half of the fiscal year, we feel as though most of these challenges are behind us and expect shipment volume and depletion volume to generally align in the second half of fiscal 2022. Moving on to wine and spirits margins. Operating margin decreased 620 basis points to 19.7% as mix benefits from the existing portfolio and divestitures combined with favorable price were more than offset by increased marketing and SG&A spend, higher COGS, and margin-dilutive smoke-tainted bulk wine sales. Higher COGS were driven by unfavorable fixed cost absorption and increased transportation costs. These headwinds were partially offset by lower great raw materials and other cost savings initiatives. Keep in mind that we're lapping lower SG&A spend in Q2 fiscal 2021 due to COVID and having smaller business post divestitures, resulting in significant marketing and SG&A deleveraging, impacting operating margins. For full-year fiscal 2022, the wine and spirits business continues to expect net sales and operating income to decline 22 to 24% and 23 to 25%, respectively. This implies operating margin to approximately 24%, which is flattish to prior year on a reported basis, which shows significant margin expansion on an organic basis. Excluding the impact of the wine experience divestitures, organic net sales is expected to grow in the 2 to 4% range. From a Q3 perspective, keep in mind that we are lapping unfavorable fixed cost absorption of $20 million in the prior year resulting from decreased production levels as a result of the 2020 U.S. wildfires. We expect this favorable overlap to be partially offset by a continued increase in transportation costs and incremental unfavorable fixed cost absorption due to the New Zealand frost. Also, we continue to expect marketing and SG&A deleveraging as a result of the wine and spirits divestitures. As such, we expect marketing and SG&A to continue to be a significant drag to operating margins in Q3 fiscal 2022. Now let's proceed with the rest of the P&L. Fiscal year-to-date corporate expenses came in at approximately $117 million, up 7% versus last fiscal year. The increase was primarily driven by higher consulting services and compensation and benefits partially offset by a favorable foreign currency impact. We now expect full-year corporate expenses to approximate $245 million, driven by increase in compensation and benefits. Comparable basis interest expense for the quarter decreased 4% to approximately 96 million versus prior year primarily due to lower average borrowings. We now expect fiscal 2022 interest expense to be in the range of 355 to $365 million. The slight decrease versus our previous guidance reflects early redemption of higher interest rate debt, as well as $1 billion of senior notes issued in July at attractive rates. Our Q2 comparable basis effective tax rate, excluding Canopy equity earnings, came in at 21.8% versus 16.9% in Q2 of last year, primarily driven by the timing of stock-based compensation benefits and a higher effective tax rate on our foreign businesses. We now expect our full-year fiscal 2022 comparable tax rate, excluding Canopy equity and earnings, to approximate 20% versus our previous guidance of 19%. This increase is primarily due to a higher effective tax rate on our foreign earnings than originally estimated. I would also note that we expect stock-based compensation tax benefits to be weighted toward Q4. As a result, we expect our Q3 tax rate to be higher than our full-year estimate at approximately 21%. We also now expect our 2022 weighted average diluted shares outstanding to approximate 192 million, reflecting the impact of our September year-to-date share repurchases previously discussed. Moving to free cash flow, which we define as net cash provided by operating activities less capex. We generated free cash flow of $1.2 billion for the first half of fiscal 2022, which is flat to prior year, reflecting strong operating cash flows offset by an increase in capex. Capex totaled $353 million, which included approximately $295 million of beer capex, primarily driven by expansion initiatives at our Mexico facilities. Our full-year capex guidance of 1 to 1.1 billion, which includes approximately 900 million targeted for Mexican beer operation expansions, remains unchanged. Furthermore, we continue to expect fiscal 2022 free cash flow to be in the range of 1.4 to $1.5 billion. This reflects operating cash flow in the range of 2.4 to $2.6 billion and the capex spend previously outlined. In closing, I want to iterate that while we had our fair share of challenges during the first half of our fiscal year resulting in several puts and takes impacting our results, the fundamentals of our business remain strong, and consumer demand for our products, particularly our imported beer portfolio, remains robust, providing us with strong momentum as we head into the second half of our fiscal year.

constellation brands - updates fiscal 2022 reported basis earnings per share outlook to $0.30 - $0.60; increases comparable basis earnings per share outlook to $10.15 - $10.45. qtrly reported net sales $2,371 million, up 5%. constellation brands - affirms fiscal 2022 operating cash flow target of $2.4 - $2.6 billion and free cash flow projection of $1.4 - $1.5 billion. beer business now expects 9 - 11% net sales growth and 4 - 6% operating income growth for fiscal 2022. sees 2022 wine and spirits ; organic net sales growth 2% - 4%. constellation - wine & spirits business continues to expect fiscal 2022 reported net sales & operating income decline of 22 - 24% & 23 - 25%, respectively.

I'm Charlotte Rasche, Executive Vice President and General Counsel of Prosperity Bancshares. David Zalman will lead off with a review of the highlights for the recent quarter. He will be followed by Asylbek Osmonov, who will review some of our recent financial statistics and Tim Timanus, who will discuss our lending activities, including asset quality. During the call, interested parties may participate live by following the instructions that will be provided by our call moderator, Gary. Before we begin, let me make the usual disclaimers. With the hard work of our entire team, the combination of Prosperity and LegacyTexas continues to bear fruit as reflected in our positive results for the first quarter. Prosperity Bank has been ranked as the number 2 best bank in America for 2021 and has been in the top 10 of Forbes' America's Best Banks since 2010. Our net income was $133.3 million for the three months ending March 31, 2021, compared with $130.8 million for the same period in 2020, an increase of $2.5 million or 1.9%. The net income per diluted common share was $1.44 for the three months ended March 31, 2021, compared with $1.39 for the same period in 2020, an increase of 3.6%. Our annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2021, were a 1.54% return on average assets, 8.6% return on average common equity and 18.43% on average tangible common equity. Our Prosperity's efficiency ratio, excluding net gains and losses on the sale or writedown of assets and taxes, was 41.25% for the three months ended March 31, 2021. We continue to watch expenses but also expect to make prudent capital expenditures to plan for our future needs and increase shareholder value. Our loans at March 31, 2021, were $19.6 billion, an increase of $511 million or 2.7% when compared to $19.127 billion at March 31, 2020, primarily due to a $558 million increase in warehouse purchase program loans. Our linked quarter loans decreased $608 million or 3% from $20.2 billion at December 31, 2020, and that was primarily due to a $570 million decrease in the Warehouse Purchase Program loans, more of a seasonal issue. At March 31, 2021, the company had $1.1 billion in PPP loans. At March 31, 2021, our oil and gas loans totaled $503 million, net of the discount and excluding the PPP loans totaling $142 million compared with oil and gas loans of $718 million net of the discount at March 30, 2020. This represented a decrease of $214 million in oil and gas loans year-over-year, most of which was planned. Our deposits at March 31, 2021, were $28.7 billion, an increase of $4.9 billion or 20.7% compared with $23.8 billion at March 31, 2020. Our linked quarter deposits increased $1.4 billion or 5.1%, 20.5% annualized from $27.3 billion at December 31, 2020. Deposits continue to grow as the government stimulus payments and other assistance continues. Consumers are now spending more, and we hear from restaurant and other business owners regarding the strength of their business. The PPP loans also contributed liquidity to businesses, some of which, such as hotels, hospitality services, restaurants were in dire need of the funds. Our year-over-year nonperforming assets decreased 34.2%. Our nonperforming assets totaled $44.2 million or 15 basis points of quarterly average interest-earning assets at March 31, 2021, compared with $67.2 million or 25 basis points of quarterly average interest-earning assets at March 31, 2020. The economy is doing well and should continue to improve as more and more people are vaccinated and more businesses reopen. Texas and Oklahoma both have bright futures. According to the Dallas Federal Reserve, Texas now has the fastest-growing population in the nation. Further, the Dallas Fed Reserve is projecting over 6% job growth, meaning over 700,000 new jobs in Texas for 2021, and Texas is expected to outperform most of the other states for the next three years. Companies continue to move to Texas with HP and Oracle announcing headquarter moves and other companies such as Tesla and such as Tesla and Samsung announcing a major expansion into Texas. Oklahoma is also projected to have population growth for 2021 and has seen expansion of many of its large businesses operating in the state, including Boeing, American Airlines, Costco and Amazon. Consumer spending in Oklahoma is above early 2020 levels and retail job additions and new housing permits are higher than the average U.S. rate. We are carefully monitoring office building, hospitality and oil and gas loans but continue to participate in these areas with experienced borrowers that can withstand the ups and downs of their industries. As bank's stock prices have increased, there are more conversations regarding mergers and acquisitions. I believe you will see more transactions throughout the year unless new tax rates are introduced, which may change the market. I expect that net interest margins will continue to decline. Regulatory burden will increase under the current administration, and technology will continue to be ever-changing, expensive and increasingly prevalent, which is a recipe for more consolidations. We have a strong team and a deep bench of prosperity, and we'll continue to work hard to improve everyone's quality of life and shareholder value. Let me turn over our discussion to Asylbek Osmonov, our Chief Financial Officer, to discuss some of the specific financial results we achieved. Net interest income before provision for credit losses for the three months ended March 31, 2021, was $254.6 million compared to $256 million for the same period in 2020, a decrease of $1.4 million or 0.6%. The current quarter net interest income includes $16.3 million in fair value loan income and $13 million in fee income from PPP loans. The net interest margin on a tax equivalent basis was 3.41% for the three months ended March 31, 2021, compared to 3.81% for the same period in 2020 and 3.49% for the quarter ended December 31, 2020. Excluding purchase accounting adjustments, the net interest margin for the quarter ended March 31, 2021, was 3.19% compared to 3.36% for the same period in 2020 and 3.26% for the quarter ended December 31, 2020. The net interest margin has been impacted by an influx of excess liquidity since the start of the pandemic. Excess liquidity during the first quarter of 2021 impacted the net interest margin by five basis points compared to the quarter ended December 31, 2020, and by 15 basis points compared to the same period in 2020. Noninterest income was $34 million for the three months ended March 31, 2021, compared to $34.4 million for the same period in 2020 and $36.5 million for the quarter ended December 31, 2020. Noninterest expense for the three months ended March 31, 2021, was $119.1 million compared to $124.7 million for the same period in 2020. On a linked-quarter basis, noninterest expense decreased $1.1 million from $120.2 million for the quarter ended December 31, 2020. For the second quarter of 2021, we expect noninterest expense of $118 million to $120 million. The efficiency ratio was 41.3% for the three months ended March 31, 2021, compared to 42.9% for the same period in 2020 and 40.8% for the three months ended December 31, 2020. During the first quarter of 2021, we recognized $16.3 million in fair value loan income. This amount includes $6.3 million from anticipated accretion and $10 million from early payoffs. We estimate fair value loan income for the second quarter of 2021 to be around $4 million to $5 million. This estimate does not account for any additional fair value loan income that may result from early loan paydowns or payoffs. Also, during the first quarter 2021, we recognized $13 million in fee income from PPP loans, majority from the forgiveness of the first round PPP loans. As of March 31, 2021, the first round of PPP loans had a remaining deferred fee balance of $9.4 million, we anticipate more than half of this remaining balance will be recognized in the second quarter 2021 due to loan forgiveness. Regarding the second round of PPP loans, as of March 31, 2021, we recorded $530.7 million in loans and generated about $24 million in deferred fees, which will be recognized over a five year period or until the PPP loan is forgiven. The bond portfolio metrics at 3/31/2021 showed a weighted average life of 3.9 years and projected annual cash flows of approximately $2 billion. Our nonperforming assets at quarter end March 31, 2021, totaled $44.162 million or 22 basis points of loans and other real estate compared to $59.570 million or 29 basis points at December 31, 2020. This represents approximately a 26% decline in nonperforming assets. The March 31, 2021 nonperforming asset total was comprised of $43.338 million in loans, $362,000 in repossessed assets and $462,000 in other real estate. Of the $44.162 million in nonperforming assets, $9.505 million or 22% are energy credits, all of which are service company credits. Since March 31, 2021, $844,000 in nonperforming assets have been removed. Net charge-offs for the three months ended March 31, 2021, were $8.858 million compared to $7.567 million for the quarter ended December 31, 2020. No dollars were added to the allowance for credit losses during the quarter ended March 31, 2021. The average monthly new loan production for the quarter ended March 31, 2021, was $645 million. This includes an average of $177 million in PPP loans per month. Loans outstanding at March 31, 2021, were approximately $19.6 billion, which includes approximately $1.1 billion in PPP loans. The March 31, 2021 loan total is made up of 39% fixed rate loans, 36% floating rate loans and 25% that reset at specific intervals. Gary, can you please assist us with questions?

prosperity bancshares q1 earnings per share $1.39. q1 earnings per share $1.39.

With me is Bruce Caswell, President and Chief Executive Officer; and Rick Nadeau, Chief Financial Officer. Please remember that such statements are only predictions. Actual events and results may differ materially as a result of the risks we face, including those discussed in Item 1A of our annual report on Form 10-K. Management uses this information in its internal analysis of results and believes this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. And with that, I'll hand the call over to Rick. Revenue for the first quarter was in line with our expectations. Our revenue growth was principally driven by new work related to the COVID pandemic response where Maximus continues to play an integral role in contact tracing, disease investigation, vaccination support, unemployment insurance programs and other key initiatives. For the first quarter of fiscal 2021, our COVID response work contributed approximately $160 million in revenue. As expected, top and bottom line growth were offset by ongoing impacts of the global pandemic tied to program changes on volume-based contracts that were implemented at the direction of our customers. As we discussed last quarter, these changes, including halting Medicaid redeterminations in the United States, are designed to ensure that beneficiaries have uninterrupted access to vital government benefits during this global health crisis. Total company operating margin was 9.3% for the first quarter of fiscal 2021. Diluted earnings per share were $1.03 per share. Both operating margin and earnings were in line with our expectations with some variability by segment. Our operations outside the United States delivered results favorable to our expectations, which offset lower operating income from the U.S. Federal Segment due to the timing of finalizing a contract which will now be recorded in the second quarter. Let me review segment financial results in our typical order starting with U.S. Services. First quarter revenue in the U.S. Services Segment increased 23.3% to $384.9 million. While revenue growth was driven by an estimated $114 million of COVID response work, the operating margin was depressed by temporary program changes and lower revenue from performance based contracts as a result of the global pandemic. Operating margin for the U.S. Services Segment was 16% for the first quarter. As discussed last quarter, we continue to experience a significant revenue and profit headwind resulting from lower volumes on some of our largest Medicaid programs. As a reminder, many state customers are currently utilizing enhanced U.S. federal matching funds for Medicaid. However, they must adhere to certain conditions, including a pause in Medicaid redeterminations to ensure beneficiaries have continued access to vital healthcare services during a global public health crisis. Those redeterminations are a significant level of activity within certain programs we operate. Our full year expectations for the U.S. Services Segment remain unchanged with a 16.5% to 17.5% full year margin predicted. Revenue for the first quarter of fiscal 2021 for the U.S. Federal Services Segment increased 10.6% to $405.2 million. The Census contract contributed $60 million, which was $10 million less than the prior year. Excluding the Census contract, organic growth for this segment was 13.5% and driven principally by an estimated $46 million of revenue from COVID response work as we continue to provide needed support to government in responding to the pandemic. This includes work with the IRS supporting the Cares Act, which, as a reminder, is the first time the IRS has used contracted agents on this large of a scale. The U.S. Federal Services Segment had approximately $4 million of revenue and profit shift out of the first quarter due to a delay in executing a contract. It has been signed, and we will record the benefit in the second quarter of fiscal 2021. The operating margin was 7.5%, which was slightly short of our expectations for a strong first quarter in this segment. Our full year expectations for the U.S. Federal Services Segment remain the same with a 6% to 7% full year margin predicted. Looking to the second quarter, including the aforementioned $4 million of revenue and profit we will recognize, the segment's margin is expected to step down. This illustrates how we continue to have more overall variability in results due to the pandemic. We are pleased to have secured COVID-response work to backfill some of the temporary shortfalls created by reduced volumes, revenue and profit from accretive performance-based contracts. Revenue for the first quarter of fiscal 2021 for the Outside the U.S. Segment increased 11.5% to $155.4 million. Organic growth, excluding the effects of currency, was at 4.8%. Operating income for the segment in the first quarter of fiscal 2021 was positive $4.5 million for an operating margin of 2.9%. The better-than-expected results for the quarter was primarily due to job placement activities in Australia, driven by a seasonal spike in demand for qualified job seekers. As Australia started to emerge from the pandemic during our first quarter, employers needed to quickly fill many retail and travel-related jobs during the busy holiday and travel season. The Australian team did an extraordinary job in successfully managing this influx of demand, but we view this seasonal spike as unique to the first quarter of fiscal 2021. We continue to see strong demand for employment services in all of our international operations. We have had positive developments since our last earnings call related to increasing demand and rising volumes for employment services. We anticipate that volumes from current programs, most notably in Australia, and supplemented by new work, will drive revenue growth in the second half of fiscal 2021. It is important to note that the new work consists of outcomes-based arrangements for employment services. They are designed to ensure that contractors can be held accountable and incentivized to achieve the job placement and retention outcomes that matter to government. This new employment services work drives our revenue estimates upward, but these programs are expected to generate losses in their early stages. However, we target operating margins within our desired corporate average over the life of such programs. We presently estimate that these start-ups will put the Outside the U.S. Segment in a loss position in the second quarter with steady improvement through the remainder of the year. We now expect that the segment will be approximately breakeven for fiscal 2021. Maximus enjoys a long history, strong reputation and demonstrated success in delivering employment services. We believe the investment required will position us for favorable economics over the life of the contracts, which outweighs the temporary adverse impact in profit for the remainder of fiscal 2021. We believe such programs are a good avenue to create substantial long-term shareholder value. Let me turn to cash flow items and the balance sheet. We had no draws on our corporate credit facility at December 31, 2020, and $132.6 million of cash and cash equivalents. Cash from operations and free cash flow of $98.1 million and $89 million, respectively, were strong and contributed to our already strong balance sheet. DSO was 75 days at December 31, 2020, compared to 77 days at September 30, 2020. Let me touch briefly on capital allocation. While we generally operate under an essential provider designation, we remain aware of budget pressures impacting our customers. However, with our corporate credit facility and the aforementioned strong cash flows and balance sheet, liquidity is not a concern. We continue to have a bias toward M&A as a means to drive long-term organic growth. Our M&A program continues to evaluate prospects while we remain prudent stewards of capital and selective in our evaluations. Our strong balance sheet and good cash from operations provides us good access to capital to fund acquisitions. We remain committed to future quarterly cash dividends and share repurchases will continue to be made opportunistically. While it is still early in the year, recent awards, scope increases and contract extensions have provided us with cautious optimism as we consider our full year guidance. As a result of these positive developments, we are raising our full year guidance for fiscal 2021. For the full year, we expect revenue will now range between $3.4 billion and $3.525 billion for fiscal 2021, driven by new work in support of government's ongoing response to COVID. Additionally, we expect diluted earnings per share will range between $3.55 and $3.75 for fiscal 2021. Our fiscal 2021 cash from operations are projected to now be between $350 million and $400 million and free cash flow between $310 million and $360 million. Our expectations for our effective income tax rate is between 25.75% and 26.50% and for weighted average shares to be between 62.1 million and 62.2 million. As we have long said, we often experience fluctuations in our quarterly financial results, which has only been exacerbated by the pandemic. However, the management team aims to provide as much transparency into our work as reasonably possible. So based on what we know today, we still expect a decrease in revenue and earnings for the second quarter of fiscal 2021 compared to the first quarter. Current second quarter consensus estimates show revenue of $773 million and diluted earnings per share of $0.73. At the present time, we expect to be above consensus revenue and earnings estimates for the second quarter. Consequently, fourth quarter consensus revenue of $875 million and diluted earnings per share of $1.02 are above our current expectations. While the new COVID-response work is providing a short-term positive tailwind, it has shorter periods of performance than our core contracts. As we have cautioned previously, there is no assurance that the tailing off of the positive impacts of the COVID-response work will coincide with the return of our core contracts to previous volume and performance levels. Our bottom line continues to be somewhat tempered by unfavorable headwinds related to the pandemic and the temporary changes on mature core programs, most notably in the United States and United Kingdom. The result has been a reduction in accretive revenue, which continues to temper operating income margins and diluted earnings per share. We anticipate that as we emerge from the pandemic, many of these programs will begin to return to historical volume levels. Factors such as the end of the Public Health Emergency declaration in the United States and when we resume face-to-face assessments in the United Kingdom are particularly important to the pattern of expected recovery. The effects of budget challenges, further relief packages and other changes in policies or legislation are some, but not necessarily all, factors that can impact our assumptions for fiscal 2021 and beyond. I would like to end by saying that Bruce and I are proud of the team at Maximus for remaining on track to deliver solid performance this fiscal year. Following the outbreak of COVID, there were many unknowns that we had to work through. Unknowns remain, and we are not free from the impacts of the pandemic, but we have a solid footing, which gave us the confidence to raise guidance. Last month, Maximus announced the planned retirement of our friend and trusted colleague, Rick Nadeau. David Mutryn, Senior Vice President of Finance, will assume the role of CFO effective December 1, 2021. I look forward to working with both Rick and David over the next nine months as we continue to execute our corporate strategy. With the election of President Biden, we're cautiously optimistic regarding the stated policy initiatives from the administration and the potential favorable tailwinds that may be created for companies like Maximus. The administration has already taken actions to increase access to affordable insurance for Americans through the Affordable Care Act and Medicaid. Over the course of the administration, we will likely see a meaningful increase in funding for social welfare programs and, of course, public health programs. Improving access to affordable healthcare is a top priority of the Biden administration, and the President has advocated building upon the Affordable Care Act, among other measures, to broaden coverage options for Americans. Additionally, as we navigate through the pandemic, we believe we will see further policy initiatives that strengthen the public health infrastructure and a corresponding effort to more broadly support vulnerable populations. President Biden has already expressed intent to tackle these challenges, and indeed, many of his early executive orders look to expand the public health workforce to provide vital services to individuals. While it's still early days in the Biden administration, we're cautiously optimistic that the areas we have seen emphasized thus far will be reflected in subsequent budget and legislative priorities that set the stage for capitalizing on opportunities to partner with government in helping to achieve their policy initiatives. Our COVID response work is a prime example of the demonstrated value of our services and the relationships we've developed with our clients. In a time of unprecedented challenges, we are grateful to have earned the opportunity to provide needed assistance. These contracts have served as a revenue driver, offsetting some of the unfavorable impacts on operations that are experiencing a pandemic-related temporary slowdown or pause. Initially, our COVID work centered around more immediate pandemic-driven needs, such as contact tracing, disease investigation and unemployment insurance programs. Our work has expanded as government demand has increased into new areas. We launched efforts to support states in responding to public questions about vaccination registration, scheduling and administration quickly, efficiently and equitably. We have hired several thousand employees to support these state and local efforts. At the federal level, as you know, we also operate the CDC help line, known as CDC Info. We recently added another 150 individuals as we scale up our operations yet again to answer questions regarding vaccinations. Supporting several states and the CDC, we are the most experienced government partner in the market to provide vaccine administration citizen services. Additionally, our U.S. Federal Services Segment scaled up to 3,200 agents from 1,500 to support the IRS with the next round of the economic incentive payments. Further, in order to improve the user experience and drive efficiency, we implemented our interactive virtual agent system in response to the increased demand. As Rick noted, we are also experiencing increased demand for our employment support services around the globe. The economic impacts of the global pandemic have left many unemployed and in need of vital support in finding work. It's important to remember that the pace at which different countries are emerging from the pandemic varies widely. Some countries have progressed further in managing the spread of the pandemic and are now turning their attention to tackling the many residual challenges, including the economy and unemployment. Maximus has a proven track record in delivering employment services and an earned reputation as a trusted long-term partner who delivers outcomes that matter. Our continued investments support our position as a partner of choice over the long term, outweighing any temporary and short-term profit impacts in fiscal year 2021. While the COVID work itself is comparatively short-term in nature, crisis support itself has a longer trajectory. While this pandemic was certainly unprecedented, this is not our first nor our last call to action in a time of public health or economic crisis. We will continue to be there to support our clients and citizens in times of need with critical services and solutions. Our work is portable, adaptable from agency to agency and department to department, whether it's the IRS, CDC, FEMA, state health departments or others around the world. We adapt from crisis to crisis, whether a global health pandemic, a natural disaster or economic challenges. Along with the launch of Maximus Public Health, we view our capabilities in contingency planning for our government customers and the rapid implementation of citizen assistance services as a core competency and elemental to the long-term relationships that underpin our business. Looking outside of the pandemic, I have previously talked about our solutions that are authorized under the Federal Risk and Authorization Management Program, or FedRAMP. Our FedRAMP certifications meet the most stringent security requirements of federal agencies as we aim to deliver innovative and cost-effective cloud-based solutions that support mission objectives and provide the highest quality of citizen services, thereby transforming the user experience. We fielded a survey of government technology leaders across federal, state and local agencies to gain insights about where agencies are in their cloud adoption journey and how they perceive the use of FedRAMP authorized cloud solutions to support their modernization and transformation initiatives. The vast majority of respondents recognized benefits from moving to a FedRAMP authorized solution beyond adhering to mandates. This survey further affirmed our solid positioning to provide a range of FedRAMP secured cloud solutions as well as our clients' demand for this service. I will now turn to new awards and pipeline as of December 31. For the first quarter of fiscal 2021, signed awards were $594 million of total contract value at December 31. Further, at December 31, there were another $1.14 billion worth of contracts that had been awarded but not yet signed. Let's turn our attention to our pipeline of addressable sales opportunities. Our total contract value pipeline at December 31 was $31.6 billion compared to $33.0 billion reported in the fourth quarter of fiscal 2020. Of our total pipeline of sales opportunities, 71.1% represents new work. I want to reiterate the continued difficulty in predicting the impact that the global health pandemic may have on our pipeline, timing of new work and return to previous operational levels. However, our strong reputation, flexibility and agility has cemented our position as a go-to partner for government. We have navigated administration transitions for decades, and we firmly believe that the foundation is laid for continued opportunities to assist governments through these extraordinary times. I wanted to wrap up my comments today reflecting on the events and protests that occurred in January at the U.S. Capitol in Washington, D.C. and in other areas of the country. Like many of you, I was shocked and saddened by these events. Maximus engages in the bipartisan political process in order to better understand our government clients' long-term goals. Our Board's Nominating and Governance Committee has oversight of the company's policies pertaining to political contributions and compliance. We remain committed to the fundamental principle of our engagement in the political process, which is, and will continue to be, to never support or fund candidates or elected officials who encourage or support violence against the Government of the United States. The macro trends for our business remain unchanged. As the pandemic has underscored, governments around the world need better solutions to deliver on policy priorities that can change rapidly. Social welfare programs that reflect long-term societal commitments and priorities, increasingly face rising demand, shifting demographics and unsustainable program costs. Maximus is well positioned to address these challenges and be a transformative partner. We offer scalable, cost-effective and operationally efficient services for a wide range of government programs. We continue to believe our portfolio mix of core business, new adjacencies and new growth platforms will allow us to achieve a healthy growth trajectory for years to come. And with that, we will open the line for Q&A.

q1 earnings per share $1.03. raises fiscal 2021 guidance due to covid-response work. fiscal 2021 revenue expected to range between $3.400 billion and $3.525 billion. sees fiscal 2021 diluted earnings per share to range between $3.55 and $3.75 per share. fy cash from operations are expected to range between $350 million and $400 million. sees fy free cash flow between $310 million and $360 million.

I'm very proud of our accomplishments in what has been an unprecedented and challenging environment over the past year and a half. I look forward to further collaboration as we enter fiscal 2022 with a strengthened operating profile and some very new and exciting opportunities in front of us. We ended fiscal 2021 with strong fourth quarter results and solid execution on our growth strategy. At the Electronics segment, approximately two-thirds of the 63% year-on-year revenue increase in the fourth quarter reflected organic growth with continued broad-based geographical recovery, including increased demand for relays in solar and electric vehicle applications. As reflected in our backlog trends, we are continuing to see strong demand across many of our product lines and all geographies at Electronics. Our Scientific segment also had a strong quarter with solid revenue and operating income growth year-on-year. We also have an active pipeline for new product development at Scientific and recently received our first product patent in this segment, which I will discuss later in the call. At the Engraving segment, revenue increased approximately 16% year-on-year, reflecting a favorable geographic mix, project timing and increased soft trim product demand. Execution on our portfolio transformation strategy has strengthened both Standex's operating performance and strategic positioning as we further expand our end market focus and introduction of new products. From a financial standpoint, all the segments are focused around high quality businesses that optimize our growth and margin profile. Total Company backlog realizable in under one year increased 19% sequentially in fourth quarter fiscal 2021, with strength in Electronics, Specialty Solutions and Engineering Technologies. On a consolidated basis, we reported an adjusted operating margin of 12% in fiscal 2021, representing a 90 basis point increase year-on-year, with our fourth quarter margin of 13.3%, the highest quarterly margin Standex has ever reported. The reshaping of our portfolio has also enabled us to accelerate our investment in resources to aggressively pursue opportunities in end markets that have healthy growth prospects such as electric vehicles, renewable energy and smart grid. Our strength and competitive advantages in these markets drive innovative product solutions, which leverage our technical and applications expertise and resonate with our customers. For example, we've been partnering with a major global energy company on a multiyear development effort and have recently delivered prototype modules to support projects in the renewable energy sector. The potential to scale production to support this project and to commercialize other exciting and innovative organic growth opportunities throughout the Company has reached a level that requires executive oversight. It marks another step in our journey toward becoming a high performing industrial operating company. Last night, we announced the creation of a Chief Innovation and Technology Officer role in response to these types of new end market and growth opportunities on which we plan to capitalize. We are promoting Flavio Maschera, President of Engraving, to this new innovation and technology role, which will also be a member of the Standex Corporate Executive team. Flavio joined our Engraving segment in July 2006 as VP of Europe and has led our efforts into successfully transforming the Engraving segment into a global texturizing business. He has also championed growth laneways into our [Phonetic] performance services and expanded into the growing soft trim tool market. His innovative approach has enabled Engraving to maintain its position as the technology leader globally. Flavio's depth of experience in innovation and new technology development and strategic insights will be a tremendous asset Companywide. I am also pleased to announce that Jim Hooven will step into the role of President of the Engraving segment. Jim joined Standex in February 2020 as Vice President of Operations and Supply Chain. In September 2020, Jim was also -- also took on responsibilities as Interim Vice President and General Manager North America for the Engraving segment while maintaining his role as VP of Operations and Supply Chain for Standex. Under Jim's guidance, the North American business has made steady progress strengthening operational excellence processes, developing talent and achieving results. We have also begun a process to address Jim's prior role of Corporate VP of Operations and Supply Chain. Underpinning our growth strategy is an active pipeline of productivity and efficiency initiatives. This is enabling us to mitigate the impact of supply chain issues and material and wage inflation which is affecting the broader industrial sector. A few of our actions which I wanted to highlight include continued lean initiatives implemented across our production plant footprint and enhanced strategic sourcing to drive direct material synergies. In addition, our focus on mitigating material inflation and improving our cost position in the Electronics segment through changes in reed switch production and material substitution is expected to be substantially complete by the end of fiscal 2022. We are in a very strong financial position to pursue organic and inorganic growth opportunities given our significant financial flexibility as a result of our strong balance sheet and liquidity position and consistent cash flow generation. Ademir will discuss our financial performance in greater detail later in the call. As far as our outlook, in fiscal 2022, we expect stronger financial performance reflecting positive demand trends, the impact of additional productivity initiatives and our significantly strengthened operating profile. In the first quarter of fiscal 2022, we expect a slight decrease in revenue, but a similar operating margin compared to fourth quarter fiscal 2021. Revenue increased $28 million or 62.7% year-on-year, reflecting a 42.2% organic growth rate or an approximate $19 million increase. The Renco acquisition contributed approximately $7.3 million in revenue and continues to be a highly complementary fit with our magnetics portfolio. Our Electronics operating margin increased to 21.6% compared to 13.1% in the year ago quarter, reflecting operating leverage associated with revenue growth and productivity initiatives, partially offset by increased raw material cost. The expansion of the Electronics segment to new markets such as electric vehicles and renewable energy as well as the impact of prior acquisitions like Agile Magnetics are adding to our prospects. We continue to leverage the sales synergies of our Agile acquisition in markets such as semiconductors and through the expanded capabilities it has provided us. In particular, NBOs contributed in excess of $15 million in fiscal 2021 compared to our prior estimate of $12 million on our third quarter earnings call. Our pipeline remains healthy, with total segment backlog realizable under a year increasing approximately $22 million or 23% sequentially in the fourth quarter as we continue to see strong growth in reed switch-based products in magnetics applications. Sequentially, at the Electronics segment, we expect a slight increase in revenue and a moderate increase in operating margin in first quarter fiscal 2022, reflecting continued end market strength in reed switch and relay products as well as further growth in the North American magnetics market. Revenue increased approximately $5 million or 15.9% year-on-year with operating income growth of approximately $3.1 million or 119% year-on-year, reflecting a favorable geographic mix, timing of projects and increased soft trim product demand. Operating margin increased to 15.4% compared to 8.1% in the year ago quarter, reflecting the volume growth, combined with segment productivity and our cost initiatives. With our GS Engineering acquisition now integrated, we have further globalized the business and leveraged its technological advantages, resulting in a very strong backlog for soft trim demand as the auto industry focuses on interior comfort of vehicles and increasingly replaces leather with sustainable materials. Laneway sales at Engraving were approximately $14.8 million, representing a 9% increase sequentially and greater than 50% increase year-on-year, including growth in software tools, laser engraving and tool finishing. Sequentially, in first quarter fiscal 2022, we expect a slight to moderate revenue and operating margin decrease, primarily due to the timing of texturization projects and regional mix. We do expect continued strength in soft trim demand. Turning to slide 6, the Scientific segment. Revenue increased approximately $8 million or 62.7% year-on-year, reflecting positive trends in pharmacy chains, clinical laboratories and academic institutions, primarily attributable to demand for COVID-19 vaccine storage. Operating income increased 48.7% year-on-year, reflecting the volume increase, balanced with investments to support future growth opportunities and higher freight costs. At the Scientific segment, we have added to our engineering and product teams to further develop a growing pipeline of potential new products. Pictured on slide 6 is our recently patent-approved controlled auto defrost refrigerator solution or CAD designed for safe and effective frozen medication storage for end markets such as pharmacies and labs and clinics. This is the first product in the marketplace which enables auto defrost while guaranteeing vaccines remain below critical temperatures, thus eliminating the need to manually defrost the freezer. The development of this product is reflective of our focus on increasing the exposure to proprietary technologies and growing our intellectual property portfolio. At Scientific, in fiscal quarter one (sic) 2022, we expect a moderate sequential decrease in revenue and a slight decline in margin, reflecting lower demand for COVID-19 vaccine storage and refrigeration and increased freight costs, partially offset by price and productivity actions. Turning to the Engineering Technologies segment on slide 7. Revenue decreased $5.7 million or 21.8% and operating income was $1.1 million lower, representing a 25.6% decrease year-on-year. The decreases primarily reflected the absence of the recently divested Enginetics business and the economic impact of COVID-19 on the segment's end markets. On a sequential basis, operating margin increased to 15.1% compared to 6.2% in third quarter, reflecting a continued broad-based sequential end market recovery and favorable mix, complemented by ongoing productivity initiatives. Sequentially, we expect a slight to moderate decrease in revenue and operating margin, reflecting the timing of projects. We are entering fiscal 2022 with an active new business pipeline, particularly in the space and aviation sectors. Highlighted on slide 7 are numerous aerospace and space platforms we are aligned with, reinforcing the strength and appeal of our spin forming capabilities which continue to resonate with customers. Specialty Solutions' revenue increased approximately $1.7 million or 7.1% as its end markets, particularly in foodservice and specialty retail, continued to recover. Operating income decreased approximately $700,000 or 18.7%. This reflected the impact of work stoppages which have since been resolved and material inflation, which we are seeking to recover through pricing actions. Highlighted on slide 8 is our Procon-designed next-generation helical gear pump for food and beverage applications such as coffee/espresso milk forming, syrup and reverse osmosis. We believe this product is approximately 20% more energy efficient than current gear pump technology with a longer service life. In first quarter of fiscal 2022, we expect a slight sequential increase in revenue and operating margin, primarily due to growth in merchandising and the Procon pumps business, partially offset by the impact of a prior work stoppage that has been resolved. First, I will provide a few key takeaways from our fiscal fourth quarter 2021 results which exhibited strength across key financial metrics. We had solid financial performance in the fourth quarter as both revenue and adjusted operating margin increased sequentially and year-on-year. From a revenue perspective, four of our five segments reported year-on-year growth, led by the Electronics and Scientific segments with total organic growth over 20% as compared to fiscal fourth quarter 2020. In addition, from a margin standpoint, adjusted operating margin of 13.3% is the highest quarterly margin that Standex has ever reported, reflecting successful leverage on our volume growth, continued buildout our price and productivity actions, as well as the impact of the strategic portfolio actions David highlighted in his comments. Our cash generation and liquidity metrics also continue to be very strong. In the fourth quarter, we reported free cash flow of approximately $26 million or 36% year-on-year increase. In addition, we generated a free cash flow to GAAP net income conversion rate well in excess of 100% in fiscal 2021. Our net debt to EBITDA, interest coverage ratio and available liquidity, all improved sequentially. We're entering fiscal 2022 with a very strong financial profile, supported by positive demand trends, our active pipeline of productivity and efficiency actions and our expectation for continued solid cash generation. On a consolidated basis, total revenue increased 26.6% year-on-year from $139.4 million to $176.4 million. The revenue increase primarily reflected strong organic growth across most of our segments, positive contribution from the Renco acquisition and favorable FX, partially offset by the divestiture of the Enginetics business in the third quarter of fiscal 2021. Organic growth was 20.5% while Renco contributed approximately 5.2% and FX contributed 3.5% increase to the revenue growth. On a year-on-year basis, our adjusted operating margin increased 460 basis points to 13.3%, reflecting operating leverage associated with revenue growth, readout of price and productivity actions and profit contribution from Renco, partially offset by the impact of work stoppages in the Specialty Solutions segment. In addition, our tax rate was 20.7% in the fourth quarter of 2021 compared to 26.7% in the fourth quarter of fiscal 2020. We expect a tax rate in the 24% range in fiscal 2022 with a slightly higher tax rate in the first quarter. Adjusted earnings per share were $1.40 in the fourth quarter of 2021 compared to $0.65 a year ago. Our solid working capital performance and execution was evident on several fronts. We generated free cash flow of $26.4 million in fiscal fourth quarter of '21 compared to free cash flow of $19.5 million a year ago. In fiscal 2021, we achieved 118% free cash flow to GAAP net income conversion, inclusive of approximately $8.1 million in pension payments made during the year. Standex had net debt of $63.1 million at the end of June compared to $82.1 million at the end of March, reflecting free cash flow of approximately $26.4 million, partially offset by $5 million of stock repurchases, along with dividends and changes in foreign exchange. Net debt for the fourth quarter of 2021 consisted primarily of long-term debt of $199.5 million, and cash and cash equivalents were $136.4 million with approximately $92 million held by foreign subs. Our liquidity metrics reinforce our significant financial flexibility. Standex's net debt to adjusted EBITDA leverage ratio was approximately 0.57 at the end of the fourth quarter, with a net debt to total capital ratio of 11.1%. The Company's interest coverage ratio increased sequentially from 11.4 times to 13.1 times at the end of the fourth quarter. We had approximately $245 million of available liquidity at the end of the fourth quarter and continue to repatriate cash with $6.8 million repatriated during the quarter. In total, we repatriated approximately $38 million in cash in fiscal 2021, slightly ahead of our initial expectations. From a capital allocation perspective, we repurchased approximately 50,000 shares for $5 million in the fourth quarter. In fiscal 2021, we repurchased a total of 267,000 shares at an average price of approximately $79 per share. There is approximately $22 million remaining on our current repurchase authorization. We also declared our 228th consecutive quarterly cash dividend on July 22 of $0.24 per share. Finally, we expect capital expenditures between $25 million and $30 million in fiscal 2022 compared to $21.5 million in fiscal 2020. The transformation of our portfolio around businesses with attractive growth and margin profiles, as well as strong customer value propositions is contributing to our solid performance. We are investing our resources in end markets with healthy growth prospects and are favorably aligned with global trends which leverage our technical and applications expertise. We have an active funnel of productivity and efficiency initiatives focused on strengthening our market leadership and cost positions, which we believe will mitigate to some extent some of the near-term industry headwinds such as raw material price increases and supply chain issues. Our financial strength and consistent free cash flow generation support a disciplined and opportunistic approach to capital allocation. In fiscal 2022, we expect stronger financial performance, reflecting positive demand trends, additional productivity initiatives and significantly strengthened operating profile.

qtrly diluted earnings per share - adjusted $1.40. qtrly net sales $176.4 million versus $139.4 million. in fiscal q1 2022, expects a slight decrease in revenue, but similar operating margin compared to fiscal q4 2021.

Our actual results could differ materially from these statements due to many factors discussed in our latest 10-K and other periodic reports. We believe these measures are important indicators of our operations as they exclude items that may not be indicative of results from our ongoing business operations. We also think the adjusted measures will provide you a better baseline for analyzing trends in our ongoing business operations. In difficult times like the ones we're living through today, it is important that we remain true to our guiding principles. Whirlpool's 110 year history is rooted in our value-driven commitment to our shareholders, employees, consumers and communities in which we operate. In 2020, we faced unprecedented challenges due to the ongoing COVID-19 pandemic. Yes, we remained firm in our commitment to all of our stakeholders. The health and well-being of our employees was and it remains our top priority. We increased safety measures at all manufacturing plants and provided additional resources to care for families and those who fell ill. We established business continuity plan to ensure our consumers received our products to improve life at home with their families. And we continue to support our global communities by procuring medical supplies, making donations and engineering critical equipment for front-line workers. In parallel, we made significant advancement toward our sustainability target, resulting in ratings improvements and external recognition. Most notably, we received a low-risk rating from Sustainalytics, a year-over-year improvement driven by our outstanding energy and water efficiency programs and our strong global product safety systems. And we were named to the Dow Jones Sustainability North America Index in recognition of our long-standing sustainable business practices. 2020 marked our 14th time on the list in the last 15 years. I'm very proud of the way our employees have managed through this pandemic. It is ultimately the agility of our organization and the resilience of our employees that allowed us to deliver record results in 2020. Now turning to our fourth quarter 2020 highlights on Slide 4. We delivered strong organic net sales growth of over 10% driven by solid industry demand across the globe. Additionally, we delivered ongoing EBIT margin of over 11%, a second consecutive quarter of double-digit margins and a year-over-year expansion of 410 basis points. Lastly, we successfully executed our go-to-market initiatives and drove strong cost takeout across the globe, leading to positive EBIT and EBIT margin expansion in all regions. Now turning to Slide 5. We will discuss our full-year highlights. We took immediate and decisive action as we announced and executed our $500 million plus cost takeout program. Further, we realigned our go-to-market strategy to effectively operate within a supply constrained environment. And structural and sustained positive demand trends and the exceptional execution of our COVID-19 response strategy resulted in record ongoing earnings per share of $18.55, a 16% improvement compared to the prior year, above our previous guidance. Record ongoing EBIT margin of 9.1%, a 220 basis point improvement and a 25% increase in total EBIT compared to the prior year. And record free cash flow of approximately $1.25 billion with positive free cash flow in North America, Latin America and Europe. Despite significant macroeconomic uncertainty, we strengthened our balance sheet and drove significant shareholder value. We reduced our gross debt leverage to 2.3 times making progress toward our long-term target of 2 times. We delivered a return on invested capital of approximately 11%, representing the fourth consecutive year of improvement as we realize the benefit of continued EBIT margin expansion at an optimized asset base in our Europe region. Lastly, we returned strong levels of cash to shareholders through share repurchases and increased our dividends for eighth consecutive year. Overall, results we delivered in 2020 reflect the structural improvements we have made, not just in 2020, but also those made during the years before. We are a fundamentally different company with an improved margin and cash flow profile. 2020 could have been a setback for us. Instead, we were able to significantly accelerate our progress toward our long-term financial goals. Turning to Slide 6. We show the drivers of our fourth quarter and full year EBIT margin. In the fourth quarter price-mix delivered 375 basis points of margin expansion, driven by reduced promotional investment and mix benefit as consumers invest in their homes. Additionally, we delivered on our cost takeout program positively impacting margin by 125 basis points. Further, reduced steel and resin cost resulted in a favorable impact of 125 basis points. These margin benefits were partially offset by continued marketing and technology investments and the unfavorable impact of currency. For full year, very strong margin expansion from price mix and our cost takeout program were partially offset by increased brand investments and currency. Overall, we're very pleased to be delivering on our long-term EBIT margin commitment and are confident this positive momentum will continue to drive very strong results in '21. Turning to Slide 8, I will review our fourth quarter regional results. In North America, we delivered 4% revenue growth driven by continued strong demand in the region. Additionally, we delivered record EBIT driven by the flawless execution of our cost takeout and go-to-market actions. Lastly, we continue to optimize our supply chain operations, driving weekly improvements in our production yield. Delivering top line growth and a record EBIT performance, the region's outstanding results again demonstrate the fundamental strength of our business model. Turning to Slide 9, I'll review our fourth quarter results for our Europe, Middle East and Africa region. Share growth in Italy and the U.K. along with strong demand in the region drove another quarter of double-digit revenue growth. Additionally, the region delivered year-over-year EBIT improvement of $29 million led by increased demand and strong cost takeout. We overcame the challenges presented by COVID-19 and restored profitability to the region in line with our commitment at the start of the year. Our 2020 results demonstrate the effectiveness of our strategic actions and the progress we have made to-date. Turning to Slide 10, I'll review our fourth quarter results for our Latin America region. Net sales increased 5% with organic net sales growth of 28% led by strong demand in Brazil. The region delivered very strong EBIT margins of 12% with continued strong demand and disciplined execution of go-to-market actions, offsetting significant currency devaluation. Overall, the region's 2020 performance serves as a proof point of the viability of our long-term financial goals highlighting our ability to deliver double-digit margins in a strong demand environment. Turning to Slide 11, I'll review our fourth quarter results for our Asia region. In India, we delivered strong year-over-year net sales growth, driven by demand recovery. In China, we delivered Whirlpool branded share growth in addition to EBIT improvement led by cost productivity actions. Overall, we are pleased to see a rebound in Asia and look forward to building on this momentum in 2021. Turning to Slide 13, Marc and I will discuss our full-year 2021 guidance. Needless to say some uncertainty remains as we continue to operate in a COVID environment. However, we do believe increased disposable income, investments in the home and a favorable housing shift are here to stay and will drive strong demand. Based on our internal model for industry and broad economy we expect global industry growth of 4%. As we have demonstrated in 2020, we are uniquely positioned to capture the structural shift and further advance our strategic priorities. It is with confidence that we provide our '21 guidance, which reflects our fourth consecutive year of record earnings per share and significant top line growth. We expect to drive net sales growth of approximately 6% as we capitalize on strong demand and share gains in all regions. Additionally, we expect to deliver above 9% ongoing EBIT margin and deliver free cash flow of $1 billion or more. Turning to Slide 14, we show the drivers of our 9% plus ongoing EBIT margin guidance. We expect price mix to deliver approximately 100 basis points of margin expansion through three key initiatives, one, disciplined execution of our go-to-market actions, two, recently announced cost-base price increase in Brazil, Russia, and India and, three, new product launches. Just to give you a few examples of our legacy for innovation, in 2020, we rolled out our new global dishwasher architecture featuring the largest capacity third rack dishwasher. In Europe, we launched a Red Dot award-winning built-in induction cooktop. In the United States, we entered the consumables detergent business with the launch our ultra concentrated Swash detergent. Next, we expect net cost to positively impact margin by 150 basis points. As ongoing cost productivity efforts coupled with the carryover benefit from our 2020 cost takeout program more than offset elevated freight and labor cost. We expect raw material inflation to negatively impact margin by 150 basis points, led by higher steel and resin cost. Further, as we continue to invest in the future, we expect increased marketing and technology investments to drive a negative margin impact of 50 basis points, while unfavorable currency, primarily Latin America, expected to impact margin by approximately 50 basis points. In total, we expect these actions to deliver 9% plus ongoing EBIT margin, an EBIT improvement of over $100 million compared to the prior year. Turning to Slide 15, we show our regional guidance for the year. Starting with industry demand, we expect a robust demand environment for North America, supported by continued strength from consumer nesting trends and increased discretionary spending. Additionally, the impact from positive U.S. housing starts, which began to strengthen in late 2019 and strong existing home sales will translate to higher appliance demand. In EMEA, we expect a continued recovery in the first half of the year to support strong growth, while in Latin America, we expect modest growth of 2% to 4% as the benefits from government stimulus in Brazil are lessened. Asia industry is expected to accelerate by 6% to 8% as the region rebounds from prolonged shutdowns in 2020. Regarding our EBIT guidance, we expect very strong margins of 15% or more in North America. We expect the impact of favorable go-to-market initiatives and disciplined cost actions to offset cost inflation. In EMEA, we expect the strategic actions laid out during our 2019 Investor Day to drive EBIT margin expansion of over 250 basis points and a full-year EBIT margin of over 2.5%. In Latin America, we expect to deliver EBIT margins of 7% or higher. A steady demand improvements and positive price mix are offset by continued currency devaluation in Argentina and Brazil. Lastly, we expect to achieve EBIT margins of 2% or higher in Asia, driven by demand recovery. Turning to slide 16, we will discuss the drivers of our 2021 free cash flow. We expect another year of very strong cash earnings of approximately $2 billion, driven by sustained EBIT margins. We plan to increase capital investments to historical levels to support the launch of innovative products around the globe. Additionally, we will continue to invest in world-class manufacturing and our digital transformation journey. Further, as we ended 2020 with record low inventory levels, we are planning for a moderate inventory built. We anticipate restructuring cash outlays of approximately $225 million primarily due to the impact of COVID-19-related restructuring actions executed in 2020 and the exit of our Naples, Italy operations. Overall, we expect to drive free cash flow of $1 billion or more as we focus on continuing to deliver record EBIT margin levels and prioritizing our capital investments. Turning to slide 17, we provide an update on our capital allocation priorities for 2021. We remain fully committed to funding the business driving innovation and growth, while continuing to strengthen our balance sheet and return cash to shareholders. We expect to invest over $1 billion in capital expenditures and research and development, highlighting our commitment to driving innovation and growth in the future. We have reinstated our share repurchase program that had been temporarily suspended during the height of the pandemic. With a clear focus on returning increased levels of cash to shareholders, we expect to repurchase shares at moderate levels. Lastly, we have a clear line of sight to delivering on our long-term goal of gross debt to EBITDA up 2 times. We are extremely pleased to see that despite the enormous challenges of operating in a global pandemic, our teams were able to deliver on our long term value creation targets. In North America, we delivered nearly 16% EBIT margins for the full year, significantly above our long-term margin goal for the region of 13% plus. We restored the European region to profitability. In Latin America, we capitalize on strong industry demand, demonstrating the long-term margin potential in the region. And finally, we delivered record free cash flow of $1.25 billion or 6.4% of sales, above our long-term goal of 6% of sales. Further, we demonstrated an unwavering commitment to our environmental, social and governance priorities, resulting in significant advancements to our targets. Building on the momentum of our 2020 performance and the operational excellence of our global team, we are confident that we are well-positioned to deliver another record year in '21.

oration delivering on long-term value creation targets with very strong fourth-quarter and full-year results. sees full-year 2021 net sales increase of about 6 percent. sees 2021 free cash flow of $1 billion or more.

Also joining me on the call today are Rick Muncrief, our president and CEO; Clay Gaspar, our chief operating officer; Jeff Ritenour, our chief financial officer and a few other members of our senior management team. Devon's second quarter can best be defined as one of comprehensive execution across every element of our disciplined strategy that resulted in expanded margins, growth and free cash flow and the return of significant value to our shareholders through higher dividends and the reduction of debt. Following our transformative merger that closed earlier this year, I'm very pleased with the progress the team has made and our second-quarter results demonstrate the impressive momentum our business has quickly established. Even today, as we celebrate Devon's 50th anniversary as a company this year, we're only getting started and our talented team is eager, energized and extremely motivated to win. As investors seek exposure to commodity-oriented names, it is important to recognize that Devon is a premier energy company and a must-own name in this space. We have the right mix of assets, proven management, financial strength and a shareholder-friendly business model designed to lead the energy industry in capital discipline and dividends. Now, turning to Slide 4. The power of Devon's portfolio was showcased by our second-quarter results as we continue to deliver on exactly what we promised to do both operationally and financially. Efficiencies drove capital spending 9% below guidance. Strong well productivity resulted in production volumes above our midpoint. The capture of merger-related synergies drove sharp declines in corporate cost. These efforts translated into a sixfold increase in free cash flow from just a quarter ago. And with this excess cash, we increased our dividend payout by 44% and we retired $710 million of low premium debt in the quarter. Now, Jeff will cover the return of capital to shareholders in more detail later, but investors should take note, this systematic return of value to shareholders is a clear differentiator for Devon. Now, moving to Slide 5. While I'm very pleased with the results our team that delivered year-to-date, the setup for the second half of the year is even better with our operations scale that generate increasing amounts of free cash flow. This improved outlook is summarized in the white box at the top left of this slide. With the trifecta of an improving production profile, lower capital and reduced corporate cost, Devon is positioned to deliver an annualized free cash flow yield in the second half of the year of approximately 20% at today's pricing. I believe it is of utmost importance to reiterate that even with this outstanding free cash flow outlook, there is no change to our capital plan this year. Turning your attention to Slide 7. Now with this powerful stream of free cash flow, our dividend policy provides us the flexibility to return even more cash to shareholders than any company in the entire S&P 500 Index. To demonstrate this point, we've included a simple comparison of our annualized dividend yield in the second half of 2021, assuming a 50% variable dividend payout. Now as you can see, Devon's implied dividend yield is not only best-in-class in the E&P space, but we also possess the top rank yield in the entire S&P 500 Index by a wide margin. In fact, at today's pricing, our yield is more than seven times higher than the average company that is represented in the S&P 500 Index. Furthermore, our dividend is comfortably funded within free cash flow and is accompanied by a strong balance sheet that is projected to have a leverage ratio of less than one turn by year-end. Investors need to take notice, Devon offers a truly unique investment opportunity for the near 0 interest rate world that we live in today. Now, looking beyond Devon to the broader E&P space, I'm also encouraged this earnings season by the announcement from Pioneer on their variable dividend implementation as well as a growing number of other peers who have elected to prioritize higher dividend payouts. These disciplined actions will further enhance the investment thesis for our industry, paving the way for higher fund flows as investors rediscover the attractive value proposition of the E&P space. Now, moving to Slide 10. While the remainder of 2021 is going to be outstanding for Devon, simply put, the investment thesis only gets stronger as I look ahead to next year. We should have one of the most advantaged cash flow growth outlooks in the industry as we capture the full benefit of merger-related cost synergies, restructuring expenses roll-off and our hedge book vastly improves. At today's prices, these structural tailwinds could result in more than $1 billion of incremental cash flow in 2022. To put it in perspective, this incremental cash flow would represent cash flow per share growth of more than 20% year over year, if you held all other constants -- all other factors constant. Now while it's still too early to provide formal production and capital targets for next year, there will be no shift to our strategy. We will continue to execute on our financially driven model that prioritizes free cash flow generation. Given the transparent framework that underpins our capital allocation, our behavior will be very predictable as we continue to limit reinvestment rates and drive per share growth through margin expansion and cost reductions. We have no intention of adding incremental barrels into the market until demand side fundamentals sustainably recover and it becomes evident that OPEC+ spare oil capacity is effectively absorbed by the world markets. The bottom line is we are unwavering in our commitment to lead the industry with disciplined capital allocation and higher dividends. As Rick touched on from our operations perspective, Devon continues to deliver outstanding results. Our Q2 results demonstrate the impressive operational momentum we've established in our business, the power of Devon's asset portfolio and the quality of our people delivering these results. I want to pause and congratulate the entire Devon team for the impressive work of overcoming the challenges of the pandemic and the merger while not only keeping the wheels on but requestioning everything we do and ultimately building better processes along the way. We've come a long way on building the go-forward strategy, execution plan and culture and I see many more significant wins on the path ahead. Turning your attention to Slide 12. My key message here is that we're well on our way to meeting all of our capital objectives for 2021. At the bottom left of this slide, you can see that my confidence in the '21 program is underpinned by our strong operational accomplishments in the second quarter. With activity focused on low-risk development, we delivered capital spending results that were 9% below plan, well productivity in the Delaware drove oil volumes above guidance and field level synergies improved operating costs. While the operating results year-to-date have been great, the remainder of the year looks equally strong, a true test of asset quality, execution and corporate cost structure proves out in sustainably low reinvestment rates, steady production and significant free cash flow. This is exactly what we're delivering at Devon. We plan to continue to operate 16 rigs for the balance of the year and deliver approximately 150 new wells to production in the second half of 2021. During the quarter, our capital program consisted of 13 operated rigs and four dedicated frac crews, resulting in 88 new wells that commenced first production. This level of capital activity was concentrated around the border of New Mexico and Texas and accounted for roughly 80% of our total companywide capital investment in the quarter. As a result of this investment, Delaware Basin's high-margin oil production continue to rapidly advance, growing 22% on a year-over-year basis. While we had great results across our acreage position, a top contributor to the strong volume were several large pads within our Stateline and Cotton Draw areas that accounted for more than 30 new wells in the quarter. This activity was weighted toward development work in the Upper Wolfcamp, but we also had success co-developing multiple targets in the Bone Spring within our Stateline area. The initial 30-day rates from activity at Stateline and Cotton Draw average north of 3,300 BOE per day and recoveries are on track to exceed 1.5 million barrels of oil equivalent. With drilling and completion costs coming in at nearly $1 million below predrill expectations, our rates of return at Cotton Draw and Stateline are projected to approach 200% at today's strip pricing. While we've all grown weary of quoted well returns, this is the best way that I can provide insight to you on what we're seeing in real time and what will be flowing through the cash flow statements in the coming quarters. While we lack precision in these early estimates, I can tell you, these are phenomenal investments and will yield significant value to the bottom line of Devon and ultimately, to the shareholders through our cash return model. And lastly, on this slide, I want to cover the recent Bone Spring appraisal success that we had in the Potato Basin with our three well Yukon Gold project. Historically, we focused our efforts in the Wolfcamp formation in this region and Yukon was our first operated test of the second Bone Spring interval in this area. Given the strong results from Yukon plus additional well control from nonoperated activity, this will be a new landing zone that works its way into the Delaware Basin capital allocation mix going forward. This is another example of how the Delaware Basin continues to give. This new landing zone required no additional land investment, very little incremental infrastructure and as a result, the well returns have a direct path to the bottom line of Devon. Moving to Slide 14. Another highlight associated with the Delaware Basin activity was the improvement in operational efficiencies and the margin expansion we delivered in the quarter. Beginning on the left-hand side, our D&C costs have improved to $543 per lateral foot in the quarter, a decline of more than 40% from just a few years ago. To deliver on this positive rate of change, the team achieved record-setting drill times in both Bone Spring and Wolfcamp formations with spud to release times and our best wells improving to less than 12 days. Our completions work improved to an average of nearly 2,000 feet per day in the quarter. I want to congratulate the team and I fully expect that these improved cycle times will be a tailwind to our results for the second half of the year. Shifting to the middle of the slide, we continue to make progress capturing operational cost synergies in the field. With solid results we delivered in the second quarter, LOE and GP&T costs improved 7% year over year. To achieve this positive result, we adopted the best and most economic practices from both legacy companies and leveraged our enhanced purchasing power in the Delaware to meaningfully reduce costs associated with several categories, including chemicals, water disposal, compression and contract labor. Importantly, these results were delivered by doing business in the right way with our strong safety performance in the quarter and combined with company delivered some of the meaningful environmental improvements over a year-over-year basis. And my final comment on this slide -- on the chart to the far right, the cumulative impact of Devon's strong operational performance resulted in significant margin expansion compared to both last quarter and on a year-over-year basis. Importantly, our Delaware Basin operations are geared for this trend to continue over the remainder of the year and beyond. Moving to Slide 15. While the Delaware Basin is clearly the growth engine of our company, we have several high-quality assets in the oil fairway of the U.S. that generate substantial amounts of free cash flow. These assets may not capture many headlines but they underpin the success of our sustainable free cash flow-generating strategy. In the Delaware Basin, cash flow nearly doubled in the quarter on the strength of natural gas and NGLs. Our Dow joint venture activity is progressing quite well and we're bringing on the first pad of new wells this quarter. The Williston continues to provide phenomenal returns and at today's pricing, this asset is on track to generate nearly $700 million of free cash flow for the year. In the Eagle Ford, we have reestablished momentum with 21 wells brought online year-to-date, resulting in second-quarter volumes advancing 20%. And in the Powder River, we're encouraged with continued industry activity and how -- in evaluating how we create the most value from this asset. We have a creative and commercially focused team working with this asset, many of which bring fresh set of eyes on how we approach this very substantial oil-rich acreage position. Overall, another strong quarter of execution and each of these asset teams did a great job delivering within our diversified portfolio. The team here at Devon takes great personal pride in delivering affordable and reliable energy that powers every other industry out there as well as the incredible quantity and quality of life we appreciate today. We absolutely believe that in addition to meeting the world's growing energy demand, we must also deliver our products in an environmentally and commercially sustainable way. As you can see with the goals outlined on this slide, we're committing to taking a leadership role by targeting to reduce greenhouse gas emissions by 50% by 2030 and achieving net zero emissions for Scope 1 and 2 by 2050. A critically important component of this carbon reduction strategy is to improve our methane emissions intensity by 65% by 2030 from a baseline in 2019. This emissions reduction target involves a range of innovations, including advanced remote leak detection technologies and breakthrough designs like our latest low-e facilities in the Delaware Basin. We also plan to constructively engage with upstream and downstream partners to improve our environmental performance across the value chain. While it's a journey, not a destination, environmental excellence is foundational to Devon. My comments today will be focused on our financial results for the quarter and the next steps in the execution of our financial strategy. A great place to start today is with a review of Devon's strong financial performance in the second quarter, where we achieved significant growth in both operating cash flow and free cash flow. Operating cash flow reached $1.1 billion, an 85% increase compared to the first quarter of this year. This level of cash flow generation comfortably exceeded our capital spending requirements, resulting in free cash flow of $589 million for the quarter. As described earlier by Rick and Clay, our improving capital efficiency and cost control drove these outstanding results, along with the improved commodity prices realized in the second quarter. Overall, it was a great quarter for Devon and these results showcased the power of our financially driven business model. Turning your attention to Slide 6. With the free cash flow generated in the quarter, we're proud to deliver on our commitment to higher cash returns through our fixed plus variable dividend framework. Our dividend framework is foundational to our capital allocation process, providing us the flexibility to return cash to shareholders across a variety of market conditions. With this differentiated framework, we've returned more than $400 million of cash to our shareholders in the first half of the year, which exceeds the entire payout from all of last year. The second half of this year is shaping up to be even more impressive. This is evidenced by the announcement last night that our dividend payable on September 30 was raised for the third consecutive quarter to $0.49 per share. This dividend represents a 44% increase versus last quarter and is more than a fourfold increase compared to the period a year ago. On Slide 8, in addition to higher dividends, another way we have returned value to shareholders is through our recent efforts to reduce debt and enhance our investment-grade financial strength. In the second quarter, we retired $710 million of debt, bringing our total debt retired year-to-date to over $1.2 billion. With this disciplined management of our balance sheet, we're well on our way to reaching our net debt-to-EBITDA leverage target of one turn or less by year-end. Our low leverage is also complemented by a liquidity position of $4.5 billion and a debt profile with no near-term maturities. This balance sheet strength is absolutely a competitive advantage for Devon that lowers our cost of capital and optimizes our financial flexibility through the commodity cycle. Looking ahead to the second half of the year, with the increasing amounts of free cash flow our business is projected to generate, we'll continue to systematically return value to our shareholders through both higher dividend payouts and by further deleveraging our investment-grade balance sheet. As always, the first call in our free cash flow is to fully fund our fixed dividend of $0.11 per share. After funding the fixed dividend, up to 50% of the excess free cash flow in any given quarter will be allocated to our variable dividend. The other half of our excess free cash flow will be allocated to improving our balance sheet and reducing our net debt. Once we achieve our leverage target later this year, this tranche of excess free cash flow that was previously reserved for balance sheet improvement has the potential to be reallocated to higher dividend payouts or opportunistic share buybacks should our shares remain undervalued relative to peers in the broader market. So in summary, our financial strategy is working well. We have excellent liquidity and our business is generating substantial free cash flow. The go-forward business will have an ultra-low leverage ratio of a turn or less by year-end and we're positioned to substantially grow our dividend payout over the rest of the year. I would like to close today by reiterating a few key thoughts. Devon is a premier energy company and we are proving this with our consistent results. Our unique business model is designed to reward shareholders with higher dividend payouts. This is resulting in a dividend yield that's the highest in the entire S&P 500 Index. Our generous payout is funded entirely from free cash flow and backstopped by an investment-grade balance sheet. And our financial outlook only improves as I look to the remainder of this year and into 2022. With the increasing amounts of free cash flow generated, we're committed to doing exactly what we promised and that is to lead the industry in capital discipline and dividends. We'll now open the call to Q&A. Please limit yourself to one question and follow up. With that, operator, we'll take our first question.

fixed-plus-variable dividend increased by 44 percent to $0.49 per share.

Today's presenters are Chris Martin, Chairman and CEO; Tony Labozzetta, President and Chief Operating Officer; and Tom Lyons, Senior Executive Vice President and Chief Financial Officer. Now I'm pleased to introduce Chris Martin, who will offer his perspective on our third quarter. Our third quarter earnings improved as the economy recovered in a measured way, with protocols in place allowing businesses to reopen safely and for consumers to return to a semblance of normalcy. At the end of July, we were able to close on the SB One acquisition, which substantially increased both our balance sheet and earnings potential. Earnings per share were $0.37, including merger-related expenses of $2 million recorded during the quarter compared with $0.22 in Q2. Total assets at quarter end rose to $12.9 billion. The impact of COVID declined substantially during the quarter and related loan deferral levels to 3.2% of loans as of October 16, as we have seen a significant reduction in the number of consumers and businesses requesting part persistence. The allowance and the related provision reflects the ongoing impact of the COVID-19 pandemic on economic activity, including the hospitality, retail-related CRE and restaurant sectors. It remains uncertain when and if additional economic stimulus will be provided or when a vaccine will be approved, which may impact the ultimate collectability of certain commercial loans where borrowers have requested multiple deferrals or forbearance. And we have proactively downgraded our most vulnerable loans, and we continuously review credit quality loan by loan. We still do not know if and when losses will materialize, but we believe the first half of 2021 will be telling absent government assistance to trouble businesses and consumers. Now Tom will go over the loan payment deferrals in more detail, but suffice it to say, we have performed a deep dive analysis of full borrower requests for relief and are pleased that so many have recovered and resumed normal payments with approximately 2/3 of those remaining in deferral currently paying interest. Our credit quality is performing in line with our expectations at this point. And the key to credit risk management has always been staying consistent with our policies, underwriting discipline and conservative loan structures. We have been and continue to be proactive at identifying potential credit issues and working problem lines to minimize losses. And in the end, we believe we're going to continue to have a strong credit quality performance through this cycle. As a result of our combination with SB One, the loan portfolio increased by $1.77 billion, further augmented by net organic growth for the quarter of $218 million on loan originations of $587 million. The pipeline improved during the quarter and the volume of loan opportunities has increased. Regarding the $475 million of PPP loans we held at September 30, like many banks, we anticipated that forgiveness might have started by now. However, we see a lack of urgency from the SBA, and the program is still being politicized by Congress. As a result, PPP loans will remain on our balance sheet longer than expected, which will modestly impact our margin. The yield on PPP loans is approximately 2.75%, and we have about $8 million remaining in related deferred fees. Deposits increased $2.46 billion, including $1.76 billion added from the SP One transaction. Included with the SB One deposits were $577 million in CDs, which were adjusted to market rates on acquisition, adding four basis points to our margin this quarter. Core deposits represent 88% of total deposits, and our total cost of deposits was 33 basis points, among the best in our market. Overall, our favorable cost of deposits reflects our strong long-standing client relationships. Borrowings increased with $201 million coming from SB One, while the cost of borrowings declined during the quarter. Capital levels remain strong and exceed all regulatory requirements. And with PFS currently trading at 87% of book value, we see the repurchase of our stock as an effective use of capital and a great return for long-term stockholders. The net interest margin held up well this quarter, and our expected earning asset growth will support total net interest income. But the effect of historically low long-term rates will continue to challenge our net interest margin. Funding costs will move marginally lower as borrowings and CDs reprice at maturity, but this may not be sufficient to fully offset declines in asset yields. And while we have negotiated interest rate floors on the sizable portion of our portfolio and the rates on loans in our portfolio have improved, loan yields on new originations remain lower than portfolio yields. Additionally, our loan portfolio is approximately 57% adjustable rate and has repriced downward, putting further pressure on the margin. But our continued disciplined management of deposit pricing has mitigated this impact. With the SB One merger completed, noninterest income increased as SB One Insurance Agency income was incorporated into the P&L, and we are excited about the prospects for this business line, given our substantial customer base. Fees on retail banking services rebounded during the quarter, and wealth management fees improved with the market rebound from COVID shutdowns. Loan level swap income was also up for the quarter. Reflecting the addition of two months' worth of SB One expenses, the increase was primarily in compensation expense, legal and consulting expenses and severance costs related to the transaction. Operating expenses to average assets and efficiency ratios remain strong, and we look forward to a decrease in expenses upon converting SB One to our data systems in November. With that, I'll ask Tom to give some more detail. As Chris noted, our net income was $27.1 million or $0.37 per diluted share compared with $14.3 million or $0.22 per diluted share for the trailing quarter. Earnings for the current quarter reflect the $15.5 million acquisition date provision for credit losses on nonpurchased credit deteriorated loans acquired from SB One, partially offset by the favorable impact of an improved economic forecast. In addition, costs specific to our COVID response fell to $200,000 from $1 million in the trailing quarter. These improvements were partially offset by merger-related costs that increased to $2 million in the current quarter from $683,000 in the trailing quarter. Core pre-tax preprovision earnings, excluding provisions for credit losses on loans and commitments to extend credit, merger-related charges and COVID response costs were $44.4 million. This compares favorably with $35.9 million in the trailing quarter. Our net interest margin expanded four basis points versus the trailing quarter as we reduced funding costs and grew noninterest-bearing deposits, while earning asset yields stabilized and we deployed average excess liquidity. To combat margin compression, we continue to reprice deposit accounts downward and emphasize noninterest-bearing deposit growth. Including noninterest-bearing deposits, our total cost of deposits fell to 33 basis points this quarter from 41 basis points in the trailing quarter. Noninterest-bearing deposits averaged $2.21 billion or 25% of total average deposits for the quarter, an increase from $1.85 billion in the trailing quarter, reflecting the SB One acquisition and organic growth. Noninterest-bearing deposits totaled $2.38 billion at September 30, and average borrowing levels increased $43 million and the average cost of borrowed funds decreased 12 basis points versus the trailing quarter to 1.19%. This rate reduction was partially offset by subordinated debentures acquired from SB One that had an average balance of $16.4 million at an average cost of 4.99% for the quarter. Quarter end loan totals increased $2 billion versus the trailing quarter, reflecting $1.8 billion from the SB One acquisition and organic growth in CRE, construction, multifamily and C&I loans, partially offset by net reductions in consumer and residential mortgage loans. Loan originations, excluding line of credit advances totaled $587 million for the quarter. The pipeline at September 30 increased $71 million from the trailing quarter to $1.4 billion. The pipeline rate increased 12 basis points since last quarter to 3.55% at September 30. The increases in pipeline volume and rate reflect the acquisition of the SB One loan pipeline and are requiring higher spreads and floors. Our provision for credit losses on loans was $6.4 million for the current quarter compared with $10.9 million in the trailing quarter. This reflects a day one provision of $15.5 million for the acquired non-PCD loans partially offset by the impact of improvements in the economic forecast. We had annualized net recoveries as a percentage of average loans of less than one basis point this quarter compared with annualized net recoveries of one basis point for the trailing quarter. Nonperforming assets increased slightly to 42 basis points of total assets from 37 basis points at June 30. Excluding PPP loans, the allowance represented 1.16% of loans compared with 1.17% in the trailing quarter. The allowance for credit losses on loans included $13.6 million recorded as part of the amortized cost of PCD loans acquired from SB One. Loans that have been or expected to be granted COVID-19-related payment deferrals or modifications declined from their peak of $1.31 billion or 16.8% of loans to $311 million or 3.2% of loans. This $311 million of loans includes $48 million added through the SB One acquisition and consists of $27 million that are still in their initial deferral period, $85 million in the second 90-day deferral period and $199 million that have completed their initial deferral periods, but are expected to require ongoing assistance. Included in this total are $92 million of loans secured by hotels with a pre-COVID weighted average LTV of 56%; $44 million of loans secured by retail properties with a pre-COVID weighted average LTV of 56%; $31 million of loans secured by restaurants with a pre-COVID weighted average LTV of 49%; $15 million secured by suburban office space with a pre-COVID weighted average LTV of 66%; and $43 million secured by residential mortgages, with the balance comprised of diverse commercial loans. Noninterest income increased $6.3 million versus the trailing quarter to $21 million, as swap fee income increased $3.2 million. The addition of SB One Insurance Agency contributed $1.7 million for the quarter. And wealth management income increased $870,000 versus the trailing quarter. In addition, deposit ATM and debit card income increased $750,000 for the quarter with the addition of SB One's customer base and the easing of pandemic-related consumer restrictions, partially offset by a decrease in bank loan life insurance benefits. Excluding provisions for credit losses on commitments to extend credit, merger-related charges and COVID-related costs, noninterest expenses were an annualized 1.92% of average assets for the quarter compared with 1.86% in the trailing quarter. These core expenses increased $9.7 million versus the trailing quarter, primarily due to the addition of SB One personnel, operations and facilities. Our effective tax rate increased to 25.5% from 20.6% for the trailing quarter as a result of an improved forecasted taxable income in the current quarter. We are currently projecting an effective tax rate of approximately 24% for the balance of 2020. We'd be happy to respond to questions.

compname announces third quarter earnings per share $0.37. q3 earnings per share $0.37.

This information can be accessed by going to the Investor Relations section of the website. During the call, we will refer to non-GAAP financial measures in discussing the Company's performance. You can find a reconciliation of these measures to GAAP financial measures in our materials for today's call. Finally, Synchrony Financial is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by third parties. It is truly an honor and a privilege to talk to you today for the first time as the CEO of Synchrony. Building on our strong foundation, I believe Synchrony is exceptionally well-positioned for this next chapter of our growth journey. There is strong momentum in the business, driven by the ongoing implementation of our strategy and the unwavering hard work and commitment of our people. While this past year has been challenging and unprecedented in many ways, we are starting to see positive signs of recovery and we are seeing the benefits of the strategic initiatives that we accelerated in the new programs that we launched last year. I'm very optimistic and excited about the opportunities ahead and I'm honored to lead Synchrony into the future. And with that, I'd like to get into some of the highlights of our first quarter results. Earnings were $1 billion or $a 1.73 per diluted share, an increase of a $1.28 over the last year. The resilience of our business has been evident as we navigated the pandemic. From the underlying fundamentals of our business, including diverse programs and networks, and solid underwriting to our ability to quickly adapt to meet the moment with easily integrated seamless digital solutions, we have demonstrated that our business is structured to execute even in the most challenging operating environments. And as we begin to emerge from this challenging period, we have seen many of our growth drivers outperform pre-pandemic levels experienced during the first quarter of last year. Importantly, purchase volume increased a strong 8% over last year with a substantial increase in purchase volume per account of 18%. While we're seeing strong trends on purchase volume, loan receivables were down 7% to $76.9 billion given elevated payment rates with the infusion of additional stimulus this quarter. Though, average balances per account have rebounded, increasing 1% over the first quarter of last year, as our new accounts which were up 3%. Net interest margin was down 117 basis points to 13.98% as further stimulus continue to elevate payment rates, which lowered our receivable mix and yield. The efficiency ratio was 36.1% for the quarter. We are on track with our strategic plans to reduce our expense base by moving $210 million of expenses by the end of the year. Credit continue to perform exceedingly well. The net charge-offs were 3.62% this quarter compared to 5.36% last year. As a result of our liquidity and funding strategy in response to the COVID-19 impact on our balance sheet. Deposits were down $1.9 billion or 3% versus last year. Given our excess liquidity, we have been slowing our overall deposit growth. Total deposits comprised 81% of our funding as our direct deposit platform remains an important funding source. Our ability to service and provide digital tools to customers makes our bank attractive to depositors and we will continue to build our additional capabilities. During the quarter we returned $328 million capital through share repurchases of $200 million and $128 million in common stock dividends. We continue to have a solid pipeline of new opportunities across our platforms, but we are being very disciplined around risk and returns and it is critical to ensure that our partnerships are structured with strong alignment that benefits both parties. Having said that, as we previously announced, we will not renew our partnership with the Gap as we were not able to reach terms that made sense for our company. We expect that exiting this partnership and redeploying the capital will be earnings per share neutral relative to current program economics and accretive to proposed renewal terms. We have been on a journey to grow with partners who leverage our digital capabilities to help and drive sales and meet the rapidly changing needs of our customers. Our ability to run programs with transformational digital innovation has been demonstrated with a number of recent wins. These capabilities are also integral to the success of all of our programs as consumers are rapidly adopting technologies that enables contactless commerce and expect engagement along their digital purchase journeys. We are leveraging our vast digital assets as well as our strong data analytics capabilities to make the entire consumer experience more personalized and meaningful. We have continued to expand our digital penetration across the customer journey from apply, to buy, to servicing. Approximately 60% of our applications were done digitally during the first quarter and we grew 14% in mobile channel applications. In retail part 50% of our sales occurred online and approximately 65% of payments were made digitally. The investments we are making in digital and data analytics continue to pay off. During the quarter, we renewed 10 programs including American Eagle, Ashley HomeStore, CITCO, and Phillips 66. We also added 10 new programs including Prime Healthcare, Mercyhealth and Emory Healthcare, which furthers our penetration of health systems. And we are also expanding the utility of our CareCredit card. Our patient financing app is now available on the Epic App Orchard. This makes care credit available to hundreds of healthcare organizations using Epic's MyChart and enabling cardholders to use CareCredit to take co-pays, deductibles and medical expenses not covered by insurance. Not only does this technology integration provide a way to increase the usage and acceptance of CareCredit, it also helps health services and hospital providers to run efficient financially healthy organizations by helping to improve revenue cycle management and reduced debt risk. We are excited by the prospects to support patients beyond elective care as we expand to offer payment options for non-elective medical expenses and routine care. I'll spend a few minutes today outlining our CareCredit strategy and providing a framework to think about the opportunities that lie ahead. Over the last several years we've been transforming CareCredit to become a more comprehensive solution for consumer financing and payments in healthcare, pet care and wellness by expanding our relationships with providers, retailers, payers and pharmacies. We have unparalleled scale and depth in this space with $9.3 billion in receivables and acceptance of approximately 250,000 enrolled provider health and wellness retail locations. The card is used by more than 8 million cardholders. We earn more than 80% of dental offices nationwide and over 40 healthcare specialties, 13 of which we entered into since 2018. We see big opportunity in health systems and hospitals and have rapidly expanded our reach by launching eight new programs in 2020, bringing our total to 13. With the growth in our pet vertical, we are now in over 85% of that practices and have grown pets and force by 174% since our acquisition of the Pets Best insurance business two years ago. A big part of our success is the engagement we have with our cardholders. Our cardholders give us high marks as we have increased our customer satisfaction score to 92% from 78% back in 2009. Our net promoter score is nearly double the credit card industry average, and is proof the value our cardholders placed on the card we've been able to increase our repeat sales to nearly 60%. That is a testament to the hard work that we've put into creating a strong value proposition for the card and for increasing utility as we build our network, one office and provider at a time. And our growth numbers reflect these efforts and the position we hold in this space. Our receivables have increased 44% in seven years. We have also increased the breadth of our business with an increase in provider locations of 41% in that time frame, and active accounts currently stand at 5.7 million, another double-digit increase in seven years. We have built an incredible platform for growth and we are in an enviable position as we chart the course forward continuing to evolve to capture further opportunity. There is still tremendous opportunity continue to unlock growth in dental, veterinary and specialty industries. We are making investments to simplify the customer and provider experience and leveraging technology to support more consumer-driven self-service capabilities with ample room for growth, with increased penetration among our existing partners and through innovation to make an increasingly easy to engage with our network. Just recently, we acquired Allegro Credit, which is both deepened our penetration in audiology and other industries, while also enabling new products and capabilities. With the steady increase in out-of-pocket healthcare costs and the popularity of high-deductible healthcare plans consumers are assuming more of the financial responsibility for their healthcare. This translates to a significant opportunity of more than $405 billion in out-of-pocket health expenditures in the U.S., but flexible and extended financing is only a small component of overall healthcare payments. So, there is significant runway for growth. We're also expanding beyond the traditional CareCredit industries and capitalizing on the evolving healthcare landscape that has increased focus on overall wellness. We have moved beyond elective care financing and now support patients by enabling them to pay for non-elective medical bills, planed procedures, and routine medical care as we expand in the health systems and more healthcare specialties. This will be enhanced by ongoing integrations with practice management software and the recent news of our CareCredit becoming available through Epic's App Orchard. Further, we have expanded our utility, creating more ways to access healthcare services by partnering with pharmacies. CareCredit is already accepted at more than 17,000 pharmacies nationwide and we recently announced that we will become the issuer of the Walgreens co-branded credit card program in the U.S., the first such credit program in the retail health sector and expect to launch the new program in the second half of 2021. We are also transforming our pet business to be a more comprehensive financial solution provider and to meet the needs of pet parents throughout their pet care journey. Now, more than ever Americans are invested in their pets with both pet ownership and cost increasing significantly over the past several years, and that trend grew even more during the pandemic. Americans spend more than $100 billion on expenditures. There is a large market outside of that practices with significant opportunity to provide new products, financing alternatives and services. CareCredit supports a lifetime of care for pets. And with the acquisition of Pets Best Insurance, we currently offer a complementary solution with veterinary care to support pet owners with simple, flexible financial options. We continue to integrate the Pets Bets Insurance offering to capitalize on the payment and customer experience synergies and we're also looking for ways to expand into other pet adjacencies through products and services in retail. By focusing on the needs of our partners and customers and bringing substantial scale and expertise, we believe we will drive loyalty to the CareCredit network and as a result should see outsized growth in the future. This is an important period of time for our company, and the world as we continue to emerge from the pandemic. Our business and the actions we've taken over the past year, we will well positioned to take advantage of the opportunities which lie ahead of us. I share Brian's sentiment of appreciation and the unwavering commitment of our people. I'll now provide an update on our first quarter results. The pandemic and resulting government stimulus actions have impact in several key areas of our business over the past year. However, our business mix has helped us to mitigate some impact from the pandemic and certain areas have performed very well, including digital, home-related products and services, veterinary services, electronics and appliances. Performance in these areas have provided support against the overall effects of the economic downturn. As we exit the first quarter, we are starting to see greater signs of economic recovery more broadly. Purchase volume an increased 8% versus last year and exceeded our expectations for the quarter. From a macroeconomic perspective, we have seen consumer confidence reached one year high March, unemployment continued to improve and the easing of some of the remaining local restrictions. This is evident in the increase in purchase volume per account which is up 18% over the last year. Average active accounts were down 8%, which marks a slowing in the rate of decline that remains impacted by the macroeconomic effects of the pandemic in 2020 and uneven recovery in the first quarter. We did originate over 5 million new accounts, an increase of 3% versus the first quarter 2020 which is a positive sign and reflective of improved consumer sentiment. Loan receivables declined 7% which was worse than our expectations. The driver was higher than expected elevation in payment rates, which resulted primarily from the recently enacted stimulus. Interest and fees on loans were down 14% from last year, driven by the elevated payment rate in addition to lower delinquencies. Dual and co-branded cards accounted for 38% of the purchase volume in the first quarter and increased 6% in the prior year. On loan receivable basis, they accounted for 23% of the portfolio and declined 10% from the prior year. Overall, we saw positive momentum in several of our growth metrics this quarter where higher payment rate is impacting loan receivable growth. While we're still cautious about the state of the pandemic with the recent rise in confirmed cases, we are encouraged by the progress made with the national rollout of vaccine and lifting some of the remaining restrictions. We remain optimistic of the positive momentum and continued improvement as we progressed through 2021. RSAs increased $63 million or 7% from last year. RSAs as a percentage of average receivables was 5.1% for the quarter. This was elevated from the historical average primarily due to the significant improvement in net charge-offs. We reduced our loan loss reserves this quarter due to an improved macroeconomic outlook in line with the decline in loan receivables. This coupled with lower net charge-offs resulted in a significant decrease in the provision for credit losses of $1.3 billion or 80% from last year. Other income increased $34 million, due to investment income. Other expenses decreased $70 million or 7% from last year due to lower operational losses and lower marketing costs, partially offset by an increase in employee costs. Moving to our platform results on Slide 9. Our sales platforms continue to be impacted in varying degrees due to the pandemic restrictions and elevated payment rates. Their trajectories have been different based on factors such as business and partner mix, digital concentration, provider access and availability of hardline goods. We have seen broad-based momentum in purchase volume as consumers become increasingly confident as we begin to exit the pandemic. In Retail Card, loan receivables declined 9%, that show momentum with purchase volume increasing 11% versus last year. Average active accounts were down 7% and interest in fees were down 16% due to the impact from the pandemic. We're excited with our renewal of the American Eagle program and continue to see significant opportunity with our recently launched programs with Verizon and Venmo as those programs begin to build. The strength of our powersports and home specialty and payment solutions continue to helped offset some of the impact from pandemic shutdowns and higher payment rates. During the quarter, loan receivables declined 1% and average active accounts were down 9%. Interest and fees were down 11%, which was driven primarily by lower late fees, finance charges, and merchant discount, all resulted reduction in loan receivables. We did see positive momentum in purchase volume, which was up 3% over last year. Our focus on growing this platform resulted in several new programs being signed and renewed key partnerships, including Ashley Home furniture during the quarter. We continue to drive organic growth through our partnerships and networks and added 3,900 new merchants during the quarter. We also continue to drive higher card reuse, which now stands at approximately 34% purchase volume excluding oil and gas. Although, CareCredit was the largest overall impact from the pandemic restrictions, improvement in this platform has continued into 2021 as providers have increased, elective and planned services from the trough in the second quarter of last year. This improvement is evident in our purchase volume being flat to last year. Loan receivables were down 8% this quarter and drove a decrease in interest and fees on loans of 7% as we reported lower late fees and merchant discounts. During the quarter, we continue to grow our CareCredit network, enhance the utility of the card. The expansion of our network and acceptance strategy has helped us drive the reuse rate to 59% of purchase volume in the first quarter. This is a powerful growth platform for our business and remain excited about the opportunities to drive future growth as the impact from the pandemic subsides. I'll move to Slide 10 and cover our net interest income and margin trends. During the quarter, recently enacted stimulus contributed to an elevation of payment rates, which were up about 2 percentage points on average compared to the average payment rates we experienced pre-pandemic. The difference was as high as 3.5 percentage points in March when the most recent stimulus plan was enacted. This has resulted in a reduction in loan receivables, which has had an impact on net interest income and net interest margin in the first quarter. Net interest income decreased 12% from last year, driven by lower finance charges and late fees. The net interest margin was 13.98% compared to last year's margin of 15.15%, largely driven by the impact of the pandemic on loan receivables and increase in liquidity and lower benchmark rates. Specifically, the loan receivables yield of 19.32% was down 135 basis points versus last year and was the primary driver of 117 basis point reduction in our net interest margin. The mix of loan receivables as a percent of total earning assets declined over 3 percentage points from 81.7% to 78.6%, driven by the higher liquidity held during the quarter. This accounted for 61 basis points of the net interest margin decline. The liquidity yield declined as a result of lower benchmark rates and accounted for 23 basis points reduction in our net interest margin. These impacts were partially offset by a 93 basis point decrease in the total interest-bearing liabilities costs to 1.57%, primarily due to lower benchmark rates. This provides a 78 basis point increase in our net interest margin. We continue to believe that in the second half of the year, excess liquidity will begin to be deployed into asset growth and slowing paying rates should result in higher interest and fee yields leading to increasing net interest margin. Next, I'll cover our key credit trends on Slide 11. In terms of specific dynamics for the quarter, I saw the delinquency trends. Our 30-plus delinquency rate was 2.83% compared to 4.24% last year. Our 90-plus delinquency rate was 1.52% compared to 2.10% last year. Higher payment rates continue to drive delinquency improvements. Focusing on net charge-off trends, our net charge-off rate was 3.62% compared to 5.36% last year. Our reduction in net charge-off rate was primarily driven by the improving delinquency trends as customer payment behavior improved over the last several quarters. Our loss for credit losses as a percent of loan receivables was 12.88%. Moving to Slide 12, I'll cover expenses for the quarter. Overall expenses were down $70 million or 7% from last year to $932 million as we continue to execute on our strategic plan to reduce costs. Specifically, the decrease was driven by lower operational losses and lower marketing and business development costs, partially offset by higher employee costs. The efficiency ratio for the first quarter was 36.1% compared to 32.7% last year. The ratio was negatively impacted by lower revenue that resulted from lower receivables and lower interest in the fee yield, which was partially offset by a reduction in expenses. Moving to Slide 13. Given the reduction in our loan receivables and strength in our deposit platform, we continue to carry a higher level of liquidity. But we believe it's prudent to maintain a higher liquidity level during uncertain and volatile periods, we are actively managing our funding profile to mitigate excess liquidity where appropriate. As a result of this strategy, there is a shift in the mix of our funding during the quarter. Our deposits declined by $1.9 billion from last year. Our securitized and unsecured funding sources declined by $2.1 billion. This resulted in deposits being 81% of our funding compared to 79% last year. The securitized funding comprising 9% and unsecured funding comprising 10% of our funding sources at quarter end. Total liquidity including undrawn credit facilities was $28 billion, which equated to 29.2% of our total assets, up from 25.3% last year. Before I provide details on our capital position, it should be noted that we elected to take the benefit of the transition rules issued by the joint federal banking agencies, which has two primary benefits. First, it delays the effect of the CECL transition adjustment for an incremental two years. And second, it allows for a portion of the current period provisioning to be deferred and amortized with the transition adjustment. With this framework, we ended the quarter at 17.4% CET1 under the CECL transition rules, 310 basis points above last year's level of 14.3%. The Tier 1 capital ratio was 18.3% under the CECL transition rules compared to 15.2% last year. The total capital ratio increased 320 basis points to 19.7%. And the Tier 1 capital plus reserve ratio on a fully phased in basis increased to 28.7% compared to 24.1% last year, reflecting the increase in the reserves as a result of implementing CECL. During the quarter, we returned $328 million to shareholders, which included $200 million of share repurchases and paid a common stock dividend of $0.22 per share. Given the continued uncertainty in the operating environment, I thought it'd be helpful to provide color on our current view on the key earnings drivers for 2021, which we've laid out on Slide 14. Our views assume that the pressure from the pandemic and a slower economic recovery continues into the second quarter with the second half seeing the pandemic largely under control and the acceleration of the economic recovery. First quarter purchase volume was stronger than anticipated as we entered the year, as local restrictions are lifted with consumer confidence improving so to consumers willingness to spend. We currently believe these trends will hold and purchase volume will continue to recover across our platforms. In the second quarter, we will be comparing against a period of widespread shutdowns. In the second half, we anticipate improving growth trends as the pandemic impact moderates and macroeconomic growth accelerates. Regarding loan receivable growth, we expect that stimulus will continue to have an impact on payment rates, and therefore, loan receivables into the next quarter. In the second half of 2021, we assume payment rates will moderate as the effects of the stimulus abates and we return to more normalized consumer payment behavior patterns. Combining this with the expected increase in purchase volume from the improving macroeconomic environment, this should contribute to loan receivable growth. For net interest margin, we expect the higher payment rates will continue to pressure on loan receivables and generate excess liquidity, impacting interest and fee yield and asset mix. We continue to believe that excess liquidity will be reduced through asset growth and so payment rates in the second half of the year, which will drive improving interest and fee yields and asset mix leading to increase in net interest margin. With respect to credit, delinquencies are expect to increase from the current levels. So, we now believe the peak will occur later than we anticipated, likely in early 2022. While current delinquencies will result in lower net charge-offs in the second quarter, we expect net charge-offs to rise resulting from the increases in delinquencies as we move through 2021. Given the magnitude of the stimulus that was deployed during pandemic, we believe the overall loss curve will be flatter than we initially thought that remains volatile and difficult to forecast due to the effects of the stimulus and industry forbearance has abated. We expect reserves to be largely driven by asset growth, impacts from any rate changes in credit and in our macroeconomic assumptions and certain combinations of these factors could result in further reserve releases this year. We expect RSAs to remain elevated into the second quarter, primarily reflecting strong program performance, including an improvement in net charge-offs, partially offset by lower revenue. In the second half of the year, we continue to expect low RSAs generally, but slightly higher net charge-offs, partially offset by higher revenue. As we outlined previously, we've implemented cost reductions across the organization and I'm pleased to report that we are in a pace which expense savings target of $210 million for the full year. Partially offsetting these cost reductions will be the expense increases related to growth in addition to anticipated increase in delinquent accounts. We will continue to closely monitor how the pandemic develops and to impacting the macroeconomic environment. At the foundation is our belief that we position ourselves well for the opportunities that will develop as the economic recovery takes from hold. Further, we've made the investments to support our partners as they have been required to rapidly transform their businesses to meet the new digital realities. And will continue to make investments in our people, products, technology and platforms to drive long-term value and continue to ensure the safety of our employees, while meeting the needs of our partners, merchants, providers and cardholders. Clearly, the pandemic has had significant impact and has in many ways changed the way we do business. This quarter made it evident that we are beginning to emerge on the other side of this period. Consumer sentiment has improved, the unemployment rate has dropped, the U.S. retail posted the largest gain in 10 months. Our business is showing its resilience as growth has accelerated with purchase volume up 8% and 5 million new accounts opened in this quarter. And although the solid growth metrics were tamped down by higher payment rates which impact loan receivables and NIM, these are headwinds that we anticipate will soon abate. Credit performance has continued to outperform and we continue to extend our CareCredit network, delivering new products, financing alternatives and experiences with a focus on overall wellness in pet. The bottom line is that we demonstrated that we were able to rapidly adapt to operate in the new environment, while continuing to keep our eye on the long-term, positioning ourselves well for the future. And in my opinion. We have never been in a stronger position. That concludes our comments for the quarter. We will now begin the Q&A session so that we can accommodate as many of you as possible. I'd like to ask the participants to please limit yourselves to one primary and one follow-up question. If you have additional questions, the Investor Relations team will be available after the call. Operator, please start the Q&A session.

compname posts q4 earnings per share $0.59. q4 earnings per share $0.59. expects 2021 adjusted local currency revenue to grow at a low to mid-single digit rate. expects, on a local currency basis, 2021 adjusted diluted earnings per share to grow at a mid-single digit growth rate. expects 2021 full year gaap diluted earnings per share to grow at a mid to high single digit growth rate. expects 2021 earnings per share reported on a u.s. dollar basis to benefit by anout ten cents based on current exchange rates.